Forum Ventures report: where health systems say innovation is most needed

The report outlined four areas as a guide to help startups to sell into these systems

The last five years have seen a huge upheaval for the healthcare space: starting with COVID and the move to teleheath and virtual care, along with already existing shortage problem that got even worse thanks to burnout, followed by the proliferation of artificial intelligence. If healthcare is a space that has long had the reputation of moving slowly, the last few years have been exactly the opposite. 

At the same time, this is a very crowded space, with more than 1,900 digital health startups in the United States as of 2022. So, how does a company stand out, especially if they want to win over the 6,000 hospitals making up the healthcare landscape in the United States?

Forum Ventures, an early-stage B2B SaaS fund, accelerator, and venture studio, talked to innovation and technology executives at four of the largest U.S. health systems, Mayo Clinic Ventures, Hackensack Meridian Health, Cone Health Ventures, and University Hospitals Ventures, to find out.

On Tuesday, the firm released a report on what these health systems said, entitled The New Landscape Of Healthcare: What Healthtech Startups Need To Know To Win, which outlined four areas where innovation is most needed: operational efficiencies, remote and hybrid care, accessibility to care, and early detection or AI-driven diagnostics.

"Those leading the charge in innovation at health systems are operating at the intersection of innovation and tightening margins. They need to consider innovations that generate revenue and address the challenges putting strain on their systems before they can invest in strategies that will put them at the forefront of change. But what exactly does that look like? What should early-stage founders be solving for at this critical juncture in healthcare?" said Forum Ventures in the report.

Operational efficiencies

One of the biggest challenges for health systems right now are staffing shortages: healthcare workers saw their burnout rate hit 60% by the end of 2021, resulting in just under 334,000 healthcare providers dropping out of the workforce. That included 15,000 internal medicine doctors, over 13,000 family practice physicians, nearly 11,000 child psychologists and chiropractors, over 8,500 psychiatrists, and over 8,000 optometrists. In Q4 of 2021 alone, 117,000 physicians quit or retired, as did over 53,000 nurse practitioners.

To counteract this issue, Mayo Clinic has deployed geo-tagging and computerization for hospital carts; that allows them to precisely track the location and amount of medical supplies and equipment within the hospital in real-time, helping manage inventory and making sure that the necessary equipment is available. 

Meanwhile, Mayo Clinic Ventures, the corporate venture capital arm of Mayo Clinic, sees thousands of ideas every year from Mayo Clinic staff, with a specific focus on non-physician employees who they believe can "bring a unique perspective to administrative tasks, which can lead to solutions that save substantial time and dollars every year.” Similarly, Hackensack Meridian Health is taking ideas from its own team members, tapping into their experience through innovation challenges.

Some of the technologies that Cone Health has implemented to overcome problems with staffing include remote patient monitoring (RPM) and virtual assistance, including cameras and televisions in patient rooms so that a single nurse can monitor the vitals of an entire floor from a central location.

“In sum, healthtech startups that can create operational efficiencies that remove friction for hospital staff, improve the work environment, and enable them to provide better care are likely to capture hospital venture spend going forward,” Forum wrote. 

Remote and hybrid care

As mentioned above, when COVID-19 hit it led to a rise in virtual care, simply because there was no other way for patients to get care. As a result, the space saw a huge increase in investments, with dollars into the sector going from $1.6 billion to $2.8 billion, a 72 percent increase from Q1 to Q2 in 2020. Year-over-year, the amount invested nearly doubled. 

Of course, that didn't last, and once people could go see their doctor in person they mostly went back to the way things were before; now, there’s more of a focus on hybrid care, meaning a mix of in-person and virtual, rather than a one size fits all approach.

Many of the health systems interviewed for the report invested in virtual care during the pandemic, including Cone Health, which introduced a Virtual Primary Care initiative; it has since continued to further develop this offering, for example creating a subscription service that give patients a device that can perform basic medical examinations on their ears, nose and throat, instead of needing to come in to see a doctor in person.

In addition, Cone Health also developed a way to triage patients using an intelligent routing system that can suggest if a virtual visit is the best option for that patient based on their age and symptoms. The idea is to get them care more quickly, while in-person visits can be used for patients who actually need them. 

Hackensack Meridian Health is putting its focus on creating a smoother transition from inpatient or acute care to home care, while also helping keep patients engaged with care long after they leave the facility, while Mayo Clinic is developing resources to provide patients with personalized education videos delivered what the report described as “a culturally, racially, and socially relevant manner,” in an effort to make it so patients are more likely to use them. 

In addition, hospitals are becoming more interested in remote health coaching, according to the report. For example, University Hospitals is exploring programs to support patients on multiple fronts across nutrition, mental health, exercise, and stress levels, designed to serve as a “lifestyle medicine” support system. 

“Hybrid care introduces a way for hospital staff to be more involved in this part of the process, putting more of the hard-tocontrol health variables back in the hands of the care provider, contributing to positive long-term impact on the patient outcome,” wrote Forum. 

Accessibility to care

The pandemic also exposed disparities in healthcare, including when it comes to geography: according to the CDC, rural Americans are more likely to die from heart disease, cancer, chronic lower respiratory disease, and stroke than people who live in urban areas. On top of that, unintentional injury deaths are approximately 50% higher in rural areas, which is attributed, in part, to greater risk of death from motor vehicle crashes and opioid overdoses.

At the same time, 80% of rural counties lack a sufficient number of primary care providers, and it's only getting tougher to see a doctor in these areas, as at least 186 rural hospitals have closed since 2005, 143 of which have shut their doors since 2010. 

To help offset this, Cone Health offers virtual primary care and virtual cardiac rehab, while Mayo Clinic Ventures is putting its focus on expanding access to healthcare, tailoring tools and solutions so that hospitals all over the world can adopt and use them, not just Mayo Clinic facilities.

However, while University Hospitals embraceed RPM during COVID, it now seems to be rethinking the approach, exploring models that are less reliant on large-scale system integrations and more focused on specific, revenue positive applications.

“While some are moving forward cautiously, others are bullish. The big opportunity here for startups is to build scalable, cost-effective remote and hybrid care solutions that will democratize access to healthcare and navigate hospital system constraints and budgetary limitations,” wrote Forum.

Early detection or AI-driven diagnostics

Finally, there’s the role of AI in healthcare, which has become something of a buzzword: $1.1 billion, or 40% of Q1’s total funding to digital health startups went to AI-enabled companies. That was up from 33% of all digital health funding in 2023, and 29% in 2022.

The area where health systems seem to be looking to incorporate the technology first is radiology, as the Radiology Department at University Hospitals partnered with UH Ventures on a project that capitalizes on the AI research capabilities of UH radiologists, while University Hospitals also created a platform called RadiCLE that allows external companies to train and validate AI algorithms for research and commercial apps. That also involved a new center dedicated to finding, sorting, annotating, de-identifying, and making that data available.

“All of this suggests that University Hospitals is actively exploring partnerships with startups that are offering promising AI solutions in radiology, especially those that can work within and improve their current infrastructure, diagnostic accuracy, and ultimately, patient care,” said Forum.

Cone Health is also looking at incorporating AI into radiology, partnering with Rad AI to utilize AI to automate the analysis of radiology images, while Mayo Clinic is looking at other clinicals areas, specifically around the heart, working on projects leveraging echocardiogram (ECG), including Anumana, which integrates AI with ECG analysis to detect heart disease and predict the outcomes of medical procedures beyond the capabilities of the human eye. Mayo Clinic is also developing a way to use biomarkers, specifically voice analysis via smart device, to detect potential cardiovascular issues. 

Hackensack Meridian Health is exploring the use of AI in imaging to identify high-risk patients for conditions like sepsis and chronic kidney disease early, while also investing in Canary Speech, a technology uing AI to analyze speech patterns in order to understand, monitor, and diagnose neurological conditions.

What does this mean for startups?

These four areas can give insights into the priorities of these health systems, which can help them parter and then sell into them.

“Navigating a sale into a health system as an early-stage startup can be very challenging and can take twelve to twenty-four months or more. Healthtech founders need to understand how executives at their target health system(s) are approaching innovation before talking to them, and be open to starting with proof of concepts and design partnerships first,” wrote Forum. 

The different health systems are looking at different criteria when it comes to partnerships: for University Hospitals, their mandate for startup investing prioritizes establishing a relationship with a company first, often through pilots or advisory roles, before considering investment, while Hackensack Meridian Health's approach to engaging with startups is a balance between investing in promising ventures and being cautious with emerging technologies like AI and machine learning.

Cone Health, meanwhile, is exploring healthtech startups that offer solutions aligning with their strategic objectives to enhance patient care, improve access, and drive operational efficiencies, as well a startups that offer solutions for financial challenges such as revenue cycle management and supply chain efficiencies.

“Ultimately, open collaboration between startups and health systems will need to come first before any deals are signed. Hospitals want time to develop a partnership, ensure strategic alignment and a deep understanding of their unique challenges, and ultimately, build solutions together that are tailored to that health systems' specific needs.”

(Image source: harvard.edu)