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Friday, 31 August 2018 21:25

Spectrum Health to take more active role in supporting, funding medical innovations

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Jansen Jansen

GRAND RAPIDS — A new business arm gives Spectrum Health the ability to delve deeper into commercializing medical innovations alongside other health systems across the nation.

The Grand Rapids health system’s new Enterprise Development & Commercialization Group complements a $100 million venture capital fund it created in early 2017 to invest in health care startups seeking to bring innovations to market.

Under the changes made last month, Spectrum Health renamed the venture capital fund Spectrum Health Velocity. Both the venture capital fund and the Enterprise Development & Commercialization Group now operate under the parent entity Spectrum Health Ventures LLC.

In the prior structure, Spectrum Health had a “passive” role and “didn’t have a lot of say in the companies that we’re investing in” through the venture capital fund, said Roger Jansen, who was promoted to president of Spectrum Health Ventures. He previously served as senior vice president and chief strategy officer for Spectrum Health.

Formation of the commercialization group provides Spectrum Health the flexibility and legal structure needed to form partnerships and joint ventures with other health systems to launch new companies, either with or without an accompanying venture capital investment.

Spectrum Health now “can have more direct influence on how those companies grow, what areas they’re focused on, how they deliver service and what type of focus they’ll have for meeting demands and solutions we have at Spectrum Health,” Jansen said.

“What it really allows us to do is broaden our influence and scope of who we work with and how we work with them,” he said. “Everybody has the same issues in health care and everybody’s paying for the same things, but there’s no scalability to that. This gives us scale in a way that saves us money and potentially makes us money, but really leverages the ability much more rapidly to bring solutions into our own system in ways we just haven’t been able to do.”

Spectrum Health moved to support those new solutions by forming and committing $100 million to a corporate venture capital fund that invests in companies commercializing new technologies, products and services that can improve patient health and drive down costs. The idea was that by co-investing with other health systems around the U.S., Spectrum Health can gain to access medical innovations for care locally.

The venture capital fund has been making minority investments in startups or investing as a partner with other investors involved in Chicago-based 7wire Ventures, an early-stage health care venture capital fund.

“As a leading health system, we must continue to identify new health solutions for consumers that will lead to health management and wellness as well as better therapies and treatments,” said Tina Freese Decker, who became Spectrum Health’s president and CEO on Sept. 1. “Partnering with other health systems and entrepreneurial companies enables us to invest and play an active role in leading-edge concepts, products and services. Revenue from these efforts will be reinvested in our mission-driven work of improving the health of our communities.”

DOING DEALS

In the first year and a half, Spectrum Health’s venture capital fund invested $9 million and committed another $13 million to startups, both directly and through 7wire Ventures.

The fund’s three direct investments are:

  • Gauss Surgical Inc., a Los Alto, Calif. company that developed a monitoring system to provide clinicians an accurate estimate of a patient’s hemoglobin and blood loss during surgeries and births. That information helps clinicians in making decisions on transfusions and medications for patients. Physicians at Spectrum Health were involved in the due diligence with other health systems that invested in Gauss Surgical.
  • Orig3n, a Boston, Mass.-based biomedical research company involved in genomics and genetic medicine.
  • Arivale Inc. in Seattle, Wash., a wellness company that uses research, personal data and customized coaching to help people optimize their health to avoid diseases. Spectrum Health announced a partnership in March to use Arivale’s Scientific Wellness program for its Medical Group and at the Strive primary care and wellness practice in downtown Grand Rapids.
    The venture capital fund also holds stakes in 13 other startups through 7wire Ventures.

QUICKER RETURNS

The Enterprise Development & Commercialization Group differs from the Spectrum Health Innovations business unit, which is focused on vetting and commercializing innovations that originate internally with clinicians and staff.

By creating the Enterprise Development & Commercialization Group, Spectrum Health can generate revenue quicker from direct equity positions in startups as they move into the marketplace, rather than wait for an exit to generate a return on investment or dividend, Jansen said.

“It allows us to bring diversified revenue streams more immediately into Spectrum Health,” Jansen said.

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