Taking investments from large health systems can be a way of killing two birds with one stone for early stage healthtech companies. This way, not only do the startups get the capital they need to fund operations and growth, they can also unlock the possibility of testing their products at these health systems, some of which employ hundreds—or even thousands—of potential users.
One example is Inception Health, the hub for digital health services at Froedtert & the Medical College of Wisconsin.
Inception Health exited stealth mode last month when it announced it had invested an undisclosed amount in Avia, a Chicago-based consortium whose current membership comprises 20 academic medical centers and health systems.
Peter Pruessing, who is the president of Inception Health and has worked at Froedtert for more than 15 years, recently spoke with Xconomy about the types of investments Inception expects to make, its relationship with Avia, and other topics. Our interview has been condensed and edited for clarity.
Xconomy: What were some of the reasons behind Froedtert’s decision to launch Inception Health?
Peter Pruessing: Innovation finds itself in a lot of different places in large organizations. Sometimes it gets lost, or subjugated to another agenda. Because we wanted to be effective at this, we wanted [Inception] to have the ability to be nimble, responsive, and proactive. That’s one of the reasons why it has a five-person board of directors, and those are all senior decision-makers at our health system.
X: I count 10 people on Inception’s team. Is everyone working full-time on investments and evaluating prospective companies?
PP: About half them are full-time. The other half spend some of their time with Inception Health but have other jobs [at Froedtert].
X: You’ve spent much of your career working in healthcare. Thanks to technological advances, patients can now play a more active role in their care, through things like fitness wearables, online health portals, and shared decision-making. Has this created more opportunities for digital health startups, and the groups that invest in them?
PP: Absolutely. We as providers have just been very provider-centric. Our intentions were positive but we just saw things through our own lens. Those [technologies] reflect the desire of consumers to have greater control over their health, and the things that provide access and help them understand how to manage their health. People are really eager to do that.
In the long run, we think the more we help them achieve what it is they want, the more they’ll see us as a trusted advisor in the process and be comfortable turning to us if they have a need they can’t meet on their own.
X: Why did you and your colleagues feel that Avia was a good target for Inception’s first investment?
PP: We’re really bullish on Avia, which is made up of large, distinguished health systems like the Mayo Clinic, Sutter Health, Providence Health & Services, and Rush University Medical Center. We feel like we’re in really good company.
None of us, as members, feel like we’re in a position to go out and scan this entire environment of innovative companies on our own. This is an expertise that Avia brings to us. We’re all committed to using it to solve real problems, and I think we’re all very enthusiastic about its impact so far. We’re feeling good about this.
X: According to its website, Avia’s investing strategy involves a “cohort” approach
