wherein Avia and its members start by identifying a challenge, then work together over the course of several months to narrow down a list of companies—which can number in the hundreds at the beginning—to a single winner that receives an investment. What’s an example of a challenge that you all have identified an innovative solution to, and together invested in that solution?
PP: Wayfinding has been a problem forever in our organizations, which are getting bigger and more complex. There is a company called Connexient. Basically, patients and visitors have an app that will guide them from their home to the parking lot or ramp that they’re going to, and then navigate that internal geography to get them where they need to be. This is something that the members and Avia essentially found together and we’re in the process of implementing now [at Froedtert and other locations].
One of the nice things about a provider investment in these companies is that it accelerates the implementation of the solutions. It’s no longer, “Gee, is my money going to give me a return?,” but rather, “I’m picking this investment because I believe it’s the right solution to my problem, and so do my colleagues.” Today, we’re in a cohort studying the problem and its solution. Tomorrow, eight of us are implementing the same solution. It’s like accelerating the startup company into that space with customers and money right out of the chute.
X: Do you expect that most of the investments Inception Health makes will be through an intermediary like Avia, or might we see Inception putting money into startups directly?
PP: I think it will be a mixture. We are free to invest in companies directly, and we will undoubtedly do some of that as well. If we believe that a startup [provides] a really important solution to a problem we have, and it’s likely to be a solution a lot of other health systems would want to use, we may just invest directly
Also, as an investor in Avia, we actually acquire ownership in some of the companies that that they are sponsoring. Some of these cohort studies result in Avia earning warrants in its portfolio companies that become equity, [so] we do earn equity in a number of other companies through our investment in Avia.
X: What are some of the criteria Inception uses when it’s deciding whether a particular company would be a good candidate to fund?
PP: We’ll invest in software, and companies that provide apps. In fact, most of what we do [will] be investments in software, rather than hardware or other things like that.
[Location-wise], it could be anywhere; one of the advantages of a virtual world is that geography doesn’t make nearly as much difference as it used to in the old days.
The technology has to be scalable, and relatively quickly scalable, so that it has a larger impact. We also want these investments to reduce the cost of healthcare and [improve] its efficiency. Providers are overwhelmed with the number of things that are being added to their plate [and] sort of groan when they imagine another thing being added. We have to be able to demonstrate to providers that something is going to make their life better, not more complicated.
