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Maestro Strategies

Hospitals buying real estate, revamping clinical space for innovation hubs

Image Credit: Allegheny Health Network via Modern Healthcare

Pam Arlotto is quoted in a May 3, 2022, article, by Jessica Kim Cohen, in Modern Healthcare. 

In February, Pittsburgh-based Allegheny Health Network held a ribbon-cutting in Bellevue, Pennsylvania, to unveil a home for one of its newest ventures—AlphaLab Health, which the system hopes will spur innovation and improvements to community health.

The 10,000-square-foot innovation hub, a partnership with Pittsburgh-based startup incubator Innovation Works, is housed in a former hospital owned by AHN. It will serve as the home base for startups participating in AlphaLab Health, AHN’s healthcare and life sciences startup accelerator launched in fall 2020.

“It’s a demonstration of what you can do to repurpose these assets that are aged but have great bones,” said Dr. Jeff Cohen, AHN’s chief physician executive for community health and innovation.

The space gives AlphaLab Health startups access to wet and dry labs to develop products, as well as office space and areas to collaborate and meet with other startups. The startups also receive early-stage funding and opportunities to connect with clinicians and test products at AHN.

The project has involved more than two years and $5 million, including renovations and investments in startups and programing—of which AHN and its parent Highmark Health contributed $2 million.

Accelerators and other innovation centers became more popular during the COVID-19 pandemic, said Pam Arlotto, president and CEO of healthcare consultancy Maestro Strategies. While hospitals have been setting up innovation programs for years, the efforts took on a new focus as the healthcare industry eyed consumerism and pushed to create new care models that engage patients at home and outside of the hospital.

They’re expensive projects, usually involving investments in real estate and hiring staff to run the programs.

Hospitals starting innovation centers have done everything from revamping old clinical or administrative space to building new facilities to house innovation programs, said Rob Lowe, CEO of Wellspring, a software company that sells products for innovation and research and development programs. It depends what type of work the hospital needs to do or the form of the incubator itself.

Some hospitals create accelerators to identify startups worth partnering with or venture capital arms that invest, Lowe said. Some, like AHN’s, are partially funded through local government as part of economic development efforts.

“Almost in all cases of these hospitals that we work with around the U.S., we see dedicated space,” Lowe said.

 

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Maestro Strategies

Google, HCA strike multiyear cloud partnership

Pam Arlotto is quoted in a May 26th article, by Jessica Kim Cohen, in Modern Healthcare.

HCA Healthcare has entered into a multiyear partnership with Google’s cloud arm, the for-profit hospital chain said Wednesday.

As part of the partnership, Google Cloud will build a data analytics platform for HCA designed to help the Nashville-based health system create tools that improve workflow and clinical care.

HCA declined to share financial details of the agreement.

HCA will work with Google Cloud’s office of the chief technology officer and professional services team to develop artificial intelligence and data analytics tools, such as alerts that could be sent to clinicians’ mobile devices so that they can respond to changes in a patient’s condition more quickly, as well as improvements in non-clinical areas like supply chain and human resources.

HCA will use Google Cloud tools including the company’s healthcare API, or application programming interface, and BigQuery, a cloud data warehouse.

“The cloud can be an accelerant for innovation in health,” said Thomas Kurian, Google Cloud’s CEO, in a statement.

The U.S. healthcare cloud computing market was valued at more than $29 billion in 2020, according to a report from market research firm Global Market Insights, and is expected to reach $79.3 billion by 2027, driven by growing adoption of digital tools and interest in data management tools that incorporate advanced analytics and store data securely.

HCA’s contract is just the latest example of a health system partnering with a technology company for cloud services. A growing number of organizations in recent years have moved applications and data to the cloud—to servers managed by other companies off-site—to help save costs and develop innovative technologies.

Mayo Clinic in 2019 struck a 10-year contract with Google Cloud that involves data storage and innovation projects, leading the tech giant to open an office in Rochester, Minn., earlier this year to strengthen its relationship with the health system. Johns Hopkins Medicine last year struck a five-year agreement with Microsoft Corp.’s cloud arm to support the Baltimore-based healthcare organization’s precision medicine program.

One of the most high-profile cloud deals in healthcare in recent years involved a partnership between St. Louis-based Ascension and Google. The agreement, which included a contract to move Ascension’s patient data to Google Cloud, drew public concern in 2019 over patient privacy. Ascension has since expanded a pilot of an electronic health record tool from Google that it tested as part of the partnership.

Healthcare’s shift to the cloud has encompassed two broad functions: migrating applications to the cloud, where they’re hosted on off-premise servers, or storing data in the cloud so that it can be analyzed more easily and used as part of analytics tools.

“There are two phenomena going on,” said Cynthia Burghard, a research director in value-based IT transformation strategies at IDC Health Insights, a division of market research firm International Data Corp.

While providers and payers were initially hesitant to move to the cloud in years past, citing concerns like privacy, security and reliability, over the past two years it’s become more common for organizations to move applications such as EHR systems to the cloud, Burghard said. Deals that involve data, such as HCA’s partnership with Google Cloud, have gained steam more recently.

Such partnerships have become more common over the past 12 to 18 months, according to Burghard.

Healthcare and life sciences companies had moved roughly 44% of business functions and 42% of IT systems to the cloud in 2020, up from 36% of business functions and 33% of IT systems to the cloud in 2018, according to a report from consulting and IT services firm Infosys, driven in part by the need to add more virtual care and remote work capabilities amid COVID-19.

Healthcare will likely continue to shift towards new cloud tools and deployments over the next two years, according to Jeff Kavanaugh, global head of Infosys’ research and thought leadership arm.

In the wake of public pushback to Ascension’s work with Google in 2019, healthcare experts suggested the controversy reflected a lack of trust the public had of Big Tech, which could pose challenges as tech companies moved into healthcare.

But Google and other tech giants have continued to make inroads in the industry.

“We’ll have to work through a lot of these issues, concerns (and) opportunities” that Big Tech companies bring, said Pam Arlotto, CEO of healthcare consultancy Maestro Strategies. She noted recent announcements involving tech companies have emphasized privacy and security. HCA’s news release reads, in part, “privacy and security will be guiding principles throughout this partnership.”

As hospitals and health systems continue to enter into such partnerships, “it’s really important that each organization that strikes these type of deals has very clear-cut goals (and) very distinct agreements with their partners about what you can and cannot do with your data,” Arlotto said.

 

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