MedCity Influencers, Sponsored Post

Why mission-driven strategic investing is so important in healthcare

In some industries, major innovations can come from outside, but in a complex regulated industry like healthcare, where patient safety and clinical workflows are ingrained, mission-driven organizations must partner with innovators.

This post is sponsored by MidAmerica Healthcare Venture Forum.

Last week I wrote about how federated groups of investors help de-risk innovations in the Venture Development Lifecycle (VDLC). One of the most important investors we didn’t talk about in the VDLC was the strategic (or what I like to call mission-driven) investor. Almost all successful firms have some overarching strategy when it comes to their products, services and customers. When an investment helps promote a firm’s strategy in some way, it’s often labeled a “strategic investment”. For example, when a health system embarking on an ACO strategy invests in a patient engagement startup that can further the ACO mission, it could be called a strategic investment.

Such mission-driven investments are often made by sophisticated enterprises that know their gaps can’t easily be filled on their own, so they seek innovators to fill them. Think about some of today’s macro trends:

  • Fee for service business models are slowly giving way to pay for performance
  • Major healthcare workflows are moving from paper native to digital native
  • Telemedicine allows diagnostics and care to be performed at great distances and outside of traditional centers of care
  • Digital biology unleashed by the genomics revolution is enabling personalized medicine and patient-specific treatment regimens
  • Digital chemistry and microfluidics allow biological specimen diagnostics on mobile devices, often obviating complex lab tests and the time it took to conduct diagnoses

Who’s going to be able to fill the hundreds of gaps that are created by the macro trends? What about the thousands of gaps created by the micro trends within each macro trend? Health systems and drug companies can’t do it alone and payers as well as device manufacturers can’t do it by themselves either. Much innovation, especially in healthcare, often requires entrepreneurs to work with complex organizations so that their ideas can be tested in situ within institutions. Building and testing innovations where they will be used rather than coming from the outside reduces their overall acceptance risk.

This is why mission-driven strategic investment is so important in healthcare. In some industries, major innovations can come from outside, but in a complex regulated industry like healthcare, where patient safety and clinical workflows are ingrained, mission-driven organizations must partner with innovators. Proper strategic investments help de-risk and position innovations so that they meet institutional mission goals. The institutions can’t create the innovations by themselves but they can provide mission-driven capital and resources so that innovators can succeed long term.

Many healthcare players are starting to recognize how important strategic investing is to the innovation pipeline. Next week, at MedCity News’ MidAmerica Healthcare Venture Forum, Stephanie Baum will lead a discussion with Robert Coppedge, Senior Vice President, Strategic Investments and Corporate Development, about the new role strategic investors play in healthcare – and how this role will continue to evolve. Register now, join us next week and let us know how you can help promote strategic investing at your institution.


Shahid Shah

Shahid Shah is an enterprise software analyst with 15 years of experience in healthcare IT. He writes regularly at The Healthcare IT Guy.

This post appears through the MedCity Influencers program. Anyone can publish their perspective on business and innovation in healthcare on MedCity News through MedCity Influencers. Click here to find out how.

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