Health IT, Startups

Exclusive: SAP dips its toes in the healthcare startup world

After a freak accident that has left an indelible impression on his mind, Bill McDermott, CEO of SAP, wants to give startups access to his company's technology to help them transform healthcare.

Underwater feet

German software giant SAP is looking to entrench itself in the minds of healthcare technology startups and transform the industry through a new partnership with New York-based global health innovation company StartUp Health.

Earlier this week, when the healthcare investing and entrepreneurial world descended on San Francisco during J.P. Morgan Healthcare Conference, StartUp Health’s parallel conference drew Bill McDermott, SAP’s CEO who announced the collaboration.

Through the StartUp Health SAP program, 15 startups will be selected globally based on certain criteria who will gain access to SAP’s HANA platform. The cloud technology functions as a platform-as-a-service that provides in-memory database and application services. The platform is designed to handle both structured and unstructured data.

“Ninety-seven percent of life sciences and pharma companies are running on us,” McDermott told the Startup Health Festival audience. “We have an ERP system that does all things from clinical, billing and capturing structuring and unstructured data. But we were quiet in healthcare.”

Not any more, if McDermott has his way.

The idea is that the initial 15 startups selected can write applications similar to apps on the app store in the HANA platform thereby exposing SAP customers to new, potentially transformative technology that can improve how they do business.

“Your application, your innovation, your idea on a bullet-proof tried and true global platform can in fact expand the virtue of your idea, of what you are trying to do to help the world run better and improve people’s lives,” he declared to a roomful of entrepreneurs in San Francisco.

If the healthcare companies using the HANA platform ends up purchasing the technology and services created by startups, SAP and the startup share the revenue. Later, in an interview, Steven Krein, the CEO of StartUp Health, explained why the program would be attractive to entrepreneurs.

“What it’s going to do is really allow access to technology, and an infrastructure and a data layer that most entrepreneurs couldn’t access nor get close to afford it,” Krein said of startups’ ability to use the Hana platform. “This streamlines access to customers for entrepreneurs and streamlines access to entrepreneurs for big companies that would otherwise not talk to one another.”

Startups won’t have to pay to be on the HANA platform. However, they would have to be StartUp Health companies and provide equity per the tiered structure that StartUp Health has created.

Criteria for selection to the StartUp Health SAP program will be announced later, but one includes the areas of interest for StartUp Health. Those are the ten moonshot areas that StartUp Health has defined: Access to Care, Cost to Zero, Cure disease, End Cancer, Women’s Health, Children’s Health, Nutrition and Fitness, Brain Health, Mental Health & Wellbeing, and Longevity.

While 15 startups will be selected — possibly expanding the universe of startups who would apply to become part of the New York accelerator  — existing portfolio companies of StartUp Health will get to access the HANA platform.

“The 15 number is relevant is because it’s a near-term milestone,” explained Unity Stoakes, president of StartUp Health, in an interview. “The idea is that this is the beginning of a growing platform and our intention, our goal is to support and organize this army of thousands of companies around the world. This is the genesis of an incredible opportunity for startups to be distributed on the [SAP HANA] platform.”

SAP’s interest in healthcare appears to have been prompted by its CEO’s personal hardship. In 2015, McDermott, suffered a freak accident, which ultimately led to the removal of an eye, and his donning of dark glasses.

“I got hurt July 2, 2015, and it was a very serious injury,” he said. “It almost cost me my life and I’ll never forget going through this experience.”

When he emerged after several surgeries, McDermott was touched by the “ecosystem of love and care” but appalled by the inefficiencies of the healthcare system.

What I learned going through the healthcare process is that you have to manage data and information. You have to have collaboration because you have so many different departments and so many different people that touch you. You are constantly repeating the same story over and over again. You are constantly filling out the same forms over and over again.

You are constantly seeing the smartest people in the world share information through voice and text and they are not even keying anything into a system. And yet when you get to the next smart person in the value chain, they don’t even know what the last smart person did unless they are buddies and they phone each other and text each other and send each other pcitures.

And I told myself we can do better than this.

McDermott said there were people who were skeptical within his company because transforming the fragmented and remarkably complex healthcare structure is not as easy as getting a customer on board with a technology solution and then scaling quickly as SAP does time and time again.

But he is undeterred because the foray into healthcare fits within SAP’s overall mission which is to run simple and improve people’s lives. But aside from the mission, the personal health injury has provided a deeper appreciation of life itself to the CEO of the $23 billion company.

“There’s nothing that touches the human soul more than your health,” McDermott said with his characteristic Long Island intonation. “People spend their whole lives chasing billion-dollar targets and you know what, even if they do, they can’t buy one second more of time with it.”

Photo: erlobrown, Getty Images

Clarification: An earlier version of the story referred to StartUP Digital Health as a digital health accelerator. While it takes equity in portfolio companies, the program is not a fixed-term, 90-day program like other accelerators and is designed to be more long term.

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