Healthy Investments

Long Island Business News
May 6, 2016
Healthy Investments

Todd Goldstein, a researcher at the Feinstein Institute for Medical Research in Manhasset, stood in a conference room with his heart in his hands. Or rather, someone else’s.
Goldstein held a white, plastic model of a child’s heart made by using a CT scan and a 3-D printer to help a doctor do run-throughs to prepare for an operation.
“A surgeon can use it to plan surgery and practice,” he said. “It can result in less operating time.”
While that model heart is far from the red, beating core of the human body, it’s part of the potentially far-reaching impact of 3-D printing in medicine.
Printers also can be used to “bioprint” or recreate everything from cartilage to a trachea, creating a slew of spare parts, even printing with living cells.
That heart, though, represents a financial as well as a medical frontier. Northwell has begun putting its money where its medicine is in a new way, backing startups and helping commercialize innovations.
“It’s our intent to work with these researchers to see if we can create a startup company based on technologies or implementing clinical applications beyond Northwell Health,” said Thomas Thornton, senior vice president and executive director of Northwell Ventures, the health system’s venture capital and business development arm.
While the Long Island Angel Network has long been matching money with innovation, Long Island’s biggest healthcare provider is getting into VC game.
“It sounds like a VC fund. We should look and act like a venture investor,” Thornton said. “We’re trying to take ideas and determine if we can use them internally, but also to determine if we can use them externally, if we can license them, create startup companies around them, and to bring that business world mentality to the system.”
The Great Neck-based health system last year invested $2 million in startups and this year poured another $500,000 into Manhattan-based HealthConnect, which makes an automated physician referral system.
“We spent 18-plus months validating that technology. We piloted it a little,” Thornton said. “If they leave the emergency department, we want to make sure they get follow-up care.”
The system is investing $100,000 and its own resources, such as expertise, to help launch a 3-D printing company focusing on medicine.
“Some of it’s internal. Some is external,” Thornton said of the source of ideas in which it invests. “What do you bring to the table?”
Where money and medicine meet
A few months after changing its name from the North Shore-LIJ Health System, Northwell Health has been expanding in just about every way.
The state’s largest healthcare provider and private employer grew to 21 hospitals and nearly 450 outpatient practices, 61,000 employees and providers in more than 100 medical specialties serving more than 1.8 million people.
It also has been adding hospitals, taking over Lenox Hill in Manhattan and expanding through alliances into Connecticut and Florida.
It opened Manhattan’s first freestanding emergency department in Greenwich Village, partnered to launch the Hofstra Northwell School of Medicine and School of Graduate Nursing and Physician Assistant Studies. It even launched insurer CareConnect.
So it’s no surprise it’s seeking to flex its monetary muscle as an research and development player, joining Stony Brook University, Brookhaven National Laboratory and Cold Spring Harbor Laboratory.
“Some years ago, a group of us sat and looked at the mission of the healthcare system, to provide world-class medical care,” Feinstein President Dr. Kevin Tracy said. “That means being No. 1 in research.”
Northwell Health CEO Michael Dowling believes the system needs to do more than care for patients, but also should seek to advance medicine.
“We wanted to create a part of the organization that would be responsible for promoting innovations and commercializing our assets, material assets and intellectual assets, developing new businesses and creating new joint ventures,” Dowling said.
While most VC funds have a certain amount in their war chest, Northwell Ventures has the potential to grow each year.
“We don’t have a fund sitting in a bank account,” Thornton said. “We can invest up to $5 million in any given year.”
Northwell already helps early stage companies pilot products and services. When something works, why not invest?
“It’s a two-way street,” Thornton said. “They get validation from their technology. We get to better understand trends in technology.”
Culture shock
Large healthcare providers such as the Mayo Clinic, Cleveland Clinic and Johns Hopkins all have investment operations. Thornton calls his 14-person operation “broadly defined, the business development arm.”
Dowling said it’s part of Northwell’s medical mission and falls within the system’s nonprofit mandate, even if it could make money.
He called this “the essence of our DNA, looking at everything with a new lens, looking at everything from a new perspective” as it develops healthcare technology and systems.
“That’s the essence of what we are and, I think, what distinguishes us and will continue to distinguish us more as the years go by,” Dowling said of research.
Northwell two years ago recruited Thornton from the Cleveland Clinic’s research arm to lead Northwell Ventures, which Dowling says is charged with helping “promulgate new businesses.”
He said Thornton has been looking at “dozens and dozens of new ideas, joint ventures and businesses,” while collaborating with the Feinstein Institute’s Office of Technology Transfer to find and fund startups, obtain patents and commercialize inventions.
“We are empowering our employees to look beyond the scope of their day-to-day jobs and encourage them to create potentially breakthrough innovations,” Thornton said of the focus on innovation inside and outside the system.
The RX for VC
While Northwell hopes to make a profit by commercializing ideas, it doesn’t only pour in cash. “We’ll invest money, time and effort,” Thornton said.
The system provides resources, ranging from expertise to equipment and the ability to tap a vast system to advance projects.
“It’s not just about the money,” Goldstein said of Northwell, which hopes to spin off a 3-D printing startup.
Thornton said knowhow about how to form a company, ranging from leadership to legal work, can help.
“We created companies set up and structured as for-profit entities,” he continued. “We have the researchers, the clinicians, the opinions of patients, administrators and others all wrapped around one thing.”
A big part of the idea is to try to build ideas into income, but also to help license technology, much as institutions such as Stony Brook University frequently do.
“We’re not the guys developing technologies,” Thornton said. “We try to figure out how to take it to market.”
The system is particularly interested in healthcare information technology applications, which can be a sweet spot. Developing medications might be key in healthcare, but that’s not the main thing Northwell Ventures hopes to do.
“It’s extremely complicated,” Thornton said of launching drugs. “That’s not to say we wouldn’t. We haven’t taken that track.”


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