Hospitals buying real estate, revamping clinical space for innovation hubs

Each startup also receives up to $100,000 in funding—half of which is provided by AHN, and the other half from Innovation Works. AlphaLab Health retains 2% equity.

AlphaLab Health accepted its first class of seven startups in 2020, six startups in 2021 and received more than 100 applicants each year.

AlphaLab Health is tracking a few metrics to gauge success, including follow-on funding that startups receive after the accelerator. Already, five of the first 13 startups have raised an estimated $10 million in additional funding, Cohen said. Six companies have started tests of their products and five have hired at least one new local full-time employee.

“We’ve been very early, but so far we’re very pleased with the direction of where this is going,” Cohen said.

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Spinning off innovation

Milwaukee-based Froedtert and the Medical College of Wisconsin launched Inception Health, a program that develops innovations and evaluates digital tools in the market, seven years ago. It’s a separate company owned by Froedtert and MCW, housed in a 10,000-square-foot office space in the health system’s North Hills Health Center.

The office was previously used for outpatient ambulatory services but was revamped to be a “classic innovation space,” said Cathy Jacobson, Froedtert’s president and CEO. The team needed dedicated meeting areas, since it’s often bringing in external partners and vendors. It couldn’t just be a conference room buried within a hospital, she said.

Inception Health was set up as a limited-liability corporation owned and funded by Froedtert so that innovative ideas wouldn’t have to compete for resources with the traditional health system, Jacobson said. Inception Health’s projects must align with challenges and goals outlined in Froedtert’s strategic plan, such as patient access, consumer experience and population health.

The company’s board is made up of C-suite executives from Froedtert and chaired by Jacobson.

Inception Health’s annual budget has increased over the years, from roughly $2.5 million in 2015 to $10 million.

The board evaluates return on investment across the portfolio rather than for individual projects, according to Jacobson. That factors in care quality and consumer access improvements.

“We want the ability to experiment and fail,” she said.

Inception Health doesn’t sell services to other health systems. It does have one hospital that pays to be a partner, which means it’s able to deploy tools that Inception Health has developed and assessed. Inception Health is working to onboard another hospital partner.

Froedtert is still fine-tuning how to design innovations with full-scale deployment in mind, beyond the initial pilot or experiment, Jacobson said.

While Inception Health’s charter is to develop innovations, it doesn’t implement them. That’s handled by Froedtert’s operations team.

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