No longer a city known only for its production of steel and Heinz condiments, Pittsburgh’s innovation economy is taking off. And Allegheny Health Network is positioning itself at the center of that growth, according to Jeffrey Cohen, MD, the Pittsburgh-based system’s chief physician executive for community health and innovation.
In 2020, AHN launched AlphaLab Health, a healthcare technology and life sciences accelerator, with Innovation Works, a nonprofit business incubator. The accelerator offers healthcare startups up to $100,000 in seed investment, access to Innovation Works’ mentorship network, clinical resources and office and lab space.
In February, AHN transformed its former Bellevue, Pa., hospital campus into an innovation hub for AlphaLab Health. The 10,000-square-foot building includes wet and dry labs, dedicated server access, conference rooms and collaboration areas.
Here, Dr. Cohen answers questions about how the accelerator was established and where it’s headed.
Editor’s note: Responses have been lightly edited for clarity and style.
Question: Who was involved in AlphaLab Health’s creation, and how was it decided that it was the right moment to launch the program?
Dr. Jeffrey Cohen: While AHN has long been a leader in clinical research and innovation, AlphaLab Health is a transformative partnership that takes our commitment to an entirely new level and further elevates the Pittsburgh region’s profile as a wellspring of pioneering, game-changing ideas and solutions in healthcare.
I previously served as the president of AHN’s Allegheny General Hospital, where I saw how the social and economic challenges of the population surrounding the hospital impacted outcomes and the cost of healthcare. In my private life, I had also co-founded multiple healthcare and advanced technology companies, so I knew the incredible wealth of talent in the Pittsburgh region and how startups could drive innovation into the healthcare system. Those experiences together made it clear that retrofitting a community asset that was formerly a hospital, not just as an innovation hub but also as a center for economic development and programs to mitigate social factors impinging on community health, could help improve the trajectory of an entire community.
Rich Lunak from Innovation Works is a seminal figure in the Pittsburgh innovation ecosystem, and we were 100 percent aligned in our vision for how our organizations could create an accelerator that was greater than the sum of its parts.
The local philanthropic and business communities and the Pennsylvania Department of Community and Economic Development have also offered critical support, both in terms of concrete financing and through the collaboration and strategic inputs it takes to bring a vision like this to life. Highmark Health and Allegheny Health Network gave us the time and freedom to develop and adapt the idea as we went.
A key component of the success of AlphaLab Health is the access and feedback loop we can provide as an integrated finance and delivery system with AHN and Highmark Health. We can connect founders with clinical mentors and champions, facilitate pilots and clinical studies. Additionally, we help founders understand the pathway to reimbursement/commercialization and better understand the complex customer and decision maker framework for healthcare solutions, which expedites development and time to market. I cannot overstate the support, buy-in and forward-looking thinking from our executive team at AHN and Highmark Health that makes this environment possible.
The Pittsburgh innovation community and major academic institutions have spent more than a decade laying the groundwork for becoming a global leader, not just in life science and healthcare innovations but in other technologies including robotics, artificial intelligence/machine learning and advanced computing. The city was recently named one of the top innovation ecosystems globally, and we have seen several high-profile initial public offerings and acquisitions of Pittsburgh-born companies.
The local talent environment, the prospects of biotech and life sciences breakthroughs expected globally in the next decade, and the comparatively low capital expenditure to convert an old hospital to a lab and co-working space all pointed to this being the right time to make a strategic bet on this idea and this community.
Q: How did Allegheny Health select Innovation Works as its partner?
JC: Innovation Works has a long track record of helping entrepreneurs convert their ideas into products. They are one of the most active seed-stage funders in the country and have an unwavering commitment to solving hard problems. One third of the Innovation Works portfolio has consistently been life sciences since the inception of the seed fund in 1999. This is particularly relevant to life sciences companies, as it is extremely difficult to find a funder at the earliest stages of life science development when the companies are likely to be pre-revenue, pre-customer and far away from clinical trials and FDA approval.
In the life sciences sector, the combination of an experienced accelerator operator with a large integrated health system was an opportunity to advance innovation into AHN.
Q: How was the innovation hub in Bellevue designed, and how will that design foster innovation?
JC: The space and equipment were designed to allow for collaboration with a wide range of business and clinical experts, while also supporting the cutting-edge research needs of the startups. Converting six prior intensive care unit patient rooms into five wet labs and a dry lab was a statement of pragmatism and purpose. The existing air handling standards made the conversion far cheaper than starting from scratch, but it is also another example of how the entire Western Pennsylvania region has gone from a steel to a medicine/education-based economy. The resilience and ingenuity of the successful entrepreneurs were copied in this model.
Q: What successes coming out of AlphaLab Health can you share?
JC: The timeline from ideation to mature company can be much longer in biotech and healthcare. Already, we are seeing positive early results from the companies that have participated in AlphaLab Health, indicating they will make an impact on healthcare and the regional economy.
Most of the companies in the first cohort have already gone on to raise new funds from venture capital and non-diluted sources. Five companies have already hired new full-time employees locally, and six companies are in trial, pilot or beta testing — depending on the nature of their product/device. Additionally, a handful are already generating revenue, which is early for companies in this sector.
Q: What are Allegheny Health’s plans for AlphaLab Health’s future growth?
JC: Even after graduating from the cohort in which they are accepted, we continue to help our portfolio companies improve their products and accelerate growth. We accept six new companies each year — which includes funding, mentoring, promoting and providing connections. In exchange for this, we receive 2 percent of the equity. Already, companies from our first two cohorts are hitting major clinical and business milestones, and their success will help AlphaLab Health continue to grow and evolve far into the future. We are also in the early stages of evaluating how to adapt this model to attract additional domestic and international innovative health companies to the Pittsburgh region.