The board of Hackensack Meridian Health has approved a $25 million capital fund so the state’s second-largest health system can dive into the world of innovation and incubators, NJBIZ has learned.
Hackensack Meridian officials said the effort is viewed as a new revenue stream as well as a way to elevate the organization onto a global platform.
The strategy will involve obtaining patents and helping companies launch through the new division, as well as a more robust use of the bench-to-bedside practice that sees research funneled from the laboratory directly to patients, the officials said.
Robert Garrett, the co-CEO, and Andrew Pecora, the chief innovation officer, said the plan for this new venture includes three phases and three locations, all of which already are under construction:
1. An ideation center to help streamline funding for ideas, in partnership with the New Jersey Innovation Institute in Newark.
“It’s kind of like Google’s campus; it’s going to feel just like that,” Pecora said.
2. An innovation center to help kick-start companies, with incubator space at the Seton Hall-Hackensack Meridian medical school campus in Nutley and Clifton.
“It would kind of be like (ABC’s) ‘Shark Tank,’ ” Garrett said.
3. Portfolio management of companies launched, housed in Hackensack Meridian’s headquarters in Edison. It will be headed by Tony delCampo, the executive director of the company’s office of commercialization and technology ventures.
“I think that’s game-changing,” Pecora said. “I don’t think you can find that anywhere else in the country.”
Garrett and Pecora said the $25 million from Hackensack Meridian, which was approved by the board in January, already has drawn interests from venture capitalists and life science companies.
Garrett said Pecora will be a key player in the team that will lead this new effort.
Pecora, who already has established himself as an innovator and businessman with the launch of his data company COTA, said that experience has given him the ideas to help cut down the time it takes to launch — shortening what is currently a couple of years to mere months.
“We’re going to have once-a-month meetings where anyone from the Hackensack Meridian Health family or anyone affiliated with us (can participate). And this isn’t just life sciences, this is information technology, best business practices — it’s anything you can think about that makes the health care experience, from beginning to end, better. Higher quality, lower cost,” Pecora said.
The team that will listen to the ideas includes individuals from the health care, venture capital and other areas that can “give guidance get off the shelf and out of the garage,” Pecora said.
“We already have agreements from several venture capitalists, a couple of life science partners,” he said. “We already have partnership-level commitments.”
Pecora and Garrett would not name the partners.
Here’s how the program will work:
- Innovative health care ideas will be presented to the partners at the ideation center. The ideas will get voted up or down.
- If an idea gets voted down, it will get some feedback and a second look to help fix any issues, and then can be re-heard to see if it can move forward, Pecora said.
- If an idea is voted up, the inventor will get some seed money from Hackensack Meridian.
Pecora and Garrett, however, clarified that Hackensack Meridian Health will not take the lead in financing.
“We are not going to be a lead investor; we are not going to put big chunks of money in,” Pecora said. “There will be other people who will be money people at the table.
“We will get equity in a company (if it spins out), licenses from the companies as HMH. The third piece is the portfolio management piece.”
The revenues HMH will see from this venture will vary by project. Garrett said it was too early to provide an estimate.
But the number of patents under HMH will be a part of that.
Since hiring delCampo away from his former post at the Boston-based Dana-Farber Cancer Institute in 2013, HMH has obtained 11 patents. And it is delCampo who will head the portfolio management division for this new venture.
Pecora said the idea for the venture was born from existing shortcomings.
“One of the things the academic centers always fall down on, and I hear this all the time across the country at (the University of Pennsylvania), MIT and Stanford, is the inventors, once this stuff gets out into the world, they are always chasing the royalty checks and no one is watching out for them,” he said. “So, if you are an inventor with us, we will watch out for you.”
It’s a logical strategy for the organization, according to Garrett and Pecora, because of the biggest asset they have at their disposal: the hospital system.
“We have 13 hospitals, 7,000 doctors, 28,000 employees that are all really good at what they do,” Percora said. “Can you imagine if you could plug into that?”
Tom Gregorio, senior executive director of NJII, said the NJIT subsidiary was always looking for an anchor partner that was big and had an appetite for innovation.
“Pecora is amazing, he has a great mind and he’s really challenging (us to disrupt the health care market),” Gregorio said.
Tom Bartiromo, NJII Health iLab chief technology officer, said, “Health care has long resisted disruptive innovations, so it’s an exciting time for us to partner with a forward-thinking innovative institution.”
The goals of HMH fit well with NJII, which already has a national presence and works in a space that lends itself to collaboration, Gregorio said.
“They are first movers, not fast followers. They are not being risk averse and that aligns well with us,” Bartiromo said.
The idea germinated roughly one year ago, according to Garrett.
Since then, he has been able to pique the interest of a variety of contacts in the health care and finance space, especially after networking at events both locally and internationally — such as the trip Pecora and Garrett took to the Vatican to attend the World Economic Forum in Davos earlier this year.
The ultimate goal: going global.
“It’s all about taking New Jersey to the next level,” Pecora said.
In fact, he said, there already is interest from a company in Israel to present at the ideation center.
“We think that we could do something super special and become an epicenter of science and transformation,” Pecora said.
The goal for 2017, Garrett said, is for the system to create a new culture of innovation for everyone at every level of the organization.
“Innovation is really going to be a differentiating factor for Hackensack Meridian Health,” he said. “We think a really healthy organization is one that promotes innovation and ideas.
“This should not be competitive. We should be able to collaborate (with other organizations in the state).”
“When you look at all the major health care systems in the United States, the ones that really distinguish themselves are those that are getting out of their comfort zone (rather than) being conservative and doing their health, driving their margins, and that’s their focus,” he said.
“We think the future is us integrating into the rest of the business community.”