With declining funding in the digital health and healthcare artificial intelligence sectors, hospitals are scrambling to make sure they have an adequate investment strategy.
To learn more about how hospitals are reacting to this funding environment, Becker's caught up with Rachel Feinman, Tampa (Fla.) General Hospital's vice president of innovation and managing director of TGH InnoVentures, the health system's venture capital arm.
Question: What is your investment strategy?
Rachel Feinman: When we started up InnoVentures, we were still deep in the COVID-19 pandemic. The funding market was actually still very high. You had a lot of hyperexuberance around telehealth, virtual health solutions due to COVID-19 and valuations were really high. The idea of a recession or an impact on the private markets was still not something anyone was talking about. That's when we started doing this. If anything, I feel like in the health tech space, there's been a bit of a reversion to the mean. So as the investor looking for deals it's a really good time, we can be pretty picky about what we want to invest in where we think there's alignment with Tampa General and with our strategic objectives.
There's plenty of really incredible companies out there, and there are better valuations than there were. From an investment perspective, and for a fund like ours, where we have such meaningful partnerships with health tech focused institutional investors, we think that we're really well positioned to make strong investments.
This year, we've already made a few and we want to continue to be really active in the market because there's just so many problems to solve in healthcare. We know that we're going to have to rely heavily on emerging technology and innovative entrepreneurs to partner with us to solve these problems.
Q: Does being attached to a health system give you an advantage when making investments?
RF: It's a very unique position to be a corporate venture fund that's captive to a health system. We're certainly not alone. We were pretty well organized, in terms of being able to rely on one another for deal flow for guidance and support as we're navigating this crazy world of healthcare. Similarly we're valuable to the institutional investors that even those who focus all of their investment strategy and thesis around healthcare, if they're thinking about investments that relate to,the operations or the care delivery within a provider system. They are still a step removed from where we are, so being able to leverage us and rely on us for that kind of expertise puts us in a really good position. We have got thousands of subject matter experts at our disposal as we are trying to do the due diligence and understand what kind of investments to make. That really plays to our advantage.
Q: Tampa General InnoVentures doesn't lead rounds. How does that change your strategy?
RF: That's why those relationships with those institutional lead investors are so important to us. We certainly do all of our diligence: We think we add to their diligence and certainly they add to ours, and in terms of helping drive the flow to us. We can be additive to the investment round as a strategic partner. Oftentimes, we are an investor, but we're also a customer or a strategic partner with a company that we invest in. That adds a lot of value to the company as well as to the investors.
Q: How do you evaluate the healthcare AI market?
RF: AI continues to evolve in terms of what we mean when we say AI. Of course, we've been working for a long time on algorithmic AI. Obviously, the buzz is all around AI and GPT and those kinds of technologies, which I think it's still a little bit early to understand. We're an Epic system. We're very closely watching the work that they're doing with Microsoft, and there's so much to see in that space. You just have to be cautious in investing and not be at the top of the hype cycle of any one technology.
We're certainly partnering and doing a lot there, and I would say our focus is on investing not just in a point AI solution, but something where the company is leveraging AI as part of its solution or platform that's solving a real significant problem in healthcare. The key is making sure that you're not investing in just the technology, but you're investing in the technology that's driving toward a meaningful solution.
Anytime the hype is really high over any one time, you can get into a situation where there's money chasing technology — that's not necessarily a meaningful solution. So that's something we're watching very closely. But there's no doubt that AI of all flavors and shapes and sizes is going to drastically change the way healthcare is delivered.
Q: What projects are you currently working on?
RF: There are a lot of exciting things that we're working on around AI. We are definitely focused on areas of opportunity to explore, how AI can continue to help us automate things within the health system. We talk a lot about workforce challenges and shortages in healthcare. It's not about displacing people. It's really about dealing with not having people. That's a really strong focus for us in terms of how we're looking at and leveraging AI in the revenue cycle in the inpatient operations space.
We're also really focused on expanding our 'rooms of the future' on the inpatient side. I'm looking at ways where we can leverage virtual care in the inpatient setting.
I think one of the things that you saw a lot in COVID-19 started at the beginning of our conversation was this focus on telehealth or virtual care. Now you're starting to see that hybrid model. We all live in this hybrid world. How many meetings do we go to where some people are in person and some people are on Zoom or Teams? In the inpatient hospital setting, that's that you're starting to see that as well.