Health system innovation leaders told Becker's economic pressures such as rising interest rates and bank failures make it even more imperative to reshape healthcare, but in a more focused way.
"Healthcare innovation at its best is always closely tied to value generation for the end users in the health system," said Omkar Kulkarni, vice president and chief transformation and digital officer of Children's Hospital Los Angeles. "This is true today more than ever, given the macro environment."
He pointed to his hospital's KidsX accelerator for new pediatric digital health companies. "We are working with our startups to ensure that their business models and pricing approach are sound and that their investment strategies are realistic, given the current environment," he said.
That includes rising interest rates, declining venture funding and bank failures such as the recent collapse of Silicon Valley Bank. Health system venture capital leaders told Becker's that institution's crash had the potential to slow innovation in healthcare.
"This is the time to fund innovative solutions for the future, not to pull back," said Jeanne Cunicelli, president of UPMC Enterprises, the innovation and commercialization arm of the Pittsburgh-based health system. "At UPMC Enterprises, we work with our clinical and operational leaders to invest in translational sciences and digital solutions that will transform healthcare while producing operational and financial benefits for UPMC and our patients."
Chris Coburn, chief innovation officer of Somerville, Mass.-based Mass General Brigham, said the healthcare innovation market has been in a downward cycle for the past 18 months. The situation could get worse if the perception of increased systemic risk continues and debt becomes more difficult to raise.
"That said, the long-term foundational drivers have not abated including, above all, an unbroken growth of the number of seniors and their need for care," he said. "A record amount of healthcare investment capital is also under management and in parallel is also being held by many life science companies."
Mr. Coburn said the industry is on the "cusp of game-changing benefits" from the mix of growing genomic and computational power that will require closer and earlier collaboration between academic medical centers and biotech companies. In just the past few months, Mass General Brigham has launched four investor-backed companies in such areas as artificial intelligence, revenue cycle and behavioral health.
"It is an exciting time — just not for the faint of heart," Mr. Coburn added.
As the consumers of innovative products, healthcare providers' ability to purchase them will be constrained by rising borrowing costs and rate increases' effects on federal funding of social programs, said Jeff Cohen, MD, chief physician executive of community health and innovation at Pittsburgh-based Allegheny Health Network. Bank failures could also lead vendors to pass on higher production costs to providers.
"The sum total of the current events will cause further headwinds for providers and impact innovation adoption," he said.
Roy Rosin, chief innovation officer of Philadelphia-based Penn Medicine, said he's lately been seeing narrowed focus, increased rigor and a shorter window for results in the innovation space.
"No doubt there's pain in the industry as organizations focus on capital efficiency. I'm still an optimist," he said. "Difficult times can help distinguish essential, high-impact work, and teams who learn to operate efficiently tend to do well as industries emerge from the business cycle."
With the rise of digital health, the opportunities for innovation have only grown, noted Scott Joslyn, chief information and innovation officer of Orange, Calif.-based UCI Health.
"The challenge in the vast digital space with today’s economic realities is to go beyond ideas and solutions with mostly intangible value, or just 'cool,'" he said. "With some exceptions, such as regulatory demands, we filter and prioritize projects that have a solid, believable return on investment."
That includes a clear understanding of the problem being solved, how to measure value capture, and identifying a business executive to hold to account and champion the project. Successful projects then fund the next round of innovation, Mr. Joslyn said.
"The fact is that healthcare today sits atop decades, if not centuries, of innovation and innovative thinking," he said. "However, it's never been more important than it is now."