For inspiration on what to invest in, David Sylvan, president of University Hospitals Ventures, looks to his children.
"The generation now — my kids' generation — wants their relationship with a care provider to be primarily digital, and perhaps somewhat impersonal, and we better lean into that," he told Becker's. "We better understand what hospital-at-home really means from a comprehensive delivery standpoint."
Mr. Sylvan has led the venture capital arm of Cleveland-based University Hospitals since 2020, overseeing the investment and innovation organization during the boom and (now) bust times for digital health. He's had to adjust.
"I prefer a little bit of rationality. We've all lived through periods where valuations made no sense at all," he said. "It's an opportunity for the money to come off the coasts, to look for those hidden gems in the flyover states and in areas that are 'underserved' from a capital velocity standpoint. Our pipeline is full. We're in an enviable position — 'we' the industry — where we can now be a little bit more discreet when it comes to where we want to place bets."
His organization has been relocating portfolio companies from such places as Brazil and the United Kingdom to his "flyover" state so they can be nearer to University Hospitals.
University Hospitals Ventures has been focusing on diagnostics, decision support tools, digital therapeutics, femtech and women-founded entities, and other startups that serve underserved patients.
Mr. Sylvan is grateful for the support University Hospitals has shown for its venture arm. He said the "behemoths have been doing this for ages: the Ascensions, the Providences, Cleveland Clinic, the Johns Hopkinses."
"Middle-market" systems like his "either have a guy or girl with innovation somewhere on their business card, but they have a day job, and they usually don't make any traction gaining any traction" or a platform like University Hospitals Ventures, he said.
"There needs to be patience because the return horizons on these are painfully long — five, seven, 10 years to start to see returns," he said. "But you're also impacting culture. You're impacting your research machinery. You're attracting tools, technologies, companies into your space that are going to impact patient experience, the clinician experience, outcomes, efficiencies, etc. You have a dual-fold lens on return."
University Hospitals Ventures, which has a staff of 18, often partners with similarly sized health system venture capital arms on investments.
Mr. Sylvan, who joined University Hospitals in 2015 after a long career in finance, also appreciates the institutional backing at a time when some other health systems have disbanded their venture capital arms. He calls that a "doomsday move." "The desire to one day re-fire that machine is not trivial," he said. "You've also impacted the culture of your organization by virtue of the signal that you send."
He foresees artificial intelligence continuing to be a huge focus for the industry moving forward, with AI ethics becoming its own "cottage industry."
"Technology is going to continue to disrupt and disintermediate. I think the bricks-and-mortar model is gone. I think remote work is here to stay. We've got to recalibrate the spectrum when it comes to the cost of labor," he said.
"Consumers have choice now. Our patients are consumers. They do have choice. They're surrounded by hospitals. They can just drive to the next one. So we've got to continue to understand, from the vantage point of the user, how they want to be treated. And those who don't address that or don't lean into that meaningfully probably face a bit of an existential crisis."