Issue link: https://beckershealthcare.uberflip.com/i/1471341
43 INNOVATION 8 reasons health AI companies fail By Katie Adams A rtificial intelligence in health- care "doesn't really exist right now," even though it should, according to Aike Ho, a partner at venture capital firm Acme Capital. In an April 12 Twitter thread Ms. Ho outlined the key reasons she thinks health AI companies fail from her vantage point as a digital health in- vestor. Here are the eight obstacles she detailed: 1. The fragmented nature of U.S. healthcare: Health AI companies must work hard to obtain data to train their models. This often means inter- facing with health systems and univer- sities that house disparate datasets, a process that can take years. 2. Bad data kills companies: Even after a health AI company acquires the data it needs, the data might be poor quality and require extensive cleaning. Bad data will lead to bad machine learning models, something Ms. Ho called "game over" for health AI startups. 3. Deciding which application can secure funding: The total address- able market for most health AI appli- cations is small, as these applications often provide ancillary services. 4. Getting adopted by health sys- tems: Ms. Ho said it is "brutal" for health AI companies trying to get their services adopted by providers unless they're also delivering care vertically. She said getting adopted while deliv- ering care vertically can also be tough, as companies are "essentially building [their] own provider group and care delivery infrastructure." 5. Demonstrating superior clinical outcomes: Health AI companies often struggle to win over risk-averse pro- viders by failing to adequately com- municate how their services lead to better care outcomes. 6. Payers usually don't reimburse: Once a provider becomes convinced of a health AI company's clinical bene- fit, it will ask who is paying. Most health AI companies are not reimbursed by insurance, and providers are operat- ing on thin margins, so it can be dif- ficult for companies that have a value proposition of cost savings rather than adding revenue to get their services adopted by providers. 7. Onboarding: Adoption will be minimal unless a health AI compa- ny's offerings integrate seamlessly with a providers' existing workflows, Ms. Ho said. 8. Determining the right business model: It is easier for a health AI com- pany to sell providers on a model where their company receives money based on the adoption of its services, but the company will go under if no one uses its products. Flat fee con- tracts are less risky for startups, but they're harder to sell to providers. n Venture investment strategies from Northwell, UPMC, OSF + more By Naomi Diaz M ore hospitals with substantial cash pools have decided to think like venture capitalists, ramping up their investments into digital health startups. A growing number of systems also have begun rolling out their own subsidiaries that focus wholly on venture opportunities, with their own set of governance models and processes allowing them to jump more quickly on po- tential forward-looking opportunities. Here, executives from four health systems with ven- ture fund arms spoke to Becker's about how and where they decide to spend their invest- ment dollars. Editor's note: Responses have been lightly edited. Brenton Burns. Executive Vice President of UPMC Enterprises (Pittsburgh, Pa.). At UPMC Enterprises, we are on a mission to solve some of the most complex problems not only for UPMC but the broader healthcare industry. ere is no single path to investing in and supporting a successful digital health company. At a high level, we work closely with our internal stakeholders — including hos- pital leadership, clinicians, operators, service line leaders, IT, etc. — to understand some of the most challenging problems at the patient, provider and health plan levels. We also listen and partner to determine if there are innova- tive approaches that we are already using that may be applicable outside of UPMC, and to see if we can add value by commercializing those approaches. Externally, we conduct a lot of market research, spend time with start-ups and talk to other health systems to understand their challenges, as well as different ways to approach a chal- lenge. As one of the nation's largest integrated payer and provider systems, we look for ways to provide value above and beyond financial investment or a customer contract. We look for companies that want to partner on piloting new solutions, validating their approach and grow- ing their companies, while working alongside our comprehensive team of product managers, engineers, designers, analysts and others. What differentiates companies that come through our door is the aspiration to solve a meaningful problem and provide real value for the patients and providers, while also having the ability to engage with our clinical stake- holders. ese companies have a cultural fit and potential to be good partners, with leader- ship that listens and adapts to the changing ex- ternal and internal environment. We are look- ing for strategic partners who want to work through the challenges with us. Richard Mulry, President and CEO of North- well Holdings (New Hyde Park, N.Y.). We have an abundance of deal flow, so the invest- ments we gravitate toward are novel and inno- vative solutions that align with our desire to