OSF HealthCare launched OSF Ventures in 2015 to invest in opportunities to improve patient outcomes, enhance the patient experience and reduce the cost of health care. Since then, we’ve made 25 investments in emerging health care technology companies with a variety of solutions.
Many of these technologies, devices and services are changing how we care for patients. Some are improving patient outcomes. And several are reducing costs to the Ministry and those we serve. Our philosophy to invest only in solutions that align with the Mission and Vision of OSF and bring strategic value to the organization has driven much of our success.
But the journey hasn’t always been easy and we’ve learned a lot over the last five years. These are some of the steps we follow when considering whether to invest in opportunities on behalf of OSF.
To invest or not to invest
Most venture funds invest in young companies (startups) with the goal of gaining financial returns once the business grows and is acquired. As a health care venture fund, it is our goal to invest in technologies, devices and services that meet our system’s needs. Therefore, we invest in companies that fit our strategic mandate and have the potential to give us good financial returns as well.
We meet regularly with clinical and operational leaders as well as OSF subject matter experts to understand their current needs and challenges and learn about their priorities for the future. This can include anything from workflow issues to the general delivery of care.
Based on that information, we scout the market for solutions that can help and bring them back to stakeholders for review and feedback. If we don’t receive clinical or operational buy-in, we will pass on a deal. If leaders and clinicians like a solution, we do a deeper dive to find out how this technology, device or service will make a difference within OSF.
We also go through a comprehensive diligence review of the companies that present as potential investment opportunities. We first determine whether the business in question is a good fit for OSF. We then take steps to understand the finances of the company, management team, technology and previous investors.
We determine if the solution has already been tried and tested and look for a good product-market fit. We also want to know the business’s customer base. This entire process helps us identify the potential risks that each opportunity might have.
Beyond that, we like to know if the management team has relevant experience either with a startup or with similar technology. We also attempt to determine if the resources we bring as a health care system and an investor in the syndicate can mitigate identified risks.
If we do invest, we typically take a board-observing or board member seat with the company. This further allows us to identify opportunities for collaboration between the company and OSF, which creates value for both. It also gives us the opportunity to work with the company’s management to help them grow the business.
After extensive diligence, we may determine a solution is not a good investment, but that does not mean it’s not useful for our system. In this case, we may still encourage further evaluation and potential adoption by OSF.
We’ve learned a lot since the launch of OSF Ventures. Here are my top three lessons for running a successful corporate venture fund:
- Leadership engagement and support, both at the executive level and in the field, is important for the deployment and ultimate success of a program like this. We are blessed to have the support and engagement of both business and clinical leaders at OSF who see the value of innovation and bringing new and emerging technologies to the Ministry for the benefit of the patients we serve.
- Building professional relationships, both internal and external, is fundamental to our success.
- There are three components to every new undertaking or project: people, process and technology. It is easy to find new technology, but getting alignment on the people and process workflow is tough. Therefore, for a successful rollout of any new technology, it is important to first find a clinical or operational champion and then to allocate appropriate resources to support them.