Aegis Ventures' digital consortium gained three new members as health systems look to collaborate to develop and scale artificial-intelligence-powered health tech solutions and tackle common pain points.
Yale New Haven Health System, Keck Medicine of USC and Hartford HealthCare joined the collaborative, expanding its reach to 14 regional health systems. The consortium, which includes Northwell Health, UPMC, Stanford Health Care and Vanderbilt Health, will codevelop, invest in and deploy health tech solutions alongside Aegis Ventures.
The partnerships with the three new health systems will accelerate the consortium's pipeline of companies with two startups set to launch this fall, according to John Beadle, co-founder and managing partner of Aegis Ventures.
"Next year, I think we could be more aggressive, just given that the model of the blueprint worked well. We have the right set of partners, the right team, the resources are in place to do it, but I think we're most focused on seeing this year out really strong," Beadle said.
Joining the Aegis Digital Consortium builds on Yale New Haven Health's mission to advance patient care and drive efficiency while also identifying ways to diversify revenue, noted Gail Kosyla, executive vice president and chief financial officer of Yale New Haven Health. Collaborating with 13 other health systems also helps drive innovation at scale, Kosyla said.
It was long the industry norm for health systems to operate in siloes. But, as organizations face financial pressures and with so many common overlapping issues, collaboration is increasingly an attractive option to address problems.
"We're really being forced to look at, what are other options from a profitability perspective just to be able to to have long-term viability and sustainability? The technology is there to build upon that. I think when you can do it at a scale that's meaningful, that's helpful, because a lot of times we look at innovations and say, 'We'd love to do that, but what's the ROI on it?' We're making huge investments on our own, and we're not necessarily going to see that ROI in the shorter term," Kosyla told Fierce Healthcare in an interview.
Aegis Ventures launched the digital collaborative 18 months ago with the backing of nine founding health systems. The initiative launched after Aegis Ventures collaborated with Northwell Ventures for three years, leading to the development and growth of four companies spanning patient engagement, AI-enabled diagnostics, workflow automation and empathetic AI. Claire is a patient engagement platform with health system partners at its core that launched in early 2023. Ascertain is Aegis' and Northwell's joint venture, a company creation platform that launched in 2021. Ascertain focuses on leveraging automation technology and AI agents to transform healthcare providers and payers’ enterprise operations. Last year, the two organizations launched Optain, an AI-powered disease detection company. Northwell and Aegis were also both investors in Hume, a conversational AI startup.
"We've been thrilled with the performance of the 11 [health systems] that are in the group to date," Beadle said. "There's been huge engagement, a lot of portfolio commitments with the health system partners. They've been great as it relates to pipeline and validation and partnering with us on the next set of companies. It's created a very high bar in terms of what it takes to join the consortium, for level of engagement and making sure that we have a very energized, active group, just given that's pretty central to our model of how we partner with folks in the industry."
He added, "I think we've had far more interest in joining than I think the resources within Aegis could handle while still delivering the very high touch-level of service and deep engagement model."
With the three newest members, Beadle said the digital consortium was impressed with the organizations' commitment to innovation including clinical champions, operational champions and C-suite champions.
"There's very strong alignment with our core investment themes, including our existing portfolio companies and the themes we're leaning into most heavily as we are launching the next set of companies," he said. "Now that we've engaged in more companies and more systems, we can spend more time with each system before they formally join. We feel like all three will be great additions to what we already have, and I think they'll have great synergy with the rest of the group."
Building trust between health systems and health tech entrepreneurs
After 18 months of progress, Aegis' digital consortium has picked up some key lessons and best practices along the way. One big takeaway is the importance of building relationships between health systems and health tech entrepreneurs and setting expectations about the pace of progress.
"Whenever you're trying to scale technology solutions, the scarce resource isn't the ability to build the solution. It's not capital. It's really trust. Trust is the scarce resource," he noted. "What we want everyone to see when they are engaging with an Aegis company is that it's been purpose-built for their system from Day 1, it's built for enterprise scale. We've rigorously validated it with all the best industry partners. And often what that can mean, especially in the earliest stages of the company, is going slow to move very fast later, given that the way these types of solutions typically scale is it takes you a little while to clinically and operationally validate with your first customer, and then from there, you're able to bring more customers to bear to get more validation."
Beadle added, "Balancing being patient with building venture-scaled businesses is always the slight tension that exists in health technology. Our biggest learning over the last 18 months has really been how to balance those two things in a way that suits everybody. It definitely takes some back and forth to figure out what are the right modes of engagement, just given that entrepreneurs and large provider systems tend to move at different speeds in different gears. It's always an exercise of crossing the river by feeling the stones."
Another key lesson is that innovation at scale cannot happen in a vacuum, he noted. "You need to build that community of practice across the ecosystem and enable those relationships to form so that everyone is rowing in the same direction with aligned incentives," he said.
The digital consortium aims to build engagement with the venture community, life sciences, payers and hyperscalers. "As we continue to advance over the next year and beyond, I would expect to find solutions that are at the intersection of multiple of those different industry constituencies. We think there's a lot of value and progress that we can drive through engaging with more of the industry and helping to connect them with a lot of what we've built in the consortium," Beadle said.
However, the digital consortium's sole focus is not just to build and sell software solutions to health systems, Beadle noted.
"A big part of our overall mandate, as we partner with systems, is serving as this wraparound revenue diversification and margin expansion partner," he said. "One thesis that we've leaned into pretty aggressively is that nexus or intersection between life sciences and providers, given all the financial pressures that health systems are under right now. We want to be sensitive to that and make sure that we are not constantly coming to them to buy software solutions."
He added, "In many cases that can mean helping them monetize assets like their data. It can mean that we go to life sciences and get them to fund a solution that can be deployed to improve patient care and improve outcomes and reduce burnout for physicians in the system. We've tried to be quite flexible as well as it relates to who pays for a particular solution, so that we can still deliver value to our partners without needing them to pay for every single solution that we bring them directly."
Beadle offered a peek under the hood at how Aegis' digital consortium develops and launches new companies with its health system partners.
Aegis' investment thesis focuses on five areas: reimagining the consumer experience, automating workflows, creating and amplifying new biomarkers, unlocking real-world evidence to accelerate clinical trials and expanding share of care for health systems.
"Within those themes, we are always validating dozens of different ideas. We might look at a few 100 different ideas over the course of a year, and almost all of those, we kill very quickly for various reasons, but we have a pretty good sense of what our 'strike zone' is as an organization, and where we want to lean in and focus time and energy," he noted.
The digital consortium partners with its 14 health system members in the early stages of getting new companies off the ground to find product market fit, Beadle said. But the consortium offers health systems a flexible model that suits their technology goals and business objectives.
"The engagement model with every system is different. Some systems want to do a lot of co-creation at very, very early stages and have extraordinary technology. They want to be reviewed, particularly through tech transfer, through investigators, through other folks, while others, I think, are more eager to be kind of customers two or customers three, and getting these companies to product market fit," he said.
Along with building health tech solutions from the ground up, the consortium also can spin out a health system's existing business unit. "We can take a successful existing program and take it from a captive business unit to something that we feel like we can turbocharge with AI, turn into a scalable company and bring it to the consortium," Beadle noted. "We can also acquire things that we can build on top of."
As an example, Aegis co-founded clinical imaging data company Avandra after it acquired "two of the largest owners of imaging assets to build the world's largest de-identified federated database for medical imaging data," according to Beadle.
"Whenever we have a really high conviction thesis, we'll go through the exercise of thinking about what's the most de-risked, high-velocity way to be able to build the type of company that we want, and then we can be quite flexible within those different modes of company creation on how we get there," he said.
Aegis' digital consortium isn't aiming to grow substantially larger, Beadle noted, as it has a limited bandwidth when it comes to building new companies with health system partners.
"Our goal is to have a couple of different engagements with each health system per year, and that can be them serving as a co-development partner on a company. That could mean them just serving as an anchor customer or a partner in something that we've already built. It can mean making investments in the portfolio alongside those," he said.
"As it relates to organizations who can get companies to product market fit, we're in a good place relative to bandwidth and we could probably add a few more, very selectively, who we think would be great partners," he said.
As AI technology quickly evolves, the digital consortium's model is designed to adapt quickly, executives said.
"One of the hallmarks of our organization is that dynamism. Just speaking on the market right now, I think it's the fastest market that I've ever seen in terms of new technology being released," Beadle noted. "We are constantly going back to the drawing board and making sure that everything we're doing are things that we think, one, can deliver value to our partners, and two, can be successful venture-backed businesses. We're continually updating how we go about this, and trying to take into account all the key learnings and best practices that we pick up along the way."