Hospitals invest millions in new venture Tech Town company to focus on health care
This article written by Thomas Gnau appeared in The Dayton Daily News on February 2, 2016. You can read the original article here.
Three competing Dayton-area hospital systems, with the Greater Dayton Area Hospital Association, have invested more than $6.5 million into a new venture meant to create health care innovations and new local jobs, the venture’s principals said Tuesday.
Premier Health Partners, Kettering Health Network, Dayton Children’s Hospital, with GDAHA, have invested millions in cash and in-kind contributions into Ascend Innovations, a partnership of GDAHA and Kaleidoscope, a Cincinnati-based health care products design company.
Ascend and its 10 to 12 employees will move to the Tech Town business park this spring, along with GDAHA and its eight employees. It will focus on creating health care products and services, licensing them and spinning those off, creating new companies, new jobs and a concentration of technical expertise along the way, its principals said.
The idea is to do more than simply hold on to Dayton companies and jobs, said Sean Barnett, an engineer and surgeon who is chief innovation officer at Ascend and chief medical officer for Kaleidoscope.
“Now it’s time for us to play offense,” Barnett said.
Ascend is a distinctly for-profit venture and was presented to the hospital systems’ chief financial officers and investment committees as just that, said Bryan Bucklew, GDAHA president and chief executive. It even turned down $1 million in Ohio Third Frontier Commission money in order to avoid state regulations so it could remain “nimble,” he said.
“As we spin off technologies and commercialize, we have the Entrepreneurs Center right across the street (Monument Avenue) from us,” said Ricky Peters, newly named CEO of Ascend and executive director of The Perduco Group in Beavercreek.
When analyzing the $8.1 billion annual economic impact of the region’s 28 hospitals, Bucklew compared that to Wright-Patterson Air Force Base’s own $4.6 annual impact — and he and others became concerned.
The feeling was that it’s not necessarily good for a collection of hospital systems to be Dayton’s top economic driver, he said.
“Our board challenged us by saying, ‘Hospitals really shouldn’t be at the top of the (economic) food chain here in the region,’” Bucklew said. “They shouldn’t be the largest business.”
There were other concerns. About 73 percent of Dayton-area patients rely on Medicare or Medicaid, making the area vulnerable to changes in those government programs, Bucklew said. In addition, the region does not have a university-anchored hospital drawing research dollars.
“That presents some challenges,” he said.
Craig Self, senior vice president and chief strategy officer for Premier, said the investment makes sense for several reasons: It offers a pathway to new innovations, strengthens the hospital system’s relationship with the Air Force Research Lab and aims to create Dayton jobs, over the long term, he said.
Bucklew did not offer precise figures, but he broke down the investment stakes this way: Premier has invested 45 percent of the more than $6.5 million; Kettering Health has invested 36 percent and Dayton Children’s has invested 18 percent. GDAHA itself has put forward 1 percent, he said.
The company is touting a special relationship with the Air Force Research Lab, based at Wright-Patterson, which often concerns itself with the health and human limits of pilots and airmen.
Barnett said the focus will not be on creating pharmaceuticals, which can wait years for federal approval. Instead, products could be devices, algorithms and more.
“If I can manufacture something here, I want to manufacture it here,” Barnett said.
While the firm has given itself no deadline for releasing its first product, Barnett said it has two offerings “in the pipeline right now.”