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How Hospitals Can Accelerate Innovation?

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To reach the most vulnerable groups, the scale-up of successful, high-quality health innovations necessitates more significant knowledge of the hurdles to implementation and uptake. It also necessitates assistance in bridging the gap between health demand and innovation supply in countries. To serve this purpose, WHO will use a new collaborative method to scale health innovations (“the WHO Innovation Scaling Framework”) to connect country health demand with the supply of mature, evaluated technologies.

To attain universal health coverage, the WHO will also promote research to eliminate barriers to health impact, strengthen primary health care systems, and reinvent intervention delivery—the WHO will also look into new technology’s ethical, social, and public health implications.

The World Health Organization has compiled a list of new health technologies for low-resource settings

The Compendium aims to gather and highlight developing innovative health innovations for low-resource situations. WHO conducts quick evidence-based assessments for low-resource countries that focus on the life cycle of health technology breakthroughs. The following items are included in the assessment:

  • technical evaluations
  • evaluations of medical technologies
  • quality system evaluations regulatory system evaluations
  • assessments of management and evaluations of safe usage

It includes manufacturer-provided data as well as WHO assessment results. The compendium focuses on health technologies that have the potential to improve health outcomes and quality of life or provide a solution to a medical/health technology need that is currently unmet. The compendium highlights the benefits and obstacles of implementing innovative health technology in low-resource contexts. NGOs and governments can utilize it—with other stakeholders to help them make procurement decisions.

It also stimulates more forward-thinking approaches in the field. Ministry of Health procurement officers, donors, technology developers, manufacturers, clinicians, researchers, and the general public are all part of this initiative. It ensures that more money is invested in health technology, resulting in universal access to critical health technologies.

Strategic Prioritization of Innovation

While innovation centers are a new concept, hospitals and health systems have long strived to improve care delivery through in-house medical products and projects. Innovation centers adopt a more proactive strategy that may extend to third parties, such as investing in surgical device startups or funds that provide access to a diverse portfolio of creative companies.

Many hospitals and health systems have discovered that establishing an innovation center provides them with a strategic edge. Centralizing research and development spending can hasten the delivery of cutting-edge medical products and services to the market, directly boosting the quality of care a system can give or solving a specific problem. The investment can also help a health system diversify its portfolio and increase operational margins. Furthermore, emphasizing the importance of innovation could assist recruit top employees and improve the organization’s reputation like the availability of the facility of online healthcare consultation.

Choosing a Structure

Clinicians, board members, patients, and the community regularly contribute to the design of innovation centers, which are generally tailored to the organization’s needs. They have four basic structures:

  • Investing directly
  • Investing directly through a subsidiary
  • Putting together an investment fund
  • Creating an investment fund in collaboration with a third-party fund sponsor

The degree of financial risk the business is willing to accept, the complexity of the endeavor, and the expertise available to oversee the center’s development are all factors to consider when deciding which innovation models to pursue.

Investing directly

To avoid the complications of incorporating a separate investment vehicle, hospitals and health systems frequently prefer direct participation in innovative companies. This is off-balance-sheet investing, which might buy stock in another company or form a joint venture.

Direct investing allows hospitals and health systems to explicitly define roles and duties while exercising control over investment decisions and finances. This structure enables them to directly connect investments with clinical care and research operations, allowing the investment to be driven by the health system’s strategic objectives—the clinical or operational needs they’re trying to address.

Even though direct investing is the simplest way to get started, risks are involved. Because there is no firewall between the hospital and its investment, organizations that adopt this structure may be more vulnerable to the tax, financial, litigation, and compliance problems.

Investing Directly Through a Subsidiary

The second-most-common investment structure is intended to reduce the risk of taxation and litigation. Direct investment through a subsidiary, generally owned by the health system, creates a more evident barrier between the innovative investment and the health system’s clinical and research operations. This helps to establish clear lines of responsibility and accountability while also expediting the investment function’s decision-making process.

A dedicated investment subsidiary also has the advantage of attracting specialized knowledge and co-investors, fostering an entrepreneurial culture, and encouraging active participation by internal inventors. However, putting this framework in place is time and labor-intensive at first, which can stifle its innovative production.

Putting Together a New Investment Fund

A hospital or health system that wants to boost its investment might want to explore launching a fund. For the anchor investor, this structure also provides clear authority lines and efficient decision-making, but the addition of limited partners increases the amount of money available to invest.

The fact that additional investors are involved is also a disadvantage of this structure. The investment will no longer be focused on the strategic goals of the hospital or health system. There is a risk of conflict between delivering financial rewards to partners and achieving strategic returns for the company. Before constructing a strategic investment fund, it’s critical to consider the innovation center’s ultimate goal.

The fund’s limited partners make it the most challenging structure to negotiate tax and reputational problems. People who have a connection to the hospital or health system, such as a board members or a donor, are frequently chosen as partners. Even the appearance of a conflict of interest for these insiders could raise eyebrows; therefore, it’s critical to establish an upfront approach to properly assess any conflicts, even if it means delaying the innovation center’s operations.

Creating an Investment Fund with the Help of a Third-Party Fund Manager

When founding a fund, another alternative is to bring in an outside sponsor to handle the investment project. Because healthcare and life science are popular specializations for venture capital and private equity. An experienced investor might offer essential skills to a fund, though their previous experience may create pay and conflict issues.

Economics of preferential or participatory funds: It may be feasible to acquire lower management costs and carry interest, or a portion of the fees and interest that limited partners pay to the sponsor, through preferential or participatory funds.

Preferential rights to the most favored nation: Systems may be able to negotiate rights equivalent to or better than those of other fund investors or even exclusivity as the fund’s only hospital or health system investor.

Getting a piece of the management business in perpetuity if the sponsor goes public or has success with additional funds is a windfall. Still, it needs the anchor investor to contribute something special in exchange.

Preparing for the Future of Healthcare

Each of these investment structures has its own set of benefits and drawbacks and the ability to be further customized. Identifying the organization’s goals is the first step in selecting the most excellent fit. Size, risk appetite, and clinical champion availability to engage with third-party medical product developers are just a few considerations, not to mention legal and regulatory constraints. As technology and data grow, a hospital’s or health system’s attitude to innovation may determine how well they are positioned to flourish in the changing healthcare market.



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