In an unusual move, one of the nations largest foundations supporting healthcare improvement has given a multimillion-dollar grant to a for-profit company that is wholly owned by the not-for-profit managed-care giant Kaiser Permanente.
The Robert Wood Johnson Foundation granted Archimedes $15.6 millionits largest grant to date in its Pioneer Portfolioto make its healthcare simulation model more widely available. But Archimedes will continue to require payment of these services developed by the grant while maintaining its client base, which pays up to $1 million or more.
It will not be free, but it will be more affordable and accessible, said Nancy Barrand, senior program officer at the foundation. We think this project has the potential to return a large benefit. Were jumping on an opportunity.
Archimedes is the brainchild of David Eddy, a physician who says he was the first person to coin the term evidence-based. Eddy developed Archimedes while working at Kaiser in Southern California in the early 1990s, and later incubated the project at Kaisers Care Management Institute in Oakland, Calif., in partnership with mathematician Len Schlessinger.
Archimedes, named after the great Greek mathematician, is a mathematical model that creates a detailed virtual healthcare reality. Millions of virtual people with individual physiologies, diseases, physician encounters and outcomes can be activated to test drug outcomes, practices and costs.
An Archimedes spokeswoman declined to say if Eddy, other management members or its board own stock options in the company or are in a position to earn more money if Kaiser sells the company.
Payers, clinicians, researchers, policy analysts and large healthcare programs have hired Archimedes to quickly and accurately test treatment interventions and forecast policy and practice outcomes. For instance, Archimedes has been able to replicate results of 30-year clinical trials in just hours, using its virtual world. The Archimedes model promises to dramatically speed up our learning, said Risa Lavizzo-Mourey, president and chief executive officer of the foundation. We believe it will translate into better decisions and better care for patients.
Archimedes was spun out of Kaiser into a for-profit subsidiary in January 2006. It has about 60 employees, mostly software programmers, mathematicians and physicians who work out of a San Francisco office. It is one of two for-profit companies launched through Kaisers Care Management Institute.
Its the typical evolution from the initial idea to making it real and widely available, said Jed Weissberg, associate executive director for quality and performance at Kaiser and a board member of both Archimedes and Kaisers Care Management Institute.
Not-for-profit health plans in California must receive approval from the state to form for-profit subsidiaries, and those approvals are made on a case-by-case basis, said a spokeswoman for the Department of Managed Health Care.
Since it was spun off, Archimedes has completed about 25 to 30 projects, which can take anywhere from a few months to a year and cost between $500,000 to more than $1 million, Eddy said. The American Cancer Society, American Diabetes Association, Centers for Disease Control and Prevention, National Committee for Quality Assurance and Pfizer are clients.
Officials from the foundation approached Eddy about getting involved after hearing him speak at a conference. The $15.6 million grant will fully fund the development of the Archimedes Health Care Simulator, or ARCHeS, an online interface and delivery system based on Archimedes. The funding will also help the company develop a business model for ARCHeS, which is expected to launch in 2011.
The idea is to bring ARCHeS to university researchers, state Medicaid agencies and others who may not be able to shell out the high price tag of the traditional model, Barrand said. The cost will be far less than what the companys well-heeled clients pay today, but still in the range of $50,000, Eddy said.
Because the foundation is a charitable organization, getting this particular grant off the ground was a challenge, Barrand said. Extra scrutiny was given to make sure the use of the money and the results are used for charitable purposes, she said. The grant is to make the model and the use of the model more affordable and more accessible to charitable users such as the government and nonprofits.
If some potential users cant afford the estimated $50,000 fee, the foundation might make future grants available, she added.
Meanwhile, Kaiser is continuing to use Archimedes. In the first quarter of 2008, the health plan will synch up the virtual world with members electronic health records so it can simulate outcomes and interventions in its own populations, and apply those findings to the real world, Weissberg said.
The foundation, which rarely gives grants to for-profit companies, denied that it is going out on a limb. I think Kaiser stuck its neck way out to create the model in the first place, Barrand said. Thats where the risk was.