Northwell Health is forming a joint venture with a startup studio that will help artificial intelligence startups get off the ground, the not-for-profit integrated health system announced Wednesday.
The New Hyde Park, New York-based provider's partner is Aegis Ventures, an investment group that builds and launches startups, which plans to pump at least $100 million into seed-stage funding for companies created through the joint venture. Northwell Health, which also plans to invest in the portfolio companies, would not disclose its financial commitment to the partnership. Other venture capital firms will be able to participate in these startup investments.
Together, Northwell Health and Aegis Ventures will develop, launch and scale AI startups that target challenges in the healthcare sector such as quality, equity and cost.
"We cannot just live in our own world," Northwell Health President and CEO Michael Dowling said. "With all of the new technological and AI advancements that are going on by companies outside of healthcare, we've got to be bringing people together so that we can learn from one another."
Engineers, data scientists and entrepreneurs working at the joint venture will collaborate with Northwell Health clinicians to create tools to predict, diagnose and manage health conditions, starting with chronic diseases and preeclampsia, a pregnancy complication. The companies also aim to spur the development of AI tools that tackle operational inefficiencies and that work to reduce racial and socioeconomic biases.
Startups will be able to use de-identified patient data from Northwell Health, which serves more than 2 million patients, and validate AI tools within the health system.
Tom Manning will chair the joint venture. Manning is the former chair and CEO of Dun & Bradstreet, a data and analytics company.
The healthcare artificial intelligence market, which includes AI tools for clinical, financial and operational processes, has attracted billions of dollars through investments and acquisitions.
Digital health companies that sell products with machine learning, deep learning and other types of AI scooped up more than $6 billion in venture capital funding during the first nine months of 2021, according to data from Modern Healthcare's Digital Health Business & Technology. Digital health companies raised $23 billion in the first three quarters of 2021. Microsoft's $19.7 billion purchase of Nuance Communications, a company that sells AI clinical documentation tools, represented the priciest acquisition of 2021 to date.
Earlier this year, Northwell Health was among the 17 health systems that committed $95 million to found for-profit data company Truveta. The health system's Northwell Ventures arm also invested in companies such as chatbot startup Conversa Health, which has since been acquired by Amwell. The company also holds an annual competition during which employees propose new ideas for the business. This year, workers submitted 70 pitches, and the winning pair earned $500,000 awards, Dowling said.
Along with funding innovations that can improve care, investing into startups can provide a new revenue stream for the health system if the new companies perform well, Dowling said.
Northwell Health's strategy is consistent with a broader trend of providers investing money into commercial digital health efforts, typically through in-house venture capital operations.
Last year, providers were the leading corporate investors in digital health companies, followed by biopharmaceutical developers, according to data compiled by Rock Health, an early-stage digital health venture fund that also compiles research on the sector. Providers accounted for 30% of corporate digital health investment deals.