creating an environment for innovative start-ups in healthcare
TRANSCRIPT
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journal homepage: www.elsevier.com/locate/hlpt
Health Policy and Technology (2012) 1, 187–192
2211-8837/$ - see frohttp://dx.doi.org/1
nCorresponding aude Constance, 77305
E-mail addresses:hotmail.hu (M. Barac
1Tel.: +33 683 631
Creating an environment for innovative start-upsin healthcare
Ray Pintoa,1, Maria Baracsib,c,n
aMicrosoft Corporation, One Microsoft Way, Redmond, WA 98052, USAbUniversity of Miskolc, Ph.D. School for Enterprise Theory and Practice, HungarycINSEAD Business School eLab, Boulevard de Constance, 77305 Fontainebleau, FranceAvailable online 13 November 2012
nt matter & 20120.1016/j.hlpt.2012
thor at: INSEAD BuFontainebleau, Fra
478.
AbstractToday’s healthcare systems are under multiple pressures. Macroeconomically, Europe is facingan ageing population, increased social and healthcare costs. As a consequence, a decreasingquality of healthcare negatively impacts a region’s competitiveness, employability, increasetaxes and reduces productivity. Some might argue that technology innovation can improveeffeciencies, quality, accessibility and cut costs. Recently, the United States is experiencing arapid growth in terms of the digital high growth health sector bringing together numerousincubators and investors beginning to specialise in healthcare. However, in Europe few bestpractices have been developed to increase public and private investment. Microsoft is used inthis paper as an example of a public–private partnership to deliver an unique business model tobetter serve innovative start-ups through a set of defined tools and services.The question isopen: do European innovative entrepreneurs’ ideas have enough potential to create tomorrow’sindustrial leaders? If so, what framework conditions can accelerate similar booms across the EU?& 2012 Fellowship of Postgraduate Medicine. Published by Elsevier Ltd. All rights reserved.
Introduction
Currently European corporations face the symbiosis ofdecreasing research and development budgets and shorterinnovation cycles regardless of the company’s size. This is incontradiction with what is needed to innovate. Bright ideasidentified and supported at an early stage such as thecase of Skype, Betfair or Facebook have already showcasedthat innovative start-ups happen under certain conditions,mostly in the United States. Similarly, studies in 2011 reportthat innovative start-ups had an extremely fast growth rate
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last year. Most of these promising start-ups work closelytogether or based upon ICT applications and services in thefield of cloud computing, and electronic or mobile health.
With regards to numerous marketable and creative businessideas expressed as main motivators to start up a business inEurope, the prosperity of the European economy has recentlybeen greatly stimulated by triggering success stories [3]. Theserather rare success stories are attracting many investors to putmoney into technology opportunities with potential highreturns. Innovative enterprises are engines of economic growthand job creation whilst struggling to commercially exploit newideas, technologies, inventions or other scientific or marketknowledge. There are different development stages in the lifeof a company before it becomes a commercially successfulenterprise (seed, start-up, early-growth and expansion).
It is worth noting that Europe produces a plethora ofsolid high growth companies. Several are mentioned in this
cine. Published by Elsevier Ltd. All rights reserved.
R. Pinto, M. Baracsi188
paper. But the focus is on how such companies scale upquickly and globally to have the impact needed to tacklechallenges in Europe and its healthcare industry. Therefore,the current article aims to provide evidence on whether theEuropean innovative start-ups possess the necessary poten-tial to become industry leaders. To answer this simplequestion additional features should be taken into accountsuch as whether Europe can experience similar trends thatare currently happening in the USA where the digital healthscene is certainly becoming very dynamic (with numerousincubators and investors beginning to specialise in health-care). Are there enough technology entrepreneurs taking aninterest in healthcare? Is the healthcare sector ready toexperiment with, and invest in, new and more consumer-orientated technologies? What role can government andother stakeholders such as insurance play? Is there sufficientseed and venture funding available? In sum, how canstartups help drive innovation in European healthcare?
From market model to innovative start-ups
Healthcare has always been an issue of great significance.But never before has it been more important than today:with economies shifting from an industrial to a moreservice-orientated approach, this sector constitutes a veryhigh percentage of Gross Domestic Product (GDP). Health-care also has a huge impact on employment, due to the factthat most related activities are provided by people.
Current European healthcare systems are under pressurefrom both macroeconomic and microeconomic sides. Macro-economically, European countries are facing increasingly agingpopulations (Italy, Hungary, Poland, etc.) or insufficient publicfunding resulting in an increasing concern about a loomingshortage of General Practitioners. These factors are jointlyresponsible for the increased pressure on primary care,extended waiting times and placing unnecessary burdens,more specifically stress, on the existing medical community.Micro-economically, an effective and efficient healthcaresystem is a fundamental ‘‘soft’’ location factor for competingeconomies [4] and has great impact on firm-taxation.
Even today health spending is rising faster than GDP andis estimated to reach 16% of GDP by 2020 in OECD countries.
Chart 1 Microsoft innovation centres around the globe.Source: [8].
To fill in this gap existing health providers will need tobetter manage increasing patient cases more effectively.Information and Communication Technologies (ICTs) can bean effective enabling tool that if properly applied in healthmay enable and accelerate efficiencies, reduce costs andimprove healthcare by putting the citizen and patient inmore control. The shift to patient-centric care has thecapacity to revolutionise health service delivery, bringing astronger culture of prevention, reducing illness and mortal-ity, increasing the lifespan of citizens while saving moneyfor hard-pressed budgets (Chart 1).
Microsoft innovation centres
Microsoft strongly believes that start-ups help drive innovationin European healthcare. Microsoft’s partner-based businessnetwork developing products and solutions on its softwareplatform is composed of more than 750,000 companies acrossthe globe. As evidence shows the ‘witch’s brew’ for any kindof new innovation is fragile and serendipitous at best. There-fore, private and public policy can be the double edged swordthat can impede the innovation it often wishes to create.
Since its foundation in 1987 Microsoft has hungrily soughtto develop cutting-edge cross-sectoral innovations based onICT. In 2007 the term ‘Microsoft Innovation Center’ (abbre-viated as MIC) was invented in Brasil in respond to increasingdemands from IT start-ups. Microsoft innovation centrestoday utilize a programme called BizSpark that providesinnovative ICT start-ups with free software, expertise and alocation where young entrepreneurs and senior expertsmeet and interact free of charge. MICs are well-equippedby state-of-the-art technology facilities for collaboration oninnovative research, technology or software with solutions,involving the changing composition of governmental, aca-demic and industrial participants.
Up till now more than 90 Microsoft innovation centreshave been established worldwide, out of which roughly 60are located in Europe. The greatest share of them arerepresenting close cooperation between Microsoft andnational governments such as the Belgian and Spanish MICs,while others are relying on industrial actors and civilorganizations, for example the MIC in Hungary. In practice,
189Innovative start-ups in healthcare
Microsoft works with 6000 small and medium sized partnersdeveloping disruptive and enabling ICT health solutions onits software platform across Europe. As Microsoft’s businessmodel lacks direct channels to its customers it is heavilyreliant on its partners.
Microsoft innovation centres are national initiatives tobetter connect ICT-related smart ideas together with fund-ing opportunities innovatively. Placing Microsoft Corporationat the heart of the concept, MICs provide learning paths forinnovative, young entrepreneurs to develop business con-nexions, networks, partnerships and indirectly open newmarkets, stimulate local economies as a win–win situation.Microsoft is committed to participate in the development ofthe new generation of innovative start-ups to furtherstrengthen Microsoft’s market positions (measured by mar-ket share) and the opportunity to include potential start-upsto the corporation’s vivid business network and enhanceapplications, services building on Microsoft products.
As a worldwide industrial player being active in a widerange of sectors, Microsoft has the necessary negotiatingpower, innovation financing instruments, managementcapacities and best practices on how successful innovationrequires introduction to market, patenting or evenknowledge-transfer among interested business parties.
Fishing Cactus
Fishing Cactus, a start-up in the gaming industry, wasfounded in 2008 by four entrepreneurs. Their team nowhas 30 developers focusing on creating high quality gamesfor a number of digital distribution platforms, and theirsuccesses include 15 released titles and a combined 30 yearsof experience in the field. Fishing Cactus rapidly becameprofitable and is now one of Belgium’s fastest growinggames studios, creating traditional entertainment games,developing games for other publishers and consulting.
The company is currently exploring a new area of thegaming industry called ‘‘serious games.’’ In partnership withMicrosoft Innovation Center in Mons, Fishing Cactus has builta prototype of a gaming solution that can support doctorswith patients recovering from brain injuries and damagedmotor skills. In collaboration with a team of doctors andspecialists, the first hospital patients’ game was released atthe end of 2010. The game is built on the Xbox 360–Kinectsystem which uses the body at the controller. The gamesimulates a highly realistic environment in which recoveringpatients can exercise the basic motor skills they may havelost during their accidents, such as cooking and packing.This first innovation is just the beginning of the ‘‘seriousgame’’ series that Fishing Cactus will explore.
miMedication
Mitchell Silva is an entrepreneur who created an award-winning health solution as part of the ‘Boostcamp Competi-tion’ held by the Mons Microsoft Research and InnovationCenter. His innovative solution, miMedication, is a personalhealth record system that supports patients suffering fromCOPD. Chronic Obstructive Pulmonary Disease (COPD) is along-term non-reversible disease that obstructs airflow andcauses abnormal inflammation in the lungs. Symptoms
include shortness of breath and acute coughing, which canbe prevented and treated if the disease is well managed.With proper monitoring, patients can prevent episodes ofexacerbation and avoid hospitalization.
With this in mind, Mitchell created miMedication as a toolthat provides insight and autonomy for patients sufferingwith COPD to manage and track their health, avoid exacer-bation and prevent their condition from worsening. The tooluses smartphone or PC platforms and allows patients to takecontrol of treating and preventing the manifestation of theirdisease. The system offers better care management forpatients by increasing personal awareness of their healthrecord, managing medication consumption, listing day today activities, monitoring in real-time their disease andproviding instant feedback of progress between the doctorand patient. Patients can use the visualization of trends anddata input to see which behaviours are easing or puttingstress on their condition. miMedication helps patients in theregion to keep their disease under control and live higherquality lives.
Although the system is available on the market forpatients for free on a 30 d trial, miMedication is mainlyfocusing on reaching the patient indirectly. This meansmiMedication is offering its services to healthcare providers,and pharmaceutical companies to store and manage med-ical data of patients. For healthcare providers, this will leadto longitudinal data of patients stored in an EHR (ElectronicHealth Record) which will lead to a better follow-up. Forpharmaceutical companies miMedication offers a securedatabase to store medical data and offers them statisticalreports of the data. By including medication reminders, thecompliance can be augmented which will result in a directbenefit for patients, care providers and pharmaceuticalcompanies. Up till now 50 patients are registered. miMedi-cation is planning a trial in close collaboration with auniversity hospital to gather as much as evidence baseddata as possible. Currently, Mitchell is negotiating with amajor pharmaceutical company in respiratory disease and ahome care provider with a potential of 50,000 COPDpatients (Chart 2).
Main services provided in the frame of MICs
As MICs are specialized according to the host countries’specifications and competitive edges, a MIC’s structure isfollowing similar comprehensive set of programs and ser-vices to foster innovation without reference to differentsectors.
Selection of best ideas
Historically, the most successful companies are those thatinnovate rapidly and change with time, bringing newproducts and services into the market in a timely fashion.In the 21st century creativity, innovation and entrepreneur-ship became critical factors for modern prosperity [9].However bright ideas do not always provide guarantee forsuccess as innovation is by nature a matter of trial and error.Only the best ideas survive the so called ‘valley of death’,the financial period when new start-ups start their activitiesto turn their idea into a marketable product.
Chart 2 Microsoft innovation centres’ model to boost national economies.Source: own edition.
R. Pinto, M. Baracsi190
In this perspective, MICs are providing incubation servicestogether with professional support for prototype develop-ment to selected first-rate projects.
Professional assistance to innovation financing
Even today innovation funding and the way innovationhappens are quite controversial and often cited approachesin all countries around the world. Debates are mainlycentred around Williamson’s article [1], which concludes,inter alia, that innovation is principally funded by firms’own financing. The authors agree that at the micro-levelinnovation impacts corporate performances [2] and plays acrucial role in the survival and renewal of firms. On theother hand, at the macro-level, it has a strong influence oneconomic growth, and consequently also affects employ-ment. In this sense, MICs are providing promising start-upswith the latest technology tools free of charge throughMicrosoft sponsored programmes as well as liaising for thearrangement of meetings with Venture Capital firms andpotential investors.
Continuity over time
At present, the internet and related technology trends areenabling new business models and services, they areempowering consumers (patients) to take a far moreproactive role in taking care of their own health, and theyare improving the way healthcare is practiced and orga-nized. Microsoft and other large suppliers and developers ofICT are investing heavily into the infrastructure and soft-ware development platforms to accelerate this evolution ofthe healthcare industry. The company in its recentlypublished paper ‘The Manifesto for eHealthier Europe’outlines much of these emerging technologies from cloudcomputing to mobile device driven health. Even todaythousands of small companies are building, perfecting andtrying to launch new products and services to improvepatient care and the work of the health practitioner.
Market orientation
In terms of market size, the European eHealth industry hasleading positions in emerging fields such as personalisedhealth systems, medical equipment and in several sectors ofintegrated eHealth solutions. Main priority areas entailtelemedicine/homecare and clinical information systemsin the primary healthcare sector. The e-Health sector hasa number of large European-based companies of specialisede-health solutions that are world leaders in their fields, aswell as an estimated 5000 European small and medium sizedenterprises (SMEs) that operate in the various sub-sectors ofe-health [6]. The eHealth industry in the EU 15 wasestimated to be worth close to h21 billion in 2006 [5].Recent research has suggested that the health ICT industryhas the potential to be the third largest industry in thehealth sector with a global turnover of h50–h60 billion, ofwhich Europe represents one third [based on researchcarried out by Agfa and Philips]. By 2010, a double digitgrowth rate of up to 11% was foreseen as driven by a searchfor more productivity and performance [7].
Services provided
Microsoft’s innovative model for the support of smart ideasare composed by the following elements:
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Microsoft BizSpark is a global programme that helps soft-ware startups succeed by giving them access to softwaredevelopment tools, connecting them with key industryplayers, and providing marketing visibility. The programmealso includes access to Windows Azure, a flexible, compre-hensive, and powerful cloud platform for the creation ofweb applications and services. In addition, BizSpark offerstechnical support, business training and a network of over2000 partners to connect members with incubators, inves-tors, advisors, government agencies and hosters. Since itwas established in 2008, more than 45,000 companies inover 100 countries have joined BizSpark.
191Innovative start-ups in healthcare
�
The Microsoft Imagine Cup is the world’s premier studenttechnology competition. We invite all eligible students touse their imagination and passion to create a technologysolution that addresses the Imagine Cup 2012 theme:imagine a world where technology helps solve the toughestproblems. In 10 years, the Imagine Cup has grown to be atruly global competition focused on finding solutions toreal-world problems. Since 2003, over 1.4 million studentshave participated in the Imagine Cup with 358,000 studentsrepresenting 183 countries and regions registering for theImagine Cup 2011 competition. � Microsoft Research is dedicated to conducting both basicand applied research in computer science and softwareengineering. Researchers focus on more than 55 areas ofcomputing and collaborate with leading academic, gov-ernment and industry researchers to advance the state ofthe art. Microsoft Research has expanded over the yearsto 13 labs worldwide and a number of collaborativeprojects that bring together the best minds in computerscience to advance a research agenda based on theirunique talents and interests.
Economic benefits
The U.S. based financial services company Standard & Poornotes that by 2050 the G20 countries will almost double theirGDP expenditure on health from 6.3% to 11.1%. Simply put,evidence shows that health systems must change to avoidcollapsing under the weight of spiralling out of control costs.There is significant increasing demand for care caused by theaging population, the changing disease patterns and the need toimprove the sustainability of health delivery systems. Chronicdisease accounts for 63% of mortality in the world, the leadingcause of deaths (WHO). In Europe, 85% of premature deaths arecaused by these preventable diseases. Chronic conditions suchas diabetes and cardiovascular diseases can be preventedwith early prognosis and early detection of negative trends.This requires a ‘‘patient centric’’ approach.
Impact of policy
Consequently, the number of innovative start-ups is growingrapidly preparing the ground for Europe’s future progress.The paper has largely focused on the Microsoft MIC as onlyan example to pick apart some of the elements to find theperfect witch’s brew to drive innovation. Whilst the MICshave begun to demonstrate success the programme is verymuch in its infancy stage and it is far too early to passjudgement if it has found the right recipe or not.
Another important ingredient, possibly the most criticalone, for the witch’s brew is the role of regulatory frame-works as well as public policies. The EU has historicallyinvested large funds across the regions to boost innovation,competitiveness and economic growth. Since then, it alsocontinues to find the right policy mechanisms and instru-ments in practice that have shown only partial success so far.The European Commission’s Innovation Union Strategy out-lines a smart set of regulatory frameworks and notableincrease in public funding to several high priority areas suchas transportation, energy or even health. It offers much
promise to deliver value and deliver a much needed boost toEurope’s innovational life. However, there remains somedaunting challenges to hurdle within the internal market.
Regardless of the many differences from member state tomember state a digitized healthcare system will need toflow seamlessly across national borders. There is an intensi-fying debate on how data protection and privacy rules canbe harmonised to allow such a flow while safe guardingsensitive medical and health information of Europe’scitizens. By far there is no easy answer. The EuropeanCommission at the end of January this year, launched acommunication and regulation to modernize the 1995Data Protection Act. It will likely be a lengthy processover several years for such a regulation to crawl its way toconsensus through the differing EU institutions. Itsoutcome will likely determine whether patient centric
internet services can prosper in the EU and how it hasthe potential to accelerate an industry based on theseservices.
Conclusion
Technology innovation is the result of a synergy of severalimportant factors at play which include both publicand private policy, academia, people, investments, andresources. The effect of accumulating a critical mass andfinding the points where ideas are born is a difficult task.There are many examples of joint efforts by governments,companies and academics where deep commitments andresources have been made while measuring success hasbeen difficult to define innovation sparks that seemed tooccur serendipitously.
While it may sound that creating innovation is a ‘fleetingdream’ or ‘red herring’ there are some great new ideas thatmake their way to the market and get scaled up rapidly.The promising combination of ingredients for success inany witch’s brew is the entrepreneur’s personal drive,sacrifice and committment. History has shown that the risktakers and luck often play a tipping point factor in beingsuccessful. The role of government, academia and theprivate sector is to ensure that the business environmentis as conducive as possible to allow ideas to spark andinnovative companies to reach markets and go globalquickly.
References
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[3] Imperial College London Study—investor-driven innovation:what can we learn from the way professional investors spot‘winners’? ScienceIBusiness Innovation Board; 21th February,2012.
[4] OECD. Trends in European health care—how to create value in adynamic environment. Roland Berger Strategy Consultants; 2005.
[5] Health Information Network Europe/HINE report. EuropeaneHealth forecast; 2006.
[6] European Commission. Accelerating the development of theeHealth market in Europe—eHealth taskforce report; 2007.
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