How Providence St. Joseph plans to avoid being disrupted by big tech – Business Insider

SEATTLE, Washington — On the 11th floor of an office building at the corner of 5th and Columbia in downtown Seattle, there isn’t a cubicle in sight.

Engineers are gathered for a Monday-morning meeting. Their colleagues working remotely are beamed in on a screen. There are sticky notes. There’s a ping pong room.

It’s not a scene you’d expect when you think of a health system that manages 51 hospitals. And the space is certainly a departure from the offices Providence St. Joseph Health has at its headquarters just 12 miles away in a corporate office park filled with cubicles in Renton, Washington.

It’s here that Providence is plotting out new ways to use technology to — as Chief Digital Officer Aaron Martin puts it — “self-disrupt.”

The health system has been turning to its high-tech neighbors for executive hires over the last five years as it works to improve its operations, bringing on executives like Martin who comes from Amazon as well as Microsoft veterans. The hope is to use technology to make the health system run smoother, whether that’s through primary care scheduling or making a better internal directory.

It’s happening at a time when big tech players like Amazon and Google are getting interested in tackling healthcare. Amazon, for instance, in November, announced it would offer a service called Amazon Comprehend Medical to hospitals, insurers, and pharmaceutical companies to help them analyze their health-records data. The company also bought pharmacy startup PillPack in 2018, marking its entrance into prescription drug delivery.

Alphabet, Google’s parent company, has a number of bets in healthcare, ranging from Verily, its life-sciences arm that’s developing surgical robots, to Calico, its life-extension spinoff.

Read more: The $23 billion health system in Amazon’s backyard just hired a new chief information officer from Microsoft

Martin joined Providence five years ago after working as a director at Amazon on the Kindle.

“I was at Amazon minding my own business,” Martin recalls. Occasionally, a recruiter he knew would reach out with a job opportunity. One day, he called with an odd one: a job in nonprofit healthcare.

So he met with Providence CEO Rod Hochman and President Mike Butler, who gave him their vision for the future of the health system amid all the changes happening as the Affordable Care Act was implemented.

Providence St. Joseph Health chief digital officer Aaron Martin
Courtesy Providence St. Joseph Health

“It must be something about the water in Seattle, because it was like talking to technology executives there,” Martin said. He said the two of them understood that tech disruption would be coming to healthcare.

“Their whole point of view was, if we don’t disrupt ourselves, somebody else will.”

Martin now oversees all of the software development and marketing at Providence as well as its venture arm. The venture arm has turned out to be a key part of the health system’s strategy.

The ideas for the companies typically come from within the health system. It’s helped found Kyruus, a software tool that matches doctors with patients, and Xealth, a company that helps doctors prescribe digital tools and medical equipment to patients, much like they’d prescribe a pill. Providence currently has 15 companies in its portfolio.

Other health systems have taken note of the work and about 84 have come by Providence to check it out over the past two years, Martin said.

Because other regional hospitals — which aren’t competing with Providence — face similar issues, it can be simple to apply the same technology to another organization.

Combining forces lets the hospitals punch above their weight. Individually, they have fewer resources than tech giants like Microsoft or Amazon. Providence, for instance, generated about $23 billion in revenue in 2017. Microsoft’s revenue was about $90 billion in its 2017 fiscal year.

Working together, however, can make implementing helpful technology much simpler.

“If we’ve implemented the solution, typically it just becomes a matter of data sharing with other health systems,” Martin said.

Growing out Xealth

Xealth’s CEO Mike McSherry was an entrepreneur-in-residence at Providence’s downtown tech offices starting in 2015 after a career working in mobile. McSherry and his team ran through about 70 ideas, some of which were difficult to put into action.

Eventually, he settled on building a platform to allow doctors to prescribe digital elements of care, whether that be articles to read, a diabetes program like Virta or Omada, or a list on Amazon of over-the-counter medical supplies you might need to buy. It’s built directly into the patient’s electronic medical record.

Initially, Xealth began within Providence’s system. When the University of Pittsburgh Medical Center came by for a demo during its prototype phase, the health system was sold as well.

The company was eventually spun out of Providence and got backing from venture capitalists including DFJ as well as the first four hospitals that took part in its pilot program. Xealth’s offices moved out of Providence’s downtown location and down the hill to Seattle’s historic Smith Tower.

It’s part of Martin’s strategy to get it right in-house, pilot with a few other regional hospitals, then get a third-party VC involved to lead a round that can help the company grow further.

An example of Xealth’s order form from the doctor’s perspective.
Courtesy Xealth

Fred Hutchinson meets its tech neighbors

Providence isn’t the only Seattle medical organization leaning into its tech surroundings in Seattle. When Matt Trunnell, now the chief information officer at Fred Hutchinson Cancer Research Center, joined about three years ago after a stint at the Broad Institute in Cambridge, Massachusetts, there wasn’t a whole lot going on between Fred Hutch and the organization’s Seattle neighbors.

“The tech neighborhood had not been exploited,” Trunnell said.

Since then, the research center has added Microsoft CEO Satya Nadella and Amazon executive Mike Clayville to its board of trustees.

Fred Hutch has been working on projects with Amazon like Comprehend Medical, which is working to sift through medical records to identify key words that researchers can then use to link patients up to clinical trials.

“This is the right time,” Trunnell.


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