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Promoting Business and Entrepreneurial Awareness in Health Care Professionals: Lessons From Venture Capital Panels at Medicine 2.0 Conferences
1Center for Medical Decidion Making, Ono Academic College, Kiryat Ono, Israel
2Tel Aviv University, Tel Aviv, Israel
3Department of Nephrology, University Duisburg-Essen, Essen, Germany
4Institute for Drug Safety, University Hospital Essen, Essen, Germany
5London Office, McKinsey Company, London, United Kingdom
6JMIR Publications, Toronto, ON, Canada
7University Health Network, Techna Institute, and University of Toronto, Toronto, ON, Canada
*these authors contributed equally
Stefan Becker, MD, MBA
Institute for Drug Safety
University Hospital Essen
Phone: 49 201 723 83844
Fax: 49 201 723 5633
1]. This lack of business training for health care professionals is neither new nor unknown. A study from 1993, for example, demonstrated that only 3% of young physicians (younger than 45 years) felt that they were well prepared to manage the business aspects of medical practice . Today, psychologists, physicians, and other academics are increasingly developing interventions for health improvement and disease prevention, yet the leap into large-scale implementation of these interventions usually requires business knowledge. Without this knowledge, researchers are often unable to successfully develop their ideas commercially and they cannot manage to turn them into successful products or companies .
Our overwhelming sense that the field is alive with effective interventions that do not later translate to scalable products or services impelled the creation of the venture capital (VC) panel at the Medicine 2.0 conferences. The disconnect between academia and business (or “industry”) can be demonstrated in 2 noticeable areas: the curricula in medical schools and the agendas of academic conferences. These 2 areas offer barriers, but also hidden opportunities; by modifying them to include the discussion of the integration between science and business, we can bridge the current gap and increase researchers’ knowledge about how to operate in the business world. In this paper, we seek to cast light on the academia-business gap, illuminate existing solutions and limitations, and offer a partial remedy that provides business education in a nutshell. Additionally, we hope that this solution will make health care professionals realize what is missing in their training, and therefore will stimulate demand for changes within the medical curriculum and training process.
To highlight the knowledge gap, we first examined the curriculum of Harvard Medical School. Recently ranked as the number 1 medical school for research in the United States , Harvard Medical School does not currently require its graduates to take any business classes as part of their education . Thus, even after completing the 4-year program, most certified physicians who graduate from Harvard Medical School have little to no formal business training. This may hamper their professional development when they begin actively leading research in the medical field, running private practices, or creating health-related start-ups (if they decide to do this) .
Second, we examined the agendas of several prominent academic conferences and found that they focused solely on science, ignoring business implementation altogether. Some notable examples are the International Federation of Fertility Societies and the American Society for Reproductive Medicine Joint Annual Meeting , the British Academy of Audiology Annual Conference , and the World Congress of the World Society for Pediatric Infectious Diseases . None of these conferences offered any business-related sessions during their 2013 events. Interestingly, even one of the biggest international medical trade fairs, Medica in Dusseldorf, Germany, has not staged a VC panel session thus far . Even conferences that are attuned to the issue of implementation, such as the NHS Health and Care Innovation Expo, showcase innovations helping visitors to bring about changes, improvements, and renewals within the NHS benefiting the whole community, but do not include a panel to inform medical entrepreneurs on how to bring their solutions to the stage where they can benefit the entire community . A welcome exception is the Doctors 2.0 You conference , which concentrates on understanding how physicians use new technologies, such as Web 2.0 and social media, and the impact of these latest technologies on the relation between physicians and patients, colleagues, industry, and the public sector. Perhaps because of its focus on integration with the industry, the first session is a start-up contest bringing together 7 companies from 5 countries working on diverse aspects of digital health. Attendees are expected from a range of industries, including the public, and physicians, professional and patient associations, pharmaceutical companies, governments, and insurance companies .
Interestingly, the American Medical Association (AMA) Accelerating Change in Medical Education Conference (held in Chicago on October 4 and 5, 2013) brought together almost 200 leaders in medical education from across the United States to discuss innovations needed to bridge the gap between the training of medical students and the needs of the health care system. Although there was an opportunity to learn about the grant projects supported by the Accelerating Change in Medical Education initiative, there was no VC panel . Because conferences can instruct and set an agenda for a field, this is a missed opportunity.
The lack of business training has adverse effects on doctors and other health care professionals’ forays into the world outside of medical school. A recent article featured on the Cancer Network website  showed that many doctors are unaware of the significance of having a proper business plan for their practice and are often unable to design one even if they do grasp its importance. Therefore, many struggle financially while running their practices. The detrimental effect of the lack of business education is exacerbated when it comes to more complex financial and business issues. Specifically, the chief executive officer (CEO) of a patient relationship management company  lists the most common reasons for the failure of health technology (health tech) start-ups: a lack of specific focus or adoption point, misunderstanding the consumers’ willingness to pay for the service or how much effort they would be willing to expend to use it, requiring too much money for development of the product, having too complex an organizational structure, and lacking understanding of reimbursement dynamics. The same problems were raised in an article explaining why business modeling is crucial in the development of eHealth technologies  and in an article that discussed the importance of understanding business and economic strategies during the development of eHealth solutions .
Furthermore, a lack of understanding of business models reduces the ability of start-ups conceived in academia to receive funding for their development. The present paper focuses on fundraising from private sources (primarily from VC funds as discussed subsequently). However, the need to present a convincing case for the viability of an idea from a business perspective also applies when seeking to raise money from government sources such as federal grants , an important source of funding for health care start-ups . Each source of funding has its own merits and is aimed at people and companies with different goals, although considerable overlap does exist between the 2 sources. Some examples are the emphasis on assembling a skilled team, showing the need for the proposed solution, and explaining why it should work [20-21]. In both cases, compelling arguments assist in securing funding. The primary difference is that federal grants are generally aimed at scientists who require additional funding to further their academic research in congruence with their university , whereas VC funding is aimed at companies looking to expand and explore commercial opportunities for profit . Thus, the latter places more emphasis on larger growth or commercialization independent of a host academic institution.
All these issues share a single commonality: scientists lack a proper introduction into the intricacies of the business world and, therefore, risk being in a suboptimal position to develop their idea into a working marketable concept.
There are 4 main solutions currently in place that aim to minimize the adverse effects of the problem. These are technology transfer offices, entrepreneurship centers, specialized entrepreneurship programs, and medicine/business dual degree programs. However, none of these solutions will solve the problem entirely.
The first solution is the technology transfer offices (tech transfer) present in many universities, companies, and government organizations . Their role is to identify which research has potential commercial interest and how to best develop and use it . Although they serve an important purpose, many tech transfers do not comprehensively educate scientists about how the business world works [26-28]. Although they have a definite positive impact on research development, tech transfers are an incomplete solution because, in our opinion, many fail to give researchers the tools necessary for them to flourish and succeed in navigating the business aspects of the health care industry.
The second solution that sets out to deal with scientists’ lack of business experience is the establishment of entrepreneurship centers in universities. These centers provide valuable support and training to aspiring entrepreneurs or researchers who are interested in learning more about the business world . Unfortunately, although these centers provide obvious benefits, their greatest drawback lies in their locality because they are inherently limited in their ability to help anyone outside of the specific university in which they are set up. For example, the Global Consortium of Entrepreneurship Centers (GCEC), which is the premier organization to promote cooperation between entrepreneurship centers from different universities, is currently comprised of over 200 centers across the United States . However, this is limited in scope because researchers from universities without these entrepreneurial centers rarely benefit from this sort of support.
The third available solution is specialized entrepreneurship programs that provide business education to scientists, such as the Stanford Summer Program on Bio-Entrepreneurship . These entrepreneurship education and training (EET) programs teach scientists how to develop their research into a viable product or a functioning company. A quantitative review of all literature on the subject showed that EETs have a positive impact on entrepreneurial success . The study found a statistically significant relationship between EET and entrepreneurship-related human capital assets (r=.217) and between EET and entrepreneurship outcomes (r=.159). More importantly, the study showed that the relationship between EET and entrepreneurship outcomes is stronger for academic-focused EET interventions (r=.238) than for training-focused EET interventions (r=.151), which emphasizes the importance of EET for academics. Again, the shortcoming is that EETs are a localized solution with limited coverage. Despite having a definite positive impact, EET programs cannot reach most health care professionals and researchers.
The fourth solution is a combined Doctor of Medicine (MD) and Master of Business Administration (MBA) program. These dual degree programs are designed with the goal of training physicians who are skilled in both medicine and business management. The integrated curriculum is designed in a way that strives to increase the drive, enthusiasm, and ambition of the degree candidates, containing the most important concepts from both fields: from strategy, finance, marketing, and economics on the business end to anatomy, physiology, biochemistry, and all other related core science disciplines of medicine [33,34]. Such programs are currently available in over 50 universities around the United States . Dual degree programs are also effective in that students who participate in a dual degree program often perform better academically and have a higher degree of satisfaction with their studies than students who complete only an MBA or Doctor of Pharmacy (PharmD) program [36,37]. Although they offer the best and most extensive form of combined training (as far as receiving a business and a medical education goes), these dual degree programs suffer from a shortcoming similar to the one mentioned previously: anyone who did not study in such a program is unable to benefit from their existence. In addition, there is a scarcity of similar programs accessible to physicians during or immediately after residency training . Lately, distance learning and online technology have permeated all levels of business education. However, most profiled programs so far are for general MBAs rather than combined MD/MBAs . None of the courses featured by the Financial Times’ Online MBA Listing 2014 focused on health care. Once again, the solution falls short because it reaches only a relatively small portion of the health care population.
For some start-ups, “incubators” may play an important role. These programs are designed to support researchers coming up with ideas by providing an array of business and services resources. Key to the success of such cooperations are powerful networks, in which all partners can trust. These are vital for bringing together know-how and venture capital. Yet, incubators are found outside of academic settings.
Having established the existence of a problem—the lack of business training for health care professionals—and the drawbacks of current solutions, we would like to propose an additional (although partial) solution, which overcomes the locality issue, namely VC panels hosted in medical and health care conferences. We are aware that VC panels cannot solve the problem entirely. In fact, anything short of making extensive business classes mandatory in medical school is unlikely to be a perfect solution. However, we believe that VC panels are a highly time- and cost-effective means of getting exposure to a broader sample of health care professionals. For many attendees, this can be their first substantial interaction with the business aspects of the research world. Deciding to attend a 90-minute session is not as big a time or financial commitment as deciding to enroll in an MBA degree, for instance. Because of this, VC panel sessions in academic conferences may attract people who are only in the early stage of considering business training or are exploring the relevance of the business world to their practice. Thus, these sessions can serve as a catalyst for creating demand for business education to be included in medical and other training and continued education programs.
Venture capital is funding provided to start-up companies. A VC fund receives equity in the company in return for its investment ; therefore, they tend to be long-term investments . VC investments generally occur after a seed-funding round (used to start the business) has already taken place, although some funds also invest at the seed stage . In 2010, there were 462 active (investing at least US $5 million) VC firms in the United States who invested approximately $22 billion into nearly 2749 companies, 1001 of these companies receiving funding for the first time . Business factors, such as the potential for rapid return on investment and a credible business plan, are generally considered more important than product characteristics .
A VC panel is where companies and start-ups present their idea to venture capitalists in front of an audience and they are often included in industry conferences, events, and television shows, such as Shark Tank or its UK equivalent Dragon’s Den. A number of prominent events developed in the United States over the past 7 years within the field of health information technology (IT). Examples are the Venture+ forum at the Health Information Management Systems Society (HIMSS) conference (Venture+ 2014: Health IT and Partnering Forums ), the Telemedicine Venture Summit at the conference of the American Telemedicine Association (American Telemedicine Association 2014 ), and the HealthTech Conference . All combine educational components with possibilities for start-ups (between 10 and 45 companies) to present themselves to a panel. In 2013 and 2014, most topics revolved around mobile health (mHealth), in particular, patient-doctor communication. Benchmarking of the events is difficult because the number of applicants, growth attendance, and criteria for selection is not always made publicly available. One example comes from the HealthTech 2013 Conference, which hosted the “Grand Rounds Innovation Showdown.” During this event, 10 start-up companies in the health industry (chosen out of more than 150 applicants) pitched their product or service to a group of judges, in front of a crowd of more than 400 health care executives, IT decision makers, venture capitalists, and members of the press . Unfortunately, no reliable data exist in examining the extent to which VC panels have affected the development of companies in which they have invested. Similar events in Europe are relatively rare: The Charité Entrepreneurship Summit has only recently started focusing on IT (Charité Entrepreneurship Summit 2014 ). The biggest Medical IT conference, Connecting Healthcare IT (conhIT), has not offered VC panels thus far .
The benefits of including VC panels in academic conferences extend both to the companies presenting and to the audience. The companies receive invaluable feedback and get to practice “pitching,” an essential skill in the business world  that is not a part of the academic training process. For the audience, the benefits include hearing about innovative new companies, learning from the feedback the companies receive, and becoming more familiar with pitches and company presentations. Panel members also benefit from an early glimpse at cutting-edge scientific developments and from exposure to existing and future academic entrepreneurs. Networking opportunities abound for all parties involved.
The Medicine 2.0 conference, established by Gunther Eysenbach in 2008, focuses on subjects such as digital disease detection, health information on the Web, and business models in a Web 2.0 environment . This conference is perfectly positioned for beginning to bridge the gap between industry and academia, and for suggesting a new agenda. It showcases studies by researchers who either developed interventions for improving health and the transfer of health information, or are evaluating existing practices. In an era of burgeoning innovation and technological advancement in health care, there is great opportunity to marry the 2 sides. We propose to achieve this not only by introducing academics to investors, but also from providing academics with the knowledge and know-how of turning their validated ideas into businesses.
For the past 2 years (2012 and 2013), the Medicine 2.0 conference included a start-up panel organized and chaired by Professor Talya Miron-Shatz, a decision scientist, industry consultant, and CEO of CureMyWay, a behavior change start-up. During the panel sessions, companies conceived inside or alongside academic institutions presented their ideas to investors and other stakeholders, and received feedback that also served to inform the audience in attendance of the requirements of obtaining funding from such sources.
Members of the panels in 2012 and 2013 were seasoned investors: William Cowen of Long River Ventures, Boston; Joseph Kvedar of Health Partners, Boston; Jay Mohr of Locust Walk Partners, Boston; Jigar Patel of McKinsey Company, London; Sid Thekkepat of m8capital, London; and Jack Young of Qualcomm Ventures, San Diego.
The companies that presented to the 2012 and 2013 VC panels had interesting and novel ideas in various stages of development. They ran the gamut from a person with an idea, 2 people developing a service, a company that had already established an impressive advisory board and raised funds, and many variations in-between. Their ideas included query engines for medical information, an online teenager community for maintaining a healthy body image, a system incorporating cell phone cameras with real-life Petri dishes to test water quality in Africa and elsewhere, a platform facilitating medical research, a health app, and a system for providing physicians with the most-read articles in their field. This suggests that Health 2.0 entrepreneurs can found companies based on a wide range of capabilities. The panel feedback reveals similarities in business needs, despite broad diversity in start-up topics.
For many researchers, the VC panel was an eye-opening first encounter with the business world. Therefore, we aggregated the feedback from the panels and compiled a list of the most critical pieces of information that the panelists related to companies. Entrepreneurs need to consider all the points mentioned subsequently when preparing a business presentation, but they are also crucial when developing the business idea and the company itself. In addition to this benefit, the feedback from the panels can help to outline and prioritize the subjects that entrepreneurial programs cover.
Table 1 lists the specific topics that companies were required to include in their pitch, with an example from a fictitious company. In this example, the fictitious company developed an apparatus for avoiding spillage when applying eye drops. Although the pitch was only 6-7 minutes long, presenting companies were required to cover all relevant topics.
The remainder of this paper outlines lessons learned from the VC panels, validates these lessons using current scientific and business literature, and discusses the potential implementation of VC panels as a partial yet scalable solution to health researchers’ lack of familiarity with the business world.