Melbourne Business School And The University Of Melbourne

A/Prof. Patricio Sepulveda

Start-up accelerators, especially if focus on digital health,are an important player in the biomedical startup ecosystem. Accelerators not only build capacity in the ecosystem but also support potential new businesses at an early stage. At the Royal Melbourne Hospital we have developed an ‘in-hospital’ start-up acceleration model, the Melbourne Health Accelerator (MHx). Our rationale is that Healthcare providers are uniquely positioned to drive the development and commercialization of biomedical innovations.

The overall aims of the MHx were two-fold: (a) to assist promising early-stage health technology start-ups validate their solutions in a clinical setting and accelerate their progress towards the next stage of their development; and (b) to promote innovation within the hospital to createnew sources of revenue, unlock latent intellectual property, and offer new career pathways for clinician-innovators.The Melbourne Health Accelerator (MHx) has now established the go-to, hospital-based startup accelerator program in Australia. This article describes some of the key design features of the program, and discusses some of the findings of the MHx experience which may form thebasis foradoption of this type of initiative by others.

1.Proximity and Connectivity

Proximity is often cited as an important factor in the success of collaboration. Geographical proximity is the physical distance between two collaborating entities, while organisational proximity refers to two or more people being in the same location and having both the opportunity and the psychological obligation for face-to-face communication. Organisational proximity is the most powerful way of for people to interact and improves the likelihood of successful collaboration. This has been demonstrated as highly important for technology ventures within an accelerator where there is a collaboration between academia and non[1]academic organisations.Geographicalproximity is more important to small firms when they are collaborating with academics, scientists, or clinicians. Bringing collaborating parties together facilitates the transfer of tacit knowledge, mental approaches, routines, values and organisational culture, which are solely transferred through physical proximity of the parties.For these reasons, we located the MHxin an ‘in-situ’clinical space of the hospital, in fact, adjacent to Cardiology, Genomic Medicine, Surgery, Nuclear Medicine, Clinical Trials Centre, and the Office for Research.

2.Design

The MHxmodel was a 13-week acceleratortaking ina cohort of up to 12 companies. The start-ups, were expected to attend on-site for 2 days per week for the duration. Eligible applicants were start-up companies developing products or services that align with the hospital’sstrategic goals and areas of expertise. To successfully apply to the MHx, start-ups needed to have a minimum viable product that addresses an unmet need, or a clear and potentially disruptive idea.In providing access to key start-up services in an intimate setting,businesses are catalysed inside a mini ecosystemwhich makes the trial-and[1]error innovation process more efficient.

To engage clinicians we created an Innovation Fellowship program that conferred a title upon selected participants and came with a monetary stipend to backfill clinical hours, enabling quarantine of time for interacting with MHx start[1]ups. This model created a competitive environment that resulted in greater interest from the clinicians. Engagement was essential to the success of our acceleratorby providing early clinical validation of start-up technologies and was a key differentiator over other accelerators.

The main focus of the accelerator was on digital health due to the fact that these companies lack a clear path for revenue reimbursement or often face high barriers to enter the market. However, we also made provision in the MHx portfolio companies to include medical devices, medical productivity software, and diagnostics.

3. Results

After three rounds of running the MHx, an independent evaluation was performed to determine if the MHx: (a) helped promising early-stage health technology start[1]ups validate their solutions in a clinical setting; and (b) promoted innovation within the Royal Melbourne Hospital to createnew sources of revenue, unlock latent intellectual property and offer new career pathways for clinician[1]innovators.

MHx targeted early stage start-ups, operating in an industry with notoriously long development timeframes and pathways to market. Traditional methods of success, such as capital raised, patents filed and revenue earned, are inappropriate measures in this context. As a result, the evaluation focussed more closely on the acceleration experience of the individual start-ups, with the majority of survey respondents in all three cohorts agreeing that the MHx program was effective and both structured and delivered well. Of the 33 alumni start-ups, 25 remained operational. Of these active start-ups, 10 have progresses to establish research agreements or trials with hospitals since participating in MHx and 8 have gone on to raise a total of more than AUD$15 million in funding.

4. Learnings

MHxwas fortunate to exist within a strong authorising environment which has been crucial to its success. The program received strong support at the executive level with direct executive sponsorship and participation throughout. Furthermore, part of creating a culture of innovation was executive support for an updated Intellectual Property Policy which outlines an upfront revenue sharing model. This is comparable to international leaders in clinical research commercialisation which incentivises staff to pursue commercialisation and also streamlines the process for staff-led start-ups to participate in the MHx program. The RMH is a teaching hospital, which places a large emphasis on the importance of clinical research. These factors have contributed to the successful implementation and would need to be replicated by other hospitals looking to run a similar program.

The majority of start-up survey respondents reported that the in-situ location of MHxwithin a clinical environment was helpful in facilitating interactions with the clinical staff and providing insights into the everyday problems clinicians are faced with. The physical co[1]location of the MHx site inside the hospital was a major value-add for start-ups and this is crucial to the successful replication of MHx at another site. Empty space within a hospital environment tends to be fiercely contested, particularly when the use is not for a clinical service. This reiterates the importance of having executive level support for the project.

The successful replication of the MHx model in another environment would require a sufficiently resourced project team. The past threeMHx cohorts were delivered by the Business Development Unit atthe RMH, which sits within the Office for Research. Feedback from the start-up cohorts indicated that one-on-one interactions with the MHx management team created much of the program’s value for the participants, so these interactions should be prioritised and budgeted accordingly.

5. Conclusions

The MHx is a strategic initiative designed to bridge the gap between the complex problems within health care, and entrepreneurial spirit and drive.Three critical factors should be replicated by other hospitals and healthcare providers seeking to replicate MHx or introduce a similar accelerator program, an authorising environment, in-situ physical location, and a sufficiently resourced dedicated project team. The success of this program has resulted in the funding of further stages of MHx that will re-use the expertise we have created for roll out across other hospital sites in a hub and spoke type model.