CHCF Value of Health AcceleratorsTraditional venture capital in health care is so 2010: welcome to The Greenhouse Effect: How Accelerators Are Seeding Digital Health Innovation, explained in a new report from California HealthCare Foundation written by Aaron Apodaca.

Aaron clearly explains the growing interest in and influence of health accelerators, which grew out of the first era of the Internet (read: dot-com bust v 1.0) and the founding of the Y Combinator, an internet incubator that made relatively small investments in exchange for equity positions in start-ups. Health accelerators emerged around 2011, first with Rock Health in San Francisco, which was quickly followed by Healthbox in Chicago, Blueprint Health in NYC (where I serve as one of many mentor-advisors), and StartUp Health, Today, health accelerators are dispersed throughout the U.S., in large and smaller metropolitan areas.

But can the go-go culture of an accelerator which, but definition “accelerates” the development and commercialization of innovation, succeed in the slow-to-morph-and-adopt health system?

The short answer, Aaron says, is “yes” — if the organizations and their offspring confront the formidable challenges that are peculiar to the health care industry.

Aaron details many of the accelerators in health and their business models, including Rock Health, Healthbox, Blueprint Health, Tigerlabs Health (Princeton NJ), the NY Digital Health Accelerator (NYDHA), StartUp Health, and StartX Health (out of Stanford U).

In the most enlightening section of this report, Aaron goes “Beyond the Hype” to describe challenges faced by accelerators and their constituents. These include:

= the need for the accelerator to find a balance between “quantity and quality”–that is, to target a priority group of companies most likely to be successful by “sharpening the selection process”

– Identify concepts that aren’t too far ahead of the market — that is, buyers’ willingness to pay for and adopt the innovation. In health care, that means ensuring either reimbursement via third-party payor or tapping into the consumer health market — which is notoriously stingy

– Work more closely with the actual users of the technologies to inform development that’s practical

– Ensure that the product can actually drive a business – or whether perhaps the innovation is more of a licensed technology or quickly acquirable by a large company looking to bolster innovation in their portfolio.

The future of health accelerators, Aaron writes, will be marked with continual evolution, and will certainly enable innovators to work more closely with user-prospects – whether hospitals, health plans, clinicians, or consumers. Accelerator leaders expect to see even more accelerator organizations emerge for health, with close ties in their local health ecosystem — the way the NYDHA has evolved.

Health Populi’s Hot Points:   As we approach the first week of March 2013, heralding the annual meeting of HIMSS, the Health Information Management and Systems Society — which I’ve often called a sort of Disneyland or Grand Buffet for health IT geeks (of which I am one) — we must guard ourselves from buying into hype cycles for various digital health technologies.

What often happens at this big meet-up of tens of thousands of enthusiastic health IT techno-optimists is a grand kumbaya for the new-new thing…while lack of interoperability and usability continue to threaten real integration and meaningful use of health information systems by both providers and patients. This happens when the design of the HIT is not very user-focused or -informed.

The health accelerators will be playing a growing role in the health innovation financing landscape, complementing corporate funding by private sector companies, public sector incentives, and the traditional VC community. To become even more relevant and successful, accelerators must get users into their workflow and support of classes (start-ups) to weave user-centered design and real-world pragmatism into their products and business plans.