Partners’ Center for Connected Health to Launch Disease-Monitoring System, Mulls Commercial Spinoff

2/12/09

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tens of billions of dollars.

The center now faces the tough decision of whether to keep SmartBeat a nonprofit service or turn it into a for-profit business. It’s fine to provide the service to EMC and other large employers in Massachusetts, Kvedar says, because his center is dedicated to providing care to patients within the Partners network. But SmartBeat could offer the same service for a fee to companies in other parts of the country, which would fall outside the center’s non-profit mission. He noted that the center, for instance, is in talks about providing SmartBeat to food company Kellogg, headquartered in Battle Creek, MI.

There’s a viable national market for SmartBeat. The U.S. disease-management business, which was worth about $1 billion in 2005, is expected to bring in more than $2 billion this year, according to forecasts by market research firm Frost & Sullivan.

Even with healthy market prospects, it can be tricky to turn nonprofit hospital services into for-profit ventures. For example, I covered the spinout of retinal imaging firm Veraxa Health from Boston research hospital Joslin Diabetes Center a few years ago. But the company reverted to its former status as a nonprofit group within Joslin less than a year after its commercial launch. Veraxa couldn’t drum up enough interest from investors to support the operation until it could reach profitability. (Here’s a story I wrote about Veraxa for Mass High Tech.)

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