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NYCEDC Bets on Streamlined Pilot Studies to Buoy NY Healthtech Startups

Xconomy New York — 

It’s one thing to come up with a new digital health product, say an operating system for health benefits, or a widget to help with patient referrals, that you think might change healthcare. It’s another to get clinicians to actually use it. That’s where pilot studies, or test runs of a new technology at a healthcare organization, come in. Their results can make or break a startup, but so can the time and money needed just to run them.

The New York City Economic Development Corp. has seen this firsthand over the past few years, while running a program originally called Pilot Health Tech NYC—now the “Digital Health Marketplace”—meant to connect digital health companies with large healthcare organizations for pilot projects. More than two dozen pilot studies were started through the program, but the results weren’t always great. Many projects just weren’t leading to “meaningful commercial relationships,” according to Andrew O’Shaughnessy, a senior project manager with the NYCEDC.

“We dug deep into why that was,” he says.

The result is some changes to the original program (more on that below) and a new gamble by the NYCEDC focused on younger companies. It’s teaming up with a small company run out of Columbia University, HITLAB, to launch an initiative called the Digital Health Breakthrough Network. Through the program, a network of local, small healthcare organizations—independent doctors’ offices, community health clinics, and pharmacies—will help run pilot studies for a selected group of very early healthtech startups. The idea is that these trials will be smaller, faster to execute, and cheaper to run than the industry norm.

The NYCEDC is betting that investors and large healthcare organizations will take these studies seriously, and that positive study results will translate into, at the very least, the beginnings of a commercial relationship or an investment round. (The NYCEDC’s specific goal is to jumpstart more healthtech companies in New York and create more jobs.) Negative results, on the other hand, means less time and money wasted on a product that either needs refinement or shouldn’t be carried forward.

“We are taking something of a risk,” by betting on the validity of these trials, O’Shaughnessy says. As Rock Health managing director Halle Tecco wrote in this blog post last year, “a validation pilot should not be confused for a real customer relationship.”

O’Shaughnessy adds, though, that the NYCEDC’s hope isn’t necessarily that a health system looks at a study and immediately stamps a product for approval across a vast network of hospitals. Rather, that it’s a start. Maybe a customer views the product as “substantially derisked,” and offers a startup a pre-sales pilot run with “more generous terms” than the company would have gotten otherwise. Maybe the customer dedicates more resources to the alliance and moves it forward quicker. Maybe a startup gets an investment it otherwise wouldn’t.

“Even if we’re not successful in generating all the data you’ll ever need for commercial validation—and we probably won’t—we are going to help you get from zero to one, and from a prototype stage to the beginnings of a product,” O’Shaughnessy says.

Here’s how it’ll work. The NYCEDC has put … Next Page »

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