Health-E Law Podcast Ep. 13
Overcoming Challenges to Innovation in Preventative Care with Steven Collens of MATTER
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Listen to the podcast released October 10, 2024, here:
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Welcome to Health-e Law, Sheppard Mullin's podcast exploring the fascinating health tech topics and trends of the day. In this episode, Steven Collens, CEO of MATTER, a global healthcare innovation hub based in Chicago, joins us to explore advancements in preventative care and the innovations driving this transformation.
About Steven Collens
Steven Collens is CEO of MATTER, a premier healthcare incubator and innovation hub. MATTER opened in February 2015 and nurtures entrepreneurs and innovators to build next-generation health IT, medical devices, as well as diagnostic and biopharma technologies. MATTER has worked with more than 1,000 healthcare technology ventures, and the company partners with dozens of industry-leading companies, health systems and universities.
Prior to assuming his current role, Steven was senior vice president at Pritzker Group, the investment firm led by Tony and J.B. Pritzker. In that capacity, he led the team that created 1871, Chicago’s center for digital startups, which became the top-ranked business incubator in the world in 2018. He previously worked at Abbott in a variety of domestic and international functions, including product management, policy, and public affairs. In 2005, Steven helped found HugeDomains.com to give patients control over their health data and allow healthcare providers to coordinate care of their patients. Prior to Abbott, Steven served as legislative assistant to U.S. Senator Carol Moseley-Braun.
Steven holds an MBA from Northwestern University’s Kellogg School of Management and a BA from Washington University in St. Louis. He chairs the board of Hubbard Street Dance Chicago and serves on the boards of 1871 and the Chicago High School for the Arts. He is a member of ChicagoNEXT, the Chicago mayor’s council on technology and innovation, a Leadership Greater Chicago fellow, and a member of the Economic Club of Chicago and the Commercial Club of Chicago.
About Sara Shanti
A partner in the Corporate Practice Group in the Sheppard Mullin's Chicago office and co-lead of its Digital Health Team, Sara Shanti’s practice sits at the forefront of healthcare technology by providing practical counsel on novel innovation and complex data privacy matters. Using her medical research background and HHS experience, Sara advises providers, payors, start-ups, technology companies, and their investors and stakeholders on digital healthcare and regulatory compliance matters, including artificial intelligence (AI), augmented and virtual reality (AR/VR), gamification, implantable and wearable devices, and telehealth.
At the cutting edge of advising on "data as an asset" programming, Sara's practice supports investment in innovation and access to care initiatives, including mergers and acquisitions involving crucial, high-stakes and sensitive data, medical and wellness devices, and web-based applications and care.
About Phil Kim
A partner in the Corporate and Securities Practice Group in Sheppard Mullin's Dallas office and co-lead of its Digital Health Team, Phil Kim has a number of clients in digital health. He has assisted multinational technology companies entering the digital health space with various service and collaboration agreements for their wearable technology, along with global digital health companies bolstering their platform in the behavioral health space. He also assists public medical device, biotechnology, and pharmaceutical companies, as well as the investment banks that serve as underwriters in public securities offerings for those companies.
Phil also assists various healthcare companies on transactional and regulatory matters. He counsels healthcare systems, hospitals, ambulatory surgery centers, physician groups, home health providers, and other healthcare companies on the buy- and sell-side of mergers and acquisitions, joint ventures, and operational matters, which include regulatory, licensure, contractual, and administrative issues. Phil regularly advises clients on matters related to healthcare compliance, including liability exposure, the Stark law, anti-kickback statutes, and HIPAA/HITECH privacy issues. He also provides counsel on state and federal laws, business structuring formation, employment issues, and involving government agencies, including state and federal agencies.
Transcript:
Sara Shanti:
Welcome to Health-e Law.
Phil Kim:
In today's episode, we're discussing the evolution of preventative care and the innovation that's propelling change.
Sara Shanti:
I'm Sara.
Phil Kim:
And I'm Phil.
Sara Shanti:
We're your hosts today. We want to thank you for joining us.
Phil Kim:
We're pleased to have Steven Collens with us today. Stephen is the CEO of MATTER, a premier healthcare incubator and innovation hub. MATTER is well established in the healthcare industry as it nurtures entrepreneurs and innovators building next generation health tech and innovative medical devices, diagnostic, and biopharma technologies. MATTER has worked with more than 800 healthcare technology ventures, and the company partners with dozens of industry leading companies, health systems, and universities. Steven, thank you so much for joining us today.
Steven Collens:
Thanks for having me.
Phil Kim:
So to start off, we know that there are many challenges that startups face. One of them that they face, along with innovators generally, is that to develop a strategy, and to get from a great idea, and then put it out into the market and onto the shelf, there are challenges that you all at MATTER help them work through on a daily basis, including at the very core of some of the issues being funding and reimbursement. Can you tell us a little bit about what markers for success look like for you and for MATTER, and what challenges you see?
Steven Collens:
Sure. So fundamentally, something that you touched on, I think is one of the core challenges that healthcare innovators face. It is because of the very strange way that our healthcare system is organized, relative basis, it is easier to build something that improves health than to build something that the healthcare industry will pay for.
So that creates this somewhat unique in the healthcare industry challenge or unique to the healthcare industry challenge for entrepreneurs who have to almost come up with the business model first or simultaneous to the development of their solution. Because if they get too far down the road building a solution that can improve health, there is a chance that if they haven't really thought through the business model that it's just there's simply nobody is going to pay for it.
And I realize that sort of sounds like something that presumably you would hear in any industry, but in healthcare, it's just different. In other industries, if you build something that solves a problem, there is somebody who's going to pay for it. And it doesn't mean you can make a viable business out of it. There's a lot of variables that go into creating a successful business and it's hard regardless, but somebody will pay something for a solution that solves a problem. And in healthcare, that just doesn't hold up. You can build something that solves a problem, and literally nobody will pay anything for it because of just the weird dynamics of and the economics of healthcare.
Phil Kim:
Yeah. You see from that certain markers or indicators of success for some of your entrepreneurs as, is it really just making sure that they have the business model built out first? And for those who think ahead, they're the ones that you see being most successful within MATTER?
Steven Collens:
We look for entrepreneurs who are trying to solve something that is meaningful and can make a big difference to improving healthcare. And we look for entrepreneurs that have a real passion behind that. And we look for entrepreneurs that not only just have that passion behind that, but have a level of tenacity, and flexibility, and open mindsets to what it is that they may not realize they don't already know. And while there's certainly no one thing to point to that is like, "Ah, this entrepreneur is going to be really successful, and this one definitely is not," that mindset, and spirit, and energy is really fundamental any of the healthcare entrepreneurs to succeed.
And part of the reason for that is that most of the businesses that entrepreneurs think that they're starting don't end up being the businesses that they ultimately build that are successful. They have to adapt, and shift, and adjust, and pivot, and iterate, and change, and that requires interesting combination of humility, but also a somewhat profound arrogance.
It's like, "I'm the one who's going to change the world and remake it to do X, Y, Z." You have to have a certain level of that, but then you also have to be really humble in internalizing the fact that you're probably wrong, at least in the beginning, for what it is that you're really trying to do. And that's a little hard to just pin on a cork board. But that's something that, if you look across the companies that have been most successful, share some that DNA.
Phil Kim:
Seems like all the more reason to work with an incubator like MATTER because there's so many different, as you mentioned, pivots, stop and go moments for a lot of these entrepreneurs. And so, without the experience that you're able to provide and the guidance, it seems like it would be a never-ending whirlpool.
Steven Collens:
I mean, look. There's a lot of great organizations out there. I am a little bit biased in thinking that MATTER is the best, but we've got hundreds of subject matter experts and mentors who work with our startups, and they have just a tremendous amount of expertise and experience in the industry, and building companies in the industry, and just understanding how the industry works.
We have serial entrepreneurs who can be coaches and advisors. We've got senior executives from insurance companies, and from health systems, and life sciences companies who bring a perspective of, "Here's how the world actually works. So this sounds great, but here's all the 15 reasons why it's not going to work. But maybe if you try adjusting X, Y, Z, and then get to something that ultimately does work."
We have a lot of classes and content, a lot of investors we work with who just have, many times, very broad and interesting perspective of what they've seen working and some of the patterns that they've seen struggling. And you're right. I mean, I do think it can be really helpful for most entrepreneurs to work with an organization like MATTER as they go through these iterations, and changes, and evolutions of their company. And we like to think that we can help them do that more efficiently, they can get to the end of that process faster, and that ultimately, that they can be more successful.
Sara Shanti:
Segues perfectly into this idea of regulation and regulators who are trying to continue to evolve with healthcare technology to ensure that there are safeguards and guardrails. So as technology moves so quickly, much faster than the pace of government, generally, how are you seeing innovation moving policy or creating policy? And we'd love to hear what you are anticipating on seeing, especially after this election year.
Steven Collens:
Such an interesting question. I am going to revise my statement about arrogance because it sounds very negative and I don't mean it in a negative way. So maybe I'll revise it to hubris. And that also has the benefit of alliteration. So maybe it's a combination of humility and hubris. That said, when it comes to regulators, the evolution of technology outpaces the changes in the regulatory, and reimbursement, and policy frameworks that govern much of how healthcare works. And it's always like that. It probably has always been like that. The thing that's happening now is just the pace of change is accelerating because of just what technology can do now.
So right now, it's pretty far ahead in a lot of cases of the reimbursement, and the policy, and the culture of healthcare. We have always had a healthcare system that is reactive and that is episodic. People engage with the healthcare system when something breaks, something goes wrong, they're symptomatic, there's an issue. They engage with the healthcare system which responds to whatever it was going on and, in many cases, fixes it. Then they tend to disengage from the healthcare system until something goes wrong again. And that's not an effective scenario to keep people healthy, or manage chronic diseases, or really focus on well-being and wellness.
Technology already exists today to transform healthcare into something that is predictive, and proactive, and personalized, and can inform somebody that something is likely going to break down before it actually does. The challenges are that, who pays for these new kinds of technologies? Who regulates it? How does it get into the hands, and into the workflow, and into the practices of the very large infrastructure that exists to support healthcare in the United States, and really, around the world? There's an inherent tension between the new technologies and the regulatory and reimbursement.
Sara Shanti:
Any creative solutions or examples you've seen, top of mind, putting you on the spot here, of how there was a really novel product or idea that had some early success in securing reimbursement, where it was outside of the traditional model, before they entered the market?
Steven Collens:
There's a company that provides... It was started by gastroenterologist who would see his patients with really severe inflammatory bowel disease, and he would see them on whatever regular schedule it was. And not infrequently, he would get a call from the hospital saying, "Hey, one of your patients is really not doing well. They're here. You need to come check them out." Turns out they end up needing surgery.
And he believed that if he had a way of engaging with people on an ongoing basis, not so episodically, as to when they showed up at his office once a year, or once every six months, or whatever that framework was, that he could have headed that off and he could have helped manage their condition such that they didn't deteriorate to the point where they needed surgery.
So he developed a system, works pretty simply. A lot of analytics and stuff underneath it. And essentially pinging patients, asking them a few questions, they fill it out, it goes through an algorithm, and then there's a dashboard in the gastroenterologist's office that shows which of the hundreds of patients that the doc is seeing at any given time, what the panel looks like, which ones are most at risk of deteriorating in the near future, so that the office can then reach out, schedule an appointment to try to intervene.
So we studied that with one of the Blue Cross plans, and the results were great. It reduced hospitalizations by 50%. The patients were a lot happier. The insurance company was happier because the cost went down by 20 or 30% in aggregate. Seems like everybody wins. They had to create a reimbursement model for it, which they did with that insurance company, such that there was an incentive for GI practices to essentially sign up for a newer payment model, and they'd use this technology to inform how they manage the patients and they were at risk. But this technology helped them ameliorate that risk, and so they could make money, and the insurance company could save money, and the patients were healthier, and it's a beautiful story.
Except then he goes out and tries to sell it to lots of other insurance companies. And it turns out that for most insurance companies, inflammatory bowel disease isn't one of the top things that they're trying to figure out how to manage. It depends, because they have different patient populations and different mixes, but it might be something like diabetes, or obesity, or smoking, or hypertension. It's these big things that affect lots of people and they have lots of costs.
And so, something that doesn't affect as many people, even though on an individual basis might drive significant cost, it's just not a large enough population that most of the insurance companies were willing to put in the tremendous amount of work that's required in order to make something like this work in the real world. Because it's not as simple as just sending out an email, and flipping a switch, and turning it on. There's all sorts of stuff that has to happen and it takes a lot of work on their part.
Sara Shanti:
And it makes sense where it's a physician innovator or a medical professional innovator, that they're able to take technology and really apply it to a patient first mentality or really solve a patient issue or an operational issue. Can you speak a little bit, Steven, to how some of them were tech innovators or those innovators that are not necessarily as familiar with on the floor of a healthcare system, how important it is and how they ensure that their technology is that patient first mentality, when we all know the point of healthcare tech is to have better outcomes and to hopefully lower the expense of the industry?
Steven Collens:
The challenge that people, especially coming from the tech industry, you mentioned tech folks coming in, the challenge that they have is that the way that healthcare operates is very different. So somebody can have built really successful non-healthcare technology companies. And again, that balance of hubris and humility, they come into healthcare and you got to have a pretty heavy amount on the humility side in order to be open to really understanding what you don't know and how healthcare works.
And a lot of entrepreneurs come into it thinking, "Oh, well, I can fix problems in X, Y, Z industry and A, B, C industry, and I'm just going to take that expertise and do it into healthcare." And sometimes that works if they come with the right attitude, and the right mentality, and the right approach, and they bring, in many cases, tremendous capabilities, and expertise. But healthcare is just its own world in a lot of ways. And so, those folks who don't come from the healthcare industry really need to make sure that they are surrounded with people who have that knowledge, and can push back, and question, and move, and push the company in a direction that ultimately can have a viable business.
Phil Kim:
Yeah. Love it. Steven, thank you so much for providing your insight and sharing your wisdom with us. We're certainly excited about the future and what health tech has in store for all of us, and we're all in this industry because we feel the same way, that it really does matter. So thank you again, and thank you all for listening.
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