This post was originally produced for Forbes.
Nonprofit Providence St. Joseph Health, the third largest health care system in the United States, traces its roots back to the Sisters of Providence and the Sisters of t. Joseph of Orange. Their missions were to serve all members of their communities, “especially the poor and vulnerable,” says Aaron Martin, 49, executive vice president and chief digital officer. That motivation now guides the system’s $150 million health care impact investment fund.
Martin, who had no health care experience before joining Providence, now leads its efforts to improve health outcomes and improve service levels using technology. Investments are made via Providence Ventures, a fund created by the parent and funded entirely by it to accelerate the digital mission. Watch the full interview with Martin in the video player at the top of this article.
So far, the fund has invested in 13 companies, two of which were Providence innovations that are being spun out in hopes that they will grow more quickly and benefit not only Providence but all health care providers.
Venrock, which raised $450 million in its latest fund, has co-invested with Providence Ventures on two companies: Kyruus and Lyra Health. Venrock partner Bryan Roberts says, “Aaron is terrific; he has the knowledge of a technology and growth savvy operator with the scale of a health system at his disposal. This allows him to bring a new lens to the change-resistant, defensive technology approach of the healthcare industry while still being grounded in the current practices and having a large sandbox in which to pressure test these new ideas.”
Martin’s background is with Amazon and McKinsey & Company and was a founder of two tech companies. At Amazon, he led the self-publishing and print on demand business and then the Kindle North American Trade Publisher business. This background helps him see opportunities to scale with the operational aptitude to do so.
“Driving innovation at scale means going digital – having customers engage and transact online with us,” he says. “In health care today, consumers transact and engage with health systems in a very limited manner. Therefore, in order to create change we must deliver a better online experience as compared to offline. In fact, this experience has to be 10 times better than what consumers are used to experiencing offline in order to entice them to work with us online.”
“We’re working to bring health care into the digital and consumer age to better serve patients and consumers – with a focus on the poor and vulnerable – delivering care on their terms: where, when and how they want it,” he adds.
There are six areas of focus that Martin identifies:
Of the 13 investments made so far, Martin describes 11 as “best of breed” that “we went out and found.” The other two were “invented” at Providence.
Providence operates in Alaska, California, Montana, New Mexico, Oregon, Texas and Washington, with $23.2 billion in 2017 revenue. “All profits go back into the system to serve our nonprofit mission,” he says. The $150 million investment in Providence Ventures came from the parent’s balance sheet.
Part of that $150 million was invested in Kyruus, which solves a problem that Martin suggests is much bigger than people expect: knowing which providers work for your hospital. When patients need to see a specialist, Kyruus helps other doctors and providers in the system as well as the patients when searching online to find the relevant physicians to get the care they need.
Funding also went to Xealth, a Providence unit that enabled physicians to prescribe digital products, from a Lyft ride to online training and education, to help patients get the care they need. By using the same process they use to prescribe meds, to prescribe digital care, the doctors are able to be more helpful to their patients and improve health outcomes.
Martin takes pride in this effort. He points out that even if the fund is quite successful and doubles in value over a decade, the financial impact will be relatively modest to such a large organization. What he really wants is to move the needle on patient care.