Closed hospital finds new life as a startup accelerator

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The second class of healthcare startups begins in November.

Call it “that old hospital” on the banks of the Ohio River in the Pittsburgh area, if you have to. But the suburban general hospital, essentially closed three years ago, has recently been reborn as a healthcare startup accelerator, enjoying the benefits of hospital-grade facilities.

Jeff Cohen, MD, first arrived in Pittsburgh in 1985, saw with his own eyes the demise of Suburban General, but now finds himself the executive in charge of the birth of AlphaLab Health, a new accelerator supporting early stage startups in their efforts to bring innovations to market, by exploring key risk points in scientific, clinical and commercial development.

“When I first came to Pittsburgh in 1985, it was the steel industry downturn, and I saw all these men who were unemployed steel workers,” Cohen says. “A lot of the Steeler Nation came from people who had just found jobs and gone elsewhere, but they were always Steelers fans.”

After resisting double-digit unemployment rates, the region began to be viewed differently.

“It has evolved into an economy of medical beds,” Cohen says. “A lot of it has to do with the persistence of the region’s educational infrastructure and the philanthropic community, that’s pretty important.” Consolidation of hospitals in the region followed, as detailed in The Next Change: The Fall of the Industry and the Rise of Healthcare in the Rust Belt, by Gabriel Winant.

“Long story short, we’ve lost ten hospitals in this area in the last ten years or so, and the question is, what do you do with a closed hospital?” Cohen said. At the time, he was president of Allegheny General Hospital, located six miles from the closed suburban general campus, owned by AGH. AGH continues to handle some of the state’s most complex healthcare cases.

In 2018, the 240,000 square foot Suburban General facility was fully closed except for 18,000 square feet of minimum use, including an emergency care center. “You could sell it, but it’s not worth much,” Cohen said. “It’s part of the bond alliances so it’s hard to get rid of it. It’s in a very poor community, which in the days of Steel was an upper middle class community.”

Executives decided to launch a ‘disruption study’ to create new healthcare businesses in the midst of this economically depressed community, focusing on the kind of social determinants of health on which healthcare in general have been concentrating lately.

Cohen assumed the title of Chief Medical Officer of Community Health and Innovation for the Allegheny Health Network, which in 2013 became a division of High health.

Thereby AlphaLab Health was born.

Jeff Cohen, MD, Chief Medical Officer, Community Health and Innovation, Allegheny Health Network. Photo courtesy of AHN.

“The biggest advantage of hospitals is that they need to have personal safety equipment, especially HVAC systems equivalent to BSL-1 and BSL-2” biosecurity levels, Cohen said.

Starting the week of October 13, AlphaLab Health is converting an old 10,000-foot intensive care unit into a wet lab, he says. “We’re putting the preamble together to do all of this – zoning, changing usage,” he says.

In return for low-cost use of the facilities, access to 2,000 AHN physicians, as well as patients, a space to test their innovations and introductions to the life science community of Pittsburgh and beyond, AlphaLab Health takes a minimum of 1% to 2% stake in each startup. “[Additionally] we coach them in the areas they need to care about in the health care system, ”Cohen said. Nonprofit startups have access to certain facilities, such as lab space, at “essentially zero” cost, he adds.

AHN owned by Highmark, a paying organization, also gives startups insight into the economics of healthcare, and for that, AlphaLab Health isn’t taking the lion’s share of equity that other venture capitalists demand. startups.

“Specifically, the University of Pittsburgh model is they have to own it all, and I’m not critical,” Cohen said. “It works for them, but it’s not good for the region.”

AlphaLab Health received approximately 80 applications before selecting the first promotion of seven startups, mainly supervised virtually during the first year of the program. As an early measure of success, startups raised more money from each other than AlphaLab Health anticipated in their initial business case, Cohen said.

The next phase of startup development is to select six other startups out of 130 applications, in early November. “We are stimulating interest in this region,” says Cohen. “For the Pittsburgh area, this is a place you can go and try your idea. If it works, great. If it doesn’t, you’re going to fail quickly, and you’re not going to spend it all. money on amenities like real estate. “

It should also be noted that Pittsburgh’s life sciences sector already has 150 companies with a concentration in medical devices and health technologies. According to AHN, from 2009 to 2019, the sector experienced 204 business expansions, resulting in the creation and maintenance of more than 22,000 life science jobs, as well as nearly $ 4 billion in capital.

AlphaLab Health won’t just inject health technologies into the Pittsburgh community, either.

“Hospitals have kitchens, and kitchens feed food insecure people,” Cohen explains. “We have other facilities where we can set up programs. We can actually measure results, and we’re starting to see a reduction in the costs of using ERs for people by doing something new like treating their patients. social determinants and feed them. “

The cost of living is “still very acceptable” in Pittsburgh, and Cohen hopes startups decide to stay in the Pittsburgh area, revitalizing its economy.

“If their ideas are successful, we will create [investment] cycles to get them to the minimum viable proof of concept of the product, ”he says.

The old hospital even lends itself to a makeover for little money to meet the needs of startups.

“We took the old patient rooms, cleaned them, took out the beds, stuff like that,” Cohen says. Add some paint and some of the large office furniture salvaged from the warehouses, and “it looks like an office with a private bathroom,” he adds. Add a $ 300 TV to the wall of a larger room and “suddenly you have a top notch conference room.” There is also ample parking outside.

“It was a really fun project,” Cohen says. “It just shows that there is a relationship between health care outcomes and the economy when the hospital closes. The three-dimensional physical building can be reused for a lot of things.”

The effort has even gained national attention, as AHN can do it all at a very competitive price, he adds.

Scott Mace is a contributing writer for HealthLeaders.


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