In early 2013, health insurer UnitedHealth Group and the vaunted Mayo Clinic in Minnesota had a big idea — to create a kind of Bell Labs for the healthcare industry. The initiative, called Optum Labs, and overseen by UnitedHealth’s IT division, Optum, would seek to leverage “big data” to improve patient care and lower costs by convening a new alliance of companies and universities that would share information, technology, and scientific expertise.
The new venture, flush with cash and a swanky Cambridge, MA office, first had to convince top healthcare players, including universities and life sciences companies, to play together in the same sandbox for the greater good. Optum Labs, led by Dr. Paul Bleicher, left, now boasts 15 partners, including medical device giant Boston Scientific and drug-maker Pfizer. (Four new ones were announced this week, including Merck.) There are currently more than 40 projects underway, including 21 launched by the Mayo Clinic. Bleicher talked to us about moving from building mode to operations mode, and attaining long-term sustainability. He also shared a few slides.
Defining the Value Proposition
Optum Labs, when it was launched, represented a big investment from UnitedHealth Group and Optum. What was the value proposition for the partners?
In the rest of the Optum business, Bleicher says, the team would have an RFP and go in and pitch why Optum is the best at meeting that need. But in this case, the potential partner “doesn’t know they need what we have, but they generally know they are willing to spend money on certain projects that would allow them to be seen as thought leaders, allow them to be associated with advances in medicine, and allow them to bring value back into the organization from learnings.”
After the initial announcement, 150 potential partners responded. But to identify key players and close deals, Bleicher and his team presented individual pitches to specific partners they hoped to attract. First, they researched challenges at the organization, then proposed how partnering with Optum Labs could help launch and advance research initiatives designed to go after those problems.
“When you have to go out and sell it, you have to understand, from the point of view of the potential partner, how is it going to be of value, how much will the value be offset by contributions I would make, and how long will it take for the value to be realized,” Bleicher says.
At the beginning, Bleicher says, Optum Labs would take any partner that wanted to participate. Now he is becoming more strategic about “filling holes.” Some of the holes he wants to fill include a large employer which is itself a healthcare payer, and health policy academics.
Shifting the Model
One of the unique features of Optum Labs is that some of its partners are also competitors in the market. This was by design. Optum Labs even has one conference room where the glass walls can be made opaque with the flip of a switch, if two competing partners are holding meetings on-site at the same time.
But that meant dealing with sensitivity about what each partner might share. Bleicher said Optum Labs initially envisioned that each external partner would share data, such as anonymized patient information gleaned from clinical trials. But some potential partners balked.
“It became very quickly obvious that that wasn’t necessary,” he says. “There were organizations that could come in and bring a lot of value without actually contributing data. As time has gone on, our focus on data has become a strategic concept. We’re not just taking data from anyone that comes in, we’re assessing what data is really needed.”
Another key change in the model centers on defining the drill sites for ideas, and developing a long-term revenue stream for Optum Labs.
“We had a vision initially that we would seek out the best and brightest and they would come in and they would have very particular interests, and there would be bright stars, constellations of ideas,” Bleicher says.
These constellations might have to do with a specific therapeutic indication, such as Alzheimer’s disease, or they might be more aligned with specific analytic methods, or something else entirely.
But over the past nine months, Bleicher says, it became clear that it made more sense to ask large partners to sponsor a specific constellation of interest, and then attract complementary partners, such as academic researchers, clinicians, health IT firms, and employers to also work on the constellation.
One reason for the shift is to help Optum Labs pay for itself long-term, following the initial investment from UnitedHealth Group.
“It became clear that the best way to build the organization we want is to become sustainable and that would require investment from the partners that were going to join us,” Bleicher says.
Currently, Optum Labs has one funded constellation focused on congestive heart failure, sponsored by Boston Scientific. The medical device company will collaborate with other external partners, such as academic researchers, to advance research that will hopefully yield new devices, processes, or health IT apps.
Bleicher hopes to have another two or three funded constellations by the end of 2014.
Drafting the Rules
One important way that Optum Labs differs from innovation shops at other large companies is that often two or more organizations share ownership of intellectual property and other assets that result from research projects.
“If you want three kids to share a big piece of cake, one splits it in half, the second one chooses a half, then the first two divide each half into three parts. The third kid picks one from each of them. It forces them to do it fairly. It’s the same concept here,” Bleicher says.
This means the parties create a statement of work for any project. It contains a description of research, the intellectual property contributed or expected to be produced, and an agreement of who owns what and how it is to be divided. Optum Labs is one of the partners, and will have the opportunity to realize royalties from innovations incubated there.
Bleicher said there have been some bumps in the road as Optum Labs begins solidifying its standard operating procedures. Some of the hiccups are purely technical — like setting permissions and passwords for certain data, and getting software to run on different computers.
Others have to do with better deploying staff to meet changing needs. Optum Labs is working to streamline how partners submit research proposals, how they are reviewed, how partners are trained in using the database, and how they are trained in privacy. Bleicher says that as the number of partners and projects grows, he envisions having an “account manager” for each partner. Bleicher says they are hiring to fill some holes, and reconfiguring staff to better meet the lab’s evolving needs. He says he plans to rearrange staff about every six months.
“We’re transitioning from ‘building’ to ‘operations’ mode. We now have a bunch of partners, working on a bunch of projects and we need to make sure we help them get to the results that they are looking for.”
Bleicher says Optum Labs has an “audacious” ladder that represents its short-, medium-, and long-term goals.
Lowest rung: Optum Labs will generate dozens of important papers in Health Affairs, New England Journal of Medicine, the Journal of the American Medical Association, and other journals. Bleicher considers this the minimum bar of success.
Second rung: Optum Labs will develop innovations and spin off products and companies that will make a difference in medicine.
Third rung: Optum Labs will become the premier organization for doing innovation and research using healthcare data.
Top rung: Optum Labs will incubate one or more major innovations that change the face of medicine. “What do I mean by major?” Bleicher asks. “This is probably not in our wheelhouse, but the concept of an Accountable Care Organization or something like that. That’s our wild goal that we’d like to achieve.”
“The natural human tendency is to say, ‘OK, it’s up and running, let’s see results,'” says Bleicher. “People always ask me, ‘Has anything come out yet?’ And now some things are starting to come out, so that’s good. We have some internal goals about numbers of publications, numbers of partners, numbers of clinical translation projects and things like that. But I think everyone understands that in the real world, we’re gonna have to see how it goes and how the process is. UnitedHealth is committed to this. They’ll measure the value they get from it against the cost and we hope it will also show we are ahead of the curve.”