Can Philadelphia Be the Silicon Valley of Health Care Innovation?

Independence Blue Cross CEO Dan Hilferty thinks so.

Dan Hilferty, CEO of Independence Blue Cross

Dan Hilferty, CEO of Independence Blue Cross

Dan Hilferty has some lofty goals for Philadelphia. He thinks it can become “the Silicon Valley of health care innovation” because of it’s first-rate universities, hospitals and thriving tech and pharma communities.

And he would know. He’s the president and CEO of Independence Blue Cross, a health insurance giant that’s investing millions in innovation to figure out new ways to drive up quality and drive down costs.

But can Philadelphia’s business leaders cut through the rhetoric and make it happen? IBC is certainly doing its part.

Through its Independence Center for Healthcare Innovation (seeded with $50 million); it’s partnership with DreamIt Health startups; and it’s new collaborative with big players like Comcast, Drexel and Penn; IBC is investing serious money into promising health care startups.

I recently spoke with Hilferty about the future of health care innovation and why hungry entrepreneurs may hold the key to solving some of the industry’s biggest problems.

BizPhilly: You say Philadelphia can be the Silicon Valley of health care. What specific steps do we need to take to get there?

Hilferty: Step one. Create a buzz and get some real activity going. With a little seed money, we can find some talented, aggressive folks who know this space and then we can say “Philadelphia’s open for business.” We’ve done this with DreamIt Health. In Year One, we started with 10 businesses, trained them on running a business and helped them startup in a successful way.

Step two. We need to figure out what we need to do from a public-policy perspective to create an environment that is attractive to these startups — whether that’s how business entities are taxed in the region or how we can work with all sectors to invoke this idea that Philadelphia is a great place to work and grow a business, but more importantly, a great place to live.

If we attract more businesses, find a tax structure that would be acceptable to a startup and growing business — then a snowball starts to roll down the hill.

Tell me about successful companies Independence Blue Cross has invested in?

We and some other Blues invested in Theranos. It’s run by an amazing entrepreneur named Elizabeth Holmes who felt the blood test results her uncle needed while he was ill weren’t available fast enough. Instead of taking a whole vial of blood to do lots of testing and analysis, Theranos is basically a prick of your finger. With the amount of blood that could fill a half inch or inch capsule, they can do 70 tests and get the results back in no time. Think about how that revolutionizes health care.

We invested in a company called 1 Doc Way in a program with the University of Pennsylvania Health System and the DreamIt Health project. If somebody is having an emergency psychological or behavioral situation, they can connect to a real professional through a Skype-type mechanism to have immediate action. It originally started in battlefields and is now mainly used in rural, hard-to-reach areas.

Another is the GlowCap for seniors. The cap on a bottle of medication literally lights up when it’s time for senior to take that med. The senior could be watching a show, knitting or reading, and boom, the light goes on and it’s time to take my blood pressure medicine.

I know Independence Blue Cross is on the lookout for great startups across the country, but are you putting special emphasis on finding Philadelphia-based companies to invest in?

If there is a homegrown startup, we should put all of our collective support, mentoring and startup capital behind it to really keep folks here and have them like feel they can grow their idea right here in Philadelphia.

How do you entice companies to move to Philadelphia or stay here after they create a company?

We get them excited. They see a synergy here with like-minded people and a supportive corporate community. You combine that with the fact that a national publication listed Philadelphia as the third-best place to visit in the world, and all of a sudden, there’s that “wow.” The restaurant scene is great. The art scene is great. If somebody leaves, it’s for a reason you can’t control anyway. If we have an attractive culture and environment, they’ll stay.

It sounds like the new approach changes the fundamental business of Independence Blue Cross. Now you’re venture capitalists along with health insurers. Any lessons learned from the process?

First and foremost, our priority is to make sure we’re following a human-centered innovation concept. The things we invest the most time and money in help us serve our members more effectively.

We realize that we are not a venture capital firm. We like to say we make investments that are just large enough that we’re seen as a good partner with the innovator or new entity, but not one that puts us in a dominant position or can make-or-break our budget in a given year.

We like to say, we’re not a health care company that happens to be in innovation. We truly believe that we’re an innovation company that happens to be in health care.