Medical Oasis

Hospital groups throughout the region are transforming their business models to create, test, patent, and manufacture the next generation of drugs, therapies, and diagnostic tools. So what’s the side effect? More jobs.
Henry Ford Health System’s new Innovation Institute in Detroit will drive the creation of business, patents, and jobs. Photo by Justin Maconochie

A few years ago, Dr. Alvaro Martinez, then corporate chairman of radiation oncology at Beaumont Health System in Royal Oak, wandered into a hotel conference room where Ford Motor Co. engineers were meeting — a rather different crowd than the medical group he’d been looking for.

Turns out, it was a fortuitous accident. Sitting in the dark, listening to auto engineers discuss how imaging could help them discover defects in an engine block too difficult to detect with the naked eye, Martinez had a light-bulb moment. He realized the same approach could be applied to medical care.

The accidental discovery led to the development of the next generation of radiation treatment for cancer patients. Called OmniBeam, the robotic technology uses real-time CT imaging to automatically adjust the radiation field during treatment. The new method not only accounts for normal patient movement during treatment, but also allows technicians to more precisely target a tumor and avoid damaging healthy tissue. It also cuts treatment time from the usual 90 minutes to just 20 minutes.

Now patented by Beaumont doctors and physicists, the technology is sold as a $3.3-million machine manufactured by Stockholm-based Elekta Axesse and sold around the world. “It’s just that type of cross-fertilization — the accidental intersection of a technology driven by a need that can lead to a new device,” says Thomas Anderson, director of entrepreneurism at Automation Alley in Troy, the state’s largest technology business association.

But if that accidental intersection relies on coincidence, luck, or the rare “aha moment” in a dark conference room, some metro Detroit health care leaders are wondering what might happen if they make innovation a more deliberate practice — mashing design, engineering, and manufacturing expertise with medical practice to produce new products, processes, technologies, and software. That steady stream of new products could improve patient care and also, the theory goes, provide an innovation engine that drives the creation of businesses, patents, and jobs.

“What we’re attempting here is not just improving hospital efficiencies and patient flow,” says Dr. Madhu Prasad, a surgeon at Henry Ford Health System in Detroit and director of its new Innovation Institute. “We have a very clear tech transfer and business development imperative.”

Now in the invention business, the goal of area medical systems is to improve health care and burnish Detroit’s standing as an international hub of creativity. To be sure, Henry Ford opened its Innovation Institute at its flagship Detroit campus in October, while Beaumont recently set up a commercialization unit that oversees the development and patenting of new technologies such as an automatic breathing control system used for cancer treatment. In 2007, the University of Michigan Medical Innovation Center in Ann Arbor was created with collaboration from a group of schools — including medicine, business, dentistry, engineering, clinical, and health research — and the Office of the Vice President for Research.


“The idea is not to have a bag full of hammers to try to find the right nail, but a structure to bring all the backgrounds together and a process to identify opportunities,” says Scott Olson, director of the U-M Medical Innovation Center.

Since its creation, the center has spun off two companies — Tangent Medical Technologies, an intravenous fluid delivery device-maker, and another company that was launched in June and is now undergoing product development. The University of Michigan also purchased the former Pfizer research campus last year, so the institution can take a far more active role in inventing and testing drugs, therapies, and diagnostic tools. Now called the North Campus Research Complex, the facility will assist researchers in creating spinoff businesses.

That type of inventive splicing isn’t new to Detroit. The world’s first operational mechanical heart was developed in 1952 by a surgeon at Harper University Hospital at the Detroit Medical Center, in tandem with researchers at General Motors Co. More recently, Ford began building sophisticated Web-connected apps in vehicles that will detect things such as pollen levels in the air for those who suffer from allergies. And area hospitals have been improving processes (and, subsequently, internal morale and patient satisfaction) by adopting lean techniques that started inside automotive factories.

What’s more, interest is growing to spur cross-discipline innovation in the health care sector, Olson says. During the past five years, leading health systems such as Kaiser Perma-nente have ramped up centers geared toward innovating health care with an eye toward tech transfer and business development.

Five years ago, Oakland, Calif.-based Kaiser Permanente won a grant to connect health care innovators nationwide, which led to the creation of the Innovation Learning Network (ILN). The group now includes some of the largest health care systems in the nation — Henry Ford Health System, for example. The idea is to connect disparate groups of medical professionals to spur idea-sharing and collaboration. “Up until 10 years ago, everybody was siloed off,” says Chris McCarthy, director of ILN and an innovation specialist at KP’s Sidney R. Garfield Health Care Innovation Center. “We were all very afraid of intellectual property and competitors.”

The big transformation came with the monumental task of delivering treatment to ever more patients in safer, faster, and less expensive ways. “There’s so much to do in health care right now, we can’t solve the problems on our own,” McCarthy says. “Everyone is trying to put together (a plan) to manage (national) health care reform. We’re going to get 30 million new people to care for, and we’re starting to think about how innovation can help us do that.”


Health care was also ripe for the type of leap forward the new centers allow. Despite the creation of ever more expensive and powerful medical devices, “not much has changed in hospitals since the 1950s,” McCarthy adds. Hospital leadership is realizing that creating a structure and networks to tap into support can help them move ideas along that can produce solutions to seemingly intractable problems.

There are other drivers of the phenomenon, as well.

A massive investment has been made by the federal government in the National Institutes of Health and to universities to fund the type of research the centers support, U-M’s Olson says. U-M alone has $1.3 billion in funded research within its walls — and more than $500 million of that is within the medical school.

“There’s an expectation from the funders, and a commitment to make those research dollars translate into something that impacts health,” Olson says. “It’s the culmination of many technologies, and finding a way to work together is one of the driving factors.”

The investments in new technologies and health care spinoffs make sense for many nonprofit health systems, as well, says Jeff Lutz, a principal in the Detroit office of Deloitte Consulting LLP. As much as half of a nonprofit health system’s income comes from investment. Similar to insurance companies, large nonprofit health providers have a large amount of retained earnings. Creative investment opportunities that feed the system’s mission — and benefit their ecosystem of vendors, physicians, and other constituencies — are increasingly important. Health care systems are “great laboratories, and in a great position to perform clinical trials and recommend new treatments. They’re customers (of medical device and technology companies) and they have a need on the balance sheet,” Lutz says.

All of these factors have led to a surge in creative thinking and activity in the medical sector. “Worldwide, there are hubs that are starting to develop that all have their unique attributes,” Lutz adds.

And Detroit is becoming such a hub, area health care leaders say.


In Detroit, technical advances can quickly propel innovation beyond hospital walls. In the city that put the world on wheels, highly educated and skilled engineers are plentiful, as are industrial designers and IT experts used to handling large databases of information. The cross-section of industry talent means innovation can be a multiple-lane highway.

“We have unique partners that can catapult the inventions in ways that other markets can’t,” says Robert Riney, president and COO of Henry Ford Health System. “I think about what other place in the country can provide best-in-class engineering and design, and I start to get really excited.”

If  Detroit has the talent, it also has the sophisticated facilities and labs that corporations and inventors alike need to develop products and processes. For example, the U-M Medical Innovation Center offers advanced design and prototyping labs that expedite medical creativity and R&D, while tech transfer services and a host of business support services smooth the transition of technology creators to funded startup status.

The Smart Sensors and Integrated Microsystems (SSIM) lab at Wayne State University, led by Greg Auner, which partnered with Henry Ford Health System on the Innovation Institute, allows similar prototyping and provides access to veteran scientists who can develop materials at the molecular level, then quickly prototype and prepare them for testing. Other area facilities offer similar services. “We not only (can) make the precision parts that function repeatedly and reliably, but because of the supplier and manufacturing community … we’re able to manufacture some of those same devices at a lower cost,” Automation Alley’s Anderson says.

Detroit is also a logistics hub, which enables the efficient flow of materials to nearly any- place in the world. And while the region has multiple assets that drive innovation, institutions and health systems alike have been operating in silos, Riney says. The building of a space that throws multidisciplinary teams closely together is a necessary step toward allowing workers’ creativity to breach the silos, thereby making it possible for them to start working toward a common interest. “Why shouldn’t Detroit do it? Shame on us if we don’t,” Riney says.

Henry Ford Health System is investing $12 million in the development of its Innovation Institute. Positioned symbolically in the middle of Henry Ford Hospital’s Detroit campus, in a three-story Albert Kahn-designed building formerly known as the “Old Ed” building, the institute features a glass-walled hub for design experts and core “innovators.”


The design experts, many from the College for Creative Studies in Detroit, will be like wandering sponges, following doctors around the hospital and cross-pollinating ideas in the hub with engineers, surgeons, and device manufacturers to find improvements to any number of health care delivery quandaries.

Other collaborators include the University of Chicago, Carnegie Mellon University in Pittsburgh, and Auner’s Smart Sensors and Integrated Microsystems program.

That latter offering, led by Auner, is focused on making tiny sensors and integrating them with micro-machines that can be used for everything from diagnosing and treating patients with breast cancer or Parkinson’s, to allowing blind and deaf people to see and hear, to detecting contaminants in food supplies or drinking water and proteins associated with brain trauma.

Auner, along with Henry Ford’s Prasad and Vincenzo Iavicoli, chair of the product design department at the College for Creative Studies, are the founding innovators at the institute. The institute is already working with aerospace giant Lockheed Martin Corp. and Wayne State to pursue a $20-million grant from the U.S. Defense Advanced Research Projects Agency to develop a blood-filtering system for soldiers suffering from bacterial infections contracted through combat wounds.

The institute is also pursuing another large grant with the same agency to develop a portable device that could detect proteins related to brain injuries in soldiers. That project involves a half-dozen Henry Ford Hospital groups, Prasad says.

The long-term plan is to develop broader relationships with other medical device manufacturers and technology companies such as Texas Instruments, Alcatel-Lucent, or General Electric, in a bid to leverage the local and national networks of innovators.


All of this drives forward Henry Ford’s medical mission, as well as a larger project to boost the region’s standing as an innovation leader. “It puts Detroit on a path to its roots — what made this city thrive,” Riney says. But the business case is also compelling. He estimates the economic return at the institute will be anywhere from four to 10 times greater than the initial investment. “We think we can beat that number significantly, but even if we don’t, that’s a significant supplement to our portfolio,” he maintains.

Licensing patented technologies developed by the institute, as well as equity stakes in spinoff companies, are the most likely source of revenue. The automotive industry also figures prominently in the development equation, a relationship Prasad calls a “natural partnership.”

In addition, the institute is creating a series of events that will pull together designers, engineers, entrepreneurs, and medical professionals — along with divergent end users like racecar drivers and astronauts — to spur conversation and brainstorming. The connecting thread is that attendees and presenters are innovating the space they occupy.

An upcoming theme of one of the events is failure, Prasad says, explaining that innovation doesn’t happen without a safe place for failure. “It’s really to create those collisions between people working in parallel worlds who come together to bring a multidisciplinary approach and new ways of thinking,” he says. “It’s those kinds of collisions that will help shape Detroit’s future.” db

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