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UPMC and the University of Pittsburgh Formalize their Collaboration on Healthcare Commercialization

February 24, 2015
by Mark Hagland
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Pitt and UPMC have entered into a formal, long-term collaboration for the commercialization of research-based products and services

On Feb. 20, the University of Pittsburgh and the 21-hospital University of Pittsburgh Medical Center (UPMC) health system announced that the two organizations had entered into a new agreement designed to accelerate the commercialization of intellectual property arising from the research activity of Pitt faculty. “The partnership,” the press release stated “is intended to speed the commercialization of new medical technologies and services, offering the dual benefit of bringing medical advances to the public more rapidly and supporting new business startups, with the accompanying economic benefits for the region.”

The press release also noted that the agreement “builds on Pitt’s core mission of impacting society through knowledge, and it is part of UPMC’s long-time strategy of commercializing innovation to improve patient care while generating revenue to reinvest in its world-class healthcare and research, and in the communities it serves.”

The agreement, says C. Talbot (Tal) Heppenstall Jr., president of UPMC Enterprises and treasurer of UPMC, is only new in its formalizing processes that have long been encouraged in both organizations. Of course, the University of Pittsburgh and UPMC have a long, mutually entwined history on which to build. Back in 1986, the University of Pittsburgh formed what it called its medical and healthcare division, beginning by bringing the Western Psychiatric Institute and Clinic under the Pitt umbrella, and encouraging the clinical research conducted there, to benefit the university. In 1986, Pitt’s leaders created the University of Pittsburgh Medical Center organization, and over time, UPMC began adding many more hospitals to its community, reaching 21 total today (plus more than 500 medical clinic sites within the integrated health system, which covers a broad swath of western Pennsylvania). The two organizations became formally separate entities in 1998, but have continued to collaborate extensively on academic and clinical research all along.

With up to $40 million per year earmarked for this collaborative work, the new partnership is one of the largest in scope of its kind in the United States between a university and a health system.

Tal Heppenstall spoke recently with HCI Editor-in-Chief Mark Hagland about the Pitt-UPMC partnership and its implications for the future. Below are excerpts from that interview.

When did UPMC Enterprises come into existence?

In October. What we did was that we split our old international and commercial services division into two pieces. One was international; and the old commercial services division became UPMC Enterprises. The international aspect goes back to the 1990s; among other things, we manage a hospital in Palermo Italy. So this really is just a reorganization and a focus of both efforts.


C. Talbot Heppenstall, Jr.

What is the vision behind this agreement with Pitt?

Both the university and UPMC are very focused on commercialization. The efforts go back to the creation of the Stentor PACS [picture archiving and communications system] solution, which is now Philips. That was created in 1999 and sold to Philips in 2005. It was based on research that took place at Pitt.  It’s one of our biggest successes, but also an example of what we’re trying to do today. The agreement now changes the relationship to allow us to move more quickly; so instead of having to develop an individual contract for each collaboration, this streamlines the process for everyone, including for the faculty, so they know this is something the university wants to focus on and UPMC wants to focus on, and moves it up on their radar screen, we hope.

The history of the Pitt-UPMC collaboration goes back even beyond the founding of UPMC as an organization, correct?

Yes. Way back in 1973, Dr. Thomas Detre came to Western Psych [the Western Psychiatric Institute and Clinic, part of the current UPMC system] as director and as chairman of the Department of Psychiatry at Pitt; and in 1982, he became the University of Pittsburgh’s associate senior vice chancellor for health sciences; today, he would be called senior vice chancellor for the health sciences. Western Psych was a research institution, basically, and Dr. Detre’s vision was to take the revenues to support research.  Beginning in 1986 with the creation of the University of Pittsburgh Medical Center, an affiliation agreement created at that time provided for all 3,500 University of Pittsburgh Medical School faculty members to instated as UPMC clinicians. And the Pitt medical school has the fifth-highest NIH [National Institutes of Health] research funding in the country. So the history of this academic/clinical research collaboration is a long and rich one.

What are you hoping to create going forward? How would you articulate the core mission of this partnership?

It is to create solutions to help improve the cost and quality profile of American healthcare. We’ve had many successes already. The first example under the new agreement is a prostate cancer test. This one is still under development, and we’re licensing the technology and sometime over the next several years, we’ll make it a commercial test. The purpose of that test is to determine whether the prostate cancer you’ve been diagnosed with, needs to be treated or not. For example, my uncle was diagnosed with prostate cancer, and the radiation treatment hurt him more than the cancer. And my father-in-law has done watchful waiting and is fine. The data shows that 87 percent of men die with prostate cancer, and only 4 percent die from it. So for most patients, it’s better not to treat it. So this test will identify the cohort of patients who do not need treatment. And we believe it will improve cost and outcomes.

Are there other examples you could mention of the collaborative work between the two organizations?

Historically, there was our early success with Stentor, which I had mentioned. Another example is what has happened with Omnix, which came out of the University; Omnix is a joint venture between UPMC and GE Healthcare, designed to digitize pathology. It’s currently available, and is awaiting FDA [Food and Drug Administration] approval in the United States; it was approved in Europe in 2013 by the EU [European Union]. I think they’re planning on US approval in 2017.

There are other examples of academic-clinical research collaboration around the country, such as at Cleveland Clinic, Partners HealthCare, and Intermountain Healthcare, among others. How is the Pitt-UPMC partnership different or unique?

A lot of our peers around the country are doing commercialization. The difference is, one, our track record is much longer; and two, our involvement in the companies is much larger. Many of our peer organizations do it more as an investment; they’ll own 5 to 10 percent of a company; our goal is to own much more; for example, with Omnyx, we own 50 percent and GE owns 50 percent.

How will you measure the success of the partnership going forward?

The most direct measure of success will be the commercial success. One of our strategic goals is to grow our diversified revenue stream.

Is there any possible downside to any of this?

Like any investment in a startup company, some of these are going to work, and some aren’t. But that’s a risk we’ve taken for years. We’ve invested in 59 companies, and about half of those ventures have worked. It depends on how you want to define the word “worked.”

What lessons have you and your colleagues learned so far on this journey?

I think the agreement with Pitt gives us one lesson, which is, the more we can refine these products and get them to market, the better. The other is that we want to be referred to as a living lab. Because we’re an insurer, a hospital system and a clinic system, that gives us perhaps a unique ability to solve problems. I think that’s where you see UPMC being different from other places. We’re excited to enter into the next part of our relationship with the university to commercialize these products, to improve the quality of healthcare and reduce its costs.

 


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