Northwell Ventures turns employee ideas into products

A vinyl attachment sewn onto hospital curtains is Northwell Health’s latest weapon against infections, and a symbol of the health care system’s effort to grow revenue by tapping employee innovation.

The Hand Shield was devised by Lorenz Mayer, a sanitation administrator at North Shore University Hospital, to make curtains easier to clean. It is being rolled out to the system’s 21 hospitals and has been sold to 20 others nationwide.

Northwell Ventures, a 3-year-old unit that aims to spawn new businesses, shepherded Mayer’s idea from concept to final product.

Northwell Ventures hunts for promising ideas from the nonprofit health system’s more than 61,000 employees. In addition to its work on The Hand Shield, it has created three for-profit companies. The initiative is part of a broader trend that has seen dozens of venture capital arms started by health care systems around the country.

Their aim: to find an edge in an increasingly competitive marketplace.

Michael Dowling, chief executive of Great Neck-based Northwell Health, formerly known as North Shore-LIJ, said the goal is to create a path for new ideas within the organization and to generate fresh income as government and insurance companies press for improved care while reining in fees.

“We’ve got to find other revenue streams,” he said. “It’s also great from a morale viewpoint across the organization.”

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Northwell Ventures has invested nearly $3 million in fledgling businesses, including a smartphone app and a drug trial company.

“The pace of innovation needs to exceed the pace of change,” said Tom Thornton, senior vice president and executive director of Northwell Ventures. “The time to change is when times are good . . . not when change is crushing you on the shores of the beach.”

Seeing a simple solution

With a research budget of $135 million, Northwell’s innovations are usually produced by the 800 researchers at its Feinstein Institute for Medical Research. But in Mayer’s case, it was about finding a simple solution for a growing problem.

As assistant director of support services for Northwell’s Manhasset hospital, Mayer — known around the hospital as “Buddy” — oversees about 270 employees who sanitize patient rooms and handle the hospital’s high volume of laundry.

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Three years ago, after receiving calls from clinicians concerned about the potential spread of infection to patients from hospital privacy curtains, Mayer wanted to see if there was a way to help.

“There was literature coming out at the same time, real PhD papers on how contaminated curtains are,” said Mayer, a 13-year veteran at Northwell.

According to a 2012 study in the American Journal of Infection Control, “Privacy curtains are rapidly contaminated with potentially pathogenic bacteria,” including antibiotic-resistant MRSA. The study found that 95 percent of tested curtains showed contamination within one week.

Since the curtain fabric can’t be disinfected on the spot and must be sent off-site for washing, Mayer said, the only way to address the issue was to remove a curtain, find a replacement in storage, and attach it. The task takes about an hour.

“We get about 200 turnovers a day here, so 200 hours is not a worthwhile investment in labor,” he said.

Mayer, 57, a graduate of Smithtown High School West, was reared on a farm. He and his brother would make extra money trapping rats for neighbors. For a few years as a teen he raised and plucked ducks. At 17, he took a position as a janitor at St. John’s Episcopal Hospital in Smithtown, where he worked his way up to become the director of environmental services.

During his 20 years at St. John’s, Mayer worked several additional jobs, including stints as an ironworker and an assembler at a snorkel factory.

Growing up poor taught him the value of work and fixing problems on his own, he said.

After observing how doctors used the curtains, he noticed something: everyone grabbed them by the edges. “I just needed something on the end,” he said.

Two weeks and one failed attempt into his science project, Mayer noticed the plastic surface of a hospital mattress, and had an idea to create a curtain with a cleanable fabric sewn to the end.

A $56 experiment

With approval from his boss, senior director of support services Chris Boffa, Mayer contacted Curtain Care Plus, the hospital’s curtain vendor, to see if it could sew a vinyl sleeve along the length of two curtains’ edges. The request cost the department $56.

To test it, Mayer installed the prototypes in a room with the most infection-prone patients to observe clinician behavior.

He later expanded the experiment to include 20 curtains in the intensive care unit, disinfecting the vinyl surfaces regularly with cleaning solutions including bleach, detergents and germicides, to test their durability.

Although Mayer didn’t think something so “obviously simple” could be new, he was surprised to find that not only did no patent exist for such a product, but Northwell executives were very interested, he said.

“Everyone looked at him like, ‘Wow, that’s a really good idea,’” Thornton said.

After hearing about “Buddy’s curtain,” the Feinstein Institute’s Office of Technology Transfer filed a provisional patent for the vinyl attachment. Curtain Care Plus was given an exclusive licensing agreement to make and sell the newly named Hand Shield.

Based on sales numbers from the last 18 months, revenue from The Hand Shield is expected to reach or exceed $1.3 million over the next five years, with Northwell to receive a 10 percent cut, according to projections from John Mazzaccaro, vice president of sales and marketing at Curtain Care.

Under Northwell’s intellectual property policy for employee inventors, Mayer could make 40 percent of that licensing revenue. Instead, he chose to split his potential revenue with Boffa as a “fair” thank-you for his encouragement.

Curtain Care is in negotiations to sell The Hand Shield to 30 more hospitals.

“I’ve worked for other places, and they’re just not as open-minded when it comes to changing or having something new,” Mayer said of the more than yearlong process that led to commercialization of his invention. “I think it just came at the right time.”

Dowling said that as government payment plans squeeze health care providers, innovations funded by venture capital can grow and diversify revenue streams.

Taking an ownership stake

Attorney Michele Masucci, Jericho-based group leader of Nixon Peabody’s health care practice, said venture capital can offer health care systems an ownership stake in technologies that reduce costs and improve patient care.

“The hospitals are saying: ‘Why not be an owner . . . instead of buying this?’”

St. Louis-based Ascension, which says it’s the world’s largest Catholic health system, was an early adopter of the innovation model, forming a venture capital arm in 2001. Senior managing director Matt Hermann said Ascension and seven other health care systems combine forces in the venture unit, which has invested in 54 companies.

Government payment rules increasingly are casting health care systems in the role of general contractor, paying, in a hypothetical example, $25,000 for a knee replacement, which also includes follow-up care such as physical therapy.

“You manage the continuum of care, because you’re going to have to figure out which providers are best,” said Patrick Pilch, a managing director at BDO Consulting, which counts Northwell as a client. “You’re almost seeing regulation, innovation and reimbursement coming together at the same time.”

Ascension’s Hermann said the effort to cut the cost of health care and elevate levels of quality for families and patients is a tricky business.

“We’re trying to repair a plane while we’re flying it,” he said.

When it comes to deciding what projects are a good fit for Northwell, Thornton said an invention or service has to enhance patient care within the health care system.

“We are not purely financial investors,” he said. “We’re not going to invest in something . . . where we don’t have a clear interest in using it inside our own system.”

Northwell’s Dowling said he began exploring a venture capital unit about nine years ago after being peppered by employees’ new ideas.

“It became obvious to go to the next step,” he said. These days Northwell schedules regular employee innovation days where workers can pitch their ideas.

Though Northwell Ventures’ initial projects have been funded from internal cash flow, Dowling said the unit could evolve into a more traditional venture capital fund that finances new companies — including outside startups — through pools of cash raised from investors.

Spinning off companies

Dowling said Northwell hopes to spin off five or six new companies a year and that talks are underway with venture capitalists who could join investment rounds.

“Ascension is further ahead, but there’s nothing to suggest we can’t be at that level,” he said.

Companies that have spun off as a result of Northwell Ventures’ work include: Vanguard Research Group, which conducts clinical trials for drug companies; HealthFlix, the mobile app created by a Lenox Hill neurosurgeon that simplifies discharge instructions by providing patients access to video recordings of doctor visits; and Health Connect Technologies, which lets physicians outside the health system monitor referrals and collaborate with other doctors.

Early-stage projects showing promise are 3D printing of living tissue implants for thoracic surgery, and the Neural Tourniquet, a bioelectronic medical device that can stimulate nerves to reduce bleeding, Thornton said. Both developments are products of Feinstein research.

“There needs to be a culture around [innovation], but there needs to be a central organization to take that and figure out what to do with it,” he said.

While Mayer has yet to see his share of revenue from The Hand Shield — the cost of patenting needs to be recouped first — he said the process has had some unexpected intangible impact on his day job.

“I do find people open their ears a little bit more,” said Mayer. “I was always the housekeeping guy. Now I’m the housekeeping guy with a good idea.”