Live at the Yale Innovation Summit

Howard Forman: ... Forman. We’re playing it by ear. We’ve never done this before. I’ll let Harlan introduce himself in a second, but I think our game plan is to interview three guests associated with the conference. I will say in advance that the usual repartee between Harlan and I is for him to tease me a lot and for me to roll my eyes a little bit, but since we do that on audio.... See? This is funny.

Harlan Krumholz: I have no idea what he’s talking about.

Howard Forman: But since we do it on audio only, we’re a lot safer that way, but I will—

Harlan Krumholz: You mean I’m not allowed to do that today?

Howard Forman: You’re going to do it. I know you will.

Harlan Krumholz: I know.

Howard Forman: I do want to say in advance—

Harlan Krumholz: What’s the picture? I thought no one would show up. Wow, this is amazing.

Howard Forman: I do want to say in advance though that I’ve known Harlan now for 29 years. He is like the best big brother anybody could ever have. No, he has been—

Harlan Krumholz: This is a strategy so I don’t say anything bad during this.

Howard Forman: This is what I deal with every week. He can’t take compliments. No. It has been really an honor of lifetime to work with him. I met him on my interview here. He has been both a mentor, he’s a role model.

Harlan Krumholz: You’re going to make me cry.

Howard Forman: Stop. So this has been a lot of fun for us to do. We’ve been doing it for almost three years right now, and we never miss a week. I think both of us are afraid that if we skipped a week, somebody else would step in and we’d lose the—

Harlan Krumholz: I know he’s going to replace me if I...

Howard Forman: He does say that, and I think the same way. But it is a lot of fun working with him, and so we really want to just be able to replicate that today, be able to talk to the guests and also hopefully give you a little sense of what goes into even doing the podcast each week.

Harlan Krumholz: The magic. The magic.

Howard Forman: The magic.

Harlan Krumholz: So now he’s said all those nice things about me. I do think that was a strategy to tamp down any sort of, but you all know that Howie is like a legend at Yale. He’s kind of like a…There’s no one quite like him. Honestly, the institution is so fortunate. All the students are just amazed—

Howard Forman: Right back at you.

Harlan Krumholz: ... by how he invests in people. That’s the secret, right? He just invests in people. And there are so many people at Yale who are like that, but there’s only one “the Howie.” So truly—

Howard Forman: We’re lucky to have—

Harlan Krumholz: Personally, you know how much I—

Howard Forman: We appreciate it. No, I really do. I think we’re going to start off with Josh Geballe, who I have known for personally only for probably about a half dozen years or a little bit, but he’s a legend here as well. He’s a Yale College graduate. He’s a Yale School of Management graduate. He is the former chief operating officer for the State of Connecticut and really led our state through the COVID pandemic and response and did so very quietly in the background while being extremely effective. And then he joined Yale in this job as Deputy Provost for, just making up titles now, but innovation and ventures.

Harlan Krumholz: Now, no one’s going to believe anything on the podcast.

Howard Forman: Exactly. I improvise. And really has brought together so much of the entrepreneurial spirit that exists at Yale right now. And what I wrote on a LinkedIn post this week, I think is really true, and that is that you go back just 10 or 12 years, and Yale was lagging a lot of institutions in innovation and venture development. And now you look at where we are right now, and I think we’re on the leading edge of innovation for any academic campus, and a lot of it is just during the brief period that Josh has been here. So we want to—

Harlan Krumholz: We were supposed to talk in the microphone.

Howard Forman: We have to talk into the mics. That’s what they tell us. So we’ll sit, and we’ll talk a little bit. Maybe you can just tell us when you first got interested in entrepreneurship and how that even came about, what it was like when you were here at Yale versus what it’s like now.

Josh Geballe: Wait a minute. Are we going to skip the part where you guys spend a few minutes talking about what’s in the news and what you’re—

Harlan Krumholz: Well, I know big news for me this week is there’s a Yale Ventures conference.

Howard Forman: That’s right. That is the news.

Harlan Krumholz: Blowing it up. It’s just extraordinary. I’d like to figure that out.

Josh Geballe: Your pod has become a weekly part of my life, and so I’m waiting for to hear what’s on your minds, what’s going on, but I’ll wait for the recording to come out. So yeah, no, we’re grateful you guys are doing this here, too. This is fun, to have you at the Yale Innovation Summit.

Yeah, so the way I ended up in entrepreneurship innovation was out of SOM, I graduated in a dotcom bust and ended up getting a job at IBM and worked there for 11 years, but throughout that time was observing that the real innovation, the real changes that were moving the world forward were not happening at big behemoths like IBM. They were happening at these small, nimble, innovative companies, and that that’s where I wanted to go. And so I left after 11 years to become the CEO of a software startup that was doing scientific data management in the cloud, back when the cloud was new and scary, and we were fortunate to grow and ultimately be acquired by Thermo Fisher Scientific and knew at that point that the next phase of my career in life was going to be about trying to give back to the startup community and this ecosystem.

I had received so much support and mentorship throughout that journey, and everyone who’s been through that knows how hard and lonely it can be, and if you have the luck to be successful, that we all have an obligation to try to give back and help others who are just embarking on that journey.

Howard Forman: What is the role of government in fostering entrepreneurship? Is it mostly to stay out of the way? Is it mostly to—there are times where regulation helps. There are times where regulation hurts. What is the role of government in fostering entrepreneurship and having seen it from both sides now, so to speak, what have you learned about what could be done better?

Josh Geballe: Sure. Well, the government plays so many important roles in innovation. Needless to say, the vast majority of the research that goes on here is federally funded, funded through public sources. And so without that support, the work that we and other research universities could do would be incredibly limited. So that’s critical. But more localized to Connecticut, New Haven, Governor Lamont and his team have been incredibly active in trying to help ensure that we have the infrastructure here, so that when new ideas come out of Yale and when new startups are formed, it becomes a no-brainer for them to stay. Used to be that most of the startup companies that spun out of Yale left town and went up to Cambridge, Massachusetts, because they had the density of talent and lab space.

Today, we’re really happy to report that most of the companies we spin out stay in New Haven, and that’s because there’s been almost 2 million square feet of commercial lab space built over the last decade, and the state played an important role in that. Private investment played an important role in that. Yale played an important role in that. And through a couple decades now of companies growing, succeeding, sometimes failing, but the talent sticking around, we now also have the critical mass of talent that those startups can stay here, find the employees that they need, the skills that they need to scale and be successful. So I think that’s the main area where we count on the state to help seed the infrastructure that we need to have those resources for our startups.

Harlan Krumholz: Here’s a quick question for you, which is, you reach a lot of entrepreneurs. What I find is that bridging expectations is really important. Everyone’s got in their mind the seven people on Instagram who walked off with $2 billion after just sitting there and making a quick app that worked really, really well. How do you manage both maintaining people’s excitement and investment in trying to make something real and big with helping them to understand there is no easy path on this journey. The journey you’re embarking on is going to be harder than you think, because there are just so many things to overcome in being able to get there.

Josh Geballe: Yeah, it is a fine line that I think we all walk. We want to encourage people to take risks, to try to think about how their ideas and their discoveries can make a difference in the world. That’s how we move the world forward. That’s part of, I think, what we’re supposed to be doing at a place like Yale.

But at the same time, be very clear with people about what’s entailed in that and thinking about the timing and the sacrifices and the struggles that come along with that and what role, whether it’s a student or a faculty member, what role they might want to play in that journey and what the timing in their personal circumstances might be. So there’s an educational component we do, both in terms of direct support with people, bringing in speakers who have been through these journeys and can talk about the struggles, both the successes and the failures. But ultimately we’re all doing this work because we’re excited about supporting these people who do want to take the risks and do want to lean into it. We just want to make sure they’re prepared and they know what they’re getting into, because it is, as you point out, a substantial commitment.

Howard Forman: It’s not for the faint of heart. I want to ask a different question from the government question, but really the mirror image of that, and that is that Yale makes strategic investments in programs as well. Yale thinks about whether they’re going to build a climate program or build out the entrepreneurship programs, even Tsai Center and who they’re going to accept donations from. Really decisions are made that factor into where the university goes. And from an entrepreneurial point of view, you don’t like institutions picking and choosing winners. You like them coming up organically, but how do you facilitate that in a way that serves institutional objectives while also allowing blades of grass to flourish and to grow over time?

Josh Geballe: Yeah, so a couple things. Our philosophy at Yale Ventures is we want to have some amount of support that we can provide to everyone at Yale. Whether you’re a faculty student, no matter what domain you are working in or innovating in, it’s important to us that we have something to offer you that is helpful. And so to serve that, we created something called Venture Labs, which is a platform of services, mentorship, pitch coaching, student fellows who can work on projects, do market research, when you’re ready, connections to investors and those sorts of things that are accessible to the entire Yale community.

But where we do see critical mass of innovation that has gotten to the scale where it is deserving of more support, we’ve been very fortunate to get some significant gifts to the university that have enabled us to create accelerator programs that can provide translational research grant funding to help get that technology advanced to the point where venture investors have seen enough de-risking where they’re ready to invest, and we can pack in around those particular projects with even more mentorship and support to help get them ready to launch. And so we have programs now in therapeutics and digital health and medical devices and diagnostics. More recently in engineering, and we’re working to scale some more as we see the volume of innovation and climate technology and AI quantum computing continue to explode here at Yale, there’ll be more accelerators that we’ll hopefully add in the near future. So we have this kind of two-tier model, but we do want to make sure that we’ve got support for everybody who’s trying to innovate.

Howard Forman: Well, we are really fortunate to have you here. I want to point out for the audience, if you would’ve asked me when to do a conference like this, I would have said, “Do it during the school year. You want to have more people.” I look out here, you have a lot of students, a lot of alums, a lot of community leaders, and you have people coming from far and wide here as well.

Josh Geballe: All over the world.

Howard Forman: So it is a huge accomplishment. I think if you had it during the school year, you wouldn’t have the space for it.

Josh Geballe: Yeah. Well, I want to say thank you to you guys too for doing this podcast every week. It’s another element of the tapestry of innovation at Yale that I think really helps highlight a lot of the great things that are going on here. And you guys are both exceptionally busy people, so the fact that you pump out a new great podcast every week is a real service to the community as well. So thanks.

Howard Forman: We appreciate it. Thanks very much.

Josh Geballe: Thanks for being here.

Howard Forman: Thanks. Good to see you.

Josh Geballe: Good to see you.

Howard Forman: So we’re going to segue now to Mary Ann Melnick, who I first met, I’m going to say now, six years ago or something in that time, and who at that time was working for Yale, I think Yale New Haven Hospital or maybe the Yale—

Mary Ann Melnick: Cancer Center.

Howard Forman: For the Cancer Center, which is university based?

Mary Ann Melnick: Mm-hmm.

Howard Forman: So at Smilow Cancer Center but working for the university. And you were in a program management clinical trials type role. I’m sort of improvising again like I do, but you decided you wanted to do a management degree. I don’t think you knew exactly what you wanted to do next, and we’ll come back to your career trajectory a little bit, but I’d love to hear what it is that you are doing at BioLabs that fulfills your personal mission in terms of where you want it to go.

Harlan Krumholz: And what is BioLabs?

Howard Forman: Yeah, yeah.

Mary Ann Melnick: Sure. So what is BioLabs? So we are a global organization that operates serviced and equipped wet lab facilities that are meant for early-stage science startups to come into our spaces and launch really quickly. Our offering enables our startup companies to come in and really start their operations very quickly, like I said. When we moved over from our interim location in West Haven, Connecticut, to downtown New Haven in the heart of the bioscience ecosystem here over at 101 College, We moved over—the day before, it was a huge snowstorm. We moved in, and one of our resident companies was able to move their things in and start their science that same afternoon. So we’re very flexible in that way. We provide that environment for our companies to come in and really start their operations quickly, and they can grow organically within our space as well because of the flexible nature of our offering.

Howard Forman: And it’s amazing space, by the way. How many square feet is it? And just to remind people, it’s the second floor to the third floor of the new building.

Mary Ann Melnick: Right, so we’re at 101 College Street across from the Alexion Building. We’re on the second floor. Our neighbors will be Yale Ventures. We have a total of 50,000 square feet. We’ve built out 41,000 of incubator space that can be the home for up to 25 companies. And then we also have 9,000 square feet of space right now that we’re eventually going to build out into what we call graduate suites, which are something like spec suites. In the real estate community that’s how people often know it, of 60% lab to 40% office space, and it’s all inclusive for individual companies to have their own private space.

Harlan Krumholz: Great. I remember, five or 10 years ago, and Howard may remember this, there were discussions around here, say, “How can we become Cambridge?” And by the way, we weren’t talking about Cambridge, Massachusetts, it’s talking about Cambridge in the UK because they really were able to create sort of an energy within Cambridge UK. And the towns are about the same size—of course very different in their nature. But the question was, “Well, how are we going to get the capacity? If we get people in, how are they going to be able to find places to work?” And this is what you’re solving for. But I always had this feeling like, “Okay, build it, and they will come.” Are they coming?

Mary Ann Melnick: Yes. There are so many different types of companies knocking on our door, very interested to get started. They’re, of course, in different stages of their growth and their development. Some of them are just starting with their ideas and just looking to see what’s available in the market for them to start their companies. And then we have some that have been around for a while. They’re thinking of growing. They’ve outgrown their current space. They’re looking to be more central in downtown New Haven, where there’s all that buzz. So yes, they are coming.

Harlan Krumholz: And you must be competing, when people are looking with all these other places. They’re looking Kendall Square, they’re looking all bunch of different places. Why are people coming here? What’s made the change? What’s the big difference?

Mary Ann Melnick: For one, I can’t overstate it enough, this environment is so much more efficient. In Kendall Square, yes, you have that critical mass. You have the talent, you have the investors, you have the ecosystem around you. But here, let’s be honest, it’s cheaper, right? It’s cheaper. You can take your money further here in this environment. And like Josh mentioned, there’s a lot of talent here, and there’s so much fantastic science coming out of Yale, and you’ve got a lot of brilliant minds around here. And that’s the ecosystem. And everyone that’s a player in this ecosystem is very much supportive of it. We’ve got AdvanceCT, we’ve got BioCT, all those groups that really want to see this community grow and thrive, and so does BioLabs.

Howard Forman: And one of the things that strikes me, you said it already about how quick it is to set up, but you have extremely scalable effects there. You are in charge of this operation down there. It’s an enormous operation in itself. We don’t think about what it takes. You think about what it takes for a single business to be able to scale, but you don’t think about what it takes to oversee what really is an incubator accelerator physical space. What are the key skills that you have to use every day to be able to make something like that work?

Mary Ann Melnick: That’s a good question. We like to bring in a diverse community of companies for many reasons. We all know that diversity just makes for a better, richer environment. So top of mind, when you have a lot of different types of companies doing different types of things within your space, you have to be able to manage that, to make sure that everyone can get along. We do offer shared resources. So we do have prospective companies that come in and they’re concerned, “Well, how can I get access to this piece of equipment? How will you manage that? How do you protect my IP in this space?”

And those are the things, we’re proud to say our community here in New Haven, one of the top things that they really love about being in BioLabs is it’s a secure environment. They don’t have to worry about their IP being stolen. Why is that? Because it’s a collaborative community, for one. Two, everyone is really focused on their company. They really want to push their deadlines, and they want to get to their milestones. So they’re focused on what they’re doing. And so it’s being able to manage those different types of workflows and making sure it’s in harmony.

Harlan Krumholz: Are we at the point yet where a group that wasn’t founded in New Haven is looking around the country to see where should we go and are actually coming to New Haven because they’re seeing that this is the most favorable environment to actually grow a company? Are we there yet?

Mary Ann Melnick: Yes. Yes.

Harlan Krumholz: Wow.

Mary Ann Melnick: One of the companies we recently met has gone through our process. So we do have a selection process to make sure that the companies that we bring into this space are not directly competing with one another. That’s another way that we make sure that there’s harmony in our community. They’re a Paris-based company, and they’re looking to have U.S.-based operations here, and they’re interested in starting soon within BioLabs. And then we also have another one that’s UK-based. They’re also looking to bring some of their operations stateside here in Connecticut.

Harlan Krumholz: One of the things I wanted to ask is we’re talking about all the positive momentum. To get us to the next level, to actually get us to be the place in the country to do that, what are the things that need to happen?

Mary Ann Melnick: Well, I think we have the mix now of academia, industry, and then government as well all wanting to see this really work out. One of the big things I think we need more of is the investments into this community and to bring some of those Boston-based dollars down here to get their attention and see that we matter, and we will make a big splash. We are making a big splash.

Harlan Krumholz: How about the health system? To me it’s like the other piece to this, which is whether or not we can... I see Lee Schwamm here, so I’m trying to get his attention too. Our chief innovation officer and data officers, we’re making up titles. It’s something like that. So to me, it’s also an, I don’t want to say untapped because it is being leveraged, but it—still, you take the university, and you take really remarkable healthcare system and then all the things in infrastructure that’s being built. Are there openings for that? I know these are largely basic science, but still, there’s a need to be able to coordinate with clinical sites and so forth. What do you think?

Mary Ann Melnick: Yeah, so you’re right in that most of our companies across our network are within that pre-clinical stage of development. I would say where it would be helpful is enabling those connections to say, Yale-New Haven, if these companies are at the stage where they’re ready to start launching clinical trials, maybe finding that path where they can start making those connections. Some of them may have not gone through clinical trials before, and they’re about to, you know, maybe in a year or two.

Harlan Krumholz: Recruitment for phase one and first in-person studies and things like that.

Mary Ann Melnick: Right.

Howard Forman: Just one last question, and this may be unfair for you, and feel free to just put it off, but it may have been better for Josh, but where you’re located is maybe a thousand feet away from Gateway Community College, and Southern Connecticut State University is probably two and a half miles away as the crow flies. How much are you able to take advantage of that talent and/or to help encourage them to have programs that provide you with the labor that really helps entrepreneurs be successful?

Mary Ann Melnick: It’s almost like you planted that question, because we are working with—

Howard Forman: So it’s not unfair.

Mary Ann Melnick: It’s not unfair. BioLabs is working closely with our developer and the city economic development group. We will have a high school STEM program within our facility for that purpose, to really attract the students here in New Haven to go into this business, to train them, show them what it is that’s possible, what’s here. 101 College is a beautiful, brand-new big building in their backyard, and they should feel like this is a part of their community, that they can come in here. This is their future as well. So that program will start off in the fall within our space. And the idea is, it also interweaves with Southern Connecticut University as well. There’ll be instructors from that program teaching the high school students here, the New Haven public school students here. And again, it’s creating that space for them, a welcoming environment that, “I can be a scientist too, here in New Haven and look at the companies that are here in New Haven that my future could be in one of those companies.”

Harlan Krumholz: I just want to ask one final thing. So your career has been a bit of a juggernaut. Really, this is incredible. It is a bit of a startup, even though it’s within a big company, you’re doing this. It must sometimes be all-consuming. What are your tips to people who are listening about what has been the best guiding principles for your career that has helped you to navigate this and be as successful as you are, but not be overwhelmed by the number of tasks and things when you’re starting off like this?

Mary Ann Melnick: Yeah, thank you. I think it’s taken me some time to really think, “Well, what’s driving me every day? Why do I go to work every day and work so hard?” I think one of the really big and important things for me is when going through the EMRA program, I really wanted to stay here in New Haven. When I first moved here 14 years ago, I thought to myself, “Oh, I made a mistake. We are going to leave here in a year.” But no, we’ve stayed 14 years. Fourteen years in. And my husband’s in the audience. He was like, “Let’s think about leaving New Haven.” I’m like, “No, I’m going to stay here.”

Harlan Krumholz: “Whaaat?”

Mary Ann Melnick: “I’m going to stay here!”

Harlan Krumholz: That’s a negotiation tactic.

Mary Ann Melnick: I was like, “I’m going to stay here. Look at what’s happening. I want to see how I can help the community here and give back.” So that’s been sort of my grounding principle. I see all of the change that’s happened over the 14 years of living here, and there’s just so much potential. And to be a part of that change and transformation for this town, I think it’s an honor for me to be a part of that.

Howard Forman: We are honored to have you.

Mary Ann Melnick: Doing the business and society mission here, I feel like my role is fulfilling that.

Howard Forman: That’s terrific.

Harlan Krumholz: Very fortunate to have you. Thank you so much.

Mary Ann Melnick: Thank you.

Howard Forman: All right, so we’re going to improvise now for a couple of minutes because somehow our other guests who we’ve been in communication with during the week—

Harlan Krumholz: Ghosted us.

Howard Forman: Has not showed up now yet, but we’re still going to count on it. Just for one minute. I wanted one minute just so you and I can talk a little bit about entrepreneurship. That’s the idea.

Harlan Krumholz: Okay.

Howard Forman: I think we don’t talk about it on the podcast at all, really, but you are an entrepreneur, and you have several companies that you’re involved in right now. One larger one. Rather than talk about the company itself, because I think that could take a long time and we probably should do that on a full podcast at some point. I want to know what have been the challenges that you have faced? What is difficult about it? What’s been rewarding about it? A little about how that has been for you as somebody who’s a faculty member and also an innovator?

Harlan Krumholz: Well, let me say I think I’ve always had an entrepreneurial mindset even to my career. What that means is that you’re constantly looking for problems to solve, and you’re trying to figure out how to do that. And you’re trying not to be constrained by the way things are. In fact, you’re trying to actively resist the socialization that says, “This is what it is, and we’ve got to accept the way things are.” It’s so easy for people to be in their current situation and not to be able to pull themselves out. And you say, “So much of this doesn’t really make sense and we’ve got to do better.” And to then recognize like, well, what is it that really needs to be done in order to do that?

So then you get ideas that you want to pursue, and you try to figure out what you do. With regard to the actual development of companies, I would say I was pretty naive at the beginning. Oh my God, you have doubts all the time. Is this going to turn out? Is something going to happen? And there’s so many things you can control, and there’s so many things you cannot control. Timing and serendipity and just getting that critical momentum, getting that critical mass.

And you’re also getting people to take risks with you. The people who are working with you are spending their time, effort, often their entire careers with it. And the one thing I started with my wife, it turned out it was amazing to work with her. She is the most remarkable person I’ve ever met in my life. I love her so much, but she’s so talented and she helped move this forward, but it subsumed a lot of our conversations for a long time about what’s going on. So like I said, it was not for the faint of heart. You have to be a believer and I believe in our area, you have to believe at the end of the day that’s worth it because people who you’ll never meet will benefit from the ideas that are going to be put into action. And you’re willing to fail.

Howard Forman: So we’re going to segue to bring Lee Schwamm up here, but since he’s—

Harlan Krumholz: I wanted to spend a whole episode on Lee Schwamm.

Howard Forman: I know.

Harlan Krumholz: This is a taste. Just a taste.

Lee Schwamm: I’ll talk fast.

Howard Forman: That’s right. So we will. We’re going to spend the whole episode with you, in about seven weeks I think. So we’re not going to steal that from us now, but I wanted to hear from you rather than spend time talking about your career today. We’ll do that at the end of July. I want to hear you tell us about how does the medical school, how does the medical center facilitate innovation? Rohan Khera got the Medical Center Yale New Haven Award yesterday. There are other people getting Blavatnik Awards, but where do you come in in terms of facilitating innovation in digital transformation?

Lee Schwamm: It’s almost like he was at dinner with us yesterday. Harlan and I went out to dinner last night.

Howard Forman: I channel whatever—whatever goes into Harlan’s head eventually comes to me, so.

Lee Schwamm: I was just really grooving on what you were saying before, but there’s a huge untapped opportunity here, and it’s one of the reasons why I was so excited to come. What we have right now, I feel like, is a lack of an orchestration layer around innovation. When I was interviewing, I said, “Well, I’d love to meet the people running innovation at Yale.”

And they were like, “Well, how much time do you have in your schedule?” Because I found at least six—

Howard Forman: Cast of thousands.

Lee Schwamm: Yeah, I found at least six groups with the name “innovation” in their title, and then there were about another five or 10 more. There’s so much innovation going on. Harlan and I were, yesterday when we were talking, I met a colleague at a collaborative who worked in Disney as actually a design engineer for Disney and now is working for a big health system. And he said, “At Disney, their definition of innovation was ‘ideas we do.’” And I think there’s just an unfathomable amount of innovative ideas. But the difference between that and what you just said about your journey, to getting to actually a sustainable solution that users adopt and users embrace, not resent, but actually embrace.

Harlan Krumholz: And creates value.

Lee Schwamm: Yeah, that funnel gets narrow very quickly. But I think right now we have a lot of bottom-up innovation. People are just coming up with ideas all the time, and then a lot of them just are dead on arrival when they hit the health system because it’s not a need. What we really need to start doing, and we don’t want to suppress that innovation, but we want to try to nurture it a little bit by saying, “Here are the problems that we’re trying to solve. Here are the things that really need to be solved where there’s a huge value, opportunity, or a gap. And boy, would we love some smart people to try to think about how to do this.” It’s really cultivating a community of investigators who want to work on problems that are relevant to the healthcare system.

Now, there’s a lot of healthcare that doesn’t happen inside healthcare systems either. So you may have great ideas about solving the problem of how to get to and from the doctor’s office. That’s not a health system problem. That’s a patient problem. But I think there’s a huge opportunity, and we’ve just started to put the pieces together to say, “Can we create some kind of a working group?” And I wouldn’t call it a committee, it won’t get anything done. Just a working group of representatives from a lot of the innovation communities, the health system, and probably folks from treasury and finance, because you got to put money into some of this stuff to actually make it happen. And start to have this conversation of what are the most important things right now for the health system? Tempered by the fact that the most important things for the health system are making money right now because margins are so poor because of COVID. It has to be times or to the integral of greatest impact.

Harlan Krumholz: So this is a question I heard a lot of people who want to try to sell ideas to health systems, and one of the questions that comes up is whether or not, “Do I have to make a pitch about how they either save money or make money?” or “If I’ve got an idea that will cost-efficiently improve outcomes, is that right now a hard sell?” Because even if they’ll get a return for patient outcomes, it’s just not the moment in time to do it. And when people are coming to you for advice, “I’ve got a great new thing” and blah, blah, blah, how do you guide them about how they should approach a health system?

Lee Schwamm: So let’s just assume for the moment that the product will actually work and that people will adopt it, and that the integration lift is not that big. The first question is going to be—

Harlan Krumholz: By the way, that—

Lee Schwamm: Those are huge.

Harlan Krumholz: And I’m really glad you said them, because some people say, “I’ve got this thing,” and you—

Lee Schwamm: Dead on arrival. Dead on arrival. So let’s just assume that that’s the case.

Harlan Krumholz: That’s the first thing they have to pay attention to.

Lee Schwamm: They have to—

Harlan Krumholz: Will people adopt it? What’s the implementation layer? What else did you say?

Lee Schwamm: Well, integration layer, and I don’t remember the third.

Audience member: Does it work?

Lee Schwamm: Does it work? Something small like that.

Harlan Krumholz: Does it work?

Lee Schwamm: Is it plausible?

Harlan Krumholz: No, but these are really important. Have you validated it? Have you done it in one sequestered environment and said it works—

Lee Schwamm: Or even just in a data mart or something. But does it sound plausible? “Oh, I have this magic equation. You plug it in and it cures cancer.” Of course not, right? That’s not going to work. But—

Harlan Krumholz: Not yet.

Lee Schwamm: Yeah, not yet. So that’s sort of that first... Okay. Let’s just assume that you passed all those hurdles. The question right now is going to be what do I have to spend to get it in place? If I have to spend a million dollars, I only have a certain number of millions to spend right now, because I’m not generating margin. So I don’t have a big pool of capital to spend. I’m using capital to actually do operating, which is bad. So that’s why we have to make margin again. But if I spend that million on this and I get a 2x return, but I could spend that same million on automation software to improve my claims efficiency, and I get a 10x return, that million is going to the 10x, unless there is some incredibly compelling downside risk of my not doing it. I’m going to get sued, or there’s such a disparity.

Harlan Krumholz: Or there’s a federal reg that I’ve got to do.

Lee Schwamm: There’s a reg, or even what I used to call the Boston Globe test, I don’t know, what’s the newspaper?

Harlan Krumholz: New York Times, we said Times, yeah.

Lee Schwamm: Yale discriminating against this class of patients by not doing X, Y, Z. So unless there’s some really big red flag reason why you’re fighting against, actually it’s not that different than the VCs. If they got two companies and one is a 10x return and one looks like a 2x return, the money’s going to go into the 10x return unless someone has a really special interest in that company.

So I think the next thing is, what is the nature of that return? If the nature of that return is half the people in this audience won’t have a heart attack next year, well, that’s great for society. But if I don’t have risk on those patients in the form of that, I’m their payer, and they’re going to stay in my plan for at least the next two years or five years, I don’t make money. Society does better, but I don’t make any money on, I don’t make my money back. This is the problem we were talking about last night. We could create an intervention that would reduce hypertension, control hypertension in the New Haven community. Let’s say we could improve it by 50%. That’d be amazing.

Who would pay for that? The people who would pay for that are the people who would otherwise pay for the care, the ED admission, the angioplasty, the rehab, whatever. Well, if they’re commercially insured, maybe they’re commercially insured by Aetna today, but next year they’re insured by Cigna. So Aetna pays the money, but Cigna gets the benefit. Unless they’re in a federal or state entitlement program like Medicare or Medicaid, where they’re going to be in there the next year, the next three years, the next five years, and they’re going to be still in it, it’s really hard to capture that ROI. And even if I do, there’s five other people claiming that they saved the same ROI because they pushed the low-salt diet and they created the sidewalks to improve the health of the community walking to and from work.

And so I have a friend, calls those “light green dollars.” The dark green dollars are the ones you can actually count in your hand. You’re paying less for a contract; you’re getting more spine procedures. You can actually count the revenue. So I think that is the problem. And I would say of the ideas that come forward that we talk about funding or making investments in, of the ones that make it through the gauntlet, 80% are the ones that have real revenue capture associated with them. And then there’s about 20% where it’s the right thing to do. There’s a safety problem you have to fix. The optics are good. There’s other reasons why, but no one’s running toward those to embrace them.

Howard Forman: It’s terrific. We have just a couple of minutes left. So quick question about, one of the things I face a lot is students reaching out to me, sometimes first-year Yale undergrads with amazing ideas and the energy to actually move them forward and the fixed costs for them to do it are de minimis. And so they’re able to actually make quite a lot of progress really quickly. Are we doing enough to foster that and to get that energy? Knowing full well that their age is where the greatest innovation often comes from.

Lee Schwamm: It’s sort of like, do you put solar panels on your roof? This sort of feels like free energy, right?

Howard Forman: Exactly.

Lee Schwamm: They’re coming with all these great ideas. This is another orchestration layer that is missing. We don’t have a good middleware layer. And actually, I brought this up in a session we did somewhere else at Yale. I can’t remember where it was, but there’s a group that now wants to talk about writing an editorial on this, but we don’t have... In the same way that you could, well, probably not with that phone, but with a lot of phones and your laptop, you can pop out the RAM and pop in bigger RAM, and there’s no integration cost. It’s modularized. We don’t have that for digital health applications. We don’t have that for most of the ideas that you’re talking about. There’s a huge vetting process that we have to pay for. There’s the integration in we have to pay for. There’s the creating a secure environment to test this with health data that we have to make sure there’s not cyber risk or breach or all these things. The activation energy and cost is really high. It’s too high right now.

Howard Forman: On our side.

Lee Schwamm: On our side, to be able to take those great ideas and put them through the wringer a little bit. So what we need is, I think some kind of sandbox, a pseudo-epic layer with real patient data but mixed and matched and blended—

Harlan Krumholz: Synthetic data, yeah.

Lee Schwamm: Yeah, but synthetic data that’s derived from real data so that it’s real enough that you could at least take it for a test for shakedown cruise. And if it survived that, geez, now there’s something here. Let’s go to the next step. We need a stage gate that’s easy to access. Not so easy to access that anyone throws garbage in. But just enough of a barrier that you got to be committed. But it’s not impossible. It’s not American Gladiator. It’s just a hurdle.

Harlan Krumholz: That’s great. One of the great things, Howie at Yale, is that especially in recent years, we’ve just had just amazing recruitments. Lee Schwamm’s one of them.

Howard Forman: Absolutely.

Harlan Krumholz: It’s like a home run for us to be able to get you to come down. I know you’re a fan now of the area, and you’re really a Yalie we’re very proud of. And anyway, we really thank you for your energy and this connection between the health system, the university, the entrepreneurial and innovation arms within Yale are essential. And you’re right in the middle of it. Anyway, much appreciate everything you’ve done.

Lee Schwamm: Well, thank you guys so much. Great to be here.

Harlan Krumholz: Howie, we made it.

Howard Forman: We made it.

Harlan Krumholz: Come on, I didn’t make fun of you. Nothing.

Howard Forman: No. Well, a little bit.

Harlan Krumholz: Little, but. I love you, Howie. So anyway, it has been a pleasure to do this with all of you this week. We’ll be back next week with the usual episode. If you want to reach out to us, you can find us on social media of any type or by email at health.veritas@yale.edu. I’m just making it up right now. We have a script.

Howard Forman: Thanks to Miranda Schafer, Ines Gilles, Sophia Stumpf, and all the people that actually make this podcast possible. Thank you all.

Harlan Krumholz: Thank you.