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Shirley Leung

Mass. business leaders bet on health care tech

Our tech industry will never be as glorious as Silicon Valley, but here is where we can make a name for ourselves: digital health care.

That’s the idea behind an effort by the Massachusetts Competitive Partnership, an exclusive group of 16 influential chief executives and business leaders.

They are taking a page from Governor Deval Patrick, who, nearly a decade ago, placed a big bet on biotech. We have always had the right ingredients: brain power, top-flight medical centers, and entrepreneurial spirit, but Patrick sprinkled some fairy dust in the form of a $1 billion state initiative that cemented the Boston area as the hub of the universe for life sciences.


This private-sector initiative — led by Vertex chief executive Jeff Leiden, EMC chief executive Joe Tucci, and retired Raytheon chief executive Bill Swanson – wants to do for health tech what Patrick did for biotech.

There’s a sense of urgency as Silicon Valley continues to command venture investing and New York is outpacing Massachusetts.

Swanson, the chairman of the partnership, has been around long enough to see our industries go through ups (biotech) and downs (shoes). To keep our economy humming, executives must find — and ride — the next opportunity.

“We really think this has a chance to have Massachusetts at the top of the food chain if we do it right,” said Swanson.

Now our biotech market was much more fully developed when Patrick got involved compared to this emerging tech field. Try naming a digital-health public company in Massachusetts other than Jonathan Bush’s athenahealth, the Watertown firm that is building out the health care Internet. Yeah, I didn’t think you could.

But like biotech, digital health care plays to our strengths: We are a region rich in health care and technology know-how. Leave social media — as hot as it is — to San Francisco.


For Massachusetts, digital health is about building a cloud to help hospitals house electronic medical records, writing software to keep patient data secure, connecting medical devices, analyzing big data for health care trends, and launching apps for consumers.

It’s also about helping people sign up for health insurance online — a seemingly simple task for any e-commerce outfit but complicated once health care is involved. Or it can be creating gee-whiz consumer ideas like PillPack, a local startup that takes the pharmacy into the digital age and to your doorstep.

Venture capitalists see the potential and last year poured $4.1 billion into digital health, up from just under $1 billion in 2011, according to Rock Health, which invests in health care startups.

So how do you jump-start this sector locally? For starters, the partnership is looking at financing, mentoring, and incubator space. On the money front, the group is pushing for a tax credit to persuade angel investors to provide seed money and is working with Leerink Partners to set up a private equity fund that would invest in Massachusetts-based digital health companies.

Leiden, the Vertex chief executive, said the fund would be in the tens of millions of dollars. While that is a lot smaller than the $1 billion Patrick set aside for biotech, these tech startups don’t need as much capital.

“There’s an opportunity for 10 folks in the garage to do something important,” said Lei-den.

Jeff Leerink, the founder of Leerink Partners, a Boston health care investment bank, said digital health care is where biotechnology was in Massachusetts in the ’80s and ’90s.


Health care’s complexity “is why it’s the last bastion of American industry that hasn’t been undergoing as much of a technological revolution as other areas of the economy,” said Leerink. “We do think now is a tipping point for the industry.”

But money alone can’t buy love from tech startups. They are attracted to Silicon Valley, where the startup culture is as natural as the California sunshine. Mentors abound, seed capital is plentiful, and entrepreneurial activity on campuses is encouraged. No wonder so many tech companies that start out here move out West.

“It is much more insular here,” said Tucci, the EMC chief. “When you go to Silicon Valley, there are thousands and thousands of people who made hundreds of millions of dollars. It’s the old adage we all learned: If you make money easy, you’ll spend it easy. It’s much easier to get an idea funded out there.”

To change our culture, the partnership wants to help loosen so-called tech transfer policies at universities and make members of its own exclusive club available to mentor aspiring entrepreneurs. The group also wants to create more incubator space for startups.

The hope is that if the state can develop a good reputation for digital health companies, it might persuade other tech firms to start, and stay, here.

Now I know not everyone likes to pick winners and losers in the economy. But the Massachusetts tech industry has such an inferiority complex to Silicon Valley that we need to feel good about something. Digital health just might be our way to win.


Shirley Leung is a Globe columnist. She can be reached at shirley.leung@globe.com. Follow her on Twitter @leung.