AlphaLab Health, region’s newest business accelerator, begins ‘study in disruption’
The Pittsburgh area’s newest startup business accelerator is recruiting its first class of entrepreneurs while continuing renovations at a sprawling center of operations in Bellevue, about 10 minutes from Downtown.
North Shore-based statefunded investor Innovation Works, Allegheny Health Network and corporate parent Highmark are collaborating to make the one-time Suburban General Hospital into a life sciences startup business accelerator, turning former patient rooms and surgical suites into offices and wet labs for fledgling software, pharmaceutical and medical device businesses. A portfolio of seven companies are in AlphaLab Health’s first class.
The 6-month-old effort is starting to have an impact, said Dr. Jeff Cohen, chief physician executive, community health and innovation, a newly created position at AHN.
“This is already a study in disruption,” said Dr. Cohen, the former president of Allegheny General Hospital. “It’s a sorely needed balance for competition” in supporting the life science business sector in Pittsburgh.
Carnegie Mellon University and the University of Pittsburgh are longtime leaders in nurturing new businesses with office and lab space and mentoring from corporate executives. The nonprofit Innovation Works — the biggest seed capital investor in the region — jumped into the life sciences startup pool in September through its AlphaLab Health program in opening up 230,000 square feet of low-cost space to entrepreneurs at the one-time community hospital, sweetened by ties to a 13-hospital medical system and health insurance giant.
The only comparably sized facility in Western Pennsylvania is the UPMC Immune Transplant & Therapy Center, a 245,000-square-foot facility featuring lab space, which is being developed in Bloomfield by Baltimore-based Wexford Science + Technology LLC.
AlphaLab Health’s edge in life science accelerators is the opportunity to try out ideas and products in real world applications, said Megan Shaw, who is the agency’s portfolio executive, life sciences.
In the past several months, the Bellevue site has hosted
educational sessions on such topics as Highmark’s vision for the future of health care, how new medical products get accepted into clinical use, and Medicare’s reimbursement criteria for new medical diagnostic tests and products, bringing real world business realities to startups.
There are a number of tech accelerators in the Pittsburgh area — which ranked first in the U.S. in emerging life science clusters in a 2020 report by real estate services company CBRE Group Inc. — each with a different twist on services and costs to the entrepreneur that make comparisons difficult.
But Dr. Cohen, a urologist who has formed and managed medical companies, believes AlphaLab Health’s draw is its lowcost office and lab space at the former hospital and its ties to a hospital system and health insurer.
In the standard AlphaLab Health agreement, startup businesses receive an investment of up to $100,000 from Innovation Works and AHN in exchange for a convertible note granting up to 2% equity in the company. Entrepreneurs also get office or lab space for $13 to $22 per square foot. The national average cost of leasing lab space is $24.30 per square foot, which can go as high as $100 per square foot in red-hot life science clusters like Cambridge, Mass., which is ranked first in the country for concentration and size.
The cost of getting a business off the ground wasn’t the only thing that drew newly graduated University of Pittsburgh medical student Dr. Stephen P. Canton to AlphaLab Health.
“Having this incubator linked to large hospitals allows us to get realtime information,” said Dr. Canton, a surgical resident in orthopedics.
Dr. Canton, 29 and a native of Wilkinsburg, and UPMC orthopedic surgical resident Dr. Dukens LaBaze, 34, of New York, formed Sterile Vision Inc. a year ago to end costly delays in surgical procedures that are caused by misplaced or missing sterile tools. The company co-founders tracked the problem to hospitals’ sterile processing centers, where a heavy workload sometimes prevents accurate accounting of the tools needed in the operating room.
“Their main concern is just getting through the day,” Dr. Canton said about sterile processing workers. “They’re cognitively loaded,” so things get missed.
The solution: a headset that sterile processing workers wear that uses patented computer vision and artificial intelligence to track surgical tools, making sure the right instruments are at the operating room table when needed. The result will be fewer lost or misplaced tools and savings in the millions of dollars in delayed surgical operations, Dr. Canton said.
AlphaLab Health’s Bellevue facility was also the choice for veteran entrepreneur William Kaigler’s latest startup, sovaSage Inc., which uses artificial intelligence and computer vision to automate the clinical management of sleep apnea patients. The software company was founded in 2019 and employs nine people but is not yet profitable.
Getting fitted for an oxygen mask, which is used to treat breathing disturbances that happen while sleeping, is among the tasks that sovaSage software can automate. Right now, the process can take several fittings with the help of a technician.
“Being able to work with a health care provider that is also a payer is at least as important as the physical space,” Mr. Kaigler said.
Mr. Kaigler teaches entrepreneurship at CMU as an adjunct professor in the Tepper School of Business. He began his career as an engineer at Respironics in 1990, founded medSage Technologies LLC in 2002, which was acquired by Koninklijke Philips, then NewCare Solutions LLC in 2011, a medSage spinoff that was acquired by Philips Respironics.
“It’s kind of a living lab,” Mr. Kaigler said of the Bellevue facility. “It’s rare you have capital, a payer and clinical expertise in one place. It’s kind of a one-stop shop.”