Growing from within: Why Providence incubates tech companies


In this article: 

  • Health care, as an industry, is ripe for innovation—however, regulatory hurdles, legacy technologies and massive inertia make transformation challenging.  

  • Providence’s Digital Innovation Group supports an inside-out incubation model, building new businesses within Providence that power transformative health care innovations. 

  • Already, the group has empowered a string of successful technology companies to spin out with an eye for broadly transforming health care. 

Health care is complicated. The industry demands innovation to improve the way patients and providers engage with one another, and solutions that can do that effectively will bring massive value to the health care ecosystem. Unfortunately, because of hurdles ranging from data access to regulation to scalability, innovation within health care often does not achieve impact at scale—especially when it comes to integrated solutions that connect many different stakeholders and processes. In practice, these challenges contribute to poor patient experience, higher costs, more provider burnout and other issues. 

Traditional “big tech” and “digital health disruptors” have tried to focus on the problem, but without access to a health system’s data system, deep clinical expertise, and an understanding of workflows and the impacts on our caregivers, external solutions rarely have a significant impact.    

Recognizing the challenges of innovating in health care, Providence founded the Digital Innovation Group in 2014. Since then, we’ve standardized the process of building and commercializing health care technology solutions, spinning out three startups in the last five years that have achieved success both inside and beyond the walls of Providence.   

“The unique mix of traditional health system expertise and tech industry best practices all under one roof have generated a string of successful new ventures, and with each successive effort, our incubation speed and quality only grows,” says Matthew Cohlmia, executive director of digital strategy at the Providence Digital Innovation Group. 

Cohlmia noted that startups outside of health care systems lack access to data, integration with the electronic medical record and support from long-term customers. As a result, many health care innovations tend to be solutions that, over time, may add more complexity to an already complex system.  

“We’re building deeply integrated platform solutions,” says Cohlmia. “We are inside the health care system and can build things no one else can because we understand how to create something scalable, compliant and seamless.” 

The innovation process 

At Providence, the Digital Innovation Group builds best-in-class health care solutions by combining the best of the startup venture world with the leadership, expertise and data of one of the country’s largest health systems.   

The model begins with identifying opportunities for improvement in health care, including surfacing challenges from patients, caregivers within Providence and leaders at other health systems. The Digital Innovation Group then prioritizes these challenges and writes business plans for new ventures. These ventures build out and test their product within the walls of Providence before scaling and commercializing to partner health systems.  

“We want to invest in and develop areas where the only way to do it is from within a health system—with deep integration and expertise,” says Cohlmia. “We have the advantage of being one of the nation’s largest health systems with experts in every field. Given the wealth of resources we have, we focus on where health care needs us to build.” 

By growing with the Digital Innovation Group, these ventures capitalize on all the advantages of incubating within Providence, including: 

  • Deep understanding of the problem at hand 
  • End-to-end expertise at every stage of the patient journey 
  • Frequent, better and diverse feedback 
  • Technology investments directed toward more complex and scalable solutions 
  • Higher success rate with more impactful results 

“The reason these companies are able to see incredible growth is because they offer very complex platform solutions that have a real value and impact on health care organizations,” says Cohlmia. “Being in our ecosystem longer improves design around provider and patient workflows to ensure they are seamlessly baked and are driving value for health systems.” 

Our companies 

The Digital Innovation Group is spinning out innovative companies at a rate of one new venture roughly every two years including: 

Xealth: A company that enables doctors to order, deliver and monitor care from one unified platform without having to access multiple systems. 

DexCare: A business that enables on-demand appointment scheduling. The Providence app uses DexCare to help patients schedule primary care appointments.  

Circle: An application, acquired by Wildflower, that provides curated, provider-approved family and children’s health resources.  

“All these tools are built with patient and provider workflows in mind. They’ve been tested and iterated in real-world environments,” says Cohlmia. “Now, they have expanded to other health systems and fit seamlessly. We’ve built things that are truly integrated.” 

Innovation’s impact on health care 

The true measure of the growth of these companies is their impact on patients. This incubation model has led to solutions that: 

  • Have clean, intuitive interfaces 
  • Integrate in-person care experiences 
  • Provide a more cohesive digital health experience 
  • Improve access to health services that patients can trust 

Xealth, Dexcare and Circle were never meant to stay within the walls of Providence. Instead, they’ve expanded to other health care systems across the country, improving the patient and provider experience as they have grown. After incubation, these companies are spun out as separate, venture-backed entities that continue to drive innovation for Providence and other health systems—without the need for continued financial backing of Providence. All three have secured massive contracts with large health systems, having developed products that meet the demands of the health care market. 

For Providence, the business case for this incubation model is clear. In addition to the direct value that deploying these solutions has brought to Providence and our patients, Providence’s equity ownership grows in value as other health systems become customers—investment dollars that are then directed back to Providence’s core mission to improve the health status of the communities we serve. The Digital Innovation Group continues to expand the incubation model and is working on identifying its next big opportunity, including evaluating the tools Providence needs to remain at the forefront of innovative health care.  

“If the solutions we need don’t exist in the market, we make them,” says Cohlmia. “We’re able to capture these huge opportunities for the benefit of our patients.” 


Contributing Caregiver 

Matthew Cohlmia, executive director of digital strategy at the Providence Digital Innovation Group 

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Related resources 

DIG THIS: Why Health Care Needs a Flywheel 

Providence Digital Innovation Group names new product and technology incubation head 

Collaborating to make health care work better. Perspectives from the Becker’s annual meeting 

This information is not intended as a substitute for professional medical care. Always follow your health care professional’s instructions. 

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