Industry Watch

John Blank, center, leads a discussion at TreeHouse Health

TreeHouse Health funds, guides, houses health-IT startups in Minneapolis

Launched in 2013, ‘innovation center’ encourages cross-pollination among portfolio companies

By Nora Clos
Wednesday, December 17, 2014

Health care innovation center TreeHouse Health is aptly named: Situated on the fringes of Loring Park in Minneapolis, its expansive second-floor office features floor-to-ceiling windows looking out upon treetops. The portfolio companies making use of its open-office space divide their time between a large common area and dedicated workspace desks, all bathed in natural light. White walls suggest empty canvases awaiting fresh creations.
TreeHouse was launched in October 2013 by Dr. John Blank and his son Jeffrey in order to provide capital, space, and resources to select health care companies, particularly startups in the IT space.
Blank has an extensive background in health care. Most recently, he was senior vice president at UnitedHealth Group’s Emerging Business Group, which manages venture activity. That job brought him into contact with many new companies that had developed promising products or services but lacked the resources to enter and succeed in the industry. “I often wished that someone had been able to give these companies better guidance earlier on, so that by the time they approached an entity like UnitedHealth Group, they were prepared with something we could pay them for,” he says.
Blank left UnitedHealth Group in 2012. With his son Jeffrey, he then started investment fund Dalmore Investments to provide capital for small businesses. TreeHouse Health was the answer to Blank’s question of how to not only invest in growing companies, but also set them up for success by providing the range of resources that small businesses need, all under one roof.
“It wasn’t my intent when we set up the investment fund to invest only in health care companies,” Blank explains. “But I found I didn’t feel as comfortable investing in other industries, and so it kind of happened by default.”
The investment TreeHouse makes in its portfolio companies is threefold, according to Blank: capital investment, free use of the space, and access to the expertise of established health care companies. 
In addition to portfolio companies, TreeHouse also works with what Blank calls “anchor tenants,” or large health care entities that have an interest in supporting innovation. Hennepin County Medical Center (HCMC) signed on as one in October 2014.
TreeHouse also partners with professional service providers that have a special focus on health care, including law, accounting, and executive search firms. Examples include accounting firm Wipfli and intellectual property law firm Christensen Fonder
“What my experience has taught me is that if you think you’re an expert in health care, you’re wrong,” says Blank. “It’s just too complicated.” Hence the benefit of bringing together many companies with specific health care knowledge, or providing resources and counseling across many areas within the broader health care umbrella.
“A big part of the environment we’re trying to create depends on interaction in a physical space,” adds Jeffrey Blank, who serves as the organization’s managing director. “We want people to be able to bounce ideas off of each other and establish a collaborative culture to help boost innovation.” 
This means that both the portfolio companies and representatives from established health care players such as HCMC spend time in the TreeHouse space. The organization hosts events in its large communal area, with the goal of further expanding the connections available to its tenants. 
Jeffrey Blank believes Minnesota is a particularly appropriate setting for an organization like TreeHouse. “We have a combination of big health care players such as United and Medtronic, sophisticated delivery systems such as HCMC, and the strong presence of emerging entrepreneurs,” he notes. “That makes Minnesota ideal for what we’re trying to do.”
TreeHouse currently works with six portfolio companies. One of them is LogicStream Health, focused on helping health care organizations maximize the potential of their electronic health record systems. It was founded in January 2013 and has been a TreeHouse portfolio company since February 2014. 
LogicStream co-founder Patrick Yoder says that being part of a highly connected health care community such as TreeHouse has given his company access to resources that previously weren’t as available: “Their connections and their ability to help the companies they invest in think about how to more fully commercialize what they do is very helpful.” 
TreeHouse’s collaborative bent has also been helpful: “There is definitely some cross-pollination that goes on, whether it’s relationships that form, or just general access to a variety of perspectives when solving problems,” he says.
The biggest goal in LogicStream’s future is expanding its client base and making the early successes it’s enjoyed repeatable, Yoder says. “Having the experience and advice of people who have done that before is quite an advantage.”