By Nicole Gregory     2/12/2016

Sunlight pours through large windows, some of which overlook the Pacific Ocean. Groups of people are gathered at wide tables, engaged in discussion or watching large video screens in the bright office rooms. Surfboards are propped up in corners, lending a vacation vibe, and light fixtures suspended from the ceiling are shaped like ocean waves.

Welcome to the Innovation Lab, a Newport Beach office aerie that was designed to encourage creativity and collaboration. The space is owned and used primarily by members of the Innovation Institute, the brainchild of Joe Randolph, former COO of St. Joseph Healthcare.


A new model for success

The Innovation Institute, which Randolph and St. Joseph Health founded in 2013, is a partnership of five health care systems (called “member-owners”) that have invested at least $10 million. The goal is to foster innovative ideas to improve health care in a sustainable way; it is a for-profit LLC.

Randolph says there is no big plan in the future to sell or merge the company, which is headquartered in La Palma. The intention is to work with the member-owner health care systems “for the long haul,” he says.

In his more than 25 years in the health care industry, Randolph has had a ringside seat to what works and what doesn’t, and he wanted to find a way to lift organizational restrictions that inhibit doctors, researchers and employees from finding successful solutions to workplace problems. But he was also interested in growth and sustainability.

So, the Innovation Institute was created with three parts. One is called the Enterprise Development Group—a group of profitable health care companies that have been acquired by the Innovation Institute. These companies deliver products and services to the member-owners, as well as other health care providers.

Another part is a growth fund, which invests in emerging companies.


An invitation to creative thinking

The third part is the Innovation Lab, located in Newport Beach, with those great ocean views. The office space has the feel of an energetic start-up, where inventors can work and an experienced staff evaluates ideas for medical products and services for commercial viability. About 300 ideas have been submitted so far.

“We look for things that can make a difference and things that can be commercialized,” says Randolph. In addition to the ideas coming from the member systems, there is also a web portal where patients and others can submit their ideas.

Many similar “incubators” fail after just a few years, mostly because it takes so long for ideas to come to fruition and generate profit. “The design model for the Innovation Lab is to be self sustaining yet independent,” Randolph says. He recognized that the people who work within the health care industry are more likely than outsiders to come up with workable answers to problems. “We needed to look within in the industry to find solutions,” he says.

So far, his model has proven successful. For the first full year their profit was $3.1 million EBIDA, last year $10 million, and Randolph is projecting $15 million for this year.

Back to the open office space. One area showcases a few of the inventions that are already in the patenting process: among them a resting holder for hypodermic needles, a sling that aids wrist injury recovery and a device used for ankle rehabilitation. Surely these could only have come from workers who saw a need and figured out a viable solution.

And this is exactly the kind of innovation that Joe Randolph is hoping will grow and continue for years to come at the Innovation Institute.