Whereas patients receive care, consumers make choices. Try as we may to act like consumers, the healthcare system makes this incredibly difficult. Whether we're ready or not, the Trump administration is about to make us all healthcare consumers FAST.
I talk to people all day long. Every day. Without exception. By Friday afternoon, I want to withdraw from the world of Oxeon and talk to no one other than my wife and three kids. That withdrawal slowly lifts over the weekend and by Sunday night, I’m ready to start talking to people again.
What is interesting, coming from the guy who turns anti-social all weekend, is that from Monday through Friday, I don’t resent my work at all. I love all the conversations and find the people – and their perspective – beyond fascinating. In many (but not ALL!) of these conversations, I find myself learning, growing and being exposed to things I had never thought about. I truly enjoy hearing people’s stories.
Through these conversations, I've learned that it’s not your average executive who wants to try to tackle healthcare. These people have something special. They bring a unique look on life and a commitment to do something bigger than themselves. Again, not ALL of them. But most of them share something that is very, very different – and worth listening to.
I feel so fortunate to be having these conversations and really just wanted to share what I experience all day. As such, I decided to collaborate to start "A Healthy Dose," the podcast series we have launched with my good friend Steve Kraus, healthcare partner at Bessemer Ventures. A Healthy Dose will share the people, the experiences, and the insights that Steve and I are exposed to on such a regular basis.
And what a segue that proves to be. Why Steve? Well, there are many reasons but the first is that he is just a fundamentally great guy. I remember my son Charlie, who decided after years (he is 12) of being focused on sports, to audition for The Music Man, the middle school musical. Steve, who also has a son named Charlie (I’m 99.99% sure he convinced his wife to select the name in honor of our Charlie) talked to my son about how much he loved playing sports and acting and singing as a kid and that he could do both and do them well. As I was never a great athlete, but by comparison my acting and singing made me look like I was #1 pitcher in the Red Sox rotation, I had little experience to share with my son Charlie. Steve’s support meant a ton to Charlie and I both.
Steve loves his job and the companies that he works with. He also really cares about the companies that he gets to know and doesn’t invest in. I know because he often advocates for them, even from the outside of a deal looking in. Steve and I have worked together on search projects, investments, product work and even creating companies from scratch; we’ve shared many experiences and our areas of interest and strengths complement each other.
We also love to laugh, and even more than that…we love to bust on each other.
So with that, we decided to bring the great stories that we are exposed to into a bi-weekly podcast format and share them with people interested in healthcare transformation, entrepreneurship and investing.
We hope to have a steady stream of guests who will share their stories of how they ended up in healthcare. Both Steve and I are political junkies so I would expect that our conversations will get into healthcare policy and the politics of healthcare. We will definitely get into the stories that led to the creation of the most interesting healthcare companies, and get rare insight from the incredible people who conceive and build them. I hope that we’ll be able to effectively share our learnings about different elements of creating companies, building products or selling into health systems or different types of go to market strategies. I know we are going to try to make the podcasts both interesting and enjoyable.
It goes without saying, Steve and I are eternally grateful for our podcast team (James, Amy and Tiffany at Oxeon and Bessemer) and to Neil Diamond for allowing us to license the classic Forever in Blue Jeans. Clearly, both Steve and I love the tune; suckers for Neil Diamond. But the lyrics speak to us as we both are involved in for-profit efforts in healthcare; driving growth and investment returns for healthcare companies as a service provider, an investor or as the founding entrepreneur. For many of the people who typically focus on these areas, Money Talks. But in healthcare, there is something more important. The people. The mission to make people healthier. The relationships. Doing something bigger than ourselves. So while money may talk, it doesn’t speak to those things.
Money talks But it don't sing and dance And it don't walk And long as I can have you here with me I'd much rather be Forever in blue jeans
Thanks for listening and let us know if you have ideas for podcast topics and/or guests.
To subscribe to the podcast visit: https://itunes.apple.com/us/podcast/a-healthy-dose/id1197975925?mt=2
Trevor, the Founder and CEO of Oxeon Holdings, is committed to helping mission-driven healthcare leaders and executives build successful companies. In his A.D.D-fueled existence as an entrepreneur, Trevor has started or turned-around 10 companies. It was only in this most recent chapter of his career, in starting Oxeon, that he fully discovered and realized the power of a Mission and Values driven organization. It is no coincidence that this chapter is the most enjoyable one to date. Trevor is based in New York, NY.
Adam Boehler, Founder and CEO of Landmark Health, visited Oxeon's New York office for a Coffee Talk to share his insights on leadership and entrepreneurship.
With every big bet, there comes that moment of truth. Is this going to work? Will it pay off? As Oxeon Partners passed its 4th birthday last November, we prepared to make one of these big bets: hang a shingle in Washington, DC and see if the company could fulfill the elusive promise of scale.
I joined Trevor and the Oxeon team back in February of 2015, hell-bent on assisting in this process of growing the business. In order to do so, we had to tackle several important issues, beyond the brick and mortar challenge of standing up a new office in a new location. Could we successfully transition to a broader leadership team beyond our founder-led history? Could we transplant our unique culture to a new location? Could we prove out the hypothesis that a local presence would give us better access to, and increased credibility in, that new market? And finally, could we document what we learned in the process – using our business as a lab of sorts, to lift insights and experiences that could then be shared with our clients in similar positions?
In addition to the questions we could anticipate, this experience has delivered lots of "firsts". Some important – the first new employee we intentionally hired into an expansion office, and some less so – the first 100K Amtrak rewards points credited to an Oxeonite! Probably the most exciting "first" however, was a curious meeting I had at DC’s most famous address last month.
In the course of our many networking calls for a biotech company COO search we're running, my colleague Annah (the aforementioned DC employee #1) had a conversation with a gentleman called Tom, who happens to be the Deputy Director for Science and Technology in the White House Office of Science and Technology Policy (yes - his title is very consistent with his department's raison d'etre). As my early-tenure and fearless team is inclined to do, she just called him up one day and asked for a chat. Why not?
For those of you not familiar with the culture of DC, it's very much a small town. Everyone knows everyone. There are only two types of people: those who participate in the business of the city (politics, government) and those who observe. The two groups don’t often mix. It's also important to note that in the insider crew, there are certain key people around whom everything orbits. Tom is one of these people. EVERYONE knows him. Or knows someone who knows him. And thanks to Annah, now we know him, too.
In the course of Tom and Annah's initial conversation, Tom became very animated about Oxeon's business model, and asked to speak to me to bounce a few ideas around. One thing led to another, and I found myself with an invitation to the White House. Tom wanted to talk about how the Administration could do a better job attracting talent for shorter-term project work that didn't fall neatly into scope for Appointees or the stability-craving careerists who make up the (stereotyped) group of government bureaucrats. A "third way" as it were, for sourcing government talent.
I arrived at the (heavily secured) entrance to the Old Executive Office Building (OEOB) a few minutes early. I snapped a few selfies, mostly just to try to impress my kids, and then fumbled the entry process spectacularly, needing several attempts to sync my passport and meeting badge. The Secret Service guys could barely contain their laughter. I've never felt more like a tourist in my own city. On that note, during my visit I did learn that we bought Alaska for $7M – $3M less than the budget for the OEOB renovation. Another story for another time.
Tom and I sat down for an hour-long discussion in his cozy, cluttered office. In an attempt not to look amateurish, I tried to keep my eyes from wandering, but I couldn't help but note the dozens of pictures of Tom with Presidents—both sitting and former—as well as many other famous government officials, only some of whom I recognized. This is the way it goes in DC. This is our version of star sightings. Who you know is the currency of power.
We proceeded to discuss many things. He asked me to explain Oxeon's search process, and our means of sourcing talent. He asked if we’d be open to "tours of duty" within the White House, to help train his team to be more proactive in recruiting talent. He also asked how they could create those same tours of duty opportunities for outside hires – quick turn, deep impact projects that were not born out of crisis. Yes!
He asked my take on industry-specific hiring, and how to be more focused in acquiring specific skills. And he asked what I thought about the value proposition of working in the White House—or in DC more broadly—for recent graduates, mid-career and longer tenured individuals. We talked a bit about other firms like ours (those who serve specific industries) and how Oxeon and the White House recruiting team might potentially work together in the coming year.
My takeaway: for all of my wide-eyed wonder at being invited to the White House, I was actually the one sharing best practices and imparting knowledge. I was the expert, and our firm was being held up as a shining example of success in attracting and hiring talent. The Administration was asking us how do we do this better? How do we operate more like you – building strong partnerships in the private sector and successfully attracting stars to our team?
Needless to say, I thoroughly enjoyed my day. I felt really proud that our new team was making in-roads in our new city. And I felt pretty sure I couldn't have asked for a better brand-building experience in the local market. There's still a ton of work to be done for sure. But I'm buoyed by our progress thus far.
PS. If you're wondering about your invitation to our DC office launch party, it's in the mail, as they say. We'll throw something together after the (slightly more important) "party" is decided on in November. Stay tuned.
Alissa is Co-President of Oxeon's executive search business. She joined the team after spending the last 20 years in the health care services business, working as a consultant and sales/marketing lead in firms such as McKinsey, the Advisory Board Company and Evolent Health. Alissa has completed CEO, CFO and COO searches, and is focused on leading the search team, building an office in DC, and expanding Oxeon's network into innovative and integrated provider systems across the country. Alissa is based in Washington, DC.
If we're not careful, our "recruiting shtick" for Landmark Health can roll off the tongue too easily. Too mindlessly. Too nonchalantly. A conversation with executives in the market usually goes something like this: "Yes...Landmark provides care for incredibly vulnerable patients, those with 6 or more co-morbidities...the frailest and most sick...compassion is most important..." And inevitably, later the conversation turns to "yes...they're backed by a leading private equity firm... typically executive compensation is base, bonus, and equity... they have one of the best CEOs we know in the industry." Then, there is an extended, pregnant pause as executives on the other end of the line process what they have just heard. This "double-bottom line" realization is a big deal.
Mission-driven health care companies are a big deal.
Landmark Health is driven by a clearly articulated company mission statement. In discussing their mission, Adam Boehler, CEO, shared "we are resolute in our delivery of high quality, comprehensive and compassionate care to individuals, wherever they reside and whenever they need it." At Grand Rounds, there is a very palpable mission, but it's more broad. Owen Tripp, CEO and Co-Founder of Grand Rounds, expressed a desire to "create a world where all patients can access expert medical advice to improve their lives." Oxeon's mission is to Make People Healthier, and everyone here embodies it on a daily basis.
While Grand Rounds is less explicit in its mission statement, don't confuse a lack of packaging for lack of rigor. Before every meeting, the company shares a story about a patient, reinforcing why Grand Rounds exists. Sometimes it is an employee who conveys the experience. Sometimes an executive. Sometimes the company brings one of its patients to the meeting to explain how Grand Rounds helped them. In every meeting, the company mission is powerfully reaffirmed.
In a recent conversation, Owen shared:
"You have to ruthlessly uphold the mission, especially when the dollars get bigger, and you start enjoying more commercial success. When certain executives make decisions that may be viewed as practical and expedient in other companies, those same decisions may compromise mission at ours. Employees are watching. They watch to see if your personnel actions back up your words; if your sales decisions back up your words. It's not enough to just launch with a great mission – you have to actively live and abide by it in all facets of the organization, every day and in every decision."
By all indications, from the way the company conducts its business and to the demonstrable success they've enjoyed, the mission at Grand Rounds is fundamentally understood by every single person who goes to work there. An employee once hung up on Owen to answer a patient call. Now it's common practice to cut internal meetings or conversations short to prioritize patients.
We asked Owen how the mission at Grand Rounds is embraced by the venture and private equity investors who sit on his Board of Directors. Our assumption was that most likely the mission at their institutional investment firms are divergent from the one present at Grand Rounds. Owen replied that "they are incredibly supportive of our Mission and the decisions we make... but I wonder whether that is because we have experienced great results from those decisions. I sometimes think whether it would be different if our results were different... less patience for mission-driven decision making. I find myself knowing that our results are BECAUSE of these decisions – they are inextricably linked and so I believe our investors will continue to be fully aligned with our mission and still fulfill their investment objectives."
Mission Works. Why? Mission helps attract great people to your company and gives them a reason to care beyond the company's financial performance. While mission attracts great people, it also gives them a decision-making framework that inspires them. It gives them something to go home feeling great about each night. (Side note: When Trevor's kids were younger, they thought he was a doctor. He would go home, and they would ask – as little kids do – what Dad did that day. He would say "We made people healthier." Ahhhhh, Dad's a doctor! If you know Trevor, thank goodness that's not the case...) Mission brings an entire organization together towards a common goal that is greater than any one individual, leading to an "engaged" workforce. This has been proven to lead to great companies that perform exceptionally well.
But a Mission has to be authentic. It can't be mandated from the top, and it can't exist to sell business. A well-conceived mission resonates because it works. And too often "bottom line" conversations are binary, leading to a distinction of whether the company is for-profit or non-profit. It's the wrong question and a meaningless distinction. A company's tax status doesn't drive its potential impact. Rather, it is the mission, leaders, business plan, creativity, and culture that matter. In fact, not only does Mission matter, but a mission-orientation gives a company an opportunity to be truly disruptive – a chance to achieve that "double bottom line," or in more relevant healthcare jargon, the "triple aim."
As you saw (if not, watch this!), purpose and meaning are clear drivers for Adam at Landmark Health and are motivating factors for the entirety of their team. Landmark Health exists to provide better, in-home care to the most vulnerable of patients. It's the reason a Nurse Practitioner responds to a 3 am house call; it's the reason the technology and innovation teams travel to remote areas to test new telehealth products. It's why client satisfaction and clinical outcomes are the most important criteria by which the executive team measures success. Net savings is a positive byproduct of this work, but more compelling is that Landmark is providing a fundamentally different—and more effective—clinical experience for patients.
At Oxeon, our mission to Make People Healthier was consciously conceived to be all-encompassing. That starts with us as individuals and as team members. This consciousness helps us identify, align and be part of our clients' end goals rather than just fulfilling a discrete part of their needs. On Day One of our new employee training, as we orient our people around how to think beyond being a service provider, investor or entrepreneur, we examine our mission statement and how it serves to align the work we do. In a recent employee engagement survey, 100% of Oxeon employees indicated that they completely understood our mission and values, and strongly agreed that our company lives by them in all of our decision-making.
As we expand and incorporate new business lines and add new senior leadership, we're working as hard as ever to keep our mission, our values, and our people at the center of what we do. We were recently given an opportunity to be deeply involved in a project that could have a substantial impact on patients who are newly diagnosed with breast cancer. The opportunity may negatively impact our operating income but profits did not factor into our decision to get involved. In fact, we consciously acknowledged the potential for loss and eagerly signed up to go forward in the name of our mission. While you are reading this article, 25% of our company is in a village in Guatemala delivering healthcare and building a clinic, all to Make People Healthier.
Mission enables us to do the "right thing," even when it does not appear to be the "profitable thing." These decisions empower us. Our employee engagement continues to grow, as we see in every quarterly culture survey. Applying our mission to every single person inside the company, to our clients and services, and to our investments and their objectives, is consistently aligning and empowering.
We call lots of health care leaders every year, and even if they're not interested in the role or the idea we're discussing, Oxeon's mission resonates. Landmark Health's mission resonates. Grand Rounds' mission resonates. And it's not just a catchy message up on the office wall. As companies like Landmark Health and Grand Rounds continue providing better care more cost-effectively, we all will continue to realize the power of Mission-driven companies, and most importantly patients will benefit from their care.
Trevor, the Founder and CEO of Oxeon Holdings, and Jacob, Director at Oxeon Partners, are committed to helping mission-driven healthcare leaders and executives build successful companies. Trevor, in his A.D.D-fueled existence as an entrepreneur, has started or turned-around 10 companies. It was only in this most recent chapter of his career, in starting Oxeon, that he fully discovered and realized the power of a Mission and Values driven organization. It is no coincidence that this chapter is the most enjoyable one to date. Jacob comes to Oxeon after working on the portfolio team at a national social venture philanthropy, and prior at a policy and research organization, committed to understanding what works to improve the lives of the most vulnerable kids and families. Trevor and Jacob are based in New York, NY.
Mia, Co-President for Oxeon's Invested Executive Search business, is largely focused on leading the search organization and building leadership teams for high-growth Healthcare IT and Services clients across Oxeon's portfolio organizations. Prior to joining Oxeon, Mia spent 15 years in commercial leaderships roles within the medical technology industry at Guidant, Boston Scientific, and Biotronik, launching disruptive technologies across the US, Europe, and Asia. Mia is inspired by Oxeon’s mission and is determined "to make people healthier" via her work with innovative organizations and in her leadership role here. She is based in New York City.
Most of us don't need a reminder about the glaring lack of diversity in the Boardroom, and I won't harp on that for this article. But I do want to provide some context for the story I will share today about women in the Boardroom.
In one respect, we've made great strides in this area. The national campaign working to increase gender diversity on corporate boards — "2020 Women on Boards" — stated in their 2016 mid-year report that most Fortune 1000s are exceeding expectations for increasing gender diversity: 42% reported having at least one woman on their board; and, of the Fortune 1000 companies with a female CEO or Board chair, 88% and 86% respectively have met or surpassed the benchmark of having 20% or more women on the Board.
On the other hand, the data remains discouraging. Earlier this month, Forbes published an exposé by Sukhinder Singh Cassidy and her new Boardlist Index, which plans to measure public and private Board seats filled by women. She found, as of the end of June 2016, that only 6.8% of private tech companies' and 10.2% of unicorn companies' board seats are filled by women.
I held my breath and decided to take a peek at the Oxeon portfolio; in a quick scan of our investments, I was pleasantly surprised. Of our 20+ investment portfolio companies, there are women on the Board at eight of them—nearly 39%. Of those eight, two are sitting CEOs and two board seats are held by Annie Lamont, a close friend of Oxeon and prolific healthcare investor in her own right.
Simple answers of gender equality aside, why does this matter? My answer is rooted partly in data—many studies correlate stronger company performance with diverse boards (gender, or otherwise), with the logic that diverse boards are better at pushing other angles of opportunity, holding themselves accountable, and thinking about key challenges in new and creative ways. But, as a mom with a young daughter, as a mentor and leader of a group of insanely intelligent, capable women at Oxeon, and as myself — a motivated, career-driven woman — I can't go without saying the issue extends into the emotional for me. And with that in mind, the core issue here is one of access. And we can do better.
Ten percent of Board seats turn over at S&P 500 companies per year. Despite these open seats, women still weren't represented — the churn didn't increase women-filled board seats by even one percentage point from 2014 to 2015. Access to Boards, for anyone, is limited. This is exacerbated by women's continued absence from major leadership roles within their organizations, another theme that has been exhausted at this point. As an executive search professional I knew I could play a role effecting change on both fronts — a serendipitous encounter showed me how.
A Serendipitous Encounter...
"And last on the standby list... Mia Jung." I leapt to my feet, grabbed my bags, and sprinted onto the NYC-bound flight after an action-packed weekend celebrating my best friend's 40th birthday in Miami. Time to sit back and relax...
Frankly, I remember appreciating the "airplane mode" silence as a chance to focus on one of the most challenging searches I had been given to-date. On the heels of a $25M Series C capital raise, the Board of a mobile health technology company had enlisted us to find a Chairperson. I recently, and proudly, had presented a slate of twenty "rock star" candidates to the Search Committee. While they commended me for my efforts, they were quick to highlight that all of my candidates were men. I couldn't believe I had missed something so obvious, and committed to bringing diversity to the slate. As I re-scanned the list of candidates who fit the profile — sitting or past CEO, prior Board experience, healthcare background — nearly all were men. I couldn't help but wonder... by the time my 2-year-old daughter Lexi was an executive, would the same challenge still exist?
Muttering to myself, I caught the attention of the woman to my left; she asked what I did for a living. I shared that I was an executive recruiter and was struggling to build a diverse slate of candidates for this particular Chairperson role. She furrowed her brow and informed me that it had been a journey to her first public board seat, and she was fortunate to have some influential mentors throughout her career. My eyes widened—what were the chances? We discussed her career trajectory within American Express, the US government, Estée Lauder, and finally to her current position at Pfizer and as a Board member for WPP. She gave me a few recommendations, her card (Sally Susman, EVP, Corporate Affairs), and wished me luck.
Well, as luck would have it, a week later, I was fortuitously asked to collaborate with Halle Tecco of Rock Health, and Leslie Henshaw of Deerfield Management, on a "Women in the Boardroom" panel discussion. We were asked to host a panel addressing the challenges women faced in becoming a Board Member—I knew Sally would be the perfect hostess. She graciously accepted, and shared her now-famous "7 tips for Landing a Board Position", which has received more than 26,000 views on LinkedIn.
The panel was immensely successful in stimulating a conversation amongst these healthcare executives. I was surprised to be pulled aside by Leslie after the panel discussion for a brainstorming session. Leslie argued that, given the caliber of women in attendance, any one of them could have been considered "Board-worthy" but seemed to lack mentors, support, and, most importantly, access to opportunities traditionally granted to men. A-ha.
In our conversation, Leslie also called out the unique vantage points from which Deerfield and Oxeon could approach this challenge: we each had portfolios of companies we were starting, had invested in, or were working with closely, and thus, had access to a much higher volume of Board seats in comparison to other constituents. To do this, however, we recognized three efforts were vital for success:
- 1. We needed to commit to granting appropriately skilled women Board seats across our respective portfolios
- 2. We needed to assemble a select group of women to participate
- 3. Recognizing that many of these women may have never before sat on a Board - public or private - we must prioritize building a support network, creating a series of educational sessions, and providing access to mentorship from women who have previously served on Boards.
Women in the Boardroom 2016
Fast forward a year later. We recently completed our first Women in the Boardroom series, co-hosted by Oxeon and Deerfield, as a direct result of that brainstorming session. With the ultimate vision to match this group of women with appropriate opportunities across our respective portfolios, Morgan Flannery, Oxeon co-Founder, and Karen Heidelberger, a Partner at Deerfield, helped build an educational series. Bringing together an intimate group of highly qualified women, the series focused on highlighting the key responsibilities and challenges of a Board Member. We were tremendously lucky to have my old seatmate Sally Susman (EVP, Corporate Affairs, Pfizer), Esther Dyson (Founder, HICCUP/ Way to Welville), Catherine Bromilow (Partner, PwC's Center for Board Governance), and Annie Lamont (Managing Partner, Oak FT/HC) as speakers across four events, covering topics ranging from how to interview for a Board, to specific case studies on the intricacies of a Board role and how to navigate them.
Many themes emerged over the course of these four sessions. Ironically, many had nothing whatsoever to do with being female, but extended into the intricacies of taking a Board seat for the first time. One clear theme, however, emerged around the power of networking. We felt, from the beginning, that a series rather than a panel, would allow women to connect and build a foundation for reciprocal relationships, which we already see happening. During one of our sessions, we learned a best practice for networking: always have the names of five women at the ready should you be asked to provide recommendations around an open Board seat. Given such limited Board vacancies, it is critical for women to be well-positioned to seize an opportunity when it arises. We feel this Women in the Boardroom initiative is a crucial next step, in not only discussing the gap in diversity, but creating an approach to act on available opportunities.
This call to action, exemplified years ago by my first conversation with Sally Susman aboard a flight from Miami to New York, is why this approach is different than other female executive initiatives. This all happened when two women made a connection, but weren't satisfied with just "talk." We are eager to see the fruits of our efforts to build a source of Board opportunities, but, more importantly, a network of supportive women, potentially resulting in the placements of high-caliber talent in these coveted positions. We believe strongly that small changes—acting on the power of networking—can make a huge difference, and it's clear that this is an effort that can exist outside of the Oxeon and Deerfield networks.
Tom, a Director at Oxeon, focuses on building leadership teams for high-growth Healthcare IT and Services clients, including athenaHealth, ABILITY Network, Crossover Health, Intermountain Healthcare, Pamplona Capital, and many others. Most recently, Tom has driven Oxeon Holdings internal growth, working to shape the company's go-to market efforts in the organizational design and development space, as well its portfolio expansion into the data science and machine learning community. He is also involved in internal operations and Oxeon's ongoing efforts to support portfolio investment's commercial activity.
The numbers are staggering. From 1999 to 2014, over half a million Americans died from overdoses of drugs, both legal and illegal, and more than half of the overdose deaths in 2014 involved some type of opioid.1 The heroin crisis that preceded this current epidemic leveled communities across the country, and even today, 125 Americans will die from heroin-related deaths.2 As we go about our lives in the era of 24-hour news cycles, we all too often find ourselves attempting to comprehend crises like this one, but unable to do so, we shake our heads and move on. Not in this case.
These numbers aren't just statistics — these numbers are personal. While writing this article, I've had two teammates experience tremendous loss at the hands of this country's prescription drug problem, and it hurts. The article that follows benefited from tremendous input, support and collaboration with Oxeon teammates, and outstanding executives and mentors across our network. What's remarkable here is that many of these same people are in a position to help SOLVE the problem, and that potential for change is where I want to focus.
Late last year, the Obama administration enlisted the help of over 40 national provider groups to tackle the nation's growing prescription drug abuse problem, and the epidemic of heroin-related deaths that it has precipitated. The NBA, Google, and the New York Times lined up to donate ad space for PSAs, and retail pharmacies accelerated their community outreach and training efforts across the country. Dr. Oz has even taken time off from debating late night television personalities to support the cause.
Here's what we've learned from early efforts at addressing the epidemic: the startling data makes a clear case that the proliferation of prescription opiates has created a largely dependent class, a majority of whom will at some point — should they survive addiction and the specter of overdose — be thrust into the illicit drug trade in search of their next dose after being denied their prescription fix. We as a nation now know how this generation of opioid abuse has formed. The old adage "admitting you have a problem is the first step..." could not ring more true. With nearly 32% of all opioid prescriptions subsidized by employers (resulting in $8 billion in additional spend per year)3, we have the data and resources required to identify pre-existing patterns and symptoms of those already trending or actively engaged in a cycle of addiction.
Established organizations like Anthem and Cigna began their own formal outreach to patients this summer who fall into prescription patterns that indicate the potential for abuse. Other groups such as the Pharmacy Quality Alliance and Prime Therapeutics have done tremendous work examining the clinical implications of multi-prescription overdose victims and their interactions with their pharmacy benefits, as well as the performance of CMS' Overutilization Monitoring System in patient populations. Their work has already enabled managed care organizations to identify patients for case management and intervention. We've taken the first steps, but we're leaving too much on the table, with a gap in connectivity - combating this epidemic will require us to work smarter, and be coordinated across the healthcare ecosystem.
Employing the same methods Facebook uses to serve us ads, and Amazon uses to accurately predict our optimal laundry detergent ordering cycle, we can "capture" patient signals and patterns that exist before the first prescription is filled and sold off to the highest bidder, or worse, over-utilized in a fatal outcome. Instead of falling back on traditional means of examining usage, we need to double-down on future-state, data-driven approaches to saving lives.
Oxeon client Cogitativo puts these practices to work, combining a team of world-class data scientists and best-in-class machine learning production. Using descriptive, predictive, and prescriptive analytics, CEO Gary Velasquez and his team have identified thousands of patients seeking poor performing, out-of-network medical and mental health services that impact quality of care.4 Using data science and machine learning, we will better understand how changes in care coordination impact our ability to intervene and drive recovery, moving to proactively engage those at risk and get them out of harm's way.
We need to build on this approach, and encourage national payers and providers that are focused on utilization to invest more deeply in acting on available data that clearly indicates patterns of abuse. The next frontier requires us to proactively identify our neighbors who are at risk and get them out of harm's way, all while expanding our knowledge of what's working in the fight against the cycle of abuse. A critical first step will require a thorough examination of how to advance our efforts by leveraging data science and machine learning.
Working in this data-driven way to combat the opioid epidemic also presents us with opportunities to apply our learnings to other disease states. We could begin to identify patients with depression or other sources of fraud and abuse tied to prescription drugs. We could use this data to create engaged, disease-specific care management and community-based, tech-enabled solutions. Oxeon client and portfolio investment Quartet has worked on the disease state front and done just that, partnering with leading Blues plans like Highmark to identify patients with undiagnosed mental illness and addiction challenges, coordinating specialty treatment before acute symptoms emerge.
In March of this year, a STAT-Harvard poll found that 41% of Americans knew someone that had abused prescription painkillers in the last 5 years.5 Efforts are underway to mobilize public resources to combat this public health crisis. But the epidemic will not slow if legacy organizations and new ventures do not leverage existing data assets in new ways to drive treatment and identification to combat the crisis. We can begin to recover from one of America's bleakest public health moments and spare countless neighbors and friends from the pain of addiction and its grip on their future.
It is my hope that we embrace the opportunity to begin or continue to reach into their communities, both local and national, to solve this crisis. All of the data and science cannot replace the human element of support for those who most require our empathy and compassion.
Get help for and seek resources to support those battling with substance abuse problems: 1-800-662-HELP.
1 CDC. Increases in Drug and Opioid Overdose Deaths — United States, 2000–2014. January 1, 2016 / 64(50);1378–82
3 ASAM. http://www.asam.org/docs/advocacy/societal-costs-of-prescription-opioid-abuse-dependence-and-misuse-in-the-united-states.pdf
John serves as a Senior Associate at Oxeon and has been largely focused on building leadership teams for high-growth Healthcare IT and Services clients including Landmark Health, Clover Health, GoHealth Urgent Care, Oak Street Health, AVIA Health Innovation, Bright Health, and many others. John has also worked closely with Oxeon's large non-profit clients, including leading Chief Innovation Officer and Chief Marketing Officer searches at Sutter Health and working closely with Intermountain Healthcare on their innovation strategy. John is also actively involved in evaluating and managing the firm's investment portfolio and equity-oriented strategy, sourcing and evaluating multiple direct Oxeon investments. John is based in Chicago, IL.
We talk a lot about different kinds of capital in the venture world: direct investment capital, human capital, relationship capital. The last few years have seen an unprecedented amount of venture capital funding into early stage companies. I was lucky enough to listen to Bobby Franklin, the President and CEO of National Venture Capital Association (NVCA), speak at MedCity Invest, a recent healthcare investment conference in Chicago. One of the key themes of his presentation was the growing rate of venture investments in early stage companies - VC dollars invested increased for the third consecutive year in 2015, hitting its highest annual amount mark since 2000. Without getting into comparisons to 2000, there's a simple truth within this data: companies are flush with cash.
Bill Gurley's excellent recent blog post, "On the Road to Recap," highlights some of the problems this has led to, particularly with the "Unicorns" of Silicon Valley: record high burn-rates (which he estimates might be 5-10x those of the 1999 timeframe), "most companies operating far, far from profitability," and "excessively intense competition driven by access to said capital" for companies chasing the increased valuation headlines. This "capital glut" within many of the Unicorns of Silicon Valley may ultimately lead to actions undesired by any founder, investor, or employee of these companies: down-rounds, loaded term sheets, and unachievable sales goals. According to Gurley, "more money will not solve any of these problems - it will only contribute to them. The healthiest thing that could possibly happen is a dramatic increase in the real cost of capital and a return to an appreciation for sound business execution." For entrepreneurs and investors seeking returns in this environment, I would add to the list of Gurley's remedies: a deep appreciation for the value of human and relationship capital.
Let’s take a second to define "human capital" and "relationship capital" and what it means for scaling venture-backed companies today. Human capital encompasses everything people bring into an organization – their skills, experience, grit, passions, etc. Relationship capital is much more than someone simply joining an organization with a "rolodex" – it’s the sum of an organization’s connectivity to the marketplace: how will this company be received by anchor partners or customers? How will this company navigate the complex relationships within the existing healthcare ecosystem? Both forms of capital are difficult to quantify, and rightly so, as they’re both fundamentally about people.
In healthcare, I would argue that human capital and relationship capital are even more valuable. Established players are not easily disrupted; sales cycles into the provider and payer space do not match those of a traditional enterprise software company; and, unfortunately, the industry can be quite unforgiving to first-time healthcare entrepreneurs. Great human capital can navigate most effectively through the complex term sheets Gurley warns may be incoming. And like top tier venture capital, great human capital attracts other A-players into organizations. Great relationship capital can accelerate healthcare’s notoriously long sales cycles. Great relationship capital can lead to a company partnering with a top tier anchor client.
It’s no secret that venture and private equity firms looking for outsized returns have been forced to put more and more dollars to work into earlier stage companies. At Oxeon, we’ve seen this trend in real-time: multi-billion-dollar private equity funds financing companies when they are no more than a PowerPoint deck put together by a brilliant entrepreneur, strategic and corporate funds increasingly funding early stage companies where they can add immediate strategic value, etc. Venture capital firms are building out more robust, and more strategic, human capital and business development teams for their portfolio companies as they continue to find competitive advantages in this capital-rich fundraising environment. On the portfolio company side, the Chief People Officer role has emerged as one of the most critical early executive hires. With an executive focused exclusively on talent – and when talent is treated as a strategic focus and not simply a function of HR falling alongside other administrative responsibilities – companies best prepare themselves for massive scale and for putting their hard-earned investment capital to its most effective use. A Series A company I worked with recently brought in a Chief People Officer as their first executive hire post-financing in anticipation of more than doubling their employee base over the next year.
Gurley clearly identifies the downsides of some of the investment “capital glut” we’re seeing in the venture space, and the winning companies will be those that maximize the value of other forms of capital – human, network, and experience. At Oxeon, we seek to bring these additional sources of value to our clients and investments through our intense focus on relationships, talent, and organizational design. While the greatest companies are always built by the most exceptional people, I believe we’ll see that proven out more when we make it to the other side of this venture capital cycle. Overinvest in relationships and people – with human capital and relationship capital, there’s no such thing as a glut.
Royal is co-founder and Chief Growth Officer of Docent Health. He led the ideation and incubation phases of the business in the Oxeon Venture Studio, working closely with internal teams and friends of Oxeon to test, refine and build the business. His focus on the convergence of the patient experience has been honed over fatherhood of three children and a variety of management, strategy, and operational leadership roles in the provider setting - starting at Deloitte Consulting and most recently from Aetna / Healthagen, where he worked in the Innovation and New Business Development group before joining Oxeon to help build out the Venture Studio.
Year: 1998 Place: The Harvard Business Review Topic: The shifting consumer landscape
Journal contributors B. Joseph Pine II and James H. Gillmore are positing a completely new way of thinking about how consumers value goods and services. The duo goes on to proclaim "the next competitive battleground lies in staging experiences." This was the core thesis of their editorial "Welcome to the Experience Economy"; that products and pricing were now secondary to the consumer experience. Revisiting that piece, nearly 20 years later, we find ourselves in the very ecosystem they predicted. One where consumers aren't satisfied with decent, they expect delight. And providers don't just work to deliver a service, they strive to choreograph customer journeys and craft branded experiences that differentiate themselves from competitors.
As you undoubtedly know, consumer empowerment has shifted a variety of landscapes, from banking to hospitality, retail to travel. Across each, digitization and the redeployment of labor have reshaped nearly every preconceived notion of what a standard service experience should be. Today when I think back and recall standing in endlessly wrapping queues at the airport to wait for an airline representative to print me my paper boarding pass, I can't help but think "how primitive!"
Unfortunately, healthcare has been startlingly idle when compared to these adjacent industries.
Which is why we created Docent Health.
At Docent Health, we’re working not just to empower provider systems with amazing technology, but to completely redesign the end-to-end patient experience.
With the unprecedented momentum we are seeing today – as provider systems shift from a physician-centric delivery model to a customer-centric delivery model – top clinical outcomes are not enough to create lasting customer satisfaction and loyalty. Modern health systems are competing for patient volume and retention as systems consolidate and new healthcare delivery entrants (retail medicine, telehealth) emerge.
Unpacking this further, market forces such as federal reimbursement changes (HCAHPS) and increased patient consumerism driven by greater cost exposure and access to information (Yelp, Healthgrades, etc.) are empowering end-consumers in the exact same manner we’ve seen in the aforementioned adjacencies.
However, the demands of this tectonic shift go beyond technology. Health systems are being forced to completely rethink customer and product segmentation, non-clinical experiences, and managing against customer lifetime value.
Now, for a moment, translate all of those thoughts into a hypothetical patient experience. Imagine if every member of a health system - from the scheduling rep to the nurse practitioner to the team member preparing your room – knew you on a first name basis. And each of them knew the relevant information that mattered to you, for their job. Like that you prefer office locations near your work, that you want your discharge plans in a digital app, that the sink in your hospital room has been dripping all night. Think of how these seminal healthcare moments would be reshaped.
And moreover, imagine there was someone to guide you, that recognized your personality, your preferences, and your emotions as you went through your healthcare journey, someone who understood what you’ve been through and where you’re going.
In this experience economy, this shouldn’t be theoretical – this is how we at Docent Health believe every patient can and should be treated.
The beauty of this type of platform is that it goes beyond the consumer. I subscribe to the philosophy that if you work in healthcare, you generally arrived here out of a desire to help and assist others. And yet, many of us in the industry struggle to feel that sense of purpose and provide the level of empathetic, high-touch care we desire.
Be it a result of dated processes or legacy systems, it’s grown increasingly difficult for healthcare workers to see patients as people. And this is the other half of the experience coin. We have the opportunity not to just make the patient journey better, but to empower staff to relate to people and give the level of care so many seek. Whether it’s real-time patient sentiment feedback, dynamic task tracking, or the ability to seamlessly interact with peers to enable service recovery, Docent Health seeks to not only reengineer patient experiences, but to rethink how service providers collaborate and engage with the people in their care.
It’s with this unwavering focus that Docent Health was born. What was incubated in the Oxeon Venture Studio in the summer of 2015 has quickly earned seed funding (from healthcare powerhouses Bessemer Venture Partners, NEA, and Maverick Capital), has landed its first cohort of anchor customers, and is growing an exceptional team.
It’s a thrilling time to be in this space. And the beauty of this moment in time is that there’s a playbook already in front of us. Restaurants and hotels, airlines and banks – each has been rethinking customer journeys over the last three decades. The experience economy gave them no choice but to innovate and evolve, and now it’s pushing healthcare to do the same. This is precisely why Docent Health has worked diligently to bring together not just a core team of healthcare veterans, but also pioneers of service excellence from those exact industries.
It’s with this team, and with this shared mission, we aim to not just deliver an unparalleled platform, but to truly reshape the delivery of healthcare services. Perhaps one day not so far down the road, when we’ve accomplished our goals, we’ll all be able to look back at the current state of experience in healthcare and think to ourselves, "how primitive!"
Oxeon Senior Associate John Ferry weighs in at MedCity Invest as a Speaker during their Startup Workshop: Design a Product with Population Health in Mind. John will be speaking alongside Veneeth Iyengar of Sage Growth Partners, Alexis Skoufalos of Jefferson College of Population Health, Garrett Vygantas, M.D. of Jump Capital, and Stephanie Kovalick of Sage Growth Partners. The team will work with select startup companies to help fine-tune their products and processes so they consider population health in their designs, increasing their likelihood for reimbursement and higher profits. MedCity Invest Speakers >>>
Oxeon is pleased to announce the placement of Kim LaFontana as Chief Product Officer at Docent Health. Kim has previously served as a Managing Director at The Advisory Board Company and in Operations and Corporate Development roles at athenaHealth. Docent Health's mission is to help health systems build and retain lasting patient relationships. Docent was founded and launched out of Oxeon's Venture Studio.
New health insurance startup Bright Health today announced it has secured $80 million in Series A funding led by Bessemer Venture Partners and New Enterprise Associates (NEA), with participation by Flare Capital Partners and others. Bright Health will use the funding to support its nationwide rollout to the individual health insurance marketplace. Click here for more information >>>
Simeon Schindelman has joined Brighton Health Plan Services as the Chief Executive Officer. Previously, Simeon was CEO and Chairman at Bloom Health and in executive roles at Medica Health Plans and UnitedHealthcare. Brighton Health Group is a healthcare enterprise dedicated to developing innovative products that align the interests of healthcare providers, employers and other plan sponsors, families, and payers. Their portfolio includes Oxeon client Privia Health, MagnaCare & DWELL Family Doctors. Click here for more information >>>
Deerfield Management and Oxeon Holdings have joined forces to expand their leadership roles in supporting innovative programs and practices to foster improved diversity in the workplace. Beginning in February and running through May, over 30 female senior healthcare executives with interest in corporate governance will receive training and guidance designed to help them obtain their first boardroom role. Click here for more information >>>
"I think health systems are starting to transform the way they think about patients, to think about them more as consumers and start providing services to them as they might experience in other industries. These services could include online access and making easier appointments or referrals. Healthcare systems need more real-time feedback on whether they are doing a great job with the patient and the patient experience. Part of the technology we’re building helps them focus on that and helps understand the patient sentiment throughout the journey." - Paul Roscoe, CEO, Docent Health Read the article here >>>
Oxeon is pleased to announce the placement of Brian Drozdowicz as Executive Vice President of Product Management at Verisk Health. Brian joins from Caradigm, where he served as Senior Vice President & GM, Population Health and Analytics. Verisk Health is transforming the business of healthcare by providing data services, analytics, and advanced technologies that answer the industry’s most complex challenges. Verisk Health is a subsidiary of Verisk Analytics.
Oxeon clients Omada Health, Bright Health Plan, VillageMD, Quartet Health, and Aspire Health figure prominently in Ezekiel Emanuel's Fortune article on "How Obamacare is Changing the Startup World". Read the article here >>>
Dan Orenstein joins the Health Catalyst executive team as General Counsel. Dan has spent the past 10 years at athenahealth where he most recently served as General Counsel, Senior Vice President, and Board Secretary. Health Catalyst uses data analytics and warehousing technology to help health systems leverage their data to improve quality of care, increase efficiency and optimize costs. Click here for more information >>>
Sarah serves as a Senior Associate and has been largely focused on building leadership teams for high-growth Healthcare IT and Services clients including Health Leads, Accolade, Health Catalyst, Grand Rounds, The Chartis Group and Kit Check. She is currently on a tour of duty within Docent Health, the healthcare technology and services company that was built within Oxeon’s Venture Studio, backed by Bessemer, NEA and Maverick, where she serves as the Head of People & Talent. Sarah is deeply passionate about healthcare innovations focused on health equity and increasing access to value-based care. As I thought about how I would craft this quarter’s FWIW article on social determinants of health, CMS totally derailed my plan. I was going to start by hooking you with a lofty paragraph about my personal experience working as a clinical social worker in an under-resourced hospital in the Bronx. But then, CMS had to outshine me by announcing their $157 million innovation model focused on social determinants of health.
If you don’t mind, I’m going to tell you my lofty story anyway.
In 2011, I opened a yellow envelope that held my destiny - my internship destiny, that is. I soon found out that I would spend the next year of my clinical social work program at a hospital in the Bronx, rotating through nearly every unit in the hospital that spanned the lifecycle, from the neo-intensive care unit to hospice. During my year at this internship I learned two important things: 1) despite my expansive student loan debt, I had chosen one of the least lucrative fields imaginable, 2) (most importantly), there is a strong correlation - so striking, that it is visible to the untrained eye - between socio-economic status and quality of healthcare. Through my personal experience as an intern, as well as the research I soon dove into during grad school, I discovered that this under-resourced, inefficient, and uncoordinated hospital in the Bronx was the exact system positioned to serve the patients that needed resources, efficiency and coordination the most. For the first time, I caught a glimpse of the strong relationship between quality of healthcare and social standing.
You can only imagine my excitement when Oxeon began working with Health Leads – the leading organization moving to bring social determinants of health to the forefront. To put it mildly, I was giddy. Over the past year, we have partnered with Health Leads on their President, Chief Clinical Officer and Managing Principal, Strategic Partnerships & Innovation roles, and have been honored (to say the least) to support their innovative and relentless mission.
Research on social determinants of health (the conditions in which people are born, grow, live, work and age; shaped by the distribution of money, power and resources) is growing, and given its alignment with the incentives of value-based care, we are seeing health systems and healthcare leaders across the country begin to prioritize the integration of social and basic needs into their care settings. Scratch that – we are actually seeing health systems and healthcare leaders struggle as they try to figure out how to integrate social and basic needs into their care settings.
We’ve all known that social determinants are important in the context of healthcare, but for the first time ever, they are taking the main stage in the dialogue around the quality and cost conundrum. CMS’s $157 million, five-year investment in the first-ever innovation model focused on social determinants will focus on “building alignment between clinical and community-based services at the local level” and reducing healthcare costs by “providing intensive community service navigation” to meet patient needs. The connection between social needs and clinical outcomes has never been so clear.
In the healthcare IT and services space, we spend a lot of time thinking about how to solve the problems of a patient once they get into the healthcare system. There is a growing emphasis on starting this problem-solving process one-step earlier; before they enter the healthcare system. This begs the questions – where does healthcare start? And, what is the healthcare system responsible for solving?
Rebecca Onie, CEO of Health Leads, an organization that equips healthcare institutions with the knowledge, insights, and tools – screenings, workflows, training, analytics, customizable technology – to mobilize healthcare staff to work side-by-side with patients to access existing community resources, has spent her career thinking about these questions. As a leader in the social determinants of health movement, I sat down with Rebecca to get her insights into the social influences within healthcare, and how she and her team have thought through the process of minimizing inequalities and leveling the playing field for all patients. Rebecca commented,
The question around ‘what counts as healthcare’ is a big one. But the bigger question is, why have we chosen to draw the boundaries of healthcare where we have?, and how do we redefine those boundaries to make patients truly healthy? How do we redefine them to become boundaries that stand the test of time? People get overwhelmed by the idea of broadening our current construct of healthcare because it seems too overwhelming – we simply can’t carry the burden of being responsible for everything. But, the choice isn’t between our narrow definition of healthcare today and solving the war on poverty, it’s about finding the right sweet spot for the role healthcare institutions can play. The boundaries are simply too tight right now – why do we count diabetes and obesity under the healthcare umbrella, but not the challenge of having a refrigerator to store your insulin? Why do we know everything about our patients’ clinical comorbidities, but very little about their social comorbidities? We need to collectively find reasonable ways to assume more responsibility for these critical drivers of health.
“So”, I asked Rebecca – “what does this CMS announcement actually mean for the market?” She responded,
Being concerned about social and basic needs is no longer optional. It’s now widely recognized that just 10% of health outcomes are attributed to medical care, while 70% are tied to social and environmental factors and the behaviors influenced by them. The announcement from CMS is a huge market signal – they are acknowledging the connection between social needs and care delivery in a real way. Social needs are a key driver of quality and costs. The healthcare sector needs to be thinking about how we bring expertise around this to our teams. This is not about expertise in poor people – let’s be clear - this is about expertise in data, in quality improvement measures, in bringing real rigor and thoughtfulness around how we integrate addressing social needs into our workflows to drive impact on outcomes and cost.
As we redefine Oxeon as a healthcare growth services firm, our job is to not just track where healthcare is right now, but truly track where healthcare is going. Unfortunately, social determinants of health isn’t going anywhere, folks. It’s here to stay, and it’s here for us to solve.
As I think back on my wild and crazy year at that hospital in the Bronx, I imagine what would have been different if each of those patients I worked with were supported with basic and social needs – what if the elderly man that was deemed “non-adherent” to his medication because he couldn’t get a ride to a pharmacy, was connected to a transportation service? What if the twelve-year-old boy with chronic and severe asthma who lived in an area referred to as “Asthma Alley” instead lived in an environment with clean air? What if the woman who came to the outpatient AIDS clinic didn’t have to choose between paying her rent and paying for her HIV medication?
I can only imagine that it would have been really, really different.
Lauren is a Principal at Oxeon Partners, working across the holding company and increasingly in the health system and provider technology space. This focus area has been honed over a variety of management, strategy, and operational leadership roles - starting at the Advisory Board Company and most recently from five years at the McKesson Corporation, where she worked in the Corporate Strategy and Business Development group before launching a new business line focused on clinical data interoperability, as well as the supporting industry nonprofit, the CommonWell Health Alliance. The night before the JP Morgan Healthcare Conference started in San Francisco, I had a dinner conversation about likely industry buzzwords at the event and for 2016. While some derivation of consumerism received the most votes, my suggestion of “provider innovation” got a lot of head nods once people thought about it. And I don’t think it was just because five minutes prior I had offered to angel invest in their future companies if I won that week’s $1.5B Powerball lottery.
Within the provider world, innovation has traditionally focused on tech transfer and commercialization - supporting and developing internally sourced inventions into intellectual property that can be licensed or sold to external parties.
While a handful of hospitals and health systems have more broadly defined innovation for more than 10 years, an increasing number of health systems have started dabbling in three other areas of early stage innovation as well:
- Internal company development: Incubating internally generated ideas into externally viable products or services.
- External partnering and anchor relationships: Establishing relationships with early stage externally developed companies, either as an initial anchor customer or marketing partner, in exchange for equity or a reduced customer fee.
- Investing: Deploying health system capital into externally developed companies in exchange for equity.
In a sector that is stereotypically risk-averse, what’s changed?
My Oxeon colleagues and I talked with 20+ health system and corporate ventures groups inside and outside of health care to understand this trend better. We found four main reasons for the increased interest in innovation and growth: a previously lost revenue opportunity (e.g., absent a forum to support and develop a staff idea, the system had lost out on the upside of a new venture); a desire to diversify beyond the clinical core; an opportunity to drive brand value; or my personal favorite, good old FOMO – seeing their peers doing it and fearing they are missing out.
While the rationale for starting provider innovation groups were quite consistent, the ways that health systems have executed on them vary widely. Most innovation groups operate & organize to align with health systems’ strategic priorities – in fact, many groups prioritize clinical or mission value vs. financial returns. There are thus only a handful of leading health systems that are solely or primarily focused on venture investing. In these cases, they are typically deploying sizeable chunks of capital from their own health system balance sheet and/or on behalf of other limited partners into externally created early stage ventures across the health care space.
The vast majority of health system innovation groups though are trying to do a little bit of everything across the four areas of innovation noted above. And while trying to accomplish multiple types of innovation on one team is possible, the reality is that most of these groups are small and often struggle to execute myriad objectives. After all, wanting to be innovative does not automatically generate results. Ultimately the right ideas, people, and capital deployment are necessary to create outsized impact.
We thus saw several best practices that in combination can set up health systems for a higher likelihood of innovation success:
- Clear mandate, strategy, and understanding of core competencies: Like any business, you need clear expectations, focus, and milestones to manage and track towards. Not every health system should be dabbling in every area of innovation or subsector of health care. Identifying and playing to your strengths is also more likely to attract the right types of investment or partnership opportunities.
- Balance of C-suite/board support with autonomy to execute: C-suite champions help innovation groups maintain funding that requires a different lifecycle than a traditional hospital service line. However, innovation groups also need latitude to make decisions and move quickly in the non-clinical, early stage space – so a separate legal and compensation structure is structurally ideal.
- Independent compensation structure: Incentive systems are ideally structured to build and support a culture of innovation across the health system. For example, health system employees that support the development or assessment of a new technology could receive equity or upside bonuses, without subjecting them to the traditional early stage venture risk. Employees that are dedicated to investing or early stage ventures though should be able to more directly experience the risk/reward upside, which is often challenging if entities are held to the same compensation structure as other health system employees.
- Ability to run like a venture portfolio: Regardless of where a health system focuses in innovation, they need to approach it like an early stage portfolio manager and realize that not every investment or incubated company will succeed. Innovation and growth requires the discipline to manage a pipeline of ideas, converting them into a series of bets, and manage expectations that success is a mix of risk and returns, not a home run every time.
Speaking of investment home runs, I won $8 in that Powerball drawing. So until the next $1B+ drawing, I look forward to working with many of you and our other clients on making provider innovation not just a buzzword, but a sustainable trend in 2016 and beyond.