Managed Care Leader Interview
Managing Partner at Health Enterprise Partners, LP
- The Interview
This interview has been edited for length and clarity.
Q1: Looking back on the last 90 days, what are some of the bigger deals (M&A, funding rounds) that you think will have a big impact on the Medicaid market this year?
I intend to answer this question by not pin-pointing a transaction, rather an over-arching market viewpoint. Meaningful use was created 10 years ago by the American Recovery and Reinvestment Act (ARRA). It encouraged the baseline adoption and utilization of electronic medical records. The investment drivers today center on how to combine and leverage a myriad data sets – administrative, claims, clinical, and social determinant – to drive predictive and meaningful analytics.
Here is an example. Cerner and i2i, which services 25% of the FHQC centers and 20 million Medicaid patients through its technology platforms, announced a few weeks ago that they are working together on a bi-directional integration to provide insights to help providers better meets the needs of their Medicaid population. As the over-arching forces continue to shift to value and managing populations, I think a vital element includes an integrated platform which help drive the activity and limited resources of providers to service the Medicaid population. This underlying data, appropriately de-identified if necessary, which is captured at the FHQC level can also have a tremendous impact as health plans think about member activation and engagement.
In short, it will take the intelligent amalgamation of various data streams as well as integrated labor model (clinical and non-clinical) working in concert to help achieve improved outcomes for the Medicaid population. The upside is this approach can be migrated into other managed populations.
Q2: Looking ahead for the next 90 days, how active do you think capital investment players will be in relation to investments with potential Medicaid revenues?
My view is that there will be a cooling effect in the very near term. Granted, there is an abundance of capital to be deployed largely within the private equity sector. However, I think the political swirl regarding the impeachment topic and the election cycle is creating a wave of uncertainty in the market. The projected enrolment target for Medicaid in 2024 of 81 million - up from 75 million last year - paints a picture of steady and consistent growth. Of particular interest is the area of managed Medicaid which now represents more than half the total category spend. This growing trend around managed care also bridges to the topic above around predictive analytics.
I think there will be continued focused investments around point solutions near term for Medicaid, but I question whether we will see larger funds making more “market-centric” bets or strategic players heading down the M&A pathways.
Q3: What advice would you give to your peers about vetting potential healthcare opportunities?
As a jump off point, I think a team with deep domain experience and selling into health care is absolute must. Long sales cycles are unfortunately a hallmark of our sector. In thinking about the companies I have been fortunate to work with over the years, the CEO’s share a single and unifying theme - an obsessive and collective focus on the customer.
Innovation in healthcare simply has to complement and leverage existing workflows as well as notably enhance the existing incentives or payment streams. The irony, and a remarkable challenge, is that the first hurdle to driving innovation is to ensure there is limited change to adjusting workflow or adjusting the status quo.
So, what does the trifecta include when evaluating an opportunity? I think the 3 variables include: 1) very low workflow friction; 2) upside for existing incentives and 3) lift on market share.
Prior to joining HEP in 2009, Dave was a Vice President for Susquehanna Growth Equity, a private equity group focused on growth stage technology companies. He was formerly the President and Chief Operating Officer of Onward Healthcare, Inc., a Welsh, Carson, Anderson & Stowe portfolio company. Prior to Onward, Dave was an Executive Vice President of Pinnacor, Inc., a General Atlantic portfolio company, which went public.
Dave is currently on the board of directors of Bardy Diagnostics, Catapult Health, eVariant, Intraprise Health, Jet Health, and Payer Compass. Dave previously served on the board of directors for HealthQx (acquired by McKesson), MobileMD (acquired by Siemens Healthcare), Nordic Consulting (recapitalized by Silversmith Capital Partners), Privia Health (merged with Brighton Health), Shyft Analytics (acquired by Medidata) and Vitals.
He is on the faculty of both Columbia Business School and the School of Professional Studies at Columbia University. In addition, Dave is also a member of the Healthcare Initiative Advisory Board at Harvard Business School. Dave is a distinguished graduate of the United States Military Academy and holds an MBA from Harvard Business School.