Healthcare Investment Leader Interview
Operating Partner, Frazier Healthcare Partners
- The Interview
Interview with Brett Moraski
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 this year?
I think we should look at this in 3 buckets:
1) The corporate space (for things like the CVS/Aetna deal)
2) Private equity
3) Venture capital
For the corporate space, the headliner was absolutely CVS/Aetna. To a lesser degree, the Cigna-Express Scripts deal. But CVA-Aetna is unique because it really is trying to drive a new model of care in the market, not just trying to make numbers work differently. They have a strategy of engagement they are laying out, and it aligns with what health plans have been talking about, but have not been able to deploy. The new entity will be using sites in the community to build wellness on the insurance side of house.
In the private equity space, I think about the Kindred-Humana deal. Humana worked with TPG Capital and Welsh, Carson, Anderson and Stowe to buy Kindred. Humana was already focused on driving care into the home and now there are a lot of assets with Kindred to do it. This deal was also interesting because you had a large insurer working with PE to do a complicated deal. That’s unique and it reflects how people will need to be creative in future auctions. You will need to be creative in how you drive value thinking of different angles.
For the venture capital space in healthcare, what stuck out for me are the heavy investments on the insurance side for things like Oscar/Alphabet, Clover, and Bright. We now have very large, well-funded startups going after a traditionally very narrow market with fewer entrants on the insurance side. The idea is that deploying new tech and marketing differently and doing partnerships differently will cause a lot of impact. This is expected to impact Medicare Advantage, but also Medicaid and commercial markets that are testing new models.
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?
Healthcare as an investment area is as active as its ever been in terms of both valuations and volume. This activity is causing people to look more broadly than before. The best example is the Medicaid space. Medicaid traditionally has been a space that people have been less comfortable investing in because of reimbursement risk. And now there are now some new dynamics around things like work requirements that can reduce enrollment in certain states. That’s on the negative side. But on the positive side, you have states like NC going to managed care for the first time. So there are big adds.
In reality, the Medicaid space is a very big market. Its more diverse than people on the outside realize. I do see the comfort level increasing for Medicaid investment. Its simply too large to ignore, even if traditionally it has gotten less attention.
One area of new focus will be things that tie back to social determinants. There is a lot of applicability in engaging with members to improve costs and care.
Q3: What advice would you give to your peers about vetting potential healthcare opportunities?
What’s tricky about healthcare is that people treat it all as one industry vertical, but really its a collection of a thousand different niches. There’s Medicaid, care technologies, provider groups, managed care, pharma, finance, and on and on. Healthcare is a multi-trillion dollar space with lot of billon dollar businesses within it.
You must get expertise or surround yourself with people that have it. Whether its in reimbursement, regulations or another area- specific expertise is key.
You also have to understand how to pivot and tack to all the changes that have happened to healthcare in the last decade. Healthcare has moved fairly rapidly in lot of different ways, even though at times it feels like an iceberg melting. That change creates opportunities, but you have to think through the fundamentals of the investment horizon and how to align with where the markets going and not where its been.
Mr. Moraski brings Frazier Healthcare Partners particular expertise in payor services and significant experience as a senior executive with some of the nation’s largest health plans. He joined Frazier in 2015 and serves as Chief Strategy Officer for Matrix Medical Network, a Frazier portfolio company and pioneer in the field of home-based medical assessments and related services such as screening, chronic care management, physician engagement and analytics.
Previously, Mr. Moraski was a senior operating advisor at LLR Partners and Corporate Vice President of Transformation at WellPoint, a Fortune 50 health insurance company, where he headed the company’s HealthyCare Solutions business unit. Earlier, he led Corporate Strategy and Innovation at WellPoint and was responsible for leading WellPoint’s enterprise strategic planning activities and its corporate innovation activities.
Prior to joining WellPoint, Mr. Moraski was Senior Vice President of Corporate Strategy and Development at Highmark Blue Cross Blue Shield, where he was responsible for strategy, innovation, corporate development, and market research. He has served as a director of Eye Care Centers of America, Davis Vision, Viva Optique, Gateway Health Plan, HM Insurance Group, Inter-County Health Plan, Linkwell Health, NaviNet, SoloHealth, United Concordia Dental, and other healthcare service and technology companies.
Mr. Moraski attended the University of Notre Dame where he earned his B.A., summa cum laude and Harvard Business School for his M.B.A. He currently sits on the board of Big Brothers Big Sisters of Greater Pittsburgh.