SAN FRANCISCO — Part of Andy Slavitt’s core mission at Town Hall Ventures is to prove that health technology companies can become a viable business by reaching low-income people who also face social challenges, like lack of housing or nutritious food options. It’s a bold claim that has yet to be proven, although a handful of Town Hall Ventures’ portfolio companies – including Unite Us and Alphabet spinout A block — have already reached valuations above $1 billion.
The stakes keep rising, especially for the millions of people who signed up for Medicaid coverage during the public health emergency and who risk of losing it at the end of the temporary extensions. And by investing in teams they trust to integrate into vulnerable communities, create culturally sensitive products and develop sophisticated analytics to assess social needs, Slavitt and his team hope to set an example for other funds. venture capitalists who have historically avoided Medicaid.
“Clinical answers are not that difficult. I can’t stress that enough,” Slavitt said. Although the diagnoses affecting low-income patients are largely the same as those affecting those with commercial insurance, the healthcare system is not set up to accommodate the homeless or medically complex pediatric patients in health care deserts, he said.
“What’s different for the most part is that being poor really sucks and being miles away from anyone who can really take care of you sucks really and needing to fill out 10 forms to get housing or a child care or one of those other things is a big deterrent to getting care,” he said. “A system that doesn’t welcome you, doesn’t recognize where you live, really doesn’t work.”
From an investment perspective, he said, there is potential for a “decent markup — not a huge markup” to help the nation’s estimated 90 million Medicaid patients get better preventative health care. , avoiding more expensive treatments in the future. “There is no bigger market than Medicaid,” he said.
STAT spoke with Slavitt in San Francisco, where he and other healthcare investors and executives descended earlier this month for the JP Morgan Health Care conference. This conversation has been edited for length and clarity.
What types of companies do you think are best equipped to solve these problems?
The good news is that there is a revival that the most Necessary investment area is also investable space. Not everyone understood it.
There are two types of ways to think about investing. We start with how to find a market opportunity and make a lot of money? And the other one starts with is there a really big problem that I can figure out how to fix? Not all health care problems will be solved by innovation. But some can, and those that can are those where you have a clinical, social, and behavioral model that meets the needs of a specific population where there is also a payment model that allows you to meet those needs.
If you look through Medicaid, you can follow the journey from mothers to babies, pregnant moms to pediatrics, complex pediatrics, then school programs, adolescent justice and mental health programs, disability, up to [dual Medicare and Medicaid eligibles and eldercare]. We have activities in all these buckets. We have investments in most of these compartments.
Find people who really understand these issues at a truly operational finite level [is important]. Take a company like Cityblock Health. There are several thousand housing units available in New York that are not used for the homeless as they are only available to people with a psychological diagnosis. And to get a psychiatric diagnosis, you have to go find a psychiatrist in New York, and then go to the appointment, and then he’s rejected. … They have a team of psychiatrists who do that, just that, and they put people in housing.
How will you know you’ve succeeded?
If we are massively successful, [Town Hall] invest a few billion dollars over our lifetime in these communities. We need hundreds of billions of dollars invested, and there’s all that capital that’s still trapped [in the health care industry] …or gets repatriated to shareholders because they are incredibly profitable businesses. And they come to these communities and reap the benefits. The money must be reinvested in these communities.
Do the communities you focus on use technology differently than wealthier communities?
SMS is cheaper to use than a browser. There are subtleties. I went into the field with a community health partner from Cityblock and said, “What is your favorite part of your job? And she said, “My iPad.” I don’t hear this often in healthcare, but she said, “I bring this into someone’s apartment and I can create access for them to the whole world. I can connect them to what they need, I can order something for them on the spot, and they can see the action. I can communicate with their daughter who is a big technology user.
Amazon has a lot to teach us going into healthcare because they know how to deploy technology in a way that doesn’t look like technology.
How are the metrics you use to evaluate companies different from other markets?
It’s flawed and it’s a bit of a moving target. We started in earnest probably a year ago. We have more resources in our team to be able to collect information from our companies. It’s always been part of the process, but if you had asked me the question for each how are they doing, I wouldn’t have been able to give you a good answer.
Simple advice, when I talk to a company, is, “Tell me what it is.” Plume, which is a trans health company, they’re like, “we need to bring anxiety and depression scores down really quickly.” So they measure it like crazy. If I look at Eleanor Health, which focuses on addiction treatment and recovery, what they basically want is to reduce craving levels. They don’t measure urine tests [as much] …they’ve learned that the frequency of touchpoints with people at different stages of their recovery from addiction is really important, so they’re going to measure that.
There is a consistent set of metrics, but you have to stick to them to tell their own story. At some level, they will know their business better.
If I don’t hear that they’re ragingly measuring the Net Promoter Score the right way, it tells me, OK, there’s another way to get paid than doing your job.
There are questions we ask of every company like diversity in your management team, diversity in your board of directors, diversity at every level, diversity in promotions. There are usually other investors around the table, and I’m sure they’ll ask the question “how’s your sales acquisition going?” But my first questions will always be about what I think is important. You have to hire diversity, especially in the early stages, and then their networks will kick in. But you have to force it.
This story, part of a series on health technologies for underserved populations, was supported by the USC Annenberg Center for Health Journalism National Fellowship.