Q1 2019 Recap: Backing thesis-extending teams and looking for what’s next
At Maverick, we’ve aimed to work with exciting companies that are tackling one or more of the triple aims of healthcare: improving quality & satisfaction of care, reducing overall cost, and raising the health of overall populations. In the first few months of the year, we’ve been excited to continue to back some of our healthcare thesis-extending partnerships with entrepreneurs.
Portfolio company news
As out-of-pocket costs have shifted to individuals and digital experiences outside of healthcare have continued to set a higher bar, patients have increasingly demanded better experiences in the healthcare setting. hims was one of the first to recognize the power of combining asynchronous telemedicine, at-home prescription delivery, beautiful design, and a consumer-friendly brand. Because of our thesis around consumers’ willingness to pay for better experiences, we were excited to participate in the Series C of hims, a company in which we first invested in the seed round.
In March, Maverick invested in Artemis Health’s $25M Series C. We’ve been excited to back Grant and the team since the Series A as they equip self-insured employers to optimize their health benefits using data. Benefits teams have long been searching for solutions to improve the health of employees & their families and avoid shifting costs on employees; Artemis has been hard at work building a product to allow employers to make better decisions by leveraging their data.
Cityblock, which delivers better health to Medicaid and dual eligible beneficiaries, is serving thousands of low-income members in New York and Connecticut today. After leading the Series A last year, we were excited to participate in the company’s Series B to continue building out Cityblock’s novel approach of local care teams, custom-built technology, and trusted partnerships with community-based organizations.
Lastly, we are excited to see that Homology, a gene-editing company we invested in and now publicly traded on the Nasdaq, file its IND and enter clinical trials.
Conferences and emerging themes
Q1/Q2 in healthcare means conferences! We’ve been following the latest macro trends coming out of J.P. Morgan Healthcare Conference, HIMSS, HES, and more:
Here are the items which really caught our attention:
ONC & interoperability
“The idea that patient data belongs to providers or vendors is an epic misunderstanding. Patient data belongs to patients.” — Seema Verma, current Administrator of the CMS
At HIMSS, the HHS proposed new rules to support patient access and electronic data exchange of health information. The proposed ONC rule, which was discussed by many at the conference including Seema Verma, Karen DeSalvo, Michael Leavitt, and Aneesh Chopra, outlines a path to make patient electronic access to health information be made available at no cost. The proposal arguably reflects the industry’s unwillingness to self-organize around interoperability given current incentive structures; the top-down nudge from HHS supports our view that government involvement will be necessary to break down these information silos. We note that the rules are “proposed” — they will likely change before becoming official, but they do provide a lens into how the HHS is prioritizing interoperability..
The reaction at HIMSS could be best described as nervous excitement. On one hand, we heard some frustration that the status quo in the private sector is behind the proposal and that in some sense “it’s easier said than done.” The proposed rule also leads to potential disruption for businesses that have served as private solutions to create piping between various stakeholders. On the other hand, big picture optimists highlighted that the electronic health information we’ve collected over the past ten years will begin to live up to its promise of being interoperable with cleaner patient record matching and more longitudinal datasets.
We’re optimistic that the ONC rules will present opportunities for entrepreneurs. How will payers present a patient’s health and utilization, and will a new company emerge as the standard of digital engagement? Will this be the start of breaking down information silos to create richer datasets for AI applications? Will digital health companies broadly be able to connect to payers and providers to provide consumer-friendly use cases?
Primary care assuming accountability for outcomes
Over the years, we’ve seen various iterations of primary care value-based initiatives: Comprehensive Primary Care Plus, ACOs, and the like. We’ve been closely following CMS’s recently announced Primary Cares initiative, the next evolution of primary care payments to reward patient outcomes and health over volume.
The Primary Cares initiative introduces two new pathways: one building on the CPC+ and targeting advanced practices ready to assume risk, and the other pushing for system-level risk at larger healthcare entities. The first pathway — Primary Care First — pays practices risk-adjusted population-based fees with flat primary care visit fees. The second pathway offers capitation payments for primary care up to potentially all services for a population.
We are optimistic that the underlying incentive shift will spur investment in technology such as telemedicine, communication tools to facilitation provider-patient conversations, and remote patient monitoring to focus providers on population health. We also believe that primary care providers will need to share best practices, quality reporting infrastructure, and care pathways more broadly. We may also see the growth of more full-stack primary care models powered by technology (like our portfolio companies One Medical Cityblock) to care for this patient population. We continue to see lots of opportunity — especially if Primary Care First can indeed enroll close to a quarter of the Medicare population over a short period of time.
Healthcare moving closer to where the consumer is
Each year we’ve attended these conferences, more momentum builds around moving care from institutional settings, especially hospitals, to care at home. The models vary widely and include basic PCP visits, patient monitoring, home dialysis, and full hospital-at-home models. We continue to see new possibilities enabled by technological developments in monitoring, sensors, and home intervention.
We’ve also seen entrepreneurs and larger companies tailor products around recently created CCM and RPM codes. In particular, products enabling either in-house or third-party clinicians to easily communicate with patients, document interactions, and reduce workflow disruption seem to be continuing to grow.
We’ve been impressed by the continued momentum of telemedicine at these conferences as well. The models for telemedicine continue to be proliferating, both by specialty (e.g. behavioral, derm) as well as mode (e.g. video, chat, AI chat, and asynchronous).
If you have any thoughts on these themes or any others that are of interest to you, please be sure to reach out to us. We would love talking to anyone who is interested in these areas as well!
The views expressed herein are solely the views of the author(s) and are not necessarily the views of Maverick Capital, Ltd. or any of its affiliates. They are not intended to provide, and should not be relied upon for, investment advice.
