December 14, 2022 • 24 mins
Alyssa Jaffee, Partner at 7wire Ventures, sees that digital health is here to stay. Healthcare is resilient and tends to be less affected by broader market dynamics. Learn how 7wire Ventures helps its portfolio companies bridge the gap between health and care, and how they approach consumers that are increasingly connected and engaged.
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S1 (00:03):
And.
S2 (00:07):
Hello and welcome to Prophets Healthcare Changemakers Podcast, where we'll
be talking to leaders in health care who are focused
on transforming their organizations to drive the next level of
growth for their business and for health care and profit.
We believe that the organizations that thrive in health care
are those that dare to change the game, striving to
improve human health, create better experiences and make the best
of care an enduring and sustainable reality for all those
(00:30):
that will transform health care are the change makers. And
for this podcast, we want to focus on them. Our
podcast dives into and recognizes the people behind the transformation
and their journeys in changing the game one story at
a time. Are you ready to dive in?
S3 (00:47):
I am Jeff Gordon. I am hosting this week's podcast
and I'm very pleased to have with me Melissa Jaffee,
who is a partner at Seven Wire Ventures, a health
care venture capital firm.
S1 (00:59):
Melissa, welcome. Thank you, Jeff, for having me. It's great
to be here.
S3 (01:03):
All right. Well, it's a pleasure. So, first of all,
tell us about yourself and how you became an investor
in digital health.
S1 (01:11):
Absolutely. Well, if you can believe it or not, I
did not grow up as a little girl dreaming of
being a venture capitalist. But I did find myself here
and I'm so grateful for it. I am an operator
turned investor, so I used to launch enterprise technologies and
health care solution selling. I worked for advisory board companies
(01:33):
for a long time. And you know, folks over there,
wonderful people, and eventually left there for business school. I
went to University of Chicago. And then I transitioned more
to the investing side. So I worked for two smaller funds.
And then I actually did start my own company. I
raised a small round, about a million bucks for that business.
We ended up I transitioned to, bought and sold that
(01:55):
company and I went more institutional investing. And at that
point I went to go work for the Pritzker's J.B.,
who is now governor of Illinois, and his brother Tony,
about 8 billion in AUM three asset classes. And I
spent my time doing exclusively venture and mostly health care investing.
And about four years ago, I'd known the 17 forever,
(02:16):
and I thought very highly of them. From my vantage point,
they were one of the best early stage health care
funds in the country and in my backyard. And so
I made the leap and came over. And now it's
one of the four investing partners. Personally, I live in Chicago.
I grew up in Chicago. My husband actually is from Chicago.
(02:37):
And we found our way back. And now we have
three boys. So my life is chaos, but mostly the
good kind.
S3 (02:44):
Well, and I know that some of that becomes fodder
and content for your eyes or your Twitter feed or
your LinkedIn feed or something about not just the chaos
of having three boys, but also your personal experience in
the health care ecosystem.
S1 (02:57):
Absolutely. It's very important as an investor to be able
to understand how to look at the world through other
people's eyes, to have empathy and understand the experiences of others.
But it's also quite powerful to have your own lived experiences.
And I've had three birthing experiences. I've and all were
(03:18):
quite different and I'm very privileged and I've had access
to some of the best health care in the world.
And it still was incredibly challenging. And so and so
my our thesis is what we call the informed, connected
health consumer. So everything that we do is about helping
people be better stewards of their health and thinking about
health care, technology and services, meaning people where they are.
(03:40):
And so in that vein, as we think about becoming
an empowered consumer, I felt that way myself. And now
I will and our team will and will frankly dedicate
our whole life in a couple lifetimes over into trying
to make that happen.
S3 (03:55):
I'm going to go back to you personally in just
a second or so, but I just want to pick
up on your thread because I as you and I
talked before we started recording about the book, I wrote
one of the first chapters. We talk about this idea
of the consumer, and I borrow the term from a
physician leader. They'd read about the patient, but by the consumer,
I don't mean that as a technical term. I write
it out as the consumer that's engaged, equipped, enabled and empowered. Right.
(04:18):
And the objective of transforming health care is to both
find and support the consumers and to create and facilitate
more people becoming consumers. So your idea kind of certainly
took me there, something I've written about and thought about
quite a bit. And it's it's a challenge, right? Because
the answers aren't always easy. They're never easy, but they're
easier for someone who's leaning into a health care system
(04:39):
and anxious to help take control of themselves. And obviously,
the hardest problems are for those that are unable to
become consumers, which is a problem that I don't think
anyone's figured out yet. But obviously a discussion can be
its own whole podcast.
S1 (04:52):
Nodding my head profusely alongside Jeff in the premium materials
of increasingly creating connected and empowered consumer. I think we
very much are aligned.
S3 (05:03):
Yeah. Good. Okay, So I want to go back for
just a second because I want to ask you one
more more fun personal question. I want to ask you
to tell us something about yourself that cannot be found
in your LinkedIn profile.
S1 (05:16):
Oh, know, as a working mom with three kids, I
feel like that is my special talent these days. But
if you if those who know me know I thrive
in chaos. So I'm one of five kids, I the
more things on my plate, the better. And I love
a big four lively household. I love I host a
(05:36):
lot of themed dinner parties. We just did a big
Halloween themed dinner party. We host Thanksgiving with 35 people.
So for me, I. And I love bringing people from
different walks of life. I host friends and family and
host colleagues and CEOs. We actually one of my board
meetings I did at my house and I hosted the
(05:58):
board dinner at the night before at my house. And
it was just it was very much so for me.
The more I can blend those worlds, the better.
S3 (06:06):
Well, you and I share being a parent of three boys,
and I will tell you that you obviously have more
energy than I ever did, because when we had three
young boys, we stopped doing all socializing and hosting. And
obviously you've got you got more energy than I do.
So I didn't even did.
S1 (06:20):
I have energy is the right word or just insanity.
But I think.
S3 (06:26):
Maybe That's right. That's right. Well, that's right. They were
talking about the same thing. All right. Well, thank you
for that. So you started to say a little bit
about about seven wire ventures better. Before I ask you
the first question, I plan, why don't you just cause
you started to go there and give us space. Just
tell us about what makes it kind of unique in
its space, what it's unique in its outlook, its its
way of managing your investments or anything else that you
(06:47):
think it's kind of relevant for, for our listeners.
S1 (06:50):
Absolutely. I mentioned our thesis Be informed connected health consumer.
This is our true north. This is everything that we do.
But there's a couple other things that also make us
quite unique as it relates to other entrepreneurs. The second
piece for us is that we're an operator driven model.
What that means is we do fewer deals and we're
more concentrated in our portfolio. So it allows us the
(07:12):
ability to get very involved with our companies. We all
have operating backgrounds. We all built companies before the managing
partners at the firm Glenn Tallman, Lee SHAPIRO are titans
of industry. They were CEO and president of Allscripts. Glen
was the CEO of Bongo. We was the CFO who
stepped in to take it public and did the Teladoc merger.
(07:33):
And today is our CEO of Transparent. So for us,
it's very much about how can we help be in
the trenches with our CEOs and have to show up
once a quarter to a board meeting, but really to
work with them directly and focus on all of the
ways that we can do information and knowledge transfer to
(07:53):
to help drive growth. And because of this, we can
be quite creative. So we both invest in companies and
we do start companies. So most notably, I mentioned the
company started by the managing partners Livongo, and we started
four others to date. Most recently, we started a women's
health business for college aged women to help them gain
independent agency in their health care journey. And then the
(08:15):
third Jeff piece, just just as you ask what makes
us different, our pieces, our operating model. The third piece
is what we call our connected consumer coalition. About 60%
of our capital. So the folks that give us money
comes from strategic investors. So our LP is our strategic
peers who work with us and work with our companies
(08:35):
to drive growth. And these are health plans, some of
the biggest health plans in the country. These are providers,
these are pharma, self-insured employers really focused on again, being
consumers of the companies that we work with and driving
innovation forward.
S3 (08:51):
So they're not just looking for an hour away, they're
looking for some solutions for themselves.
S1 (08:55):
Yeah, you think about Cigna as one of our big
help years and of course they're looking our job where
our fiduciary is to return capital to our partners, of
which one. So far we've been very successful in doing so.
But for Cigna in no matter what, what's the biggest impact?
It's yes, it's helpful to get a return on investment,
but also it's how they can drive commercial success across
(09:18):
the organization. That's really what moves the needle. And so
creating partnerships with MSK businesses or behavioral health businesses or
chronic condition companies, that is really where they see our
partnership driving this.
S3 (09:32):
I'm going to stay on this for a minute because
I think it's really interesting because a lot of our
clients also are strategic investors in what I'll call, you know,
on the side while they're operating a health plan. Right.
Or whatever the case may be. And I actually interviewed
someone at Livongo maybe four years ago, I can't remember.
And one of the blue plans had a stake in
them and was also our client. And I said, how
(09:54):
is it going in terms of getting adoption at the
payers and this, you know, personal language. So it's really
a challenge. And I said, but they're an investor, they're
clearly committed. And and she said, yes, but just still
culturally getting them to act and move is really hard.
So my question for you and this is a tough one,
so forgive forgive me for throwing at you. I don't
know if there is an answer, but what is the
(10:15):
secret to getting a strategic investor to adopt and become
a customer of the portfolio company and to use it
for the good that they're trying to create?
S1 (10:26):
I know, Jeff, I get this question a lot and
people want a silver bullet with the one thing that
they can do and the thing it's not one secret.
It's hundreds of little secrets. It's hundreds of little things
that you're doing to build that relationship. But primarily, are
you solving a real problem that they care about? And
that is something that you really have to understand and
ingrained within that. Helps the health plan in that risk
(10:48):
bearing entity to know what's important to them and want
to know what's important to them. Are you going to
the right place? And so a lot of the best
organizations we work with have done an amazing job bridging
the financial and commercial sides of their organization where they
really understand who the right stakeholders are to adapt and
champion some of these solutions. It's when you don't have
(11:10):
an internal champion, it can be really, really challenging. And
then are the incentives aligned? And so making sure that
this is something that doesn't cause additional friction for the incumbents,
but actually is something that will help make their lives
easier and that their members, their employees, their consumers easier.
And a lot of the ways to get the adoption
(11:30):
rates going. Again, Livongo is a pioneer of this, are
the unglamorous ways of doing things like direct mail, doing
things like outreach and call center. Again, a lot of
this country right now is not clicking on apps necessarily.
A lot of them are consuming health care. It's still
the traditional way. And so finding ways to meet people
(11:53):
where they are and I that's something that you and
I have communicated about before this, but that's very important
to do so in order to be successful.
S3 (12:00):
Great. Thank you for reflecting on that one. You wrote
an article in Med City News, I don't know, a
couple of months ago, and I read it when it
first came out and it really struck me. And I
went back just as I was thinking about this conversation
and I read it again. One of the things you wrote,
I think you wrote a couple I may have stitched
a couple of pieces of it together, but health care
is lost. The part about care and the chasm continues
to widen between health and care, which is really, I think,
(12:23):
interesting and simple and profound at the same time. But
before we talk about how to fix it, could you
just explain what you mean by that? And how did
we get here where health and care are divorced?
S1 (12:35):
Have my provocative title. Absolutely. But the truth of it
is that we're in a situation right now where so
much of our health care system is focused on health
and that the clinical aspect of health it's focused on
we care for sick people. We live in a fee
for service world, and we're focusing on how to fix
(12:59):
the problems of sick people versus how do we help
empower and encourage healthy people to retain sustained health. And
a lot of that is in care. And it's even
if you think about the residency programs and they're doing
a better job. But the way we train is not
to say this isn't important at all. It's incredibly important
(13:20):
to figure out how to be in the business of
care delivery, but also to be in the business of
caring for patients and all of that. We think about
social determinants of health and all of the things that
impact somebodies health quality, whether it be their transportation or access,
whether it be their food and nutrition, whether it be
their communication abilities that those have sometimes been underperforming and
(13:42):
underserved when it comes to delivering care to a patient.
And ultimately, what we now know is that it's incredibly
important to do and we have to do a better
job of instead of saying, hey, and you're your doctor,
we'll see you and just talk to you about your meds.
And then in the future, maybe somebody will call you
(14:04):
some coach, we'll call you or a community outreach, hopefully.
And how do we bridge those two things together? How
does it become one cohesive health care experience versus this
fight for patient health care?
S3 (14:16):
Yeah. Is this just all kind of come to the
root of our terrible reimbursement system? Is that the root
cause of all of it, or is it more complicated
than that?
S1 (14:24):
This is part of it is being in fee for
service and absolutely the incentive structure not being aligned for
what is important as we think about paying for value
and value based care. Absolutely. That the more we go
into a value based structure and a risk structure, the
more the incentives are aligned. It also is the way
(14:49):
that the system was built was not just in the
incentive structure, but in the brick and mortar of what
is it hospital and where does getting receive care. And again,
the trickling of this have now started to show some
light on retail pharmacy being a huge player in health care,
Amazon becoming a better player in health care communities and
(15:11):
what community centers are doing, religious institutions, grocery stores and
some of the biggest grocery store chains I do calls
with because they know their role as a player in
health care. So it is not it is this in
large part the incentive structure, but there are other components
of this that continue to create that divorce of health.
S3 (15:32):
Okay. So what's the path forward toward fixing it? What's
the path forward and to what extent is it going
to be traditional health of traditional health care players reinventing themselves?
Versus to what extent is it going to be new
to the world ventures? Obviously, in your shoes, you're focused
more on the latter. So curious for your perspective.
S1 (15:53):
Traditional players still maintain a very important role, but they
can't do it alone. And so if you think about
where the bulk of primary care is delivered in this country,
it's not typically in technical primary care. It is with
the large incumbent organizations. Now, that said, they can't do
it alone. Digital plays a pretty transformative role in increasing
(16:14):
access to care. And what we talked about at the
top of the hour, which was empowering consumers to be
better stewards of their health. And if you cannot do that,
it's incredibly challenging to fix this problem because at the
end of the day, you someone just told me. Now,
I think the average provider, I thought it was like
14 to 20 minutes. Someone just told me, now it's
(16:36):
11 minutes on average. I haven't fact checked that per say.
But the time with your provider is so short that
how do you expect people in that short amount of
time to get everything that they need to manage their care?
And in reality, it's everything that happens around that visit
and outside that visit to make sure that visit is
(16:58):
very powerful and that people are managing their care, that
23 hours, six days a week, that they're not in
the provider's office and that they have the ability to
be empowered with the data, the access to the data
that they need, that they're connecting into the system. So
you and I can become better stewards of our house.
S3 (17:17):
Good. So tell us about some of the ventures that
either by specific ventures or the kinds of ventures that
you are most excited about?
S1 (17:26):
Absolutely. We I think I've talked enough about our thesis,
but if there's one thing to take away today, please, again,
what we're trying to build is so many things for
so many problems in health care that are broken. But
our true nature is empowering, informed, connected health consumers. Beyond that,
there's a number of plans for us that are really interesting.
(17:47):
So things like vertical solutions for chronic condition management. That's
where Livongo plays. That's where a company goes awry. But
we invested in focus on chronic skin conditions, also mental
and behavioral health, particularly severe mental illness. We've invested in
a company called No KB and OCD for obsessive compulsive disorder. Also,
(18:07):
Bright Line Health, which is focused on pediatric behavioral health.
We're looking at health events, something that happens to you,
whether it be MSK or oncology. This can be, for example,
within Jasper Health, which is helping people navigate their cancer
care journey or recovery one a.k.a. Also looking at vulnerable
(18:27):
populations and how we can really extend access and reach
for investing in business called Same Sky Health The platform
for multicultural populations. Also business caraway I mentioned, which is
a business focused on college age women and aging in
place is also another component for us. And that's interesting.
A business called Home Thrive, which is helping family care
(18:50):
caregivers to support and engage their aging. So just a
handful of other lands, I think we are opportunistic and
we're very semantically driven. Our process is to really understand
the landscape, identify where the players are and figure out
where we think that there's whitespace opportunity and those are
(19:10):
sound that I'd say we're pretty excited about for the
year to come.
S3 (19:14):
Cool. So I'm going to tell you about a question
I often get and I'm going to turn it on you.
So this is about, you know, I wrote a book,
as we discussed in 2019, and people sometimes ask, what
would you have written differently now post COVID or what
did you fail to see? You know, I get different
versions of it. When we went. Did you fail to
anticipate what did you put more focus on? Or what
(19:34):
have you learned about COVID that makes sure that this
is different? And I think I say, you know, my
overall kind of thesis about the need for health care
to be transformed, become more consumer centric and empower consumers, etc.,
hasn't changed. But I think one area that I talked
about tangentially was around the need to change the culture
inside health care organizations and the challenge of of culture change.
But I think the workforce shortages is that thing that
(19:56):
just completely was not on my radar three years ago
when it should have been right because the trends were
there in terms of the shortages and the demographics. But
it just really smacked us all in the face three
years later just how, you know, health care delivery has
to be reinvented because there's not enough people being born
to take care of all the people that have already
been born. And there's going to need to be a
(20:18):
technology solve for that. So anyway, that's how I tend
to answer the question. I want to go back to
you and ask you when you think about what you
have as an organization have learned or how you think
differently about investing in health care today versus what you
knew in early 2020, what comes to mind?
S1 (20:35):
I don't think I ever could have predicted what kind
of an accelerant COVID would be for digital health. You know,
I've been doing digital health for almost. 15 years now,
but well before it was called Digital Health. And we
used to call it health care I.T.. And I don't
think I ever could have seen how rapidly we would
(20:56):
need digital health. And there's so much work to be
done on embedding it into the database of health care,
which we talked a little bit about earlier on and
some of the challenges of with incumbents. But the need
for it was so spotlighted in COVID, which is only
(21:18):
a good thing. But I I'm not sure how we
could have seen and we could have gotten the average
consumer to see if it were not for the pandemic.
S3 (21:28):
So we issued a report recently called Transforming Health Care
the Changemakers Playbook, and we wrote about this for Focus.
And I'm going to pick one and see if you
have a thesis or hypothesis. And it's this idea because
I don't think we've touched on it here in this conversation.
And this is what we call here, there and everywhere
of care. And really what we're getting at is care
moving outside the hospital, whether it's to homes, whether it's
(21:49):
the work sites, whether it's two retail clinics. It's one
of those things that we've kind of identified or we
believe are many if identified, but we believe is going
to be a critical force going forward that cuts across
all parts of the traditional health care ecosystem. The payer
has got to think differently. The providers are going to
think differently. The health care technology companies got to think differently.
Do you have a thesis about about where the opportunity
(22:09):
and potentially where the limitations are in this here, there
and everywhere cares because as we've dubbed it.
S1 (22:15):
Very aligned. And thank you for sharing the materials because
for us, meeting people where they are is very much
part of our thesis. We invested in a business called
Metal Drive, which is really extending care into the home
using alternative providers like EMT. And so the importance of
saying we talked about this earlier, that you can't just
(22:35):
get your your health from the of us the hospital
that why can't health care be ubiquitous. The way of
thinking is why can I pick up my phone and
call a bank, use my mobile app if I want to,
or walk into an actual location if I need it to.
So whenever it is, we need health care to to
live like that. I actually don't believe health care should
(22:58):
fully live in home retail, so fully live online or
it should feel that kind of ubiquity that other industries
do and have.
S3 (23:08):
Good. Last question for you. Any short term guesses or
prognostications you want to make? What is your hot trend
that's going to emerge in 2023?
S1 (23:20):
Headliner is Digital Health is here to stay. Whatever you're
reading about the broader market dynamics and the market dynamics
are up right now. And don't get me wrong, but
health care is resilient. Health care tends to be less effective.
And the progress that we're seeing across our portfolio and
others is too great to not continue to double down
(23:43):
to digital health. What I would expect is to see
some continued consolidation. So a little bit more on the
M&A side where companies that maybe have raised a good
amount of capital, maybe haven't met the milestones, seeing those
either merge with other companies or continue to build in
a more thoughtful way than previous two years they have.
S3 (24:04):
Good. That's great. Well, thank you for sharing that. Melissa
Jaffe of Seven Wire Ventures, thank you for being on
the podcast.
S1 (24:09):
Thanks for having me.
S2 (24:15):
And. Thanks for listening to Prophet's Health Care Transformers Podcast.
This podcast is produced by Jared Johnson and his wonderful
team at Shift Forward Health and a big thank you
to our hosts, Priya NASIR, Lindsay Moseby, Paul Shrimp and
Jeff Gorgie. If you like today's episode, you can find
more great content like this at Prophet dot com slash thinking.
(24:38):
I'm Anna Kuno, the senior editor of this podcast. Thank
you for listening.
And.
S2 (00:07):
Hello and welcome to Prophets Healthcare Changemakers Podcast, where we'll
be talking to leaders in health care who are focused
on transforming their organizations to drive the next level of
growth for their business and for health care and profit.
We believe that the organizations that thrive in health care
are those that dare to change the game, striving to
improve human health, create better experiences and make the best
of care an enduring and sustainable reality for all those
(00:30):
that will transform health care are the change makers. And
for this podcast, we want to focus on them. Our
podcast dives into and recognizes the people behind the transformation
and their journeys in changing the game one story at
a time. Are you ready to dive in?
S3 (00:47):
I am Jeff Gordon. I am hosting this week's podcast
and I'm very pleased to have with me Melissa Jaffee,
who is a partner at Seven Wire Ventures, a health
care venture capital firm.
S1 (00:59):
Melissa, welcome. Thank you, Jeff, for having me. It's great
to be here.
S3 (01:03):
All right. Well, it's a pleasure. So, first of all,
tell us about yourself and how you became an investor
in digital health.
S1 (01:11):
Absolutely. Well, if you can believe it or not, I
did not grow up as a little girl dreaming of
being a venture capitalist. But I did find myself here
and I'm so grateful for it. I am an operator
turned investor, so I used to launch enterprise technologies and
health care solution selling. I worked for advisory board companies
(01:33):
for a long time. And you know, folks over there,
wonderful people, and eventually left there for business school. I
went to University of Chicago. And then I transitioned more
to the investing side. So I worked for two smaller funds.
And then I actually did start my own company. I
raised a small round, about a million bucks for that business.
We ended up I transitioned to, bought and sold that
(01:55):
company and I went more institutional investing. And at that
point I went to go work for the Pritzker's J.B.,
who is now governor of Illinois, and his brother Tony,
about 8 billion in AUM three asset classes. And I
spent my time doing exclusively venture and mostly health care investing.
And about four years ago, I'd known the 17 forever,
(02:16):
and I thought very highly of them. From my vantage point,
they were one of the best early stage health care
funds in the country and in my backyard. And so
I made the leap and came over. And now it's
one of the four investing partners. Personally, I live in Chicago.
I grew up in Chicago. My husband actually is from Chicago.
(02:37):
And we found our way back. And now we have
three boys. So my life is chaos, but mostly the
good kind.
S3 (02:44):
Well, and I know that some of that becomes fodder
and content for your eyes or your Twitter feed or
your LinkedIn feed or something about not just the chaos
of having three boys, but also your personal experience in
the health care ecosystem.
S1 (02:57):
Absolutely. It's very important as an investor to be able
to understand how to look at the world through other
people's eyes, to have empathy and understand the experiences of others.
But it's also quite powerful to have your own lived experiences.
And I've had three birthing experiences. I've and all were
(03:18):
quite different and I'm very privileged and I've had access
to some of the best health care in the world.
And it still was incredibly challenging. And so and so
my our thesis is what we call the informed, connected
health consumer. So everything that we do is about helping
people be better stewards of their health and thinking about
health care, technology and services, meaning people where they are.
(03:40):
And so in that vein, as we think about becoming
an empowered consumer, I felt that way myself. And now
I will and our team will and will frankly dedicate
our whole life in a couple lifetimes over into trying
to make that happen.
S3 (03:55):
I'm going to go back to you personally in just
a second or so, but I just want to pick
up on your thread because I as you and I
talked before we started recording about the book, I wrote
one of the first chapters. We talk about this idea
of the consumer, and I borrow the term from a
physician leader. They'd read about the patient, but by the consumer,
I don't mean that as a technical term. I write
it out as the consumer that's engaged, equipped, enabled and empowered. Right.
(04:18):
And the objective of transforming health care is to both
find and support the consumers and to create and facilitate
more people becoming consumers. So your idea kind of certainly
took me there, something I've written about and thought about
quite a bit. And it's it's a challenge, right? Because
the answers aren't always easy. They're never easy, but they're
easier for someone who's leaning into a health care system
(04:39):
and anxious to help take control of themselves. And obviously,
the hardest problems are for those that are unable to
become consumers, which is a problem that I don't think
anyone's figured out yet. But obviously a discussion can be
its own whole podcast.
S1 (04:52):
Nodding my head profusely alongside Jeff in the premium materials
of increasingly creating connected and empowered consumer. I think we
very much are aligned.
S3 (05:03):
Yeah. Good. Okay, So I want to go back for
just a second because I want to ask you one
more more fun personal question. I want to ask you
to tell us something about yourself that cannot be found
in your LinkedIn profile.
S1 (05:16):
Oh, know, as a working mom with three kids, I
feel like that is my special talent these days. But
if you if those who know me know I thrive
in chaos. So I'm one of five kids, I the
more things on my plate, the better. And I love
a big four lively household. I love I host a
(05:36):
lot of themed dinner parties. We just did a big
Halloween themed dinner party. We host Thanksgiving with 35 people.
So for me, I. And I love bringing people from
different walks of life. I host friends and family and
host colleagues and CEOs. We actually one of my board
meetings I did at my house and I hosted the
(05:58):
board dinner at the night before at my house. And
it was just it was very much so for me.
The more I can blend those worlds, the better.
S3 (06:06):
Well, you and I share being a parent of three boys,
and I will tell you that you obviously have more
energy than I ever did, because when we had three
young boys, we stopped doing all socializing and hosting. And
obviously you've got you got more energy than I do.
So I didn't even did.
S1 (06:20):
I have energy is the right word or just insanity.
But I think.
S3 (06:26):
Maybe That's right. That's right. Well, that's right. They were
talking about the same thing. All right. Well, thank you
for that. So you started to say a little bit
about about seven wire ventures better. Before I ask you
the first question, I plan, why don't you just cause
you started to go there and give us space. Just
tell us about what makes it kind of unique in
its space, what it's unique in its outlook, its its
way of managing your investments or anything else that you
(06:47):
think it's kind of relevant for, for our listeners.
S1 (06:50):
Absolutely. I mentioned our thesis Be informed connected health consumer.
This is our true north. This is everything that we do.
But there's a couple other things that also make us
quite unique as it relates to other entrepreneurs. The second
piece for us is that we're an operator driven model.
What that means is we do fewer deals and we're
more concentrated in our portfolio. So it allows us the
(07:12):
ability to get very involved with our companies. We all
have operating backgrounds. We all built companies before the managing
partners at the firm Glenn Tallman, Lee SHAPIRO are titans
of industry. They were CEO and president of Allscripts. Glen
was the CEO of Bongo. We was the CFO who
stepped in to take it public and did the Teladoc merger.
(07:33):
And today is our CEO of Transparent. So for us,
it's very much about how can we help be in
the trenches with our CEOs and have to show up
once a quarter to a board meeting, but really to
work with them directly and focus on all of the
ways that we can do information and knowledge transfer to
(07:53):
to help drive growth. And because of this, we can
be quite creative. So we both invest in companies and
we do start companies. So most notably, I mentioned the
company started by the managing partners Livongo, and we started
four others to date. Most recently, we started a women's
health business for college aged women to help them gain
independent agency in their health care journey. And then the
(08:15):
third Jeff piece, just just as you ask what makes
us different, our pieces, our operating model. The third piece
is what we call our connected consumer coalition. About 60%
of our capital. So the folks that give us money
comes from strategic investors. So our LP is our strategic
peers who work with us and work with our companies
(08:35):
to drive growth. And these are health plans, some of
the biggest health plans in the country. These are providers,
these are pharma, self-insured employers really focused on again, being
consumers of the companies that we work with and driving
innovation forward.
S3 (08:51):
So they're not just looking for an hour away, they're
looking for some solutions for themselves.
S1 (08:55):
Yeah, you think about Cigna as one of our big
help years and of course they're looking our job where
our fiduciary is to return capital to our partners, of
which one. So far we've been very successful in doing so.
But for Cigna in no matter what, what's the biggest impact?
It's yes, it's helpful to get a return on investment,
but also it's how they can drive commercial success across
(09:18):
the organization. That's really what moves the needle. And so
creating partnerships with MSK businesses or behavioral health businesses or
chronic condition companies, that is really where they see our
partnership driving this.
S3 (09:32):
I'm going to stay on this for a minute because
I think it's really interesting because a lot of our
clients also are strategic investors in what I'll call, you know,
on the side while they're operating a health plan. Right.
Or whatever the case may be. And I actually interviewed
someone at Livongo maybe four years ago, I can't remember.
And one of the blue plans had a stake in
them and was also our client. And I said, how
(09:54):
is it going in terms of getting adoption at the
payers and this, you know, personal language. So it's really
a challenge. And I said, but they're an investor, they're
clearly committed. And and she said, yes, but just still
culturally getting them to act and move is really hard.
So my question for you and this is a tough one,
so forgive forgive me for throwing at you. I don't
know if there is an answer, but what is the
(10:15):
secret to getting a strategic investor to adopt and become
a customer of the portfolio company and to use it
for the good that they're trying to create?
S1 (10:26):
I know, Jeff, I get this question a lot and
people want a silver bullet with the one thing that
they can do and the thing it's not one secret.
It's hundreds of little secrets. It's hundreds of little things
that you're doing to build that relationship. But primarily, are
you solving a real problem that they care about? And
that is something that you really have to understand and
ingrained within that. Helps the health plan in that risk
(10:48):
bearing entity to know what's important to them and want
to know what's important to them. Are you going to
the right place? And so a lot of the best
organizations we work with have done an amazing job bridging
the financial and commercial sides of their organization where they
really understand who the right stakeholders are to adapt and
champion some of these solutions. It's when you don't have
(11:10):
an internal champion, it can be really, really challenging. And
then are the incentives aligned? And so making sure that
this is something that doesn't cause additional friction for the incumbents,
but actually is something that will help make their lives
easier and that their members, their employees, their consumers easier.
And a lot of the ways to get the adoption
(11:30):
rates going. Again, Livongo is a pioneer of this, are
the unglamorous ways of doing things like direct mail, doing
things like outreach and call center. Again, a lot of
this country right now is not clicking on apps necessarily.
A lot of them are consuming health care. It's still
the traditional way. And so finding ways to meet people
(11:53):
where they are and I that's something that you and
I have communicated about before this, but that's very important
to do so in order to be successful.
S3 (12:00):
Great. Thank you for reflecting on that one. You wrote
an article in Med City News, I don't know, a
couple of months ago, and I read it when it
first came out and it really struck me. And I
went back just as I was thinking about this conversation
and I read it again. One of the things you wrote,
I think you wrote a couple I may have stitched
a couple of pieces of it together, but health care
is lost. The part about care and the chasm continues
to widen between health and care, which is really, I think,
(12:23):
interesting and simple and profound at the same time. But
before we talk about how to fix it, could you
just explain what you mean by that? And how did
we get here where health and care are divorced?
S1 (12:35):
Have my provocative title. Absolutely. But the truth of it
is that we're in a situation right now where so
much of our health care system is focused on health
and that the clinical aspect of health it's focused on
we care for sick people. We live in a fee
for service world, and we're focusing on how to fix
(12:59):
the problems of sick people versus how do we help
empower and encourage healthy people to retain sustained health. And
a lot of that is in care. And it's even
if you think about the residency programs and they're doing
a better job. But the way we train is not
to say this isn't important at all. It's incredibly important
(13:20):
to figure out how to be in the business of
care delivery, but also to be in the business of
caring for patients and all of that. We think about
social determinants of health and all of the things that
impact somebodies health quality, whether it be their transportation or access,
whether it be their food and nutrition, whether it be
their communication abilities that those have sometimes been underperforming and
(13:42):
underserved when it comes to delivering care to a patient.
And ultimately, what we now know is that it's incredibly
important to do and we have to do a better
job of instead of saying, hey, and you're your doctor,
we'll see you and just talk to you about your meds.
And then in the future, maybe somebody will call you
(14:04):
some coach, we'll call you or a community outreach, hopefully.
And how do we bridge those two things together? How
does it become one cohesive health care experience versus this
fight for patient health care?
S3 (14:16):
Yeah. Is this just all kind of come to the
root of our terrible reimbursement system? Is that the root
cause of all of it, or is it more complicated
than that?
S1 (14:24):
This is part of it is being in fee for
service and absolutely the incentive structure not being aligned for
what is important as we think about paying for value
and value based care. Absolutely. That the more we go
into a value based structure and a risk structure, the
more the incentives are aligned. It also is the way
(14:49):
that the system was built was not just in the
incentive structure, but in the brick and mortar of what
is it hospital and where does getting receive care. And again,
the trickling of this have now started to show some
light on retail pharmacy being a huge player in health care,
Amazon becoming a better player in health care communities and
(15:11):
what community centers are doing, religious institutions, grocery stores and
some of the biggest grocery store chains I do calls
with because they know their role as a player in
health care. So it is not it is this in
large part the incentive structure, but there are other components
of this that continue to create that divorce of health.
S3 (15:32):
Okay. So what's the path forward toward fixing it? What's
the path forward and to what extent is it going
to be traditional health of traditional health care players reinventing themselves?
Versus to what extent is it going to be new
to the world ventures? Obviously, in your shoes, you're focused
more on the latter. So curious for your perspective.
S1 (15:53):
Traditional players still maintain a very important role, but they
can't do it alone. And so if you think about
where the bulk of primary care is delivered in this country,
it's not typically in technical primary care. It is with
the large incumbent organizations. Now, that said, they can't do
it alone. Digital plays a pretty transformative role in increasing
(16:14):
access to care. And what we talked about at the
top of the hour, which was empowering consumers to be
better stewards of their health. And if you cannot do that,
it's incredibly challenging to fix this problem because at the
end of the day, you someone just told me. Now,
I think the average provider, I thought it was like
14 to 20 minutes. Someone just told me, now it's
(16:36):
11 minutes on average. I haven't fact checked that per say.
But the time with your provider is so short that
how do you expect people in that short amount of
time to get everything that they need to manage their care?
And in reality, it's everything that happens around that visit
and outside that visit to make sure that visit is
(16:58):
very powerful and that people are managing their care, that
23 hours, six days a week, that they're not in
the provider's office and that they have the ability to
be empowered with the data, the access to the data
that they need, that they're connecting into the system. So
you and I can become better stewards of our house.
S3 (17:17):
Good. So tell us about some of the ventures that
either by specific ventures or the kinds of ventures that
you are most excited about?
S1 (17:26):
Absolutely. We I think I've talked enough about our thesis,
but if there's one thing to take away today, please, again,
what we're trying to build is so many things for
so many problems in health care that are broken. But
our true nature is empowering, informed, connected health consumers. Beyond that,
there's a number of plans for us that are really interesting.
(17:47):
So things like vertical solutions for chronic condition management. That's
where Livongo plays. That's where a company goes awry. But
we invested in focus on chronic skin conditions, also mental
and behavioral health, particularly severe mental illness. We've invested in
a company called No KB and OCD for obsessive compulsive disorder. Also,
(18:07):
Bright Line Health, which is focused on pediatric behavioral health.
We're looking at health events, something that happens to you,
whether it be MSK or oncology. This can be, for example,
within Jasper Health, which is helping people navigate their cancer
care journey or recovery one a.k.a. Also looking at vulnerable
(18:27):
populations and how we can really extend access and reach
for investing in business called Same Sky Health The platform
for multicultural populations. Also business caraway I mentioned, which is
a business focused on college age women and aging in
place is also another component for us. And that's interesting.
A business called Home Thrive, which is helping family care
(18:50):
caregivers to support and engage their aging. So just a
handful of other lands, I think we are opportunistic and
we're very semantically driven. Our process is to really understand
the landscape, identify where the players are and figure out
where we think that there's whitespace opportunity and those are
(19:10):
sound that I'd say we're pretty excited about for the
year to come.
S3 (19:14):
Cool. So I'm going to tell you about a question
I often get and I'm going to turn it on you.
So this is about, you know, I wrote a book,
as we discussed in 2019, and people sometimes ask, what
would you have written differently now post COVID or what
did you fail to see? You know, I get different
versions of it. When we went. Did you fail to
anticipate what did you put more focus on? Or what
(19:34):
have you learned about COVID that makes sure that this
is different? And I think I say, you know, my
overall kind of thesis about the need for health care
to be transformed, become more consumer centric and empower consumers, etc.,
hasn't changed. But I think one area that I talked
about tangentially was around the need to change the culture
inside health care organizations and the challenge of of culture change.
But I think the workforce shortages is that thing that
(19:56):
just completely was not on my radar three years ago
when it should have been right because the trends were
there in terms of the shortages and the demographics. But
it just really smacked us all in the face three
years later just how, you know, health care delivery has
to be reinvented because there's not enough people being born
to take care of all the people that have already
been born. And there's going to need to be a
(20:18):
technology solve for that. So anyway, that's how I tend
to answer the question. I want to go back to
you and ask you when you think about what you
have as an organization have learned or how you think
differently about investing in health care today versus what you
knew in early 2020, what comes to mind?
S1 (20:35):
I don't think I ever could have predicted what kind
of an accelerant COVID would be for digital health. You know,
I've been doing digital health for almost. 15 years now,
but well before it was called Digital Health. And we
used to call it health care I.T.. And I don't
think I ever could have seen how rapidly we would
(20:56):
need digital health. And there's so much work to be
done on embedding it into the database of health care,
which we talked a little bit about earlier on and
some of the challenges of with incumbents. But the need
for it was so spotlighted in COVID, which is only
(21:18):
a good thing. But I I'm not sure how we
could have seen and we could have gotten the average
consumer to see if it were not for the pandemic.
S3 (21:28):
So we issued a report recently called Transforming Health Care
the Changemakers Playbook, and we wrote about this for Focus.
And I'm going to pick one and see if you
have a thesis or hypothesis. And it's this idea because
I don't think we've touched on it here in this conversation.
And this is what we call here, there and everywhere
of care. And really what we're getting at is care
moving outside the hospital, whether it's to homes, whether it's
(21:49):
the work sites, whether it's two retail clinics. It's one
of those things that we've kind of identified or we
believe are many if identified, but we believe is going
to be a critical force going forward that cuts across
all parts of the traditional health care ecosystem. The payer
has got to think differently. The providers are going to
think differently. The health care technology companies got to think differently.
Do you have a thesis about about where the opportunity
(22:09):
and potentially where the limitations are in this here, there
and everywhere cares because as we've dubbed it.
S1 (22:15):
Very aligned. And thank you for sharing the materials because
for us, meeting people where they are is very much
part of our thesis. We invested in a business called
Metal Drive, which is really extending care into the home
using alternative providers like EMT. And so the importance of
saying we talked about this earlier, that you can't just
(22:35):
get your your health from the of us the hospital
that why can't health care be ubiquitous. The way of
thinking is why can I pick up my phone and
call a bank, use my mobile app if I want to,
or walk into an actual location if I need it to.
So whenever it is, we need health care to to
live like that. I actually don't believe health care should
(22:58):
fully live in home retail, so fully live online or
it should feel that kind of ubiquity that other industries
do and have.
S3 (23:08):
Good. Last question for you. Any short term guesses or
prognostications you want to make? What is your hot trend
that's going to emerge in 2023?
S1 (23:20):
Headliner is Digital Health is here to stay. Whatever you're
reading about the broader market dynamics and the market dynamics
are up right now. And don't get me wrong, but
health care is resilient. Health care tends to be less effective.
And the progress that we're seeing across our portfolio and
others is too great to not continue to double down
(23:43):
to digital health. What I would expect is to see
some continued consolidation. So a little bit more on the
M&A side where companies that maybe have raised a good
amount of capital, maybe haven't met the milestones, seeing those
either merge with other companies or continue to build in
a more thoughtful way than previous two years they have.
S3 (24:04):
Good. That's great. Well, thank you for sharing that. Melissa
Jaffe of Seven Wire Ventures, thank you for being on
the podcast.
S1 (24:09):
Thanks for having me.
S2 (24:15):
And. Thanks for listening to Prophet's Health Care Transformers Podcast.
This podcast is produced by Jared Johnson and his wonderful
team at Shift Forward Health and a big thank you
to our hosts, Priya NASIR, Lindsay Moseby, Paul Shrimp and
Jeff Gorgie. If you like today's episode, you can find
more great content like this at Prophet dot com slash thinking.
(24:38):
I'm Anna Kuno, the senior editor of this podcast. Thank
you for listening.
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