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SFRANCISCO — Part of Andy Slavitt’s core mission at Town Hall Ventures is showing that health tech companies can do a better job of reaching low-income people and those who face social challenges like lack of housing or nutritious food options. Although a handful of City Hall Ventures’ portfolio companies — including Unit Us and Alphabet’s spinoff CitiBlock — have achieved valuations above $1 billion, it’s a bold assertion that hasn’t been proven yet.
Especially during a public health emergency for millions of people enrolled in Medicaid coverage, and the damage continues to grow. He may lose it when the temporary expansion ends.. And by investing in teams they believe can embed themselves in vulnerable communities, build culturally sensitive products and develop sophisticated analytics, Slavitt and his team hope to set an example for other venture funds that have historically avoided Medicaid.
“Clinical answers are not that difficult. I can’t stress that enough,” Slavitt said. Although diagnoses affecting low-income patients are often the same as those with commercial insurance, the health care system is not set up to handle medically complex pediatric patients who are homeless or in medical deserts. He said.
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“The difference is that it’s really disgusting to be poor and it’s really painful to be miles away from anybody who can really take care of you, and it’s a huge hurdle to get housing or child care or any of these other things to fill out 10 forms,” he said. “A system that doesn’t accept you, doesn’t know where you live, doesn’t work.”
From an investment perspective, there is a “good margin — not a huge margin” potential in helping nearly 90 million Medicaid patients get better health care, avoiding expensive future treatment. “There’s no bigger market than Medicaid,” he said.
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STAT spoke with Slavitt in San Francisco, where he and other investors and healthcare executives descended earlier this month for the JP Morgan Healthcare Conference. This discussion has been edited for length and clarity.
What kind of companies do you think are best suited to solve these problems?
The good news is that there is more revival. A desirable investment location is also an investable location. Not everyone thought so.
There are two ways to think about investing. One starts with how do I find a market opportunity and make more money? And the other starts with is there a really big problem that I can figure out how to solve? Not all problems in healthcare are solved by innovation. But some of them can, and what they can do is the needs of a specific population where there’s a clinical, social, and behavioral model where you have a payment model that allows you to meet those needs.
If you look at Medicaid, you can trace it all the way from maternal to infant, pregnant to pediatric, complex pediatrics, then school-based programs, justice and juvenile mental health programs, disability. [dual Medicare and Medicaid eligibles and eldercare]. We have activities in all those buckets. We have investments in most buckets.
Finding people who really understand these problems at a really practical level [is important]. Take a company like Cityblock Health. There are thousands of housing units in New York that are not available to homeless people because they are only available to people with mental health diagnoses. And to get a psychological diagnosis, you have to find a psychiatrist in New York, and then you have to attend the appointment, and then you will be rejected. … They have a team of psychiatrists who do that, nothing, and put people into housing.
How do you know if you are successful?
If we are very successful, [Town Hall] We invest a few billion dollars in our lifetime into these communities. We want to invest hundreds of billions of dollars, and all this capital is sitting there trapped. [in the health care industry] … or because these are incredibly profitable companies, they return to shareholders. And they go into these communities and extract the profits. Money should be reinvested into these communities.
Do the communities you focus on use technology differently than the wealthy?
SMS is less expensive to use than a browser. There are subtle things. I went out into the field with a CityBlock community health partner and asked, “What’s your favorite part of the job?” I told him. She said, “My iPad.” I don’t hear that very often in health care, but she said, “I can bring this into someone’s apartment and make the whole world accessible to them. I can link to what you want, I can order something on the spot and you can see action. I can relate to their daughter who is a big user of technology.
Amazon has a lot to teach us when it comes to healthcare because they know how to deploy technology in unconventional ways.
How do the metrics you use to evaluate companies differ from other markets?
It’s imperfect and a bit of a moving target. We started in earnest probably a year ago. We’ve got more resources on our team to be able to collect the data from our companies. It’s always been a part of the process, but if you asked me the question of how they were doing each of them, I couldn’t give you a good answer.
One simple thing, when I’m talking to a company, is, “Tell me what it is.” “We need to rapidly reduce anxiety and depression,” says Plum, a trans health company. So they measure that like crazy. If I look at Eleanor’s Health, which focuses on addiction and recovery treatment, the bottom line is that they want to reach low levels of desire. They do not measure urine tests [as much] … They’ve learned that frequency of contact with people at different stages of their addiction recovery is very important, so they measure that.
There is a consistent set of parameters, but you have to respect them to tell their own story. They know their business to some extent.
If I don’t hear that you’re measuring net promoter results the right way, it tells me, well, there’s another way to get paid besides doing your job.
There are questions we ask every company, such as the diversity of your management team, diversity on your board, diversity at every level, diversity in advertising. There are often other investors at the table, and I’m sure they’ll ask, “How’s your sell-off going?” I’m sure you’re asking that question. But my first questions will always be what I think is important. You have to hire diversity, especially in the early stages, and then their networks will come. But you have to force him.
This story, part of the Health Technology for Underserved Populations series, was sponsored by the USC Annenberg Center for Health Journalism’s National Fellowship.
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