At HLTH, Former CMS Administrator Andy Slavitt Explains His Launch of a Venture Capital Firm
As announced on Tuesday, former Administrator of the Centers for Medicare and Medicaid Services (CMS) Andy Slavitt, with two co-founders, has launched a venture capital firm intended to “invest in healthcare technology and service companies transforming care delivery to American’s most vulnerable populations.”
Healthcare Informatics Managing Editor Rajiv Leventhal noted in his report Tuesday morning that “The firm, which will be called Town Hall Ventures and will be headquartered in Minneapolis and New York, announced its creation at the HLTH Conference being held this week in Las Vegas. According to a press release, it is being ‘built on a foundation of broad and deep expertise in building companies to improve care in Medicare, Medicaid, risk-based care, complex conditions and in addressing social determinants of health. These areas of focus touch almost 120 million Americans and approximately $1.2 trillion in annual healthcare spending,’” the press release noted.
Leventhal’s report noted that “Along with Slavitt, Town Hall ventures will be led by Trevor Price, founder of Oxeon Holdings, an executive search and investment firm; and David Whelan, managing general partner of predecessor firm Oxeon Ventures and formerly general partner and CFO of investment firm Accretive LLC.”
And Tuesday afternoon at the HLTH Conference, at the convention center at the Aria Resort, Slavitt sat down with CNBC health technology reporter Christina Farr during a general session entitled “Investing in Solutions that Focus on the Most Vulnerable Populations,” for an interview about the new venture.
Farr asked Slavitt, “Why are you making this transition now?” “Let’s look at the national problem, Christina, which is that we have communities around this country with typical medical conditions, yet very poor outcomes,” Slavitt said. “Among those disproportionately affected include people of color, the poor, the elderly, children, and people with disabilities, and certain diseases and conditions. And we probably don’t invest as much in those communities as we should, in terms of technology that can help us. So I think we need to shift. And if we spent the next decade investing in primary care, mental health, drug addiction … is there any doubt we could have better health in this country?”
CNBC's Christina Farr interviews Andy Slavitt Tuesday afternoon at HLTH
“How will you find companies that are going to help do this together?” Farr asked. “I think the problem is that we don’t look like the population at large,” Slavitt replied. “So unless we do a great job studying, listening, and talking to people, we will very likely not build solutions that help the people who need them the most. We haven’t figured out yet how to solve that problem. The good news is that there is a set of incentives in the Medicare and Medicaid system that will make it easier to achieve good outcomes. And there are technological entrepreneurs who are creating great solutions. And so what is it that leads individuals not to fill a prescription or to get a diagnostic test at the right time? If we can create solutions that address those issues, we can make progress,” he said, in addressing the underlying issues. “What we’re doing at Town Hall hopefully will be a catalyst to doing that. And we want to draw attention to” the solutions that could emerge.
Asked for examples of solutions, Slavitt mentioned the challenges embedded in how dialysis is delivered to kidney failure patients. “We spend $100 billion a year on kidney care, and we haven’t changed the way dialysis is provided for four or five decades at least,” he said. “So someone getting dialysis is taking two buses to sit in a room hooked up to a machine as big as an EHNIAC machine. The thing is, you can make machines that are this big,” he said, making a gesture about the size of a microwave, “and there is technology there—and there is funding available. And look at mental health, pregnant moms, early childhood, community-based clinics—all of these are opportunities—we wait for people to get sick until we take care of them—and that needs to change. And by the way,” he added, “it’s not just about medical care. It’s also about housing, nutrition, transportation, socialization.”
Meanwhile, he said, “Trevor Price and David Whelan, my partners, and I, we don’t care whether it’s someone who has an idea on a napkin, or whether they have something more fully developed. But we want to find people who have good ideas and we’ll help them build infrastructure, build a management team, build solutions, build relationships. And we’re not alone; there are other people who see this as well, starting a few years ago with Medicare Advantage and other models, and now it’s moving into Medicare/Medicaid with dual-eligibles as well.”
Slavitt went on to note that, “Today, we have 30-40 percent of our Medicare population in Medicare Advantage. And 75 percent of the largest health insurance population in the country, 70 million people—are involved in managed care plans, driving the cost down. And generally speaking, when a Medicare patient is admitted to a hospital, the hospital loses money—perhaps $5,000 on an admission. But if you could spend money bringing people their prescriptions, bringing them to clinics, and you could drive down costs, that would be a great investment. So to the extent you can deliver great outcomes, there’s a real opportunity there,” he said. And states and the federal government are very interested in working with entrepreneurs.”
A bit later, in a segment of the conversation focused on the question of luring tech entrepreneurs into public-private collaborative work, Farr said, “You definitely see a divide between Silicon Valley and DC, then?” “Look,” Slavitt said, “people like Adam Boehler, the new head of CMMI”—who was officially named to the job by CMS Administrator Seema Verma on April 8—“and he’ll do a terrific job, and be a great public servant, because he understands how to make the government and technology work together.”
“Do you have thoughts about which companies will have the greatest impact in healthcare, and why?” Farr asked. “My great hope is all of them,” Slavitt said. “We have a temptation when we hear about someone entering this space, to say, ‘They don’t know what they’re doing.’ And guess what? That means the incumbents are just going to get bigger and bigger. And unless you think the incumbents are killing it, we ought to let these new people in. How can I use my Google platform, or Microsoft platform, or whatever, to improve healthcare? Because we’re not killing it; the healthcare system is arguably more expensive, more complicated, less integrated, less coordinated, than it was ten years ago. And that’s after countless conversations like this. So we need participation.”
“What are your thoughts on the Amazon-Berkshire Hathaway-JP Morgan Chase collaboration?” Farr asked. “Well,” Slavitt said, “I think that there are a few things that groups like that can bring to the table. Where Amazon can add value is the consumer permissioning experience, the trust. Right now, consumers don’t have anyone they can trust at an institution level; they may trust their doctor, or neighborhood, or pharmacist. And the consumer engagement attempts are coming at them from people who they don’t necessarily trust. Now, the trust people have in Amazon isn’t necessarily the trust they have in medical entities. But Jeff Bezos disrupts new things every week, and then takes a rocket ship to another planet. So we ought to welcome that, and if they fail, let’s not say, see, they failed. We ought to cheer them on. We ought to remind ourselves, we have a $2.8-trillion or larger healthcare system that isn’t doing an ideal job of taking care of everyone, so we ought to encourage (participants) in to help us figure it out.”
“Why the name Town Hall Ventures?” Farr asked. “I’ve been to a lot of town halls,” Slavitt said. And, he said, a town hall “is a place where people go to solve problems together. It’s also a place where the public and private sectors meet. And last summer, I issued something called the town hall challenge, where I challenged people wanting to repeal the ACA, to discuss the issues with me. And only eight people did this, so I issued this challenge saying, I’d be happy to come to meet with people. So we did 16 town halls and met with 38,000 people, in red districts, purple districts, military bases, community centers, to talk. And we’re just at the beginning of our common American story.”
“We’ve talked about what’s broken in healthcare,” Farr said. “What gives you hope” for the future? She asked. “I’m really inspired by the new group of entrepreneurs who are mission-driven and community-based. There are companies coming into opioid abuse, behavioral health, trying to do the same thing. And these entrepreneurs mean business. And it would be my honor over the next decade to help them grow and build solutions to solve problems that can help us.”
