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Flashy Isn’t Everything: Addressing Essential Healthcare Needs as a VC

by John Moore III | February 08, 2022

Following the money in healthcare with Jessica Zeaske, PhD, Managing Partner – Strategic Investment at Echo Health Ventures

It’s what everyone wants to know, both in healthcare and the wide world of business overall: what’s the next big thing? What opportunities are there for investment and growth? In our industry, this is an especially pressing question, as technology adoption, regulatory compliance, and emerging care delivery models are pivotal to improving the quality of care for patients everywhere. One of the key takeaways from this discussion is that there are plenty of opportunities to impact care delivery that don’t necessitate some glamorous innovation in the heart of the hype cycle; many problems can be addressed with more basic approaches to operational innovation, a focus that differentiates Echo Health Ventures from most other [Silicon Valley] VC firms.

Oftentimes, the old mantra applies: follow the money. Healthcare investors and investment firms are motivated to find projects that will streamline care delivery and save money. When firms like Echo Health Ventures, – who invest largely on behalf of LPs from the insurance side of the market – look for investments that will benefit members of those plans, there is substantive overlap with what we cover here at Chilmark, which makes this interview fit so well in our broader reporting.

Some of the key insights Dr. Zeaske (@jessica.zeaske) shares in this video are around how Echo Health Ventures evaluates new investment opportunities. How does this organization successfully deploy their product in a crowded marketplace? What do care providers and end users need from healthcare tech? How does a given solution address access to care and health equity? Where does it fit in with the eventual shift to value-based care?

Tune in to the video below to hear how Jessica Zeaske, Managing Partner at Echo Health Ventures, thinks about these very important healthcare considerations.

Check out the (AI-generated) transcript below:

John Moore III: [00:00:14] Welcome back to the Chilmark Research channel. Today we are broadcasting from HLTH and I am joined by Jessica Zeaske from Echo Health Ventures. So could you tell us a little bit more about what you do with Echo Health and what Echo Health does themselves?

Jessica Zeaske: [00:00:25] It’s wonderful to be here and it’s a fun–it’s actually, of course, just great to be back in real life with people. So that is wonderful. So I am an investor with Echo Health Ventures. Echo Health Ventures invests on behalf of three different Blues plans: Arkansas Blue Cross, Blue Shield, Blue Cross of North Carolina and Cambia, which is up in the Pacific Northwest. We do have a dual mandate as investor. We look for financial returns, but also very driven for the experience of the member and the benefit of the member of those Blues plans. And so we really are looking across what is the population health, what are the interventions, what are the solutions that we can really drive to these populations now we have rural, urban, you know, commercial Medicaid, Medicare, et cetera. So we can really look across the spectrum of early stage to late stage companies to invest in to push forth the mission of again going back and serving the patients, the members in these communities.

John Moore III: [00:01:26] Ok, fantastic. So there’s been a lot of focus on improving health equity and improving health care access, especially in the light of the pandemic and all the public health issues that have been raised by that, by this huge national health crisis. So could you tell me a little bit about if that’s shifted your focus, if that has influenced your thesis at all? Like how has the last year impacted what Echo Health is focusing on in order to better serve those members and patients?

Jessica Zeaske: [00:01:50] Yeah, no, it’s a great question. So and you know this already; my background originally was in public health, and I actually love to see there are more investors with public health backgrounds coming to the table because it actually gives you that lens of: how does equity, behavioral health, how do issues of access and affordability. These are issues that we are finally talking about on the grand scheme at Echo Health Ventures. We’ve always invested in these types of companies. Even back from circulation to which is a ride-sharing program to our investment in Cityblock, our investment in Wildflower Health, or Eleanor. These are all companies that were designed to address those fundamental inequities that exist in our health care system.

Jessica Zeaske: [00:02:37] And I think when we get in this echo chamber as investors and we think what is going to be great and we listen to each other and then we talk to some early adopters. And I think at Echo Health Ventures, we’ve always gone back and said, what does a primary care doc outside of Little Rock, Arkansas need? What does a, you know, a small employer in Idaho need? These are the questions that this is America, and we really work to make sure that we can try and invest in things that can help them, which is different than what can my friends in Silicon Valley use. And again, there are some of those great opportunities out there, but we really want to start at that regional level and then build up.

John Moore III: [00:03:18] Ok, so you mentioned your public health background. So could you actually give us a little bit more history about how you ended up, where you are today and what motivated you to get into health care specifically? Because most people I know in this industry, there’s a reason that they’ve fallen into health care, that they’ve pursued a career in health care in some capacity. So what’s your story?

Jessica Zeaske: [00:03:36] Yeah, it’s a great question. And I always like hearing people’s origination stories of how they got into it. So I was doing a PhD in public health, and a man by the name of Carl Schramm came and gave a lecture, who was an entrepreneur. And he said the issue we really need to look at in this country to truly solve health care. We need to follow the money and follow the money back to that. Over 50 percent of our health care is funded by the government. We need to follow the money to understand how the reimbursement changes, people’s behaviors, changes, provider’s behaviors. We need to understand deductibles and co-pays and dove in really deep to the money side of it. And I just it clicked for me and I was like, “I want to go work.”

Jessica Zeaske: [00:04:20] And so I he was kind enough to hire me on and we invested together for a number of years. And really got that opportunity to look at how entrepreneurship paired with investment capital can change. Health care markets can make it affordable, can really change. And again, I work within some fabulous, innovative Blues that are bringing change to the market. But you have to have that entrepreneurship and innovation coming and meeting them. And when you get them together, that’s where we can really start to see some fundamental change.

John Moore III: [00:04:55] So as you’re looking at the market right now and how things are shifting constantly, as we’re trying to achieve this quadruple aim and you know, there’s this push towards value based care that’s still getting some resistance from the traditional, you know, more revenue driving fee for service model–again, I’m going to get back to your investor thesis and what’s exciting you right now? What are the top three opportunities that you can look at right now from a public health or from the payer side, from your vantage point as an investor with that kind of backing of your LPs? .

Jessica Zeaske: [00:05:23] Fantastic. So the first three areas, let me go, start with administrative simplification. It’s boring and it’s not sexy, but when it’s the fundamental of how we drive health care to be more affordable, when we talk about how to make it more member friendly, patient friendly, we do have to finally go back and fix the pipes. And what is exciting to me is seeing tech entrepreneurs start to come into the industry with a with curiosity, not contempt, which we actually saw more five to 10 years ago, which is, “Hey, teach me  what adjudication really means. I might be able to help out.”

Jessica Zeaske: [00:06:05] And so when I say simplification, when we’re talking about process automation, we’re talking about chat bots, we’re talking about, you know, smoother pipes to get clinical data back and forth and interoperability. Of course, all of those fall under this administrative simplification, and it’s an area that at Echo Health Ventures, because we work with health plans, we know very, very deeply.

Jessica Zeaske: [00:06:26] You know, two other areas that I would say we are spending a lot of time on is one that we talked about some of the equity issues. But you know, the disparities of health in this country, we are every single one of our investments needs to be–it’s not a “Hey, let’s go target some CEOs. Let’s go target some companies.” It is every single company needs to be able to address: how are they looking at rural populations? How are they dealing with, you know, how do they understand Medicaid? How are they going to work with new Medicare Advantage plans? How are they going to or geriatric populations it has to infuse through? So it’s not an area, it’s CEOs who understand those fundamental issues. And then third, I think there’s great opportunity within the pharma space, the pharma services space, I love the convergence that’s really coming to this market across pharma diagnostics, plans providers. And when we all start to sit around the table, there’s some real opportunity there that we are. We’re starting early on that one, but we’re starting to see some opportunity there.

John Moore III: [00:07:25] Yeah. So pharma is definitely an area that we’re starting to get a little bit more into. As this data begins to get more normalized and more computable, it actually has more relevance to the real world evidence side of what pharma needs to be doing. Ok, so you mentioned infrastructure at the very beginning, which then prompts me for the next question. What are your thoughts on what’s going on on the Hill right now with the infrastructure bill and all these budget bills and all the the discussions around what they might be investing in in health care, or how they might be changing, how the federal government funds health care in this country? Do you have any opinions on that?

Jessica Zeaske: [00:07:57] Well, how long do we have? So talk about a few things that everyone should be for. Everyone in this country should be thinking about how we get broadband access across this country when we look at the telemedicine rollouts and the affordability of telemedicine solutions. This should be a fundamental issue that health care needs to step up and be more aware of access and affordability on the tech and broadband side. Second of all: what I said before, when we’re following the money, a lot of roads lead to D.C. on this. They are defining our, you know, the bundling, the ACOs, Medicare policy, Medicaid policy also states on that. But and then you look at the VA and you you say this is where a lot of the changes are coming. And I think there’s some excitement coming out of that in terms of it’s slow, of course, but it is a looking at value based care. How can we drive the incremental changes in some of that value based care, the direction the directionality is right, moving away from fee for service to that is the right direction.

John Moore III: [00:09:09] Ok, so in that final, I guess we can end on this note, but how long do you think it’s going to be until we actually see true value based care be the dominant model? Not necessarily the only one, but the dominant model fully in the majority of finance in this country. You know, as far as driving the economic activity in healthcare.

Jessica Zeaske: [00:09:25] I will say I think there are–it is going to be regional for a while. Yeah, I, you know, point to Blue Cross North Carolina as a leader in this space of of really moving that Blue Premier and the cost savings are showing up for them and for their members, more importantly in that state. So if I look, I can pick out pockets of states and say, Hey, I think those 10 states now, these 15 states, until there is true Medicare change and then it becomes federal, there are states regionally. We sit in one of them as we sit here in Boston, Massachusetts. Like it may be longer for Massachusetts to get there, but it is, you know, we will slowly get there. So there’s not a magic number in that, but I will see state by state we’re starting. You see that innovation come.

John Moore III: [00:10:14] You know, it will be like what will actually cause that switchover? Because right now, you know, there’s a lot of resistance to value based care. A lot of people want to keep doing the fee for service model because it’s so easy to rely on. I mean, the pandemic obviously put a very clear–this is what could happen. You have your patients already covered and they’re already paid for. And so now there’s this pandemic and people aren’t getting all their electives and they’re already paid for. So there’s a benefit there. But outside of these big kind of one off acute events like a pandemic, like what we just experienced, what do you think might finally get that? Get more of the provider side? Because you mentioned that it’s good for the patients and the payers. But what about like when are we going to see the more providers buy?

Jessica Zeaske: [00:10:50] It’s actually can be excellent for the providers, but not all providers want to move to that. And it’s one of the reasons we’re investing in companies across the board who are who are pursuing this: Strive Health and Heartbeat, Heartbeat Health and Vori and companies that are really driving to create a new provider model in to enable that value based care. Validate and Cityblock. All of these companies are in that space because I think once there is some competition, there is some push partnered with come back again. The fundamental change in the reimbursement model starts with the payers, starts with CMS, starts with the health plans that are writing there was reimbursements. Once those start to move, the providers will follow.

John Moore III: [00:11:39] Well, thank you for joining us today, Jessica. This has been great. It’s always a wonderful catching up with you. For those of you that aren’t aware, which is most of you, Jessica was one of the first people that was kind of welcomed me into the health care space when I was getting started. So we’ve had a longstanding relationship and she has a fun place in my heart.

Jessica Zeaske: [00:11:55] Thank you. Well, it is great to be here and you know, I’m a supporter of the work you guys do at Chilmark and great to see you here at HLTH.

John Moore III: [00:12:03] And thank HLTH you for having us out here and thank you everyone for watching.

Jessica Zeaske: [00:12:06] Yeah, thank you.

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