The opening day of the HLTH 2023 event offered a blockbuster announcement from General Catalyst CEO Hemant Taneja. Dr. Marc Harrison, the former CEO of Intermountain Healthcare who joined General Catalyst last year, will lead a new initiative called the Health Assurance Transformation Company (HATco), with the goal of acquiring and leading its own for-profit health system. Value-based care will be a focus of the new entity.
Taneja acknowledged that it was an unconventional move for a venture capital firm to launch a business like this.
“It’s actually forcing us to think about transcending our own business. First of all, if we have a health system that we’re supporting, we have to think for the very long term,” Taneja said. “It’s our responsibility to make sure all the things we do and the transformation that we think about does not diminish the quality of service that people get. We also have to be thinking about a long horizon that generally isn’t in the context of venture capital firms.”
Harrison said they needed to have a way of putting into practice their vision for value-based care.
“We need a proof-of-concept of this wild radical transformation of what healthcare should look like in the United States and beyond. And the only way we can do it is to have our own system,” Harrison said. “We assembled a 20-health system ecosystem of friendly partners plus a large payer. These folks serve as our thought partners, a place where we can confirm our hypotheses around what healthcare transformation should look like. We’ve got huge scale to work with in terms of sandboxes to begin to try some of our health solutions.”
HATco will also work with 150 digital health companies assembled by General Catalyst.
Harrison highlighted three “levers of transformation.” HATco will leverage technology to drive operating profit. It also seeks to transform the workforce. He acknowledged that not enough people in healthcare are working in mental health or taking care of the elderly. HATco will also work with AI technologies, applying automation to some tasks in healthcare. It will also seek to identify new revenue streams to create profits for the health system it envisions.
Another featured speaker at HLTH was Weight Watchers CEO Sima Sistani. She reflected on the progress made in the area of weight management and obesity in the 60th year of the organization. But she also called for changing the way we talk about weight.
“We’ve written a new chapter in the story of obesity care. We have a clearer path than ever for preventing, treating and even curing people with weight-related chronic disease. So even with all the shame around weight, this is an incredibly exciting and hopeful time to be in this space. We have the medications, we have the behavioral tools, we have the innovations we need to start delivering better health outcomes for people around the world. What we don’t have is a healthy way to talk about it.”
Sistani, who was a member of Weight Watchers years before she joined the company, drew comparisons to mental health. Going to a therapist, talking about depression, anxiety and other mental health topics is greeted with acceptance and encouraged, and no longer derided as a character flaw the way it used to be, particularly in the workplace. Sistani said a similar change was needed for how we talk about weight.
“You have to start by shifting the language because eventually the language shifts the culture and the culture shifts the outcomes,” she explained.
The patient engagement conference within HLTH, ENGAGE at HLTH, highlighted some compelling discussions on generative AI focused on large language models, retail health, the battle to make prescription drugs more affordable, and investment trends.
In a fireside chat with MedCity News reporter Marissa Plescia, Merith Basey, executive director of advocacy organization Patients For Affordable Drugs, said she was greatly encouraged by the Biden administration’s work to lower the cost of prescription drugs, particularly insulin. The legislation was part of the Inflation Reduction Act. Despite this achievement, Basey noted that several drug companies have filed lawsuits seeking to overturn prescription drug provisions in the Act. She encouraged the audience to educate themselves by reviewing the bipartisan bills proposed by members of Congress. She also urged for greater transparency from the pharmaceutical industry.
“The system is currently rigged against patients for the benefit of corporations,” Basey said.
A panel of experts discussing investment trends shared their outlook for 2024. Maria Toler, SteelSky Ventures founding partner, observed that a “valuation reckoning” is underway.
“We are starting to see so many companies, even good companies, selling for pennies on the dollar.”
Eric Klein, a partner with Sheppard Millin who served as the panel moderator, raised the question of where valuations would go.
Blake Wu, a partner with NEA, said the venture capital firm derisively referred to many of the healthcare investments made in 2021 as “tourist capital.” The rush to invest in companies seeking to transform healthcare in the wake of the Covid-19 pandemic, were not properly vetted, were overvlaued, or both.
Anuradkhika A., system vice president for strategic partnerships, innovation, at CommonSpirit Health Ventures, noted that most startups don’t make it past the Series C stage as a general rule.
“How many niche products can exist in [this market]?”
Anuradkhika also emphasized a recurring theme when it comes to investment arms of health systems investing in startups. She warned startups not to align their technology to any one health system in a way that can’t be scaled at other hospitals.
“You have to make sure that the company can apply their technology to other health systems,” Anuradkhika said. “Startups should ask hard questions of health system investors who want to invest in them such as, ‘Why do they want to do this?'”
Wu agreed and said startups that can’t scale beyond a single health system risk diminishing their value with repeated pilots that go nowhere.
Photo: Michail_Petrov-96, Getty Images
