Category: Black Book

David Tamburri

BIO

Prior to joining HEP in 2009, Dave was a Vice President for Susquehanna Growth Equity, a private equity group focused on growth stage technology companies. He was formerly the President and Chief Operating Officer of Onward Healthcare, Inc., a Welsh, Carson, Anderson & Stowe portfolio company. Prior to Onward, Dave was an Executive Vice President of Pinnacor, Inc., a General Atlantic portfolio company, which went public.

Dave is currently on the board of directors of Bardy Diagnostics, Catapult Health, eVariant, Intraprise Health, Jet Health, and Payer Compass. Dave previously served on the board of directors for HealthQx (acquired by McKesson), MobileMD (acquired by Siemens Healthcare), Nordic Consulting (recapitalized by Silversmith Capital Partners), Privia Health (merged with Brighton Health), Shyft Analytics (acquired by Medidata) and Vitals.

He is on the faculty of both Columbia Business School and the School of Professional Studies at Columbia University. In addition, Dave is also a member of the Healthcare Initiative Advisory Board at Harvard Business School. Dave is a distinguished graduate of the United States Military Academy and holds an MBA from Harvard Business School.

The Interview

This interview has been edited for length and clarity.

Q1: Looking back on the last 90 days, what are some of the bigger deals (M&A, funding rounds) that you think will have a big impact on the Medicaid market this year?

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I intend to answer this question by not pin-pointing a transaction, rather an over-arching market viewpoint.  Meaningful use was created 10 years ago by the American Recovery and Reinvestment Act (ARRA).  It encouraged the baseline adoption and utilization of electronic medical records.  The investment drivers today center on how to combine and leverage a myriad data sets – administrative, claims, clinical, and social determinant – to drive predictive and meaningful analytics.

Here is an example.  Cerner and i2i, which services 25% of the FHQC centers and 20 million Medicaid patients through its technology platforms, announced a few weeks ago that they are working together on a bi-directional integration to provide insights to help providers better meets the needs of their Medicaid population.  As the over-arching forces continue to shift to value and managing populations, I think a vital element includes an integrated platform which help drive the activity and limited resources of providers to service the Medicaid population.  This underlying data, appropriately de-identified if necessary, which is captured at the FHQC level can also have a tremendous impact as health plans think about member activation and engagement.

In short, it will take the intelligent amalgamation of various data streams as well as integrated labor model (clinical and non-clinical) working in concert to help achieve improved outcomes for the Medicaid population.  The upside is this approach can be migrated into other managed populations.

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Q2: Looking ahead for the next 90 days, how active do you think capital investment players will be in relation to investments with potential Medicaid revenues?

My view is that there will be a cooling effect in the very near term.  Granted, there is an abundance of capital to be deployed largely within the private equity sector.  However, I think the political swirl regarding the impeachment topic and the election cycle is creating a wave of uncertainty in the market.  The projected enrolment target for Medicaid in 2024 of 81 million – up from 75 million last year – paints a picture of steady and consistent growth.  Of particular interest is the area of managed Medicaid which now represents more than half the total category spend.  This growing trend around managed care also bridges to the topic above around predictive analytics.

​I think there will be continued focused investments around point solutions near term for Medicaid, but I question whether we will see larger funds making more “market-centric” bets or strategic players heading down the M&A pathways.

Q3: What advice would you give to your peers about vetting potential healthcare opportunities?

As a jump off point, I think a team with deep domain experience and selling into health care is absolute must.  Long sales cycles are unfortunately a hallmark of our sector.  In thinking about the companies I have been fortunate to work with over the years, the CEO’s share a single and unifying theme – an obsessive and collective focus on the customer.

​Innovation in healthcare simply has to complement and leverage existing workflows as well as notably enhance the existing incentives or payment streams.  The irony, and a remarkable challenge, is that the first hurdle to driving innovation is to ensure there is limited change to adjusting workflow or adjusting the status quo.

So, what does the trifecta include when evaluating an opportunity?  I think the 3 variables include:  1) very low workflow friction; 2) upside for existing incentives and 3) lift on market share.

Brett Moraski

BIO

Mr. Moraski brings Frazier Healthcare Partners particular expertise in payor services and significant experience as a senior executive with some of the nation’s largest health plans. He joined Frazier in 2015 and serves as Chief Strategy Officer for Matrix Medical Network, a Frazier portfolio company and pioneer in the field of home-based medical assessments and related services such as screening, chronic care management, physician engagement and analytics.

Previously, Mr. Moraski was a senior operating advisor at LLR Partners and Corporate Vice President of Transformation at WellPoint, a Fortune 50 health insurance company, where he headed the company’s HealthyCare Solutions business unit. Earlier, he led Corporate Strategy and Innovation at WellPoint and was responsible for leading WellPoint’s enterprise strategic planning activities and its corporate innovation activities.

Prior to joining WellPoint, Mr. Moraski was Senior Vice President of Corporate Strategy and Development at Highmark Blue Cross Blue Shield, where he was responsible for strategy, innovation, corporate development, and market research. He has served as a director of Eye Care Centers of America, Davis Vision, Viva Optique, Gateway Health Plan, HM Insurance Group, Inter-County Health Plan, Linkwell Health, NaviNet, SoloHealth, United Concordia Dental, and other healthcare service and technology companies.

Mr. Moraski attended the University of Notre Dame where he earned his B.A., summa cum laude and Harvard Business School for his M.B.A. He currently sits on the board of Big Brothers Big Sisters of Greater Pittsburgh.

The Interview

Q1: Looking back on the last 90 days, what are some of the bigger deals (M&A, funding rounds) that you think will have a big impact this year?

I think we should look at this in 3 buckets: 

1) The corporate space (for things like the CVS/Aetna deal)

2) Private equity

3) Venture capital

For the corporate space, the headliner was absolutely CVS/Aetna. To a lesser degree, the Cigna-Express Scripts deal. But CVA-Aetna is unique because it really is trying to drive a new model of care in the market, not just trying to make numbers work differently. They have a strategy of engagement they are laying out, and it aligns with what health plans have been talking about, but have not been able to deploy. The new entity will be using sites in the community to build wellness on the insurance side of house.

In the private equity space, I think about the Kindred-Humana deal.  Humana worked with TPG Capital and Welsh, Carson, Anderson and Stowe to buy Kindred. Humana was already focused on driving care into the home and now there are a lot of assets with Kindred to do it. This deal was also interesting because you had a large insurer working with PE to do a complicated deal. That’s unique and it reflects how people will need to be creative in future auctions. You will need to be creative in how you drive value thinking of different angles.

For the venture capital space in healthcare, what stuck out for me are the heavy investments on the insurance side for things like Oscar/Alphabet, Clover, and Bright. We now have very large, well-funded startups going after a traditionally very narrow market with fewer entrants on the insurance side. The idea is that deploying new tech and marketing differently and doing partnerships differently will cause a lot of impact. This is expected to impact Medicare Advantage, but also Medicaid and commercial markets that are testing new models.

Q2: Looking ahead for the next 90 days, how active do you think capital investment players will be in relation to investments with potential Medicaid revenues?

Healthcare as an investment area is as active as its ever been in terms of both valuations and volume. This activity is causing people to look more broadly than before. The best example is the Medicaid space. Medicaid traditionally has been a space that people have been less comfortable investing in because of reimbursement risk. And now there are now some new dynamics around things like work requirements that can reduce enrollment in certain states. That’s on the negative side. But on the positive side, you have states like NC going to managed care for the first time. So there are big adds.

In reality, the Medicaid space is a very big market. Its more diverse than people on the outside realize. I do see the comfort level increasing for Medicaid investment. Its simply too large to ignore, even if traditionally it has gotten less attention.

One area of new focus will be things that tie back to social determinants. There is a lot of applicability in engaging with members to improve costs and care.

Q3: What advice would you give to your peers about vetting potential healthcare opportunities?

What’s tricky about healthcare is that people treat it all as one industry vertical, but really its a collection of a thousand different niches. There’s Medicaid, care technologies, provider groups, managed care, pharma, finance, and on and on. Healthcare is a multi-trillion dollar space with lot of billon dollar businesses within it. 

You must get expertise or surround yourself with people that have it. Whether its in reimbursement, regulations or another area- specific expertise is key.

You also have to understand how to pivot and tack to all the changes that have happened to healthcare in the last decade. Healthcare has moved fairly rapidly in lot of different ways, even though at times it feels like an iceberg melting. That change creates opportunities, but you have to think through the fundamentals of the investment horizon and how to align with where the markets going and not where its been.

John Lovelace

BIO

Mr. Lovelace is president of UPMC for You, a managed care organization that serves Medical Assistance and Medicare Advantage Special Needs Plan recipients in 40 counties in Pennsylvania. 

He provides leadership, direction, and administration for the services provided by UPMC for You, which offers coverage to eligible Medical Assistance recipients through its contracts with the Pennsylvania Department of Public Welfare as well as coverage options for Medicare beneficiaries who are also enrolled in the Pennsylvania Medical Assistance program. 

He is also President of Government Programs and Individual Advantage for the UPMC Insurance Services Division. In this role, Mr. Lovelace oversees Medicare products, Medicaid, and the Children’s Health Insurance Program (CHIP) of UPMC Health Plan, known as UPMC for Kids. He also oversees a group of Medicare Advantage Special Needs Plans for people who are dually eligible for Medicare and Medicaid, and for individuals who are eligible for long-term care services. He oversees UPMC Individual Advantage, a guaranteed renewable individual product. He is also responsible for compliance, finance, and operations for individual products on and off the Healthcare Exchange. 

In addition, Mr. Lovelace is Chief Program Officer at Community Care Behavioral Health Organization, a behavioral health managed care organization that is part of the UPMC Insurance Services Division. Community Care provides behavioral health coverage for more than 900,000 Medicaid beneficiaries in 36 Pennsylvania counties as well as care coordination services in New York.

In addition to his service on local, regional, and national organization boards of directors, he serves as Board Chair for the Association of Community Affiliated Plans (ACAP), a trade association comprised of 60 provider-affiliated regional health plans enrolling Medicaid and other low-income beneficiaries. 

Education/Training:

• Graduate degree in rehabilitation counseling from the State University of New York at Buffalo
• Graduate degree in information services from the University of Pittsburgh

The Interview

Q1: Looking back on the last 90 days, what issues have you been focused on the most? Do you think your peers (leaders in other MCOs) have been focused on similar issues?

Focus the last 90 days

We have spent a lot of time working for rate adequacy in Medicaid. Our major buyer is the state of Pennsylvania. The state has a number of strategic initiatives they want MCOs to help them achieve. Like many states, they are working to move forward with value-based payments to Medicaid providers. We are working to achieve rate levels that will achieve these aspirational goals. You also have to identify the right outcomes that make sense to match up with value-based payments. One recent example is our work on c-section rates. 

We’ve also been busy delivering on a wide range of contracts we have with the state, including DSNP and LTSS programs. Our LTSS rollout began January of this year, and next January we will be statewide. It already has 74,000 members.

Based on discussions with my peers in other MCOs, we all have the same focus issues: payments, rates and outcomes.

Progress on impacting social determinants of health

I have spent the past several years working on ways to address social issues that drive healthcare outcomes (SODH). The discussion has moved forward significantly in the last 5 years. We started talking about it in housing 10 years ago. And Centene recently announced an entire center focused on social determinants. It is now widely recognized now that there are a lot of things that can be done about it:

• People are building referral networks. Screening for needs is critical, and we are learning that its easier when screener thinks there is some sort of solution.
• We are starting to have conversations about using social determinants data for structuring payments accordingly.
• We are making progress working with PCPs and FQHCs. Working to resource community health workers has been a big focus. And adding social workers to our strategy has been a big step.

With all the recent progress in things we can do to address these needs, there has not been much progress is seeing how the economics of all these things we think will impact social determinants interact. Our starting point- housing- does have good data on how housing costs impact medical spend. The main example, and the one with the most clarity, is homelessness.

For those beginning to think about how they want to impact social determinants in the populations they serve, I’d say there are 3 things to do:

• ID what issues and needs are to be screened for
• Determine how to explain the business case for items you can do something about
• Explore where you have partnerships to help impact social determinants in a meaningful way

This really is the next big wave in Medicaid managed care. Everyone is going to be doing it, and the procurements reflect that. Look at the recent NC managed care RFP and its focus on social determinants. And the next Medicaid procurement here in PA is expected to have requirements related to data systems and accounting for health outcomes related to social determinants.

Q2: Looking ahead for the next 90 days, what do you think the most pressing issues will be?

Several things come to mind, and a lot of them have to do with behavioral health services: 

• I think we will see more focus on accomplishing meaningful integration on impacts of physical health on behavioral health (and vice versa). Think about what we are seeing in some efforts in duals programs now.
• There will also be an increased focus on outcomes for treatment of substance abuse disorders. As death rates increase, we will see more focus on what to do about this. Restricting supply by itself doesn’t fix the problem. You may just be pushing the problem to a place you don’t see it anymore. The annual death rate from opioids is already shocking, and its expected to be at the same level for the next 10 years based on an article I read recently. Along these lines there are groups like the Shatterproof Coalition. This is a group founded by wealthy person whose son died of overdose after many attempts at rehab. Their mission is to work with payers to create evidence-based models for substance abuse treatment. All of this is part of a discussion about belief-based programs vs. evidence-based-medicine. We’ve had the former in things like AA and NA for decades. While it works for a lot of people, it also doesn’t work for a lot of other people. Other models are untested in terms of evidence, too. There is no evidence that 28-day rehab works. The main idea of this coalition is to create evidence that helps payers to implement different models.  Getting 40 big payers to change provider behavior is easier than getting 10,000 providers to change.
• I think we will also see new focus on the impacts of value-based care. Where it take us by focusing on paying for success is a worry. One of the unintended consequences in pay for performance is taking only easier people. How do we account for this? What if people are treatment resistant, or not motivated to change? How do we account for those people that won’t be welcomed in value-based payment models by providers who want to shed risk?

Q3: What advice would you give to your peers about managing vendor partner relationships?

• The first thing is to ask potential vendors is what peer reviewed evidence they have to support that what they are proposing is effective or what the impact is. What you normally get is carefully cultivated samples that are more like published commercials vs. evidence-based medicine. Vendors will pick and choose from successes and put those as their pitch. Don’t rely only on the vendor to tell you the great stuff.
• Be careful to quantify expected outcomes for what cost. Avoid a strategy to just try things and see what happens. You want clear, quantified goals like “reducing ED visits for CHF by 20%.” You also want to have a structured period of study and agree at the beginning what the goals and study methods are.
• Explore vendor arrangements where they share some risk as part of the arrangement. Value-based payment models can apply to vendors, too. What’s the consequence if we don’t achieve expected results? You don’t want to leave room for finger pointing at the end. You want to make the rules clear at beginning, so you don’t argue over what went wrong.

I’ll give a somewhat hypothetical example to help illustrate all this:

We were in discussions with a care management vendor for help with high risk patients in Pennsylvania. This particular vendor had had success in other sectors.

We were able to talk with other MCOs who had worked with them. We learned the vendor was good at ABC, didn’t know what D was, and E-G was a complete revelation to them. They had no experience with patients with SMI. Turns out their success was very specific elderly ladies with early stage dementia who lived in independent living.

All the details are twisted up a bit to be discrete about who the vendor was, but you get the idea.

The moral of that story is to talk to your colleagues in other MCOs. Groups like ACAP are good for those discussions, because you’re not really in a group of competing MCOs.