Parth Desai, Principal, Healthcare Venture Capital at Flare Capital Partners

State of Digital Health 2020 with Parth Desai, Principal, Healthcare Venture Capital at Flare Capital Partners transcript powered by Sonix—easily convert your audio to text with Sonix.

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Saul Marquez:
Welcome back to the Outcomes Rocket, Saul Marquez here, and today I have the privilege of hosting Parth Desai. Parth is a Principal at Flare Capital Partners focused on accelerating the transformation of health care by identifying and investing in innovative early stage health care technology companies. He brings over a decade of experience and corporate strategy, innovation, health policy and clinical research to the role. Today is an incredible time to be part of health care transformation and the work that Parth and his team are doing, working with the system and platform that they have at Flare Capital Partners across a wide range of companies that are innovating to make things better in our health care system. It’s an exciting time to discuss what he’s seeing across so many different verticals within the health care economy and to dig deeper into what Path believes is driving that transformation of care. So it’s such a privilege to have you here on the podcast. So glad that you could join us today.

Parth Desai:
Yeah, thrilled to be here. Thanks for having me on, Saul.

Saul Marquez:
Absolutely. You guys are doing some fun work. And actually some of the companies Aton look at Iora Health, Suki. We’ve had some of your awesome company leaders on our podcast, so it’s cool to be here with you now. Parth and the list is long of innovative companies instead of your portfolio, we’re going to dig into those folks. You’re going to learn more about what they’re up to. But before we do dive into that look to hear more about you Parth and what inspires your work in health care, for me, both my parents are physicians.

Parth Desai:
So I was exposed pretty early on, saw firsthand a lot of the things that worked well in health care, but maybe not so well. And my plan was always to go to med school. But as I learned more about the industry, I wanted to have a more macro level impact and so had some great opportunities to work in health care policy in Massachusetts when the state was working on the health care cost and quality reform after universal care legislation in 2006, did some management consulting great experiences. But I wanted to get closer to a lot of the emerging innovation that was taking place in health care and be a part of kind of shaping building that. So that ultimately led me to New York Presbyterian Hospital, where I had a chance to work with a lot of the hospital’s leadership team on setting innovation priorities, investing in startups to catalyze that innovation. Great opportunity to get a deeper understanding of how this technology works in operation. And I think more than anything else, for me, it was exciting. I started to realize, you know, we’re just in the early stages of reaching the full potential of the digitalization of health care. And so that leads me to kind of a lot of what I do today at Flare, which is spending time thinking about how health care is being transformed across the entire ecosystem. I think there’s tremendous untapped opportunity ahead of us. And as an industry, it’s amazing even now just to see the current environment, how much of our care used to be in person and is slowly or as quickly, I should say, almost overnight, become digital. It’s an unprecedented transformation and I think there’s just an enormous opportunity ahead of us. And so, again, for me, I’m just excited by having the chance to work with some brilliant folks who are catalyzing a change.

Saul Marquez:
Yeah, that’s fantastic. You know, it’s awesome to hear your folks were physicians and you saw an opportunity to to contribute broadly. And today we are seeing that transition more Right.. I mean, today, more than ever, we’re seeing more physicians becoming CEOs and CMOs leading companies. You took the business route and with health routes took the business route, and now you’re doing some really special and unique things at flair. Tell us a little bit about how the business is adding value to the health care ecosystem today.

Parth Desai:
Yeah, so one thing that’s maybe a bit different about our fund compared to some other platforms out there is that nearly three quarters of our capital, the capital that we invest, is actually on behalf of some of the leading health care enterprises in the country. So we have about 10 of the leading health systems and academic medical centers on a platform of the leading health plans in the country and some of the largest global pharma lab med device and retail health corporations. And so their collective footprint represents about nine hundred billion in annual revenue. 11 billion research dollars. We’re talking about 80 million insured lives. One hundred and seventy hospitals. So it’s a really kind of broad and deep network. And I think our team is fundamental belief is to transform health care and drive collaboration. We not only need to understand the needs and strategic priorities of these organizations, but also strive to bring them onto a common platform to help catalyze and facilitate cross-industry collaboration and innovation. So we work very closely with that group to carefully vet out emerging needs across the ecosystem. Identify technology that that maybe is addressing some of those needs care model services are also part of that and then work with them to collectively improve their ability to deliver high quality value care services. And then we look for fantastic entrepreneurs that are who are building these technologies and seem to be close and committed partners with them, helping them tap into that network for strategic guidance, insights and maybe even partnership opportunities that can accelerate the realization of their technologies for potential. And so our partner base is a powerful enabler. This they’ve contributed about three hundred and fifty million dollars in revenue to our portfolio companies and they’ve invested almost two hundred million dollars alongside us. Actually, we’ve we’ve even created a few companies with some of our partners. And so I think it just speaks to the symbiotic nature of the relationship. We seek to work with incredible entrepreneurs and plug them into this ecosystem. That’s what we think unlocks the ability to maximize, impact and benefit that part.

Saul Marquez:
That’s definitely a fantastic ecosystem. And I’ve seen a lot of companies succeed and also fail. But the ones that succeed are the ones that tend to integrate themselves across the different stakeholders. Your platform here, FLARE Capital Partners, has done a really great job of just basically partnering with everybody involved and probably much of the reason why you guys have been successful to have those partners as part of the way that you guys do things and be involved in that. What would you say has been a result and maybe an outcome for some of the companies that you’ve been a part of and that have gone through this program? How has that made them different?

Parth Desai:
There’s there’s countless examples of this across our entire portfolio, all of our companies. We’re thrilled about what they’re doing, how they’re transforming health care. The easiest way to tackle that is if I just highlight a few of our investment teams and a couple of our portfolio companies. Yeah, one of the themes we invested in is something we call novel delivery, which is really the shift in making health care more accessible via lower cost settings. So so think telemedicine, home based care, virtual specialty clinics, digital therapeutics. And we have a few companies in our portfolio addressing this. One example is our health, who I believe has been on your podcast before. But there is a network of next generation primary care clinics built on a vision of patient centered, relationship based care primarily for seniors and Medicare Advantage plans. We’ve been an investor in the company since twenty fifteen. A unique component of our model is that it’s quite novel to utilize a custom built medical record and tech platform that’s aligned to their care model is more patient centric versus traditional EMR that’s more designed to facilitate billing. So that’s a real enabler of their care model. I think the other thing to point out is I was committed to the model and the outcomes that put those outcomes at risk through value based contracting arrangements with health plans. And the model itself has been incredibly successful. They’ve had a fantastic impact on the patient experience net promoter scores of 90 percent versus the industry standard, which is somewhere in the single digits. Clinical outcomes have been fantastic. Seventy six percent of patients with hypertension and diabetes management control and up to a 40 percent reduction in unnecessary capitalization, so to speak, to some of the outcomes that they’ve been able to achieve with their model. Another area that we spend a lot of time thinking about is really payment reform and outcomes oriented contracting structures that reward integrated care and financing structures. And so this goes back to the theme I mentioned before of bringing stakeholders across the health care ecosystem on the platform. Bright health is a great example of this, really, a company that we seeded in twenty fifteen really embodying what we think is is the next generation of care delivery, but also finance and collaboration. So bright is a consumer focused health insurance and technology company that’s differentiated by its focus on improving the quality, delivery and coordination of care by partnering with carefully selected networks of high performing care delivery systems and a handful of markets across the country. That care and financing model is enabled by an intelligence layer that leverages tech in advanced analytics to support better consumer experience, clinical performance and overall plan operations. And so together, this has translated to lower out-of-pocket costs for members. For example, fewer readmissions, E.R. visits, fewer duplicate tests, referral free specialists visits really focused on how do we make the member experience the most optimal that we can. And the model’s been, again, incredibly successful. They’ve scaled rapidly since they launched in their first marketing. Twenty sixteen the right now offers made individual plans and about twenty two markets across 12 states. So again, I think just speaks to the nature of how quickly that model has taken hold in the market.

Parth Desai:
And then lastly, one other theme, maybe the highlight here is around intelligent analytics in next generation, technology that unlocks efficiencies and untapped value in both health care practice, but also operations. And so I think many of the emerging technologies that we hear a lot about lately, things like artificial intelligence, machine learning, natural language processing, robotic process automation, they’re all great examples of this. And Suki’s is a recent investment we made that exemplifies this. Suki’s of voice enabled a high powered digital positioning system that reduces the administrative burden on doctors. The companies focused on basically the fact that today increased clinical requirements have been associated with a lot of electronic medical record use and navigation, and that’s contributing to a lot of physician burnout and billing and inefficiencies that result in something like three hundred seventy five billion dollars of waste every year. So Shuki software essentially standardizes clinical note capture at the point of the physician patient encounter improves the accuracy of the note. Suki’s technology is able to learn associated coding and billing patterns and then improve efficiency and patient throughput by essentially allowing the physician to spend more time with the patient versus the electronic medical record. And Suki’s had a remarkable impact on care delivery. They’ve been able to reduce the time the physician spends on a clinical note from about 30 minutes to three minutes. Their providers have seen their claims denial rates fall by almost 20 percent. At the end of the day, you have the companies focused on making the experience of care better for patients and physicians. So again, it’s great to companies in our portfolio.

Saul Marquez:
Yeah, all three of them Right.. I was sharing with you that I was recently in an interview with the American Academy of Family Practices, and they were raving about Sukey and what a great partner they were to their offices. And the better the outcomes that they’re helping with, I mean, just incredible companies that you guys are working with. And Bright Health is another fascinating next generation offering on the payer side. You guys are working with some outstanding companies. And so kudos to you guys. Folks, if you’re curious about the portfolio over at FLER Capital and what Path and his team are up to their capital, dotcom is where they’re at. Just a great place to learn really kind of where the innovations happening. These guys have figured out novel delivery, payment reform, intelligent analytics. I mean, I love these themes. How did you guys land on those writers? There’s so many areas that you could focus on. How did you guys land on those three pillars?

Parth Desai:
Yeah, and I should mention there’s there’s other pillars beyond those three as well. Yeah, exactly. But I think what I what I would say is what’s interesting is these are we have about five themes that we touch on. So two of the others that I didn’t mention here are around the infrastructure of health care. So the movement from on premise of the cloud, cybersecurity, robotic process, automation that might be categorized on the infrastructure. And then we have one around kind of the future of the consumer. And that’s things like helping individuals better access care, pay for their care, things like that. So those are five things that we identified. And frankly, the subcategories within those evolve all the time. A lot of what’s going on today is accelerated the shift in maybe focus and importance of certain subthemes within those categories. And so I would say that those are five governing categories within them. It shifts all the time. And we have companies that are tackling themes in multiple categories. So they span across two or three of those. And so we use those as guideposts. No, constantly refreshing them as we see the overall environment shifting.

Saul Marquez:
Love it. So as you’re listening to this, you’re thinking, wow, there’s opportunities to really work with somebody like FLER Capital or you might be a strategic thinking. Wait a minute, these folks kind of know what’s going on. I might want to consider doing some investments with them. And are those opportunities open part?

Parth Desai:
Yeah, absolutely. Anybody who’s interested in just learning some more, sharing thoughts about what they’re seeing, trading ideas, always love to have those discussions, always looking to work with fantastic folks in any capacity and always happy to open up our networks where appropriate to. So we’re all about health care, transformation, innovation. So like minded folks, always welcome to to reach out. Please, please contact us.

Saul Marquez:
Love it. And so if you take a step back path and think about setbacks, which setback would you identify as. A critical one that taught you and the company some good lessons.

Parth Desai:
Yeah, you know, I think given that we’re all living it and it’s top of mind nowadays, I think the current climate is a good place to start a lot of real time, quote unquote, setbacks that we’re assessing and navigating on a day to day basis. But I think a lot of the work we strive to do is to be an extension of the companies we work with Right.. So setbacks are just a common part of our day to day, especially when it comes to early stage companies. And so, again, going back to the current environment, it’s been a setback for some of our companies, maybe arguably even an opportunity for others. The most important thing to keep in mind that we keep front and center is that each setback, again presents a unique set of opportunities that we work with some incredible entrepreneurs to highlight some of the things they’ve done very quickly, kind of assess the impact of the current environment and then look for opportunities to help, whether it’s in the actual delivery of care or mitigating some of the challenges borne out by the resource constrained health care infrastructure today. And so that’s manifested in some of our companies. We’ve worked quickly with them to pivot their solution set to respond to the current needs. Some have even offered up their services for free. And I think one of the things we discuss a lot with all of these teams is that some of the best companies of our generation were built during the last downturn in 2008. And so we think the current environment presents a similar opportunity moving forward. Given that the current situation is so oriented around the health care industry, I really think that being dynamic in scrappy quickly figuring out where you can help out and then seeing how that creates opportunities for us is how we think about things and how I think a lot of you as we work with the company as well.

Saul Marquez:
That’s good perspective path. And I appreciate your mentioning of 2008. And just a reminder to all of us, Right., that this too shall pass on this one. There’s there’s a health span to it and we’re dealing with that. Talks about vaccines within 18 months, 18 months fly by. And where you’re going to be after that when we have this thing under control begins today. And so if you had to highlight maybe one or two, I guess things that are we could take advantage of during this time to better improve outcomes and business models, what would you say that one or two things are?

Parth Desai:
Yeah, I think there’s there’s a couple of things here. Everybody talks a lot about virtualization or care. So so that’s that’s top of mind. We’ve seen a huge influx of telehealth and digital homes as a new engagement mechanism. We spend a lot of time also thinking about behavioral health. There’s a ton of data out there that links to the fact that going back to two thousand eight for a second, whenever you have a couple of percentage point increases in unemployment, the rate of behavioral health disorders, so things like substance abuse, things like depression, anxiety start to spike and skyrocket. And so we’re already in a resource constrained infrastructure where access is a challenge in that industry. So perhaps there’s better opportunities now to quickly come to market with solutions to address a lot of the needs there. We think that there is a lot of tailwind behind value based care. Obviously appreciating that operational and financial investment to to quickly enable a value based infrastructure is going to be difficult right now. But if you look at kind of macro trends, like just federal spending, for example, and the strain that’s going to put on public spending going forward as the federal government takes on more debt and has to service that, combined with things like moving away from a utilization based infrastructure, a lot of providers have obviously had to postpone elective procedures. And so a fee for service for that’s that’s super challenging. But thinking about novel payment mechanisms, thinking about the downward pressure on rates, perhaps there’s going to be more tailwinds for value based care moving forward. And then one of the things that maybe I’m quite intrigued by is around the digitization of health care.

Parth Desai:
So we’ve seen the current environment and how it shifts in patients and consumers think about accessing and receiving care, as well as employers and businesses thinking about providing care. That’s all been set in motion. But one of the things I wanted to hone in on that I spent a lot of time thinking about right now is is automation and health care in particular the potential for technologies like robotic process automation and for artificial intelligence to augment the health care workforce and and really free folks from, let’s say, let’s call it lower order activities to perform higher order activities. And to set some context here, there’s several unique tailwinds that. Facilitating that shift. You look at non for profit hospitals that are operating margins hover somewhere around two percent on average super thin. Then I hit on how there’s been a reduction in monthly revenue, primarily driven by canceled elective procedures and a shift in service mix. That combined with pent up demand from canceled cases, I think is going to fuel surge and utilization, maybe the tail end of this year, maybe when things start to open back up early next year. And so that that leads me to believe that along the lines of operating efficiency and cost, believe that those two things are going to be top of mind issues. And so if we maybe drill down into where the inefficiencies rooted in the enterprise, especially in health care provider systems, it’s really a manual error when completing repeatable rules based tasks, which there are a lot of provider operations in the revenue cycle process, the credentialing process, supply chain ordering for just a few examples.

Parth Desai:
And our specific is a technology that’s long been used in other industries to augment the labor force and streamline a lot of these tasks. But historically, it’s been super slow to take hold in health care. I think only about 30 to maybe 50 percent of providers actively use the technology today, let alone have a pattern of indoor usage of the technology. And that’s to a lot of reasons. The operating budgets I mentioned before, but maybe even the lack of the Right. in-house expertise, the sponsoring governance, these efforts. And so I think one of the things that we think is going to begin to change in the coming years is the adoption of this type of automation technology, starting with ARPA, because, you know, a lot of instances are a good kind of first step into intelligent and automating the enterprise. And we’ve seen that take place with companies like IPASS or Fusion companies that have started servicing other industries, but also entering health care. A lot of providers who have had some early endeavors with this, we’ve seen some incredible ahli. But then you see the large technology companies bringing this their provider customers. Microsoft, I think, is going to be a formidable long term player here. And so as these startups and large enterprises bring this technology to the provider customers, I think we’re going to see a lot of this, a lot of adoption of our people, what we call the intelligent automation, which is combining our robotic process automation with emerging technologies like artificial intelligence and a natural language processing. Just really excited to see how that can transform the industry, moving from some great insights.

Saul Marquez:
And, you know, like before the COVID thing started, there was a lot of focus on RPA and I felt like a lot of people were really starting to get grounded in taking advantage of that. And and I think it’s great that you’re calling out this opportunity to refocus there as much as you could. Don’t abandon those focus areas that you were working on before, because on the back end of the year and the beginning of next year, all this pent up demand is going to just do it before you need it, right? Exactly.

Parth Desai:
Exactly. Yeah. And it’s yeah, it’s it’s an interesting area of focus. I know we’ve been hearing some buzz about. It’s so cool.

Saul Marquez:
Now, I love your thoughts. What would you say you’re most excited about today?

Parth Desai:
Yeah, I mean, so I that’s I would go back again to just the overall automation of the enterprise. I think that’s one of the things that we are going to see moving forward. If you if you look at kind of the operating cost structure, a lot of kind of health care organizations, a lot of it is is labor based. And I think there’s an opportunity to pare technology with the labor force to make to make everything operationally more efficient. And so that transformation is is what I say. What I think is is likely going to be a really exciting trend to keep an eye on all of it.

Saul Marquez:
I agree. And it’ll be exciting to hear what you guys decide to focus on or double down on as we as we turn the page on this epidemic. This has been a ton of fun. Love your thought process around all these things. Definitely a thought leader in the space. What book would you recommend to the listeners as we as we look to wrap our arms around how we get better and do better for patients, but also our businesses?

Parth Desai:
So there’s a lot of books on this topic. And frankly, to be honest with you, I. Day to day consume a lot of kind of short form content to date with current events, do a lot of research. And so I’m getting my updates, my research, my nonfiction through a lot of those formats. And so top of mind can’t really say that there’s a single nonfiction book that I would I would get out there. I mean, one of the things I like to do in my spare time is read a lot of fiction. There’s a handful. I could. Yeah, how about on the fiction side, I’m reading the three body problem outside of being kind of involved in day to day health care and the transformation of health care. I’m a big space science buff. And so that’s one that’s one book that I think tackles that one. Whenever I’m taking some time off of it,

Saul Marquez:
Folks, you know where to go. Outcomes rocket that health in the search bar type in Flare capital. And you’ll be able to find this interview with Parth Desai and just the full transcript links to them and the companies in their portfolio. It’s all there. So make sure you check that out and learn more if you’re curious. And Parth, thank you for spending time with us. Before we say goodbye. I love if you could just leave us with the closing thought and then the best place for the listeners could continue the conversation with you if interested.

Parth Desai:
Yeah, thanks. I really, really appreciate it. Again, thank you for having me on the podcast. Allow me to share some more about my perspectives and our collective enthusiasm for the transformation of health care. Just to reiterate, I think we’re at the beginning stages of significant transformation, arguably accelerated by the current status quo. And so I think there’s significant untapped opportunity to redefine how health care in our country and globally is delivered access and finance. And so I’m just very enthusiastic to meet and work with like minded folks on the journey. And if anyone wants to continue the discussion, feel free to reach out to me on LinkedIn, Twitter or my email, which is just my first name Parth at Flare capital.com

Saul Marquez:
Outstanding Parth It’s been a great discussion and definitely looking forward to staying in touch with you. Thanks again.

Parth Desai:
Thanks so much, Saul.

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