Outcomes Rocket_Andrew Adams: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.
Saul Marquez:
Hey everybody! Saul Marquez with the Outcomes Rocket. I want to welcome you back to today’s podcast and today I have an amazing guest. His name is Andrew Adams. He’s co-founder and managing partner of Oak HC/FT, that’s healthcare and fintech, where he focuses on growth, equity, and early-stage venture opportunities in healthcare. Andrew currently serves on the boards of August Bioservices, Curana Health, DispatchHealth, Eating Recovery, and many more names that you will recognize. So, Andrew, I’m glad that you’re here with us to talk about entrepreneurship, venture, and the future of healthcare. Thanks for joining us.
Andrew Adams:
Oh, thank you for having me, Saul. Really appreciate it.
Saul Marquez:
Absolutely, so, look, we’re going to dig into some highlights, the things that entrepreneurs should be thinking about in building their businesses. But before we do that, I’d love to hear more about you, Andrew, and what inspires your work in the healthcare space?
Andrew Adams:
Yeah, we, I’ve been spending time in healthcare for over 20 years now, almost 25 years. And it’s, my interest in that space started very early age, my mother was a nurse, it’s maybe, it’s in the blood, which is bad pun and cliche here, but it certainly started my interest in healthcare, and then worked for a number of firms focused on healthcare and healthcare services businesses before partnering with one of my co-founder and managing partners, Annie Lamont, now, over 20 years ago. But it’s always been a passion because it’s the perfect marriage of an area I care a lot about, plus the investment side, which I also care a lot about and have interest in seeing companies be built, and I think ultimately what we love at our firm is the fact that we’re doing well by doing good. If some, we say we’re, our focus is generating returns for investors as an investment firm, but every company we back on the healthcare, and even on the fintech side, there’s a real mission behind it and that’s to improve the quality of healthcare in the US.
Saul Marquez:
Love that, and your personal story resonates and then, that’s what we’re up to here on the Outcomes Rocket. So talk to us a little bit about how you and the business are adding value to the healthcare ecosystem, whether it’s one of the companies in the portfolio or things that you’re up to.
Andrew Adams:
Sure, so we again, have been active healthcare investors for many decades, and so there’s a many byproducts of that. One is we understand the regulatory and regulated nature of the industry. We appreciate the complexities of selling to a large managed care company or a hospital system or a pharma company. We’ve also seen a lot of cycle, and we know that there’s no shortcuts to building a large-scale business in this industry because it, in a day you’re serving a patient, you’re trying to deliver a better outcome, you’re trying to make care more efficient and more affordable and expand access, or you’re accelerating the development or commercialization of a much needed pharmaceutical product. You got to, there’s no shortcuts to doing that, particularly at scale, which is really our goal. So how do we support our companies? It’s really taking all those pieces and making sure that we’ve got the expertise in our firm to be able to do that. So we have folks that come from investing new backgrounds where they’ve supported early-stage companies, great late-stage companies. We have people with operating backgrounds, we have people that understand the clinical side, the regulatory side, and then we’ve got expertise in helping to build out talent or build out tech with an organization. It’s a lot of different resources that, we’re just supporting a company. And then I’d say the last thing is just the fact that we’ve been in this industry a long time. We know a lot of people, at customers, we know how customers kind of buy solutions, whether they get in, whether it’s a managed care company or a hospital, and they ultimately know how these large enterprises buy companies. And so I think that’s, those sets of experiences, or we’d like to think, make us a good sounding board for our executives as they’re building their companies.
Saul Marquez:
That’s great, and certainly that expertise, that depth of knowledge in the entire life cycle is a huge differentiator. If you had to hone in on maybe one particular thing that you think you guys do better than most, what would you say it is?
Andrew Adams:
I’d say we’re expert in healthcare. There’s nobody who has the breadth and depth of healthcare expertise than we do. It’s not something I say lightly or to pat ourselves in the back, it’s just a fact. We have backed more companies in healthcare, in our brand of healthcare, than really any other investor over a very long period of time. And I think what comes with that is, that is the kind of experience that an executive wants. There’s bumps along the way, there are crossroads at any business face, and it’s who’s on your team when you’re trying to navigate those choppy waters, whether that’s getting through COVID, whether that’s working through the labor inflation that’s going on, whether that’s just a crisis that comes up, that’s a broad answer to your question, but it’s just, that’s the package that a company gets when they’re working without Oak.
Saul Marquez:
And I appreciate that, it’s clear, it’s clear. And as you think about the milestones, the accomplishments that you guys have had the opportunity to achieve, what would you say is one of the ones that that you’re most proud of as it relates to making outcomes better or making business better?
Andrew Adams:
It’s hard to choose because we’ve had the privilege to work with a lot of great entrepreneurs out there, but I see, it’s easier the long-term relationships. So what gives us the most pride is when we work with an executive or an executive team on one outcome and you can go way back to, Andy was an early investor in Athena Health and that grew up to be a big company, and at that point Jonathan Bush and Todd Park built an amazing business and then have gone on to other entrepreneurial ventures and we’re affiliated with those and we’re a backer and devoted, which taught in Ed Parker building. So these are long-term relationships that people within our firm have. Those are hugely valuable and we’re incredibly proud of those. For me, Tom Lee created OneMedical, funded OneMedical, built it up, but eventually went public, is now to be acquired by Amazon and is now doing again in a company called Galileo. These long-term relationships with incredible healthcare entrepreneurs gives us a great sense of pride, and that is what we are very proud.
Saul Marquez:
That’s great, yeah, definitely some tried and true people and businesses, I think familiar to everybody listening. And you talk about sometimes the waters get choppy and it’s those tough moments that sort of define who we are. Talk to us about one of the biggest setbacks you’ve had, or the company has had, and a key learning that came out.
Andrew Adams:
I think it was, this has been said by many people different from different perspectives, but like COVID, that was, because that’s where the rubber hit the road for our portfolio companies, that many of them are designed for patient care, and they’re designed for patient care outside of the hospital, whether that’s in the home or a primary care setting, we like that because it’s less expensive, you can still provide high-quality care, and you’re increasing access. That’s the mission of those businesses, but I don’t think anybody expected for essentially hospitals to be shut, and people to be sheltering at home and in place, and it just created an incredible amount of volume for these businesses, which sometimes businesses can just grow almost too quickly if they’re not prepared. So I think that is where everybody, everyone, you know, our management teams, the people, caregivers on the front line, were working around the clock. Nobody understood kind of COVID, it was those early days, and I’d say that’s where we could have been more proud of our CEOs and executive teams. And frankly, the workforce is on how they stood up and really put the care for others ahead of themselves. And it was gratifying in many different ways, but was incredibly stressful, and like decisions had to make be made immediately, particularly around like rolling out virtual care. What are your policies, what are your standards for delivering care? And I’d say that was a real bellwether moment, I think, for many of our companies. I think they’re emerging much stronger, but we had the second wave, which we’ve all forgotten about, what was certainly something to deal with because of how different companies and people were dealing with the second wave, and now we found ourselves in an inflationary environment with kind of a macro recession on top of it. So that’s another set of challenges, but I’d say that initial wave of COVID was certainly one where you really had to be a problem solver. Things were just, you were hoping they weren’t breaking and you didn’t want to sacrifice quality care, but you just couldn’t pile on like it was all hands on deck then for everybody. And it was quite a moment, I think, in the history of a lot of these businesses.
Saul Marquez:
Yeah, I definitely agree with you. Yeah, Andrew, a lot of people have said that healthcare has always been recession-proof, but man, it is not pandemic-proof, and it certainly broke a lot of things and it forced us to change. In a lot of ways, it’s been the first disruption, major disruption that healthcare has faced in a long time. And now the front door to healthcare is changing, there’s different front doors, and there’s different players in the space. So as the entire industry evolves, what are you most excited about? Because in that evolution there’s opportunity, right? So what are you most excited about in that evolution of where care is going?
Andrew Adams:
I’m most excited about two things. So one is it feels like the alignment of incentives is becoming to gain some more and more traction, and that’s largely around the value-based, and we can just all read about CVS acquiring Oak Street, and we’ve got a bunch of value-based care businesses in our portfolio, and that’s by design. One, because we believe primary care is a very powerful kind of front-end, you talk about the front door, like first step in a patient’s healthcare journey. A lot of decisions are made there, and if you have a more of a value-based mindset, you’re choosing the right thing, not necessarily what can be the most financially rewarding, and for the patient. And if you’re able to have confidence in your team and your operations and your technology and your data, you’re more than happy to bring on that financial risk for these value-based contracts. So like, that wave feels like it’s accelerating and we have companies like VillageMD and other … that it has a significant partnership with Walgreens, and Cirano, which is another value-based business. So we have a number of businesses that are taking on kind of this financial risk because they’ve invested all the in the systems and are confident in the outcomes for the patient. So we like that because traditional fee-for-service is just all about volume and that’s the wrong incentive. The second thing is it feels like the embrace of tech, for technology is just accelerating, and I think a lot of this is just, it just has to happen. If your labor is going up 10%, it’s just not sustainable if you’re not getting commensurate increase in your rates, and so you just got to run your business more efficiently, so you have to embrace technology to do that. And it’s not about buying tech and then laying off a bunch of people. It’s like buying tech and being able to redeploy human capital within your organization to higher-value areas. Or maybe you don’t have to hire as quickly because you’ve, you have tech in there for human-in-the-loop solutions, like the human has got the technology tools to be more productive. I think that’s the name of the game and I think large institutions are there and it’s really, I think, up for the entrepreneur to make sure like, that’s great, I got a market there, but I’ve invested in like security, scalability, and operating excellence to be able to meet the standards of my customer. But those are the two trends that we’re most excited about.
Saul Marquez:
Yeah, for sure, Andrew, and you think about that labor problem, it is huge. And it’s like I say, there’s a reason why there’s no more tollbooth operators. It’s the same thing for spot-checking and everything else that we do. What are some solutions that you’ve seen that the listeners could potentially consider in their struggle and goal of overcoming what’s happening in the labor market?
Andrew Adams:
Yeah, I think if you’re, certainly, if you’re a listener at a managed care organization, and I’m just thinking about like administratively, right, the claim, the member experience, the benefits design, there’s a lot of kind of quote-unquote transactions and all in very different streams, but there’s a lot of dollars at play as you’re doing that. And I think there’s a trend, a lot of that was outsourced, and I think there’s a big trend amongst managed care to want the tech tools to bring some of those capabilities in-house and do it more effectively and have more oversight and transparency, kind of control over those processes. We are investing in companies that, like a company called Realtek in the payment integrity space. Are you paying, are your claims accurate, or your payments accurate? We have things for provider networks and roster data accuracy, Veda Data is one of our companies there. Those are tackling major pain points, but like a major pain point for payers, that’s a tens of millions of dollars problem where technology and data solutions can be hugely effective. And if you think about like a healthcare system, you know, back to your comment on the intake. We have a company, Syllable that’s doing a lot of great things for the call center, right? That sounds kind of like the call center, but that’s the first point of contact with many healthcare systems and again, sets into motion a lot of different patient journey, and to do that more effectively in a tech-enabled way that it can be a big unlock round. It’s guiding patients to the most appropriate place within the organization, in addition to just running your organization more efficiently in that function. So those are just a couple of examples of areas where we always want to address the pain points, like we want the ugliest problems, the most complicated problems, because that’s where the real ROI is, and it’s like a must-have, like not a nice-to-have.
Saul Marquez:
Yeah, and this is a great example of it. Really appreciate you giving us a couple examples, and folks, there’s way more examples than that, and you just touched on a few. We’ll leave a link to Oak HC/FT in the show notes for you to check out all the great stuff that they’re up to. But Andrew, as we conclude here, I’d love if you could just share a closing thought and then the best place where the listeners could get in touch with you, where entrepreneurs could learn more about the great things that you guys are up to.
Andrew Adams:
Yeah, I would just say I think we read a lot of headlines about the US healthcare system and all the problems. And yes, we spend a lot of money and there’s a lot of ways we can improve, but I would just tell listeners out there and maybe it’s because we’re a venture firm and this is what we do, is there’s a lot of really smart, really talented entrepreneurs that are operating in healthcare and are coming in to work in healthcare from other industries because they just see this need and they’re drawn by the mission. So help is on the way is what I’d like to say, and a lot of people that are motivated to do that at great scale. We work with a lot, my peers in the industry work with a lot, so, you know, that is that’s something to be optimistic about, that there’s a lot of smart people trying to figure out how to make healthcare system run more smoothly and efficiently with better outcomes. And then in terms of getting in contact with me, I, Andrew@OAKHCFT.com is great. It’s on our website, but that’s a great way to get in touch with me and certainly on Twitter as well.
Saul Marquez:
Outstanding. Listen, Andrew, really enjoyed our time with you today. The thoughtful people listening will leave with more ideas because of you. So I want to thank you, and looking forward to staying in touch.
Andrew Adams:
Sounds great. Thanks for having me.
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