CareDelivey_Todd Cozzens: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.
Manav Sevak:
Welcome to the Memora Health Care Delivery podcast. Through conversations with industry leaders and innovators, we uncover ways to simplify how patients and care teams navigate complex care delivery.
Manav Sevak:
Hey, everybody! This is Manav here from Memora Health. Very excited for today’s podcast, get to feature one of my board members, and also somebody who’s become a good friend and somebody who’s probably one of the most experienced folks in digital health as an entire industry, Todd Cozzens. Todd, thanks so much for coming on.
Todd Cozzens:
Glad to be here, Manav.
Manav Sevak:
Awesome, so you have an interesting background both in healthcare and a little outside of healthcare. I would love if you can maybe just start by sharing your story of how you ended up getting into healthcare, what you were doing before, and then what that journey has been looked like, having been a founder, having been an investor, and what all you’ve done over the past several years.
Todd Cozzens:
Yeah, I got into healthcare by chance. I was training for the olympics in sailing and sailing is, you know, yes, it is an olympic sport and it’s an expensive sport too, and I needed money and I didn’t have any money. So I got a job selling cardiology equipment for Marquette Medical and really liked that, and when the olympics were over, I went full-time to Marquette, and then at a meeting at the headquarters one day after I was, I became the number one salesman in the country within 18 months because I still had my competitive juices flowing from the olympics. And the founders said, hey, who wants to go to Europe and set up our European organizations and maybe speak a foreign language? I said, yeah I speak French, I’m going to Paris. So I lived in Paris and set up the European operations, built that out, and later took over international and sales and effectively became the CEO of the company and took it public with the founder and had a great run as a public company. And then we sold it to GE in the late nineties and stayed at GE for about a day, and then I took proceeds of that and started Picis, which was an EMR for the high acuity areas of the hospital, OR, ICU, emergency room, and we built that up, 2000 hospitals, 23 countries. We’re about to take it public, we sold it to United and I stayed on and worked at Optum in various roles as Optum was getting launched, and then I went from there to Sequoia and Sequoia Capital, we all know who they are, what they do, and what their track record is, but they had not been in healthcare for quite a while. And with the kind of digital health boom that was starting, they had made a couple of investments with a young guy named Mike Dixon, who sourced Health Catalyst when he was 26 and he sourced MedExpress. And so I joined as a senior advisor at Sequoia to help them build out the healthcare practice, working closely with Mike, and had Doug Leoni and others as co-board members and companies. So I really learned the investing trade from the best investing shop in the world, had a great run there. And from there, my only issue with Sequoia was just because of who they are. They’ve got the best network in tech, but healthcare was kind of a new direction for them and it was kind of destined to be about 10 to 15% of what they do because this was the boom times. This is when they were doing WhatsApp and Instagram and Airbnb and Zoom and all the others, Snowflake, etc. So I had the chance to start my own fund in conjunction with Leerink, as you know, the largest healthcare-focused investment bank, and partner with Jeff Leerink had known him for ten years and he wanted, just like many investment banks, they wanted to set up a principal investing arm, and he decided the first one to do was in growth equity and in digital health. And so we started putting one together, and I had to figure out who I was going to start it with, and I couldn’t pull Mike out of Sequoia, he’d just become partner. So I picked Jared Kesselheim out of Bain and, who was unbelievable academics at Bain and at Harvard in medical school, undergrad, business school, but more importantly, eight years, very successful investing at Bain in the digital health area. He was kind of a competitor, but we also looked at a lot of deals together. And getting him out of Bain was not easy because he had the next 30 years of his life planned for him, but was able to do it because he kind of had the same feeling about digital health that was growing and there wasn’t enough attention being paid to it by these generalists. And also it’s very hard for generalists to understand healthcare, bringing a deal across the finish line, like, hey, I’ve got this fantastic new product that helps payers close gaps in care and to increase their star and ES scores. And people were looking around the table and like, what did you just say? Can we parse every word of that? So anyway, we started on 105 million and we invest in 15 companies and had a good run there. And then until we raised during the pandemic, 500 million, Mike did eventually join us from Sequoia because he had become a man on an island over there. We still work very closely with them and I still have the highest regard for that firm. And so that was the genesis of our investment in Memora, was in fund two. We just closed fund three January right before Putin invaded Ukraine, which was good timing. And we’ve got a great team, everybody in the team is 100% focused on digital health. We built out portfolio services, acceleration services, like Julie Mortensen, who came from Health Evolution, and Robin Mercer is probably the best sales ops commercial ops person I’ve ever seen, she works with our companies, Robin Borg on the talent side, some great partners around the table, Scott Rosen, Nick Shaw, and a bunch of great associates with the digital health background, so that’s awesome.
Manav Sevak:
It’s awesome, I’m going to rewind really quickly just for the beginning and ask how did you get into sailing in the first place?
Todd Cozzens:
Oh, I started sailing when I was a kid and sailed … a boat called Star Class Boat out of Chicago Yacht Club. And at my club was a gold, bronze, and silver medalist in the Olympics. And I obviously would look up to those guys like they were gods, but it was also great because it was like going out to your local golf club and playing with Jack, Arnie, and Tiger every weekend, so I learned a lot. It was kind of like being at Sequoia. I jumped into the arena with the top people and yeah, they beat my ass, but I learned a heck of a lot from them, and that gave me the, you know, the desire to go for it. And I picked a great partner, a guy named Peter Wright, who was kind of a savant in the sailing world. And we did three Olympic campaigns and won a bunch of stuff. Unfortunately, not a lot of money, there’s not a lot of money in sailing, but a lot of glory, I’ll tell you that, and that was it. And, but I knew that sailing was not going to be my career. And as I said, I got lucky and jumped into healthcare and that was that.
Manav Sevak:
That’s awesome, that’s awesome. So you’ve seen a lot of evolution in healthcare from the days where EMR is, even where a new concept to now, where the concept of a practice or a health system existing without an EMR is one that spawned everybody. What do you think has changed the most in the past, call it, 20 years of the industry and how they think about technology?
Todd Cozzens:
Well, there’s two things that, the two biggest changes are this 100% focus on fee-for-service healthcare, where the only way that doctors and hospitals get paid is by doing more procedures, and voila, what do we get? We get too many procedures. And that’s a whole emphasis behind value-based care. Value-based care is kind of, there’s kind of a knock on it, because it hasn’t progressed, but if you think about Kaiser, if you think about Medicare Advantage, Medicare Advantage is the largest value-based program out there, and it’s wildly successful. So, but, you know, the other area is the EMR. The EMR was the game changer. Before 2009, 5% of doctors and hospitals had electronic medical records. And then Congress got together finally in a bipartisan way, a word we don’t hear much anymore, and they enacted the high-tech act as part of the stimulus package that came out of the 2009 financial crisis, and that was basically giving $39 Billion of free money to hospitals and doctors to bribe them to put in electronic medical records, and they did. They did it fast, they did it furiously, and there weren’t a lot of rules around interoperability, etc., because it was stimulus money. If they had to wait for interoperability to happen, as the so-called shovel-ready projects that we talked about back then, would have taken years so to spend the money. And so we got out there and it created a duopoly basically between Cerner and Epic, but what it did was it laid the digital data foundation layer for the hospital, which they never had before. So if pharma wanted to see how their drugs were doing, they’d take paper records off the shelves of hospitals and put them into computers and long laborious process, and there was just an archaic way of doing things and everything was done on fax and sticky notes, spreadsheets, so that changed the game. And EMRs are fantastic data recording tools. You know, they’ve got a long way to go. There’s still, we’ve talked to doctors, they spend two and a half hours at the end of every shift going through their EMR inbox and they’re really good at recording data. And that was the genesis of the digital health movement. Thousands upon thousands of companies were formed after 2009 and to the point where we got to 95% of doctors and hospitals with electronic medical records. And by 2016, 2017, that’s when we started fund one. You know, it’s kind of funny, when we raised fund one, the LPs were out there saying, is digital health big enough to raise the fund? And now we’re raising fund three. They were saying, you guys are in all of digital health, how do you manage that? So it has really come around, so it was, that was the genesis that gave the data for pharma to build tools that get their drugs to market faster. Employers were able to take on digital solutions to manage conditions they weren’t getting from their third-party administrators or their brokers. It gave the genesis for payers to automate their archaic systems and processes, and we’ve had the emergence for the first time of the healthcare consumer, because now they could go online and manage their care that they weren’t getting because it’s too difficult to get an appointment or it’s too cumbersome, it’s too costly to pay all the copays, etc. So that was the boom, that was the big change, and everything we’re seeing today keeps layering on top of that. So now we’ve got data. So now you see all these data solutions in every industry, in pharma and in payor and provider around analyzing that data. You’ve got workflow tools, what I call EMR 2.0, which I put Memora and others in that category, taking the data and taking it to the next level, which you guys do nicely, but many other companies are doing as well in different areas.
Manav Sevak:
Yeah, no, absolutely, it’s valuable perspective. What is maybe like the one trend, and this is a bit of a controversial question, so let’s see where it takes us, but what’s maybe the one trend that you’ve seen come as a result of EMRs getting implemented that you are not bullish on, right? Or maybe a wave of companies that are coming to market that you think are necessarily not adding value to healthcare?
Todd Cozzens:
Oh, that’s a deep and long question, but the EMR is a great data recording tool and it does it extremely well.
Manav Sevak:
What’s one, what’s maybe, to rephrase that, like a negative side effect of EMRs?
Todd Cozzens:
The negative side effect is that it does create a lot of work. You know, yes, the old paper flow sheets probably didn’t have all the data that they needed to have. Now there’s almost too much data and all the tasks and all the follow-ups you’ve got to do with the EMR to manage an episode of care, for example, all the manipulation, I mean, what other industry has brought on a whole group of companies called scribes? These are, this is going back to the Dark Ages. These are humans that walk around following doctors and inputting data because it’s so cumbersome for them to enter data on their own. I mean, that just gives you an idea of the excess work that happens. So, but I do believe that there’s a whole wave of companies that are taking that data, taking those workflows and automating them and making them much easier. So as I said, there’s EMR 2.0 coming on, it’s not one company, it’s not one trend, it’s a bunch of companies that realize that there’s a gap there between the amount of data and that’s in analytics, that’s in workflow tools, that’s where a lot of the AI and machine learning effort is going, and so you’re seeing a lot of boom there. There’s been many companies that have tried to attempt this, some of them have fallen by the wayside, some are grown very, very much, but there’s others that have really hit the mark with a, I think what’s been missing also is that we talk about being physician-centric and we talk about being patient-centric. What we don’t talk about is being episode-of-care-centric. The episode of care, the longitudinal episode of care from pre-hospital, to in the hospital, to post-hospital, to post-acute, to in the home, and that continuum and all the data around it and not just the caregiver having those tools but the patient not only to be informed but being engendered to react and to know what’s happening during their, to be informed and to do their follow-ups. And if you can make very simple, easy-to-use software on the patient side, now you’ve got the interaction between the caregiver and the patient would help both of them, it’s a win-win. You’re going to have better outcomes out of that because you’re looking at the whole episode and that’s also going to play into value-based care, where it’s not just the simple procedure that gets paid for, it’s the episode and a good outcome gets you a bonus bad outcome, you eat the cost. And so these tools that are automating around the episode of care and the focus in the episode care, interacting with the patient and the doctor simultaneously, I think are some of the winners.
Manav Sevak:
Yeah, 100%, and it also, it’s interesting why I think it’s something that we’ve come across a lot as well of, historically, so this transition of healthcare moving more and more outside the walls of the hospital, the rise of EHRs and the implementation of EHRs has provided this foundation of data, which is, what you mentioned, mainly around how that patient is performing when they’re directly in front of you, which is 1% of the time, the remaining 99% of the time when that patient is not in front of the care team. There’s still so much room to build infrastructure to be able to collect all that information, structure it, be able to track how they’re performing, be able to make recommendations, and things like that, that is a core thesis of sort of where Memora stands as well, so that makes sense.
Todd Cozzens:
Yeah, I mean, if a patient has a condition, first of all, they’ve got to find a doctor. Maybe they’ll be lucky enough to find a doctor in an epic-based system that has Epic ambulatory and Epic throughout the hospital, so there is some continuum of data there, but there isn’t much continuum, that’s good for the caregivers, except for the additional burden of manipulating these complex systems and entering all of this data and manipulating, as I said, answering their inbox. But invariably, if they’re in a clinic, it’s going to be a different EMR, and then when they get to a rehab center, it’s going to be maybe a physical therapy EMR, and none of these systems are integrated, talk to each other. There’s no overarching data link that brings all their data into a pool. And so, then, it’s the, it’s not just that, it’s the workflow, it’s how to simplify the workflow. So I can just click on something, did you take your meds today? Yes, I’m interested in it because I’m not just giving feedback. I’m getting reports on how I’m doing relative to what the care pathway is, etc. And that is what we saw early days at Memora, and we’re in other companies that do different things along the workflow decks care, for example, you know, they bring in like 30% more commercial patients to hospitals and vital, you know, informs the patient and the loved ones what’s going on in their emergency room encounter. And so there are a number of them, but I see Memora is one of the leaders in what I call this EMR 2.0 advance.
Manav Sevak:
Yeah, …. Cool, so last question for you is, you’ve obviously seen a lot of innovation in healthcare plus have seen this and obviously have had a chance to invest prolifically over the last couple of years as digital health is really starting to boom. I think one, just underlying kind of fact is that all these new dollars that are flowing into digital health, all of this innovation has happened. Our ability to deliver care and our cost of care has only gotten worse, right? So the question for you is what kind of makes you most optimistic around where healthcare is headed as an industry right now? What gets you really excited about all the different changes that are coming in the coming years that are going to help us kind of steer the ship in the right direction for healthcare as a whole?
Todd Cozzens:
Well, you’ve got to put this in perspective. I mean, we’re in the, still in the very early innings. I mean, we, you know, 10 years ago, 12 years ago, 15 years ago, we had a completely paper-based system. You can’t say that about any other industry, finance, banking, insurance, or what have you, they’ve all digitized for years. And healthcare finally started to digitize only that period, I think it’s 15 years more before value-based care really rolls out to the extent that we all think it will and that hospitals will and doctors and workflows around the continuum of care will be completely digitized to the point where there’s still hospitals out there, where you still have to do a lot by fax, for example, it’s amazing. One of the prestigious hospitals in my area, Boston, you know, still has a lot of that going on. So we’re a long ways away from where this is going. When you bring in some of the things we’re doing on the data side, the analytics, the intelligence that we can gain, the interoperability standards like FHIR when they get really, really proliferated. You’re going to see a lot of great things happen to systems talking to, the systems still don’t talk to each other today. Companies like Memora are being incredibly ingenious about how they make that happen, you guys and others have been able to crack that nut, but it has to be a much more generalized approach. So when all that comes together, we will be a fully digitized system and we have only one way to go but to, everyone’s going to have the same information. You’re going to have transparency across payor provider, consumer patient, pharma, company, employer, and with that transparency, there’s only one thing that happened is that the overall cost of the system is going to go down.
Manav Sevak:
Love it, love it, awesome. Well, Todd, thank you so much for coming on. This is valuable perspective, some of it even new for me and hopefully helpful for the rest of the folks listening and excited to hopefully have you on against soon.
Todd Cozzens:
Really happy to be part of this and love to see you without your glasses on with your new Lasik surgery. So now that you could, now that you can see, it’ll be even better.
Manav Sevak:
Thanks, Todd.
Todd Cozzens:
All right, take care, bye-bye.
Manav Sevak:
Thanks for listening to the Memora Health Care Delivery podcast. For more ideas on simplifying complex care for care teams and patients, visit MemoraHealth.com.
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