Medicaid Innovation and Sustainable Ventures

GUEST BIOs

Zeena Johar, Entrepreneur in Residence, Frist Cressey Ventures
Zeena Johar joined Frist Cressey Ventures as an entrepreneur in residence to further her passion to continue serving vulnerable populations on Medicaid by leveraging innovative technology enabled solutions. As a healthcare entrepreneur, Zeena has dedicated her career to building companies for the underprivileged, underserved and the vulnerable. Previously, Zeena was with Rubicon Founders where she co-founded Imagine Pediatrics (IP) along with Oak HC/FT and Optum Ventures. IP as a pediatric value-based care company, works to support the sickest-of-sick kids, by providing them 24*7 virtual and in-person support. As the chief growth officer, Zeena led Imagine’s strategic partnerships with Centene and United Healthcare across TX and FL. Before joining Rubicon, Zeena led operations at Advantia Health. Advantia is now one of the largest Women's Health roll-ups with 50 Offices (across 4 States plus district) and >200 Obstetrics & Gynecology providers. Before joining Advantia Health, Zeena worked in health policy with Dr. Mark McClellan (previous FDA Commissioner & CMS Administrator). In 2007, Zeena co-founded SughaVazhvu Healthcare (SVHC) along with Dr. Nachiket Mor in India. SVHC, as first-of-its-kind technology enabled primary care platform, set-up clinics in rural India to support disease management for chronic conditions such as diabetes and hypertension. As CEO in 8 years, Zeena grew SVHC to 10 primary-care clinics, serving >100K patients visits. SVHC was showcased as a case study by The Brookings Institute. SVHC was also awarded the NASSCOM Social Innovation Honor 2014 for its innovation in healthcare delivery and use of mobile technologies. Zeena received her PhD in Molecular Diagnostics from ETH, Zurich, Switzerland. Zeena is a Harvard Business School alum (Program for Leadership Development) and was elected as an Ashoka Fellow in 2013 and an Aspen Global Leadership Network (AGLN) Fellow in 2014 as one of Asia’s 100 Pioneers by Purpose Economy in 2014 and Yale World Fellow 2015.

Chris Johnson, Founder and CEO, Bluebird Kids Health
Chris Johnson is the founder and CEO of Bluebird Kids Health, a pediatric primary care organization serving over 20,000 patients. Through value-based care partnerships with payers, Bluebird Kids Health delivers comprehensive care by integrating physical, mental, and social health services. Its innovative clinical model is supported by a population health technology platform, which ensures proactive access to care tailored to the needs of each child. Before founding Bluebird Kids Health, Chris served as the CEO of Landmark Health, an organization specializing in in-home primary care for seniors with serious illnesses in value-based partnerships with Medicare Advantage plans. Under his leadership, Landmark expanded its operations from 10 to 38 states and grew its patient base from approximately 150,000 to 700,000. Chris also guided the organization through its integration with Optum, where Landmark became a cornerstone of Optum’s Home and Community portfolio. Chris resides in Newton, Massachusetts with his wife, Devon, and their three young children. In his free time, he enjoys exploring the outdoors with his family.

Aditi Mallick, CMO, Hopscotch Primary Care 
Dr. Mallick brings over a decade of clinical and executive leadership experience to Hopscotch. She has served in senior leadership roles at the Center for Medicare and Medicaid Services, where she developed clinical strategies and led collaborative efforts to advance value-based care and quality improvement. Prior to CMS, Dr. Mallick ran statewide COVID-19 response efforts for the North Carolina Department of Health and Human Services and was an engagement manager in the healthcare practice at McKinsey & Co. Dr. Mallick is dedicated to collaborating with teams to advance clinical excellence, promote health equity, and improve patient access and outcomes. Dr. Mallick earned her M.D. from Stanford University School of Medicine and completed her internal medicine residency at Massachusetts General Hospital and Harvard Medical School before serving on the clinical faculty at Johns Hopkins and George Washington University Hospitals. She earned her A.B. from Harvard College.

Jenny Ismert, CEO, Community Plan of Kansas, UnitedHealthcare Community & State 
Jenny Ismert is a healthcare executive with over 20 years of experience. She is an expert in government healthcare programs for Medicaid and duals, a technologist with experience operating business and tech teams and end to end capital management and deep experience in healthcare innovation, including value-based care, complex care delivery models, and consumerism. She has proven the ability to create business opportunities, drive pragmatic innovation at scale in a complex organization and strategically position for current and future market dynamics that impact revenue & growth.

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TRANSCRIPT

Announcement: 0:07

Welcome to the Breaking Health Podcast, a series of discussions with the most disruptive CEOs and leaders in digital health.

Payal Agrawal Divakaran: 0:18

All

Payal Agrawal Divakaran: 0:18

right, I'd like to welcome my fellow panelists here. You've got Jenny, Chris and Zeena, and you were expecting Aditi Malik. She sat on the tarmac for an hour and called me this morning at 7 am and said she's not going to make it, but she has given me permission to channel her insights and relay them to you. So I'm going to do my best Aditi impressions here. But you're in for a treat, because now you get to hear more from these three superstars, so we're really excited to have this opportunity. Let me make sure I start my timer.

Payal Agrawal Divakaran: 0:56

So I was actually on this stage two years ago talking about Medicaid 2023. The title of that panel more Medicaid, more problems. You know, the more money, more problems. You kind of get how I put that together. And here we are today talking about Medicaid challenges and Medicaid cuts. So I'm really excited to sort of lead us in this discussion.

Payal Agrawal Divakaran: 1:21

You all want us to have a crystal ball on what's going to happen in Medicaid. We don't have the crystal ball, but we're going to give you a bit of perspective. It is a $900 billion plus program. It is ripe for cuts, of course, but I think in order to really understand what's going to happen, we have to go a level deeper, and that's what we're going to do today with these folks who are extremely deep in Medicaid. And so let's dig in.

Payal Agrawal Divakaran: 1:45

Our first topic is going to be Medicaid coverage and, by understanding Medicaid coverage, what is at risk or not within the population. So you all know this. But just to level set, the way you get Medicaid coverage is one of two ways either depleted assets or disability, and or you know you could. You know it could be children, adults or the elderly that fit in one of those two categories. So, jenny, I'm going to go to you first, maybe just a quick introduction of yourself, and then talk to us about the elderly, which are the duels, and how you sort of view that population and the risk of cuts within that.

Jenny Ismert, CEO, Community Plan of Kansas, UnitedHealthcare Community & State : 2:23

Hi, good afternoon. Jenny Esmert, I'm the CEO for the Kansas Medicaid Health Plan. We also I also run our DSNP business in the state of Kansas. And DSNP is what? Dual Special Needs Program, which is a subset of a Medicare Advantage product just solely focused on the duals. And I think the piece too that's important as we think about the duals is these two programs are getting tethered together. So with a lot of the federal rule changes, dsnps and Medicaid Managed Care in particular are starting to be codependent on one another. For us to be able to operate or do business in the state, so in Kansas, for example, you have to hold a Medicaid one another for us to be able to operate or do business in the state, so in Kansas, for example, you have to hold a Medicaid managed care contract to be able to operate a DSNP in that market. So these two markets are starting to converge.

Jenny Ismert, CEO, Community Plan of Kansas, UnitedHealthcare Community & State : 3:14

I would say on the. So, just by way of quick background, been in healthcare for 20 years, 15 years in Medicaid specifically, so love Medicaid. So I would say on the cut side, it's like the billion dollar question. Right, you can't read the tea leaves. But what I would tell you is is that the bet we're making is the sentiment regarding preservation for the programs that serve this population is there. I would say this is an exercise in nuance, the devil's in the details related to it. So, and I'll just lay out a couple of examples. So Medicare Advantage I think we all see the dynamic that's going on in the Medicare Advantage side. I think how that plays out and I'm not going to debate the merits of those debates that are going on right now but how those things play out will deeply impact DSNIP. So you even see it play out with the amount of dollars that are being reinvested into benefits on the DSNIP side as a result of some of the changes in the revenue that's going on in the Medicare Advantage side, and those are really critical benefits. So food utilities, things like that that really preserve a dual's ability to kind of address some of the barriers that they have is really critical. So that's one thing I would say.

Jenny Ismert, CEO, Community Plan of Kansas, UnitedHealthcare Community & State : 4:33

Kind of another dynamic that's playing out on the federal side is ACA and expansion. I think the proposed draft on the bill that came out is that. It's really proposed draft on the bill that came out is that it's really. They're really looking at cuts in FMAP and eligibility essentially is how I would see that that doesn't necessarily have a huge impact but in Kansas specifically has a huge impact, don't get me wrong. But the dynamic that's probably. So. That's kind of first and foremost what the dialogue that's going on. The piece that's probably more nuanced that we'll see is the tax infrastructure that underpins how states fund the Medicaid program. So provider tax infrastructure, those are conversations that are going on now that will be significant changes. So we're planning for kind of scenario planning against those things. So that's what I would say is happening at a federal level, that's influencing it.

Jenny Ismert, CEO, Community Plan of Kansas, UnitedHealthcare Community & State : 5:30

What's going on at a state level is that really it's a compounding issue is how I would describe it, which is an emergence of state budget challenges that are going on. State budget challenges that are going on, like in my state, for example, they're anticipating a budget shortfall by 2028. And then we've got a very Republican supermajority in our state. So they're definitely pulling themes from the federal side down to the local state level and states are going to be in the very real position of making some changes to their programs. But I don't think it'll be.

Jenny Ismert, CEO, Community Plan of Kansas, UnitedHealthcare Community & State : 6:08

Hey, all of a sudden we're going to stop covering, you know, elderly populations. It'll be much more nuanced, and I say that because I think it's important to pay attention to the details. As you're thinking about doing business in Medicaid, like pieces, like you know, maybe they'll start to define different benefit coverage options, like create caps. They might start to explore on the waiver side, which makes most people's eyes cross on how complicated waivers are. But the way states control costs in those waiver programs is they design wait lists so they only cover a certain number of individuals. They're not going to unilaterally cut the program, but they're going to start to control budget costs related to those things. So just a couple of examples that I would lay out.

Payal Agrawal Divakaran: 6:55

Thank you, Jenny, and you can see how deep Jenny is and what a treat this really is. But just wait till you hear from the others. So, Chris, I'm going to move to you next. Chris, tell us, give the crowd a little bit of context on what you're working on, and therefore I'm going to ask you to talk about kids, kids covered by Medicaid, views on that population and what's safer at risk.

Chris Johnson, Founder & CEO, Bluebird Kids Health : 7:15

Yep, great to be here. Thanks for having me. I will try and follow in Jenny's footsteps, although she's way more articulate than I am. I'm the founder and CEO of Bluebird Kids Health. We are a pediatric primary care business that enters into value-based care arrangements with commercial and Medicaid players. Our goal is actually to focus on democratizing access to pediatric services for kids, so this is a very informed crowd.

Chris Johnson, Founder & CEO, Bluebird Kids Health : 7:46

But one one statistic that's kind of crazy is 50% of children in the country are covered by Medicaid or chip, um, which is kind of like a cousin to Medicaid. Is that fair, cousin cousin, cousin to Medicaid? Um, you know, I I like to think of it as like glass half empty, is? It's really a shame that so few children actually have access to commercial insurance coverage, especially in our country, which is one of the wealthiest in the world and the wealthiest that's ever existed in humanity civilization. The glass half full is that there's generally been an agreement that children deserve access to healthcare.

Chris Johnson, Founder & CEO, Bluebird Kids Health : 8:24

When Medicaid was passed originally I think it was 1965, in the Social Security Act, it was originally focused on children and mothers of low income and those who had severe disability, and it's continued to be, I'd say, like the corner of Medicaid policy historically has been support for children and pregnant mothers in the program. That was further enhanced in the late 90s with the CHIP program, the Children's Health Insurance Program, which actually expanded access to coverage for those who were up to 200% of the federal poverty limit. So traditional Medicaid is like 138%, I think, of the federal poverty limit. So it added about 4 million additional children and that's been a bipartisan policy position. It was renewed a couple times since the original act was passed, so I share all that.

Chris Johnson, Founder & CEO, Bluebird Kids Health : 9:23

What we're focused on are primarily children under 18 years of age. About half of our population has Medicaid or CHIP and while I'm very nervous about the broader access challenges, I actually think that in general it's very politically unpopular to remove basic healthcare services for children across the country. I think it will be relatively unscathed by a lot of the policy discussions that are happening. Those children will be impacted because a lot of times their parents may have access to fewer resources. They're often also on Medicaid. They might be expansion populations, but for kids I'd just throw the bigger policy thing. Facing kids is actually a lot of the conversations around vaccine access that's happening at the policy level in Washington. It's a really core component when you think about vaccinations, it really is like 90% focused on children. It's a core component of, like, most Medicaid programs as well.

Payal Agrawal Divakaran: 10:26

Thanks, Chris, and a couple tidbits. You might be some of you who live here in Massachusetts thinking you know this is not a Massachusetts problem. The kids on Medicaid I was at the Dana-Farber board meeting a couple of weeks ago. 48% of Massachusetts kids are on Medicaid across the state. And then the second point I want to make is 406 Ventures happily invested in Chris's company, and this was done in. Was it November? The fall September, September, when we knew the new administration was coming, and yet we still made this investment. So we're going to talk a little bit more about that. But, Zeena, so you have done work in kids in the past and now you're working on sort of a new population. Give the crowd an intro, tell us specifically about those with disabilities and the LTSS I mean, tell the audience what LTSS even means, but tell us about that population and the sort of the pros and cons.

Zeena Johar, Entrepreneur in Residence, Frist Cressey Ventures : 11:21

Yeah, thanks so very much, Payal. First of all, thank you for this incredible opportunity and excellent job, jenny and Chris. In outlining, you know, the broader headwind, the broader landscape and the opportunities that lie in front of us. Absolutely delighted to be here. That lie in front of us. Absolutely delighted to be here. Currently I'm an entrepreneur in residence at Fresh Cressy Ventures.

Zeena Johar, Entrepreneur in Residence, Frist Cressey Ventures : 11:45

Previously I was the co-founder of Imagine Pediatrics, primarily a home-based medical group that just focused on the needs of the sickest of sick kids, kind of building on your introduction. If you zoom out and I will get to LTSS in a second if you zoom out of the pediatric population, around 3% to 5% of kids which, for simplicity, let's address them as complex kids have very high needs and the high need population that we were drawn towards are the technology dependent kids, kids who need have G-tube dependence, have Venn dependence and need a lot of support outside of. You know what a PCP office or other resources can bring to them. For example, if you have a kid who is G-tube dependent, they need access to timely, durable medical equipment so that they can bring all of the feed that is needed for them. Most often, if you have a vent-dependent kid, you have a private-duty nurse that is really helping manage, you know, the day-to-day, hour-to-hour progression of the child, given the very high dependence that they have on technology. And Imagine Pediatrics primarily provided 24 by 7 support to these families to really maximize safe days at home. That was a metric that we came up with, that, yes, we want to avoid their unnecessary visit to the ED or the hospital, want to avoid their unnecessary visit to the ED of the hospital. But a metric that we were very proud of is how do you maximize safe days at home? And it was fascinating to see that, as CMS and CMMI are coming up with their new policy mandate, safe days at home is a metric they're beginning to talk about that. It is not only how do you really keep them home, but how do you keep them home safely and how do you really maximize you know their performance on clinical metrics. So that's primarily what Imagine Pediatrics did, kind of zooming all the way out.

Zeena Johar, Entrepreneur in Residence, Frist Cressey Ventures : 13:51

When you look at Medicaid and Payal, you set it up very well.

Zeena Johar, Entrepreneur in Residence, Frist Cressey Ventures : 13:55

There are primarily two entry points no-transcript. There are specific programs that are designed to cater to the needs of these individuals and you will see a whole cast of waivers both on the pediatric population, as well as the adult population, or one that would be very similar to the technology-dependent kids, are the individuals that sit within the traumatic brain injury waiver. Again, individuals that need a lot of support, but not only a lot of support with all of their clinical needs but all of their ancillary needs, you know, making sure they have the nurse that is supporting them, they have the right durable medical equipment, they get the right therapy. You know, support and that is a continuum that I feel that, with the headwinds, or rather the tailwinds that we have ahead of us, how do you really think about sustainable solutions that are better serving the needs of all of these high-risk, high-need individuals that are primarily I would call them a clinical phenotype, which is defined by each of the waivers, which gives you a unique opportunity to address to some of their needs.

Payal Agrawal Divakaran: 15:35

Yeah, and thank you, Zeena. And Medicaid has never been for the faint of heart, but I think there was this moment in time where sort of you know, a lot of founders and entrepreneurs were saying, of course, I mean, this is a massive population and a massive problem, and so you had a spike in innovation over the last several years as it pertains to Medicaid. This is not a moment in time where you can sort of be a quote tourist in Medicaid, right, so let's shift to that. Is it a good time, though, in general even to be for the founders out there to be starting something in Medicaid? Chris, I'm going to go to you. You started Bluebird Kids when you you know you had you could be starting something in any other population. Why did you do that? And and sort of what was your thinking?

Chris Johnson, Founder & CEO, Bluebird Kids Health : 16:21

That felt like a leading question. Oh really no, it's a great question. So just a little bit of context. Before I was at Bluebird Kids, I was at an organization called Landmark Health and had the privilege of leading that organization for a number of years, was eventually a part of UnitedHealth Group. As a part of that, very focused on value-based care but, more importantly, focused on where is there an unmet clinical need. We were focused on senior populations bringing primary care into the home. As I was leaving that organization, I was looking for where is there another underserved population, where are there patients who are not receiving access to high-quality care?

Chris Johnson, Founder & CEO, Bluebird Kids Health : 17:03

I really didn't know this until I learned more, but kids really are struggling to get access to high-quality primary care. About 35% of children do not have access to a pediatrician in this country. That's not because they don't try desperately, desperately hard to. It's because they're locked out of the system and that generally is due to the fact that they're on Medicaid. As I shared before, over 50 percent of children are on Medicaid. The network access when you're on Medicaid is much more limited due to reimbursement rates, and so we found that Bluebird Kids focused on this clinical problem, which are children are not getting access to pediatricians, to pediatric care, and, as a result, their utilization patterns look like seniors on Medicare. So Medicaid children, even excluding those super complex patients that Zena was talking about, often have ED utilization that's north of 600, 700 ED visits per 1,000 members per year, and they can have inpatient utilization that's encroaching 200 inpatient admits per 1,000 per year.

Chris Johnson, Founder & CEO, Bluebird Kids Health : 18:13

Truly, when I first saw this data, I literally thought that someone sent me the Medicare data sets, because most children are healthy. Why is this happening? And it's due to a really big access barrier, and so we designed a system to democratize access. We locate our clinics in lower-income neighborhoods that tend not to have pediatric access points, not to have pediatricians, to have pediatricians, and then we have the market environment to be able to go to managed care plans Medicaid managed care plans and say, hey, we have a better solution, a better way to partner together. We aren't building a Medicaid solution, we're building a great pediatric experience. We contract with commercial plans, but we also need to contract with all the Medicaid payers, because it's the preponderance of the children, and in the neighborhoods where we operate, it's sometimes 60, 70% of the kids are covered by Medicaid, and so that I would just frame it as like I don't think I said like let's go build in Medicaid. I actually said we really said where is there a huge clinical need? And I think you find that there's a lot of clinical need in Medicaid because historically fee-for-service has been a challenging business to do in Medicaid.

Chris Johnson, Founder & CEO, Bluebird Kids Health : 19:23

I just try to make one more point. Of course, and I'd be curious, like Jenny's perspective on this, the other dynamic that we saw happening is that there's a lot more competitive rivalry to use a Michael Porter term in the managed Medicaid space. In many states there's kind of been this, I think, demarcation, where what I'd call bluer states have kind of said we're going to hire really smart people into our Medicaid departments and we're going to build these internal Medicaid plans. Massachusetts does that. They hire some incredible people in MassHealth that design these really great programs and they kind of push it out to the market. There's been other states that tend to be redder, more conservative states that have said actually we're going to leverage market forces, we're going to have competitive bids for Medicaid plans to come in and we want the best proposals to come in and they're going to administer our Medicaid program for us and usually those programs are focused on and Jenny can definitely check on this.

Chris Johnson, Founder & CEO, Bluebird Kids Health : 20:27

What type of access are you providing for my members? How high quality is the care that they're receiving? And then there's usually kind of like a kicker thing around like can you move folks into value-based care? And or what innovative things are you bringing to my members and for someone who's building a care delivery organization? That's a great person to contract with, where you can align what's great for the consumer, the end user, what works for the managed care plan and also what's a sustainable business model for a care delivery organization.

Announcement: 20:56

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Payal Agrawal Divakaran: 21:14

And, Chris, that's a wonderful segue because I did want to go to you next, Jenny, and say for the founders who are starting a company in the Medicaid space, they often say we're going to go contract with the state plan, but what do they need to really understand, especially in today's environment, to be successful in doing that? And how do you sort of approach those conversations with you know startups and say this is one that gets it and this is one that doesn't?

Jenny Ismert, CEO, Community Plan of Kansas, UnitedHealthcare Community & State : 21:36

Yeah, which you can tell in five minutes by the way.

Jenny Ismert, CEO, Community Plan of Kansas, UnitedHealthcare Community & State : 21:40

Here's what I would say. So I think you summarized the procurement cycle pretty well. I think. Look, innovation and Medicaid hell yeah, chase it Like it's so desperately needed and you can do it.

Jenny Ismert, CEO, Community Plan of Kansas, UnitedHealthcare Community & State : 21:53

What I would tell you on the buy side, on the payer side, is that but you've got to show up. I think your quote is it's not for the faint of heart is exactly right. I think we just spent what a good 10 minutes talking about how complex it is, how state-based it is. But what you need to understand on the buy cycle for a state right is that they are pre-purchasing their Medicaid managed care organizations 24 to 18 months out from the start date and they're running that contract for three to five years. That's your buy cycle on the managed care side. And so just a cautionary note about don't rely on the procurement, embedding yourself in the procurement to be like, yeah, that's my pipeline, right, because we have no idea if we're going to get in or not. That scoring, the way states think about it, it is some combination of politics and scoring and reputation, right. But on the managed care side, I often say that if they like you and you're driving outcomes and you're easy to work with. Like that's a really good recipe for success on the managed care side. So, but that's the. That's who's decisioning on the buy side.

Jenny Ismert, CEO, Community Plan of Kansas, UnitedHealthcare Community & State : 23:03

So what I would advise is one show up and know your stuff about Medicaid. Oftentimes I'll have, you know, companies that will come pitch to me that don't understand waiver structures but they're wanting to buy into or get us to buy into their complex solution. I'm automatically going to distrust that. If you don't understand the Medicaid nuances, that you're not necessarily building for Medicaid, build for commercial and try to retrofit it in. It doesn't work in my estimation, so do it for Medicaid.

Jenny Ismert, CEO, Community Plan of Kansas, UnitedHealthcare Community & State : 23:42

I actually think Medicaid is a really interesting space to innovate in because you've got all these barriers, You've got these tight challenges in front of you, you've got very clear kind of healthcare needs. It's kind of an interesting dynamic, I think, to innovate in. I would argue that if you can get it to work in Medicaid, you can get it to work anywhere else, because Medicaid and its core tenants is you're capped on your profits. You've got to drive clinical outcomes. That's kind of core to, at least on the Medicaid managed care side, what we need to do. So I actually think it's a really interesting kind of opportunity to drive that level of innovation.

Payal Agrawal Divakaran: 24:15

And I'm going to debate that point in just a few minutes. But I want, Zeena, I want to give you because I have an opposing point of view to that. But, Zeena, I'm going to give you a few minutes here on the floor to say you could? You've seen so much through your experience in healthcare and yet you chose once, and then now a second time, to be exploring starting a company in Medicaid. Why Give the audience a little bit of perspective about why you think there's still opportunity there?

Zeena Johar, Entrepreneur in Residence, Frist Cressey Ventures : 24:40

Yeah, no great arguments to build on. Thank you, Chris and Jenny. Primarily, what I'm like very drawn towards and this kind of feeds into the conversation we were having this morning which is that around incentive alignment, you know when you think about managed care, when you think about Medicaid, when you think about procurement, yes, at a state and the managed care entity level, there is a risk that is involved in terms of dollars that govern. You know how do you provide to the populations that you're managing. But if you come a level deeper, you know there is a lot of thought process around how do you delegate risk. You know, to other entities, whether you're talking about PCPs, whether you're talking about inpatient utilization, ed utilization, there are specific metrics, certain behaviors that encourage your performance. Whether you know, when you're talking about PCPs, whether that is annual exams and the likes you spoke about vaccine access and the likes.

Zeena Johar, Entrepreneur in Residence, Frist Cressey Ventures : 25:46

What I'm very drawn towards within Medicaid is and this is primarily built on, you know, having the opportunity to serve complex kids is that there are vast green spaces within Medicaid wherein, primarily, business is fee-for-service, as usual.

Zeena Johar, Entrepreneur in Residence, Frist Cressey Ventures : 26:07

And if there were small buckets of spend, that is one thing, but for high-risk populations that is more than half their spend. So what I see as a clear opportunity and which is why I kind of set context, you know, within the disability lens is that a large chunk of care continues to be provisioned through fee-for-service. You know them whether that's a large nursing provider, large DME provider to flip to a value-based care construct, even if it is upside, only think about that stuff. On the other hand, if you think about a large nursing provider, they're like, yes, we would love to, but I don't have the wherewithal to actually do that. And that in itself is a great opportunity that I see that within Medicaid there continues to be opportunities to meaningfully think about clinical models that can really align incentives of the health plans who are paying for it, the providers who are provisioning all of those services, and clinical outcomes for the patients.

Payal Agrawal Divakaran: 27:18

Thank you, Zeena, and I think that the sort of debate I have, or distinction I would make, is perhaps the difference between starting a company that's going to be for medical needs versus behavioral health needs as it pertains to Medicaid. I think if you're starting something in sort of the medical needs primarily, aka Bluebird Kids, build it for Medicaid, because I think there's of the medical needs primarily aka Bluebird Kids, build it for Medicaid because I think there's very specific medical needs On the behavioral health side. What we see is it's often a little bit challenging to get the rates that you might need, especially for the companies that are paving a sort of case rate or a fee for value oriented rate with the health plans. That often commercial is the first to tip on that and then employers will tip and then all the founders want to ultimately serve Medicaid Right.

Payal Agrawal Divakaran: 28:06

I think about Equip, which is treating eating disorders now entirely virtually. If they had started in Medicaid they would have. It wouldn't have worked, the economics wouldn't have worked. What they said was sort of we're going to start with commercial because we know the ROI and the rates exist. Then we're going to the employers will come through the ASO book of the business and then now all the major Medicaid plans are coming in, and at a very similar rate, and so I make this distinction only in medical versus behavioral and how you may want to sequence could be different.

Jenny Ismert, CEO, Community Plan of Kansas, UnitedHealthcare Community & State : 28:35

Yeah, no, I think that's a great point. I think the one thing I would maybe coach folks to look at is the whole and I don't know what the acronym stands for the CCBHC Movement Demonstration Program.

Payal Agrawal Divakaran: 28:47

I'm going to write that down.

Jenny Ismert, CEO, Community Plan of Kansas, UnitedHealthcare Community & State : 28:48

Yeah, so what it essentially is doing a lot of states. We're at a tipping spear in Medicaid and I can speak to our experience in Kansas where they're moving--this federal demonstration program is moving . Those providers are now making more on this Medicaid payment structure than commercial. So I do think that that's going to change potentially.

Payal Agrawal Divakaran: 29:23

Yeah, no, that's great. So let's shift to and, by the way, I'm coming out to you audience in about five minutes for Q&A, so to please get ready for that but let's talk about the fundraising environment. Is it, is it dead on arrival to come to a VC and pitch something that's in Medicaid? Let's talk about that. Obviously, I have a perspective, but, Chris, you just raised a quite a large round for what you're doing. What was your experience and why did it work?

Chris Johnson, Founder & CEO, Bluebird Kids Health : 29:49

to raise the money. I mean you might be qualified to answer too apparently, but um.

Chris Johnson, Founder & CEO, Bluebird Kids Health : 30:01

I think there's three things that um, that we, that we focused on um and are just like our true North star. One is that there was a problem and we had a good solution for it out in the market. So we truly understood there is an access problem. We understood what we needed to build in order to close that access gap and I think we were very crystal clear with that. We had the data to support it. Crystal clear with that, we had the data to support it and could be.

Chris Johnson, Founder & CEO, Bluebird Kids Health : 30:36

I'd say I think we were probably more facile in explaining the nuances of hey, we have some commercial business, but this is actually the nuances of how Medicaid works and will work on this book. Two, was we really understood the unit economics of the business from day one. This was built around. Yes, we want to go after a big, important problem. We want to have a great tech-enabled solution, but it only works if we really understand what the steady state unit economics are, and that was grounded in how we talked about the business from the very first day, the set of assumptions.

Chris Johnson, Founder & CEO, Bluebird Kids Health : 31:04

We had third-party data that validated that so that we could really talk about hey, this is really an operational, executional business that we're building, which leads me to the third thing was I've been very fortunate. We have just an incredible team who got aligned against our mission, but I would argue myself excluded a punch way beyond what you're normally seeing in a Series A business in terms of just the folks that have come along with me on this journey incredible operators, incredible finance leaders, incredible medical leaders, incredible people, leaders. That are all the components that you need to build a great, really great, sustainable care delivery organization.

Payal Agrawal Divakaran: 31:45

Yeah, and of course, chris is being humble. I think this is a real moment where the VCs who believe in the long arc investing in health care, we continue not to be afraid of what is the risk but the opportunity in health care. And I'm looking out at the audience to some great investors in Medicaid I see Anna out here, see Alyssa at CVS. Those are the people who really truly understand the dynamics here at the level of nuance that is required to make good investments. And in these moments of time come opportunity.

Payal Agrawal Divakaran: 32:17

So in my view, you know, investing in companies like Bluebird was, you know, there's not many people who are going to get it in this moment of time and so if you can and you can be thoughtful about it, it's a great time to be investing. So you're just going to have to find the investors who sort of know that. And that gets me to you. Zeena, you went into the belly of Frisk Cressy because I think you felt some alignment there. Why did you choose to do that, as opposed to sort of saying I'm going to build this thing and raise the funding later?

Zeena Johar, Entrepreneur in Residence, Frist Cressey Ventures : 32:44

Great

Zeena Johar, Entrepreneur in Residence, Frist Cressey Ventures : 32:44

question. So primarily two things. You know, one you're building a little bit on, jenny, your your point that you made earlier is when you're thinking about innovation in Medicaid. I think it is incredibly helpful to have a very precise understanding of the population. That you are going after is a very heterogeneous, you know, population. What looks, what sits in one waiver is very different from what sits in the other waiver, is very different from what sits in SSI, is very different from what happens in TANF. So they're like all of acronyms I am so sorry I just assume everybody knows every acronym in the room but yes, waivers, and like the broad disability category and the broad income-based category, each one of those need very specific solutions wherein you're going after a clearly identified population and a clinical solution that works for that population. So that, in my mind, is very that. Have a clear understanding of which population are you serving and is your clinical solution absolutely tailored to that population.

Zeena Johar, Entrepreneur in Residence, Frist Cressey Ventures : 34:00

Why Frist Cressey Ventures is primarily the vision that we share, you know, which is kind of going back to my first conversation with you. Know, senator Frist, who's the founder, you know, of the fund, who truly believes in taking on extremely hard problems and allocating a meaningful chunk of your own professional life and the resources of the fund to, you know, really go after that. Unfortunately, these are not companies that you can spin around in 12, 15, 18 months. These are long-term commitments and literally the first question that we sat down and reflected for almost 45 minutes is why are you committed to this and what is your time horizon as you think about change and I think is this the right time to think about medication? 100%, but you absolutely need mission-aligned partners who are there to problem-solve with you as you go after these very specific green spaces and create thoughtful businesses, which will take a minute to really come together.

Payal Agrawal Divakaran: 35:13

That's exactly right. Any questions from the audience here? Yes, please, sir, and there may be. Go ahead and say it. Oh, Mike is coming to you. Eileen, it's right over here near Melissa.

Audience Question: 35:26

Hi, pay your side here. Really excited to hear the discussion around innovation and Medicaid being difficult due to the regulatory landscape, especially with LTSS and children focus. My question is how are you navigating innovation with the recently passed regulation on both of your areas, mac-urs and the HCBS ensuring access to care rule? Just curious, if anything, or if that's too far out that you're even thinking about it.

Payal Agrawal Divakaran: 35:52

Just curious, if anything, or if that's too far out that you're even thinking about it, and I'm going to ask in your answer to abstract a layer higher so that everyone in the audience can sort of understand what we're talking about.

Chris Johnson, Founder & CEO, Bluebird Kids Health : 36:01

But any thoughts? Yeah, for what we're focused on, those are less relevant. Our insight is like, very, very simple, which is literally a third of children in the country are not getting access to pediatricians, and so I almost feel like a butter knife here next to like two Ginsu knives. But like, really. The idea is like, and it's sitting like in front of us every day, like if you walk down the street in any town, most likely you're going to pass a child who is struggling to get access to a pediatrician. They don't have a t-shirt that says it, but it's there. It's like hiding in plain sight. The data shows it, supports it, and the outcomes are known to be really atrocious. When those children don't get early access, they're not getting preventative screens, they're not getting diagnosed with dyslexia, therefore they never learn to read. They drop out of school in middle school because they're just frustrated. It's those little nudges that we're focused on getting them access, driving better medical outcomes, but also just broader societal outcomes for the population we serve.

Zeena Johar, Entrepreneur in Residence, Frist Cressey Ventures : 37:13

I think from my perspective and Jenny, keep me honest here if you zoom out and you primarily just look at the eligibility pathway into disability, given the strong link that it has to your clinical phenotype, that my understanding is, all of what you're reading almost does not touch that Specifically. If you get closer to waiver populations over there, your eligibility is very strongly determined with your clinical condition, let alone the other attributes. I don't see them impacting any of the clinical pathways that give you access to those benefits. Jenny would that be

Jenny Ismert, CEO, Community Plan of Kansas, UnitedHealthcare Community & State : 37:53

I would agree.

Payal Agrawal Divakaran: 37:55

And I think you know my higher level response to the question, which is a great one, is you know, I have yet to see a company and I've been with 406 for 10 and a half, almost 11 years that isn't somehow, you know there is. There can be stroke of the pen risk in so many companies and situations and there has been, I mean in the last you know, 10 and plus years that I've been doing early stage health care and then I was doing private equity before that. That's not something new. And so this point that Chris makes, which is sort of making sure you're at the abstraction layer of the big problem and the big dollar problem so that as these topics come through and changes come through, you're still sort of somewhat immune to that. Now, of course you can't be naive and the sort of the specificity of the population you focus on, but I've not seen a company over time that's not had some sort of regulatory impact or bob and weave and you've just got it. That's part of being, you know, involved with these innovations.

Payal Agrawal Divakaran: 38:51

Any other question you know involved with these innovations? Any other question, jenny, I do want to ask you. A question here is you know there's often skepticism on a lot of VCs will fund the Medicaid startups but not a lot of them work. And you and I had that debate and I said you know I think there's some in our portfolio that are doing okay. But you said you highlighted, you know, carebridge as a success example. Could you spend sort of you know, a little bit of time telling the audience why?

Jenny Ismert, CEO, Community Plan of Kansas, UnitedHealthcare Community & State : 39:14

Yeah, I think you know CareBridge is interesting. I think it's like a live example of all of the characteristics that we were speaking about earlier, which is they were targeting the long-term services and supports waiver space. They knew that space so well. They knew the problems with the Medicaid managed care side and the delivery of the non-clinical support services that go into that population was so on point with. We had literally just come out of 18 months of deep exploration with our health plans about why that product was not performing and quite literally, they checked the box on everything. It was as a business that we were experiencing and where it was that we were actively looking for a solution, and what they went after was not easy. It was extremely complex, but they had honed into the solution and understood the nuance of that marketplace so well that you know, when they came to the table, it was very difficult to say no. We signed on to be the anchor partner at that point.

Jenny Ismert, CEO, Community Plan of Kansas, UnitedHealthcare Community & State : 40:28

So, but what? I would tell you that maybe some lessons learned from that. I think, where they thought they'd drive the savings and where they actually did were two different things. So, and then two, don't underestimate how complicated it is to talk about care management in the context of a provider practice that's deploying care management, I think not. Even today. I think people still don't describe what they do really accurately and so just know, going into that, how complex that is.

Jenny Ismert, CEO, Community Plan of Kansas, UnitedHealthcare Community & State : 41:01

And then I think too, the one piece too, on the risk that they took, because I think that's we haven't necessarily did a deep dive into that, and what I mean by that is they took downside risk, and they took downside risk on a body of services that nobody was taking downside risk on at all, not even upside risk. So that's one thing I've learned is that you know, generally speaking, the models that we see that do really successful are willing to put something on the table from a risk standpoint, whether that be taking risk on engagement, taking downside risk. I think that that's that was really important and they did that. They were willing to kind of take that leap and believe so deeply in what they were doing.

Payal Agrawal Divakaran: 41:47

Thank you, jenny, and we've. We are at the end of time, so I'm going to wrap up with two comments. The first is, if you want, you liked this conversation and you want to hear more on innovation and how to be a founder, I'm supposed to make a plug here for the DHIS podcast, the last four episodes of which I had the privilege of being the guest host of, and so you'd get to hear from some great founders and CEOs. You can find that on iTunes and all that good stuff, but I will channel Aditi Malik in this last comment that I make to close our panel, which is, in her words Medicaid is not going away, it's having tailwinds, in fact, and so this is the right actually the right macro environment for innovation and disruption, should you understand the nuances. Thank you so much, Jenny, Chris and Zeena for joining me. Appreciate it.