Latest / StartUp Health NOW Podcast / Melissa Buckley Gets Candid on How Philanthropies Partner With Startups

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Melissa Buckley Gets Candid on How Philanthropies Partner With Startups · StartUp Health NOW Podcast

• 0:00
  [on-hold music] I often get calls that people don't know I'm a foundation.
• 0:15
  They don't know, they don't know what my interests are, they don't know what my themes are.
• 0:19
  So it starts with really, um, caring about your audience and knowing what the conversation's about and where that person's starting from.
• 0:26
  And if you don't, I always say, be really honest, and I try to do this too, is, "You know, I've spent some time on your website. I've spent... But can you... It's really helpful for me to hear you articulate that.
• 0:36
  I hear the verbal rendition of that. Can you just take 10 seconds to walk me through what your perspective is and what you're, what's important to you?" And then launch. [upbeat music] Welcome to StartUp Health NOW.
• 0:53
  On this podcast, we interview some of the most inspiring and forward-thinking folks in healthcare, and today is no exception.
• 0:59
  My guest is Melissa Buckley, the Director of the Innovation Fund at the California Healthcare Foundation.
• 1:05
  In our conversation, we unpack the philanthropic foundation and the unique way it invests in new ideas based on impact, and then we'll get into the innovation fund, which has been around for about 10 years, and get more tactical about how startups can successfully partner with them.
• 1:20
  Stick around. [upbeat music] Melissa, thanks for joining us for this StartUp Health fireside chat. Absolutely, Logan. It's good to be here.
• 1:34
  I should also mention that CHCF has been a partner and supporter of StartUp Health in the past, uh, initiatives that we've done, and we appreciate that ongoing relationship. Absolutely.
• 1:45
  We like to tell the story, uh, or Unity does of, and Steve, uh, how we wrote the first check to StartUp Health way back many years ago. Um, so it's good to still be here. I didn't know that, but that's fantastic.
• 1:57
  Melissa, let's start high level, and introduce us to the California Healthcare Foundation, its origins, its mission, et cetera. Absolutely.
• 2:06
  So the California Healthcare Foundation, uh, focuses on improving access and quality of care in California, particularly for folks here that are not well-served by the existing and traditional delivery system.
• 2:17
  So we spend a lot of time focusing on the Medi-Cal, um, program and improving, uh, its ability to support one-third of Californians who are, um, benefit from that program.
• 2:28
  We were born as a foundation like others, uh, ar- in and around the country, we're called a conversion foundation.
• 2:34
  So you might often hear of, um, money and/or funding going to philanthropic activities when there's a merger of two large healthcare organizations or, um, as part of some sort of transaction.
• 2:45
  We were born with the California Endowment when Blue Cross of, Bl- Blue Cross of California, um, converted to WellPoint, and the liquidation of the stock that we received as part of that purchase went into our endowment.
• 2:58
  So we, together with the endowment, sit on about $4 billion of assets, and we make grants into delivery system to improve access to care. How's the mission behind CHCF, has it evolved over, over the, the last decade?
• 3:13
  So the foundation's been around probably 25 years now. The, the innovation fund, which is what I l- lead, um- That's right. That's about the ten-... was born about 10 years ago.
• 3:22
  So the foundation in general has always been focused on California and the delivery system overall.
• 3:26
  The innovation fund, which we, uh, dreamed up about 10 years ago in partnership with, um, our CEO at the time, Mark Smith, who you may have, have run into, and Margaret Laws, who now leads the Hope Lab, a Hope, Hope Lab, which is now a mid-year company.
• 3:41
  We started the fund back then to, uh, try to find organizations that were more focused on scaling things that worked.
• 3:51
  So as a foundation, one of the typical things we do is work with nonprofits and academics who are good at, um, conceptualizing good ideas for the outcomes they want, but aren't at all focused on how you would build an organization that scales.
• 4:06
  And so we, back then, obviously being in the heart of Silicon Valley, thought that there was probably a way that we could partner with emerging technology companies that were more organized that way, and that's what we've done.
• 4:17
  Um, we have evolved our focus over the last 10 years from a sort of more of a disruptive innovation, like let's look for things that are just disruptive.
• 4:24
  Uh, I don't know if folks have done much exploration around Clay Christensen, but that 10 years ago was sort of the talk of the town.
• 4:30
  How do you find low-cost models that just change everything as a way to make them better? Um, and now we've really focused on being another sort of, another way into the problems that our grant makers are wrestling with.
• 4:42
  So, um, whereas some of my colleagues are just focused on collaborating with people, learning collaboratives, policy change, we do that in a very targeted way, and we try to bring impact investing alongside to solve those same problems, and I can say more about that.
• 4:56
  So we've, we've evolved. We continue to do more, do more new and different work over time as responding to what the market's trying to do. Yeah, I wanna dig a little bit more into the uniqueness of the methodology.
• 5:07
  You said you offer a different way into the problem. So what do you mean by that? Well, so, you know, two ends of that.
• 5:15
  So on the philanthropic grant making side, those folks, you know, Robert Wood Johnson, um, the California Endowment, my colleagues, really are looking for...
• 5:26
  In CHCF specifically, we work with policymakers in Sacramento, regulators, people thinking about how to reimburse, uh, how to, how to regulate healthcare delivery in the state, and we work with all the health plans and health provider organizations at the delivery system level, um, to give them grant funding to do what they're doing better.
• 5:44
  Adopt a new care model, figure out how to do care coordination, figure out how to care for the homeless in a way that's like, obviously we're not doing that well. And so how do we, um, do that differently?
• 5:53
  And they provide grant money, free money to solve those problems. Hmm.
• 5:58
  Um, and then on my venture side, my venture colleagues are really focused on businesses, and they're focused on, um, I wanna make an investment and get a financial return by s- finding and helping, um, companies that can scale.
• 6:09
  So we sit in the middle of that-We want to find and support and partner with companies that can scale and that venture capitalists love because what we're trying to do is know that something spreads, and they have...
• 6:20
  Our companies and partners, we want to be investable because that's the mechanism to grow and spread what they do.
• 6:26
  [computer notification sound] And like my grant colleagues, we're entirely focused on the problem that company is potentially solving.
• 6:33
  So when we, um, make an investment into a company, um, generally that's either a low interest loan with warrant coverage or an equity investment, depending on what the company needs, and what we care about is whether they can make the change we want.
• 6:45
  Um, and when we, if we ever make that money back, it goes right back out into grants or other impact investments. So it's all, it's entirely focused on sort of a philanthropic change and impact. Got it. Got it.
• 6:57
  In between those two things. Yeah. Uh, you've started to describe a little bit of the work that you're doing, but sort of break down your role at the foundation, um, and what you're doing sort of day to day. Sure. Um,
• 7:09
  so our foundation is what, we're not, we're not what's called a responsive grant making. We have opinions, um, based on our experience and expertise about what can make a difference in healthcare delivery.
• 7:20
  Um, and so we have strategies. So, uh, we have strategies that are how do you improve access to care? How do you improve capacity of the delivery system? So better access to specialists through telehealth.
• 7:30
  Um, um, working on scope changes for nurse practitioners or, or, or folks so that they can do more of the work, um, under their scope. And then on the population side, um, how do you do...
• 7:43
  How, how do you change the way care is delivered through care models and for complex populations?
• 7:48
  So I spend a lot of time understanding those strategies, understanding what we think needs to change in the world to get to better outcomes, and then I spend a lot of time with folks like StartUp Health, um, and with my inv- networks of investors, um, and networks of entrepreneurs trying to find companies that could potentially, um, work in my part of the market.
• 8:09
  So there are companies in the world that are always gonna be commercially focused, are always gonna be direct to consumer, are built that way.
• 8:16
  Um, there are other companies that inherently will have public payers in what they're trying to do, and Medicaid in what they're trying to do.
• 8:24
  So if you're a behavioral health company, for example, you know, huge numbers of, um, the, who, uh, a big part of the problem you're trying to solve relates to people who are, have low incomes and, and all of your potential customers are trying to help serve those folks better.
• 8:39
  Maternity, 50% of all matern- all births are reimbursed by Medicaid programs across the country.
• 8:44
  So there's some business models, um, in healthcare that are, are inherently more in my wheelhouse or the foundation's wheelhouse, and I try to find those and try to figure out, um, where there's a good match.
• 8:56
  So where the company can benefit from being in my world or knowing the people I know, understanding what I do, and where there is potential for those same folks because they're smart, because they have a new way of doing things, that they could actually make a difference on the ground in the community in terms of outcomes.
• 9:12
  Can you expand a little bit on the business models that interest you most and are most aligned with the foundation? Yeah. So we can, um...
• 9:19
  You know, historically in our portfolio, we've partnered, um, I don't know if folks know these companies, but I'll just list a few.
• 9:26
  Collective Medical, which, um, is a way of connecting originally emergency departments through, um, having providers have real-time access to ADT da- information so they could, uh, better, have a better sense of where patients are in the community and, and whether they're hitting up multiple, multiple healthcare facilities.
• 9:44
  Um, that's one of our... We, we partner with Omada, which was one of the first, um, companies that did virtual DPP, and there we've partnered. They had great clinical outcomes in the commercial side of the equation.
• 9:55
  We partnered with them to fund those same [computer notification sound] trials in a Medicaid and safety net context, and translate a lot of their work into Spanish to make it more accessible for a broader set of people.
• 10:04
  Um, Docent Healthcare was a recent one, which is a care coordination platform for, um, birthing people that, um, in California, has a big payer, uh, dignity health, which is Common Spirit nationally.
• 10:17
  And so Common Spirit was working with that company to try to really effectively better, um, the frag...
• 10:24
  There's large amount of fragmentation around birthing, um, in the delivery system to try to coordinate how a, a person is, who's, um, expecting a delivery to move across the healthcare delivery system.
• 10:35
  So we partnered with Docent. Those are some of the examples of companies that we, um, work with and, um, they all speak to what we care about. So we care about care coordination.
• 10:46
  We care about telehealth as a way to get better specialty care. Um, we care about, um, um, behavioral health. There's lots of movement on integrated behavioral health models.
• 10:57
  So really it is, um, the problems everybody's thinking about, but- Yeah... not, not sort of nice to haves, but really need to haves in the system. Yeah.
• 11:06
  It gets me thinking about this term impact investing, and how as important as it is for us to have that kind of focus, it's become a bit mushy, uh, of a term, and there are so many companies doing such great work.
• 11:22
  Um, you've, you've really kind of started to describe some of these, uh, priorities you have, but how do you, how do you define impact investing? How do you sift
• 11:33
  when there is so much impact to be, [chuckles] to be found as so many great startups out there? How do you, how do you sift through it? Well, you asked two questions. What is impact investing? Yeah.
• 11:43
  And so that term is a little bit like, and, you know, in the healthcare services world, care coordination, like it can mean anything. Yeah. Same.
• 11:49
  Um, but what it means to us, there's really two ways people do impact investing. Um, there's lots of ways, but sort of in, at this level, people, um, can either be investing the sort of for, for financial return.
• 12:04
  So if I'm a large foundation and I wanna invest my corpus, I'm investing in all sorts of public bucket things, but I also wanna invest in things that also serve my mission, but I wanna do it for a financial return 'cause I have a legal obligation to make m- make money on my, on my endowment.
• 12:20
  Then there's people, and this is what we are, that as an alternative to grants, so, um, foundations are required to pay out a certain amount of money every year.
• 12:28
  Um, and-Out of that sort of 5 to 10% of people, of money that the foundation puts out every year, you can make grants, you can also make loans and make investments if they're to the, if the purpose is to make a change in the world that's aligned with your mission.
• 12:42
  So that's what we mean by impact investing.
• 12:44
  So we're using, as an alternative to grant funding, I use loans and equity investments, um, in order to cement the relationships that I'm trying to have with the emerging technology companies.
• 12:55
  That's the currency that they care about. That's what makes the partnership real. We just organize around the work that we wanna do once we've cemented our relationship through that currency.
• 13:04
  So that's the first part of your question, which is what is impact investing. Sure. How do we sort through it all? We have definite strategies as a foundation. So we wanna improve, um, care for homeless populations.
• 13:16
  We wanna improve care for frail elder, dual, dual eligibles and frail elderly. We wanna figure out how tele- to use telehealth to improve access to specialty care in the safety net.
• 13:25
  Um, we wanna use technology to, to accomplish more efficient training for, for pieces of the workforce because there just isn't enough provider capacity in the safety net particular.
• 13:36
  So my grant makers have specific strategies, and I'm looking for those same companies. Do you publish those priorities? Uh, can a startup can sort of keep track of what your priorities are? Absolutely.
• 13:48
  We have a really robust website that lays out our sort of our areas of focus. Um, it also has a huge amount of, um, research and intel on healthcare in general, particularly in California. So if you're...
• 14:00
  Often I have a question and I Google it, I'm like, "How are, you know, nurse practitioners reimbursed in general?" And I end up right back on my own website. So- [laughs]... they're kind of...
• 14:11
  It's sort of like Kaiser Family Foundation in that way. There's a ton of research that, um, and just basic data on the delivery system that is, is right there too, so people can learn and grow from it.
• 14:21
  You know, what I'm curious about listening to you is just the unique relationship that you might have collaborating with a startup.
• 14:28
  I think a lot of folks who are seeking funding are maybe going down a traditional, uh, pathway, and you're describing a philanthropic foundation with a billion dollars in funding, uh, some of which can be given as, um, grant money if the, you know, um, impact area aligns.
• 14:46
  So could you talk to, you know, our, our, our group here, our startup, our entrepreneurs about what's unique about partnering with a philanthropy, with, uh, a foundation like yours? Oh boy, there's a lot.
• 14:59
  You ask these big questions. So, um, in some ways we're just the same as a strategic investor and an investor in general.
• 15:06
  Um, sometimes money's really important, but often what you are looking for alongside that money is the, the people you're bringing to the table to think about growing your company. Um, and so we have that same...
• 15:17
  You know, our capital is, is not a lot. It's a million dollars, and for most people that's the next to nothing.
• 15:22
  Um, uh, but we are, me and my team, my experts at the foundation know we, we're each experts in a particular area, and we bring that expertise, um, to thinking about how the company can get traction in the market. Um,
• 15:37
  so it's really sort of what we can say at the board level or what we can say in terms of product development or market fit or who we can introduce the company to, that's very similar to a strategic investor.
• 15:45
  Um, what is more unique from the foundation's perspective is that, is two things.
• 15:50
  One, when we sort of make a million dollar investment, we couple that with, say, $400,000 of grant money that doesn't go to the company, but goes into the delivery system.
• 15:58
  So if, um, and we spend a lot of time trying to figure out if there's a partnership that makes sense, a bi-direction, has bi-directional value.
• 16:05
  So if the company really thinks it needs evidence, um, to order, in order to sell to incremental customers, or if it just needs a proof point, or if it needs, it really wants to tackle a regulatory challenge.
• 16:18
  So we figure out what is critical path for the company in terms of barriers and opportunities, and it, and if we're aligned with that, then we put that grant money to ev- something as simple as an EHR integration in a particular place where the company's trying to pilot or, I don't know, um, we get Harvard or Mathematica or Rand to do an evaluation to get that proof, that data that someone needs to sell.
• 16:39
  Um, or we, you know, you know, pay for clinic, we pay for TA or we pay for whatever translation to Spanish.
• 16:45
  So we try to grant fund against what the barriers are, um, to get everybody to the next level that they need, uh, to either prove that they, what they does works or to scale it. So that's, that's different I'd say.
• 16:59
  And the other important difference is, again, we don't care about the money. Like we expect financial return just because our investors care about that, like the VCs care about that and we care about that for scale.
• 17:09
  But we really focus on the problem.
• 17:11
  So we are always a person around the table that says yes, and like, let's all agree that what we really wanna do, if this is a great company, it's gonna change the delivery system in this important way.
• 17:22
  Yes, we recognize that there has to be revenue, but like, if you wanna be a great company, this needs, this, this is a transformation we're looking for.
• 17:29
  So we're really, I think, good at h- like raising the flag, reminding people of what the core mission is of that company, um, and reflecting both the sort of business perspectives, but also the, the problem, the, the, you know, the mission of what we're all trying to do together.
• 17:46
  Awesome. Talk to, talk to me about, uh, the tactical side of pitching a foundation. You just, you know, you talked about how it's all about impact.
• 17:56
  It's not the, the same sort of conversation about the returns as, as you might have with a traditional VC. Uh, are you hitting the impact points that you're looking for? So obviously that's important.
• 18:08
  You gotta have that in your, in your deck.
• 18:10
  But getting into the specifics of how you would advise someone who is trying to, to tell that story, um, a- any advice on, on the tactical side of, of how to pitch a foundation like this?
• 18:25
  Um, I would say it's way more like a customer pitch than it is an investor pitch. Mm.
• 18:30
  Like the investor pitches pieces are in there-But the first thing that we think about, which is very similar to what your customers are thinking about, is what is the problem you're, you're, you're, you're solving, and why is it different?
• 18:42
  Why are you different? Why, why, you know, why do we... should we believe this works?
• 18:48
  Um, and then we ask questions about how the hell are you gonna be reimbursable and financially sustainable in the safety and delivery system.
• 18:55
  Like, that's hard enough in healthcare, but, like, do you understand how reimbursement works, um, in a, like, a non-consumer play kind of setting? So those are the things we think about first.
• 19:09
  Um, in general, if you're talking to people, and you...
• 19:12
  I hope you all know this, like, the whole market sizing stuff, like, we've known that seven times over about the background of the market and the need and all that stuff.
• 19:21
  So I would just have those pages, but skip over them and say, "I'm sure you know this." Like, flattery is good. "I'm sure you know this, so we're just skipping over this.
• 19:28
  Let's get to the heart of what's different-" Got it... um, about us. And so that, and, um, I, I have to say, and I spent a lot of time with large hospital systems and plans, you don't sell, don't sell, don't sell.
• 19:42
  Like, they are overwhelmed, and we are overwhelmed with what they call vendors- Mm... um, which you guys call champions and they call vendors, um, that are selling them stuff.
• 19:50
  And often they're selling them stuff that I... that is vaporware, and they don't trust at all what you're saying. So I would say be authentic, be, um... Acknowledge what you don't know.
• 20:00
  Don't sell something you don't have. Um, and that really goes a long way. Can you give me an example of a time when someone did that successfully with you? It's one thing to say be authentic.
• 20:12
  It's another thing to kind of look at yourself and analyze your pitch and say, "Am I being authentic?"
• 20:18
  [laughs] Uh, can you think of a successful pitch that didn't sell, you know, that really kind of did what you're describing? Um- Or just any specifics on, on what that really looks like, uh, when you're pitching.
• 20:31
  It starts with knowing who you're talking to. And so
• 20:34
  whether it's, like, when you get to be a more substantial company, you have sales reps out there in the world that, like, you may have talked to that company 10 times already and they don't know, and they're calling you and they're, like, hitting you up as if you haven't had 10 conversations.
• 20:46
  Mm-hmm. Um, it is, like, I often get calls that... and people don't know I'm a foundation.
• 20:52
  They don't know, they don't know what my interests are, they don't know what my themes are, um, and they just start from scratch as if I'm anything in the world, like I'm a... You know, I could be an apple or an orange.
• 21:02
  So it starts with really, um, caring about your audience and knowing what the conversation's about and where that person's starting from.
• 21:09
  And if you don't, I always say, be really honest, and I try to do this too, is, "I have to say I don't know a lot about you. Can you just give me the five-minute pitch?"
• 21:19
  Or, "You know, I've spent some time on your website. I've spent... But can you... It's really helpful for me to hear you articulate that, uh, hear the verbal rendition of that.
• 21:26
  Can you just take 10 seconds to walk me through what your perspective is and what you're... what's important to you?" And then launch.
• 21:33
  Like, don't be afraid to be genuine and sort of say what you don't know and what you do. I think that's, uh, really human. That's good. And human matters. [notification sound] That's good. Do, do your homework.
• 21:43
  Admit what you don't know. It's good advice. Uh, your California Healthcare Foundation, uh, what regions [laughs] do you cover? W- Who, who do you work with in terms of, um, catchment area?
• 21:54
  So our, you know, expertise is California, and our mission's tied to California. Um, but obviously companies... First of all, lots of company... Medicaid and California are hard markets.
• 22:04
  They're large, but they're complex. Mm-hmm. Not every company should be here or be, like, in, you know, wholly here.
• 22:10
  So we, um, partner with anyone that has a footprint here or has an intention of coming here and has, like, you know, interested partners and customers. So Clinify is a Chicago-based company. We think that what...
• 22:23
  Before we invested in them, and this is what we do in our diligence, is talk to lots of clinics and plans and hospitals about whether they're interested in this thing, whether it could solve a problem, and whether, you know, they would be potential customers, and that was the case with Clinify.
• 22:36
  So- Got it... we're working to try to help them enter California. Got it. Makes sense.
• 22:42
  Speaking of California, let's talk a little bit about just your lessons learned, uh, in the region and kind of how that can be educational for us more broadly for folks on the call and, and watching this from all over the US or even the world.
• 22:55
  Um, I understand you've been involved in the statewide health data exchange that's existing in California. You've written about it, a lot of research on your website.
• 23:04
  Um, kind of tell us a little bit about that exchange and what you've learned, uh, working within it.
• 23:10
  Uh, I think it could be just edifying to the folks on the call, uh, who are maybe working on their own regional exchanges. Hmm. Oh, that's a whole nother world. Um, so where to start?
• 23:22
  So California has long been working at improving our ability to exchange clinical data, um, 20, 30 years ago. With the be... Uh, before the beginning of the HITECH Act, um,
• 23:35
  we were working in the state and trying to sort of create those systems and those relationships and those governance structures.
• 23:41
  Uh, the pandemic has made it painfully aware how important those things are, particularly in moments of crisis.
• 23:48
  Um, and I think because California is so large, we have done a really poor job relative to states that are smaller, like Maryland, where the state government is more, um, interested and able to step in and sort of be the guiding force for, you know, as one decider.
• 24:04
  California, we don't... The state does not like to decide things and lead things and require things.
• 24:09
  So right now we're trying to figure out how to advance largely what is a robust commercial system of EHR interoperability and, and data exchange.
• 24:20
  A smaller system, which is HIOs here, um, that do more of the nonprofit exchange and, and, uh, clinical data exchange outside of the eight large systems, which is particularly important for sort of in terms of health equity, 'cause not everybody can afford Epic, um, in terms of the providers that are working in the medical delivery system.
• 24:39
  Um, we went through a legislative conversation over the last year that, um, was not successful at moving us forward, except that the governor's office stepped up and decided to fund a stakeholder process where we'll continue to have the conversation about frameworks that can sort of point us all in the right direction.
• 24:55
  So-As everybody on the call probably knows, interoperability and data exchange is critically important as our country becomes more mature in healthcare.
• 25:05
  Um, and it's also capital intensive, and also, um, intense in terms of the governance agreements and legal structures that exist in and around it.
• 25:15
  So I think it's actually a perfect place for a foundation to try to, uh- Right... keep trying to make progress.
• 25:21
  And so we invest in a company called Verato that does identity matching, and so, um, which is part of the challenge in, in data exchange, which is, um, knowing one patient and one, what is one patient versus seven pages in terms of their data as it comes across organizations.
• 25:37
  So we're always looking for other companies that are doing things that support interoperability, um, uh, and data, data analytics. Yeah, makes sense.
• 25:46
  Yeah, it's a good, um, [laughs] it's a good, it's a good plug for working with a partner that knows the, knows the landscape and can help you get plugged in.
• 25:55
  I mean, besides working with a foundation that's already done the research, any other strategic advice for an early stage startup that wants to plug into a state data exchange, um, and maybe is struggling with, with some of the aspects of it?
• 26:09
  You can call us. That's a long conversation. [laughs] Happy to have [laughs] happy to talk more. I mean, CMS is, um...
• 26:14
  we're actually supporting ONC to do, um, a, a, a large survey that hopefully everyone will participate in.
• 26:21
  And it, the federal regulations recently sort of required folks to adopt FHIR-based APIs that hopefully will enable folks like these startups to better plug into EHR systems like Epic and into the HIOs.
• 26:36
  Um, and so they need help knowing whether that's actually happening and providing teeth, uh, around the, that sort of, those regulations if necessary, and we're helping them do that.
• 26:47
  So, um, happy to talk more about if people have questions about how to plug in. It's, it's new. It's new. It's early. Yeah, yeah. Yeah. Absolutely.
• 26:57
  You know, one of the challenges any s- you know, founder faces is really trying to forecast and really understand what's gonna come next.
• 27:04
  And I wonder if there are ways in which you feel like the, the California healthcare environment, uh, is a bellwether for other parts of the country.
• 27:13
  Obviously, not in every area, but are there ways that you think there are, uh, trends you're seeing that maybe other regions, uh, haven't gone through yet, uh, that could be instructive?
• 27:24
  Business model trends, uh, technology. Yeah. Um, you know, what, what I've found that really drives the California market is, um, remembering that one in three people are on Medicaid.
• 27:37
  Um, and there's a large population obviously on Medicare.
• 27:42
  Um, but M- Medicaid adults specifically, watching what the waiver processes are here, where people are focused at state government from a regulatory perspective, um, and the same is true nationally from the CMS, CMS perspective.
• 27:55
  These big regulations, if you remember back at the beginning of, uh, the ACA, value-based payment was the thing people w- that was new and people were talking about, and we're still adapting to value-based payment.
• 28:07
  So that's what all this care coordination work is about. That's what, um, care management's about. And in Medicaid specifically in California, that trend continues.
• 28:17
  The regulatory conversation is around, um, integrating behavioral health, focusing on care for complex pop- people, uh, co- people with complex conditions that have social determinants related to them.
• 28:29
  So how do you bring the community-based, um, social service organizations into conversation with the clinical system? How does, how does payment work b- across those big divides?
• 28:40
  Um, so I would look to regulatory changes and expect that to... All the, all your potential customers are gonna be adapting to that- Yeah...
• 28:50
  over a 10-year window, but there are leading indicators of where people are going. Yeah. You know, we've talked pretty big picture about the priorities of the foundation and the regulatory environment.
• 29:02
  Uh, and just to shift gears a little bit, I'd love to hear kind of where your personal passions lie. What gets you up every morning in terms of working with the startups that you partner with?
• 29:14
  You know, I, I grew up in DC, um, and that, back when I grew up there, was a mission-based place where everyone around me was, worked for an organization that wanted to make change in the world.
• 29:24
  That's what we were all there to do, and that's sort of who I was designed to be genetically. Um,
• 29:31
  and I was always interested in healthcare, but I'm also a pragmatist and I'm competitive, so I spent years as an investment banker and a strategic consultant at McKinsey.
• 29:41
  Um, um, and one of my first jobs was at a thing called Lawyers' Committee for Civil Rights, which, um, took on precedent-setting discriminatory la- uh, lawsuits and staffed them and re- got them paid for by all the big firms in DC.
• 29:54
  And so th- it was this public-private partnership thing where you could do good and have it paid for, have it work bidirectionally.
• 30:00
  So the firms got to train their junior attorneys on non-paying clients and make a difference in the world. So the place I sit now is that. So I get to care about the problems we all care about.
• 30:12
  How do you provide better care for people that really need it in a way that a lot of us don't?
• 30:18
  Um, and I get to, um, figure out how to harness the smartest people on the commercial side of the world and people with a lot of money, and I figure out, I try to figure out how to make those two things work for everybody at the table.
• 30:33
  Um, and, 'cause I think that we're all here to make a difference, and I think that we all have different ways into that, but I, but I, I find it just so satisfying when that whole group of people get to do something they're really proud of and that is sus- financially sustainable.
• 30:47
  So that gets me up in the morning. Healthcare, I'm sure everyone would agree, is super depressing, and sometimes it feels like you're rearranging chairs on the s- deck of the Titanic because it's so hard to make change.
• 30:58
  However, there are moments when, you know, you get to make partnerships and do good stuff. Um, you evaluated a, a lot of different opportunities and companies. Um, what are some red flags that you've come to notice?
• 31:09
  Obviously, if a company's notHaving impact in California, that'll be, you know, number one. But other red flags you think folks in this call or, or other entrepreneurs should be thinking about?
• 31:22
  Um, again, we're like a customer call in, in a lot of ways. So for me, sitting in the foundation, um, if s- like, folks that don't know anything about...
• 31:34
  S- there are folks that c- uh, we talk to that don't know the difference between Medicare and Medicaid. There are, um, I mean, honestly. There, um, there are,
• 31:44
  um, folks that have products and the, and it, and I look at the LinkedIn or the company website before, and if every single person... And this is, like, I can't be unfair.
• 31:53
  Many, many companies are fully staffed with, um, white men and women, and women would be great, but if, um, if the, if that is also coupled with, like, marketing materials that are all sort of high-end, shiny object, commercial sales, consumer sales sort of language, like, it's just too hard.
• 32:12
  Like, I, I can't make it work in the safety net, and I don't have reason to believe that the, um, founding team is ac- is really, that's not their pathway anyway. Hmm.
• 32:21
  So I wanna see that somebody knows what the safety net is, knows what even Medicare and dual eligibles are, and, like, what they say, who they are, what they say, and what their product is reflects that they know that.
• 32:34
  Yeah. How, um, rare is that? Uh, like, when you're evaluating opportunities, do you find that it is the exception, uh, or that, that most folks sort of get it?
• 32:50
  Um, by the time they find us, I mean, and people ref- for, people, the people, the companies that we talk to sort of know who we are, and they're making a call specifically because of our position in the world. So,
• 33:02
  um, so we, and we meet, meet a lot of amazing people in healthcare and healthcare services.
• 33:08
  Um, there are still people in the world that, you know, are baked into more commercial, the more commercial side of healthcare, and wouldn't even, like, it wouldn't occur to them, like the word social justice or, um, um, you know, a representative team.
• 33:24
  Like, that is just still, like, something that they don't think about. Yeah. Um, and so it's a big comp- it's a big country with different kinds of, lots of different things going on in it.
• 33:33
  And so sometimes those folks come our way, and it's just, that's not a Medicaid...
• 33:37
  That's not the, the, that's not the language and currency and mindset of, of the customers that would, that I am able to connect people to. Yeah.
• 33:45
  Like, you need to know, you need to say something that they, that reflects you understand who they are. Yeah. And we're getting towards the top of the hour.
• 33:53
  I'm gonna hit you with another really big picture question, and it could be a tough one to answer, so I'll just give you a pre-warning.
• 34:00
  Uh, when we bring on, uh, new companies into StartUp Health, we ask them what their health moonshot is, and one way that we sort of tee that up is to say, you know, really looking out 20, 25 years from now, how do you want the world to be different because your product, your platform, your company existed?
• 34:21
  H- and pushing people to sort of think beyond the next quarter or the next year. So I'm gonna turn that to you.
• 34:27
  Uh, whether it's your personal work or the work of the foundation, what do you see as that health moonshot vision that's really kinda pushing out the boundary of what's possible in terms of impact?
• 34:41
  I want people to build innovative, impactful solutions that work for, um, folks in Medicare, in the commercial delivery system, and in Medicaid. Like, I don't want those divisions to exist the way they do.
• 34:58
  I don't think that given technology is, like the margins around technology, the way that is used in the world, like, it should be possible that more people benefit in the US from that smart thinking and those cool products,
• 35:14
  um, than just some of us. Um, and I, and I, and I want, that's what I want. Yeah. I want data to flow everywhere.
• 35:23
  I want, like, those tools to be helping, um, or supporting or enabling care in a much broader way than they currently do. Yeah.
• 35:32
  How do you see California in that sort of framework as a microcosm for the country and the world? [computer notification sound] Do you think about that mission in terms of global health as well? I'm curious.
• 35:44
  Um, I think about that, that to be true for the whole country. I think every state... You know, one of the challenges in healthcare is healthcare is local, and, um, Medicaid programs are state by state.
• 35:56
  And, um, so it just, um, it, it's just we're all fragmented in this part of the world in a big way.
• 36:04
  And so I also hope, like, just structurally we can get away from some of this fragmentation in healthcare to make the whole thing happen better. Yeah. But in terms of California being a bellwether, it's not.
• 36:14
  I mean, I would say it's a large market. People are attracted to be here because it's a large market. Um, however, there are a lot better states to work in, depending on the product you're trying to sell.
• 36:24
  Melissa, thank you so much for taking the last hour with us, sharing with us about, uh, your passion, about the California Healthcare Foundation, its work, uh, the innovation fund, uh, and, and all the work you're doing there.
• 36:37
  Really appreciate your transparency and, and the willingness to really share what's going on behind the scenes. Absolutely. Thanks for having me. [upbeat music] Thanks for listening to StartUp Health NOW.
• 36:55
  StartUp Health invests in health transformers from around the world who are committed to achieving audacious health moonshots.
• 37:01
  If you wanna learn how you can join this community of entrepreneurs, or if you wanna connect with one of our 350 companies, go to startuphealth.com.
• 37:09
  If you'd like to learn how you can invest in our Health Moonshot Rolling Fund in collaboration with AngelList, go to healthmoonshots.com. Thanks for listening to StartUp Health NOW. We'll be back next week.