Maverick Ventures’ Ambar Bhattacharyya on the Future of Healthcare

Ambar Bhattacharyya, Managing Director of Maverick Ventures

Maverick Ventures

Ambar Bhattacharyya is managing director of Maverick Ventures, a San Francisco-based $400 million venture capital fund that invests in healthcare start-ups. His portfolio of healthcare companies includes six IPOs and four unicorns (start-ups valued at $1 billion or more).

Bhattacharyya — who currently sits on the board of Artemis Health, Docent Health, Centivo and Cityblock Health, and is an observer on the board of Collective Medical Technologies and Hims & Hers Health — recently spoke with CNBC ahead of the upcoming CNBC Healthy Returns March 30 event focused on health innovation. This interview has been edited for length and clarity.

CNBC: Telemedicine is a focal point at Maverick Ventures, where do you see the biggest opportunities in this space?

Bhattacharyya: Over the past few years, we’ve seen the rise of telemedicine both as a standalone platform and as a technology that providers leverage to extend their reach. We were early funders of companies like Hims & Hers and One Medical that changed the paradigm of how hundreds of thousands of people access healthcare – first virtually. Looking ahead, we see several new waves of telemedicine acceleration.

I expect healthcare systems to re-examine how they use telemedicine to extend their reach beyond their own four walls. There has been a buzzword about “the digital front door” for hospitals over the past five years. Most hospitals have understood at least the first stage of this transformation, mainly through virtual visits. But in the future, healthcare systems will think about how telemedicine can more meaningfully transform every department.

For example, companies like Proximie are expanding how hospitals can leverage their operating rooms by providing high-fidelity telemedicine between surgeons around the world. I expect to see significant innovations in other areas, including cardiology.

CNBC: On that, you talk about the rise of remote patient monitoring, home phlebotomy, glucose monitoring…a zoom in on the growth of virtual care, as well as the growth of specialty virtual clinics , in cardiology, GI, endocrinology, etc.

Bhattacharyya: The root cause of the interest in these fields is the desire to do more preventive health care, transforming our system from a ‘sick care’ system into a ‘health system’.

A fundamental problem is that in the traditional fee-for-service model, financial incentives are aligned with treating people after they are sick, without necessarily spending time with a patient first. The real result of all these technologies is that we can intervene with a patient before that hospital visit or regular follow-up.

In a perfect world, one would think that the current system is frictionless. But the reality is different: going to Quest Diagnostics or Labcorp every week/month/quarter for a blood test adds friction to a person’s life, just like poking your finger three times a day for over 10 years . These service and hardware innovations can help facilitate more longitudinal, patient-centered, and preventative care. If carried out on a large scale, they will transform the functioning of specialized practices.

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CNBC: Let’s talk about how the Covid-19 pandemic has increased the need for comprehensive health care and community organizations to provide medical care. Explain how Cityblock Health, one of the startups in your portfolio, is making big inroads in this space.

Bhattacharyya: Cityblock has been fortunate to work with many of the most vulnerable members of our population during this immense time of need. The society now has more than 70,000 members and is poised to redesign the health care system for the underserved in this country.

CNBC: Your fund is also interested in mental and behavioral health start-ups, an area you believe has been ignored as part of the healthcare system for too long. What does your due diligence look like for these companies?

Bhattacharyya: For diligence in mental and behavioral start-ups, we tend to focus on a combination of factors. First, we like to hear from the leadership team what idea they had that was “unobvious” (and some said impossible) and could upend the way the traditional system works. This tends to give us a vision of what the team wants the world to look like and how, given enough capital and support, they could create it.

After that, our due diligence focuses on “white-hot risk” which is the basic assumption behind the operation of the business model. Sometimes it’s about changing consumer behavior; sometimes the behavior of the supplier. Other times it’s about what the insurance companies will pay or a larger dataset. Most importantly, we want to ensure that the clinical model is patient-centered and represents an improvement in step function over the status quo.

In the area of ​​mental health, I will mention that one aspect of due diligence that we focus on less than before is market size. There are real mental health deserts all over America, and over the years we’ve found that the patient experience for those diagnosed with less common mental illness is downright terrible. In these areas, we believe that a targeted approach combined with excellent clinical results can pave the way to creating new standards of care.

CNBC: You’ve seen a growing consumer appetite to pay for health and wealth outside of insurance. What seems like a counter-intuitive willingness to pay for these direct-to-consumer models. What is the profile of these consumers, and where are the opportunities in this space?

Bhattacharyya: Before becoming an investor, I worked at a company called MinuteClinic (now owned by CVS). MinuteClinic operates health clinics inside pharmacies where people can come in for same-day appointments and now works with most major insurance companies. But at first, MinuteClinic was not networked with insurance companies, and we had a “menu” of our prices and services hanging outside our clinics (almost like a restaurant). And what I noticed was that people were willing to pay cash, out of pocket, for what they saw as a “better” healthcare experience.

At that time, the definition of “best” was very controversial. Our clinics were staffed by nurse practitioners, we didn’t treat everything, and of course we were located in non-traditional locations. But the value proposition for our customers was “better” – it was high quality care, with transparent prices, open nights and weekends, and a few meters from a pharmacy in case they needed of a screenplay. And they were willing to go to an off-grid, cash-only provider to get those benefits. It was so magical.

This MinuteClinic experience shaped my view of consumers’ willingness to pay for healthcare. There remains a major lack of segmentation in healthcare, and there are millions of patients who are willing to pay for their “better” version. For some, this means having same-day access to a clinician on their schedule; for others, it means having access to holistic medicine. Others may want a second or third opinion on a serious health issue. These are very deep wells that we are just beginning to exploit.

CNBC: You’ve noticed increased interest in applying US-based models of care overseas, especially in emerging economies. Describe this trend.

Bhattacharyya: The United States has been an innovator in the healthcare ecosystem, but there are nuances in how care is delivered in other countries that can give local models an edge. For example, in economies like India, the majority of the healthcare system is paid for in cash. So we’ve seen many models here that started with insurance or an employer marketing move going direct to consumer and evolving quite quickly.

In Brazil, there is a similar dynamic between patients seeking care through its national health service SUS (about 75% of the population) and Medicaid in the United States (about 84 million people). Important differences exist, but the central issue remains the system – how do we get better care for the underserved in a way that works best for those communities? We’ve started to see a cross-pollination of ideas from those countries to the United States and vice versa, which is exciting to watch.

CNBC: What comes next?

Bhattacharyya: We are in a fascinating moment when, to the casual observer, many of the tailwinds of Covid-19 for health care seem to be slowing down. What they lack, in my view, are the major demographic and societal trends that will continue to push healthcare innovation to the top of the priority list over the next decade. New challenges arise. We have a significant shortage of clinicians in this country, and the clinicians we have are burned out – and we need to find ways to address that.

Technology can help. Artificial intelligence and machine learning in healthcare are no longer hypothetical; many payers, providers, and pharmaceutical companies today use these tools to perform tasks more efficiently and effectively. There is a lot of wood to cut and we need the most creative and passionate people to solve these problems.

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