Okay, it has only been three weeks. But it’s love nevertheless.
Based in San Francisco (my home for nearly a decade), I joined Oak HC/FT to help immerse the firm even deeper in the west coast entrepreneurial community. All day long, I get to think and talk about innovative ways to improve the wellbeing of millions of Americans. Sure, like in any job, there are frustrations and fatigue. But what fundamentally gets me out of bed every day is that I’m constantly learning. Learning about new technology, about new business models, and about new approaches to solving problems that truly matter – it’s a really fun way to earn a living.
As I begin my new role at Oak HC/FT, I wanted to share some of my own perspectives on the healthcare market and what I expect we may see in the coming year.
Companies being created today will save healthcare in the United States. We all know the reality that the US spends far more on healthcare than any other high-income country while providing consumers with a materially worse level of care. Meanwhile, it is crystal clear that the federal government is too dysfunctional to be counted on to help solve these intractable problems. Fortunately for all of us, entrepreneurs are stepping up and attacking every nook and cranny of the healthcare ecosystem to improve quality and lower cost. It might be dramatic, but it’s not an understatement to say that our future depends on their success.
The capital raising environment may become a bit more circumspect than it has been in the past. Despite record levels of venture capital fundraising and sky high asset prices, I have recently had multiple conversations with entrepreneurs who have begun to appreciate the risks associated with maxing out valuation in early funding rounds. While a big valuation reduces dilution and creates sexy headlines, it also increases the risk of down rounds if execution isn’t perfect (terrible for morale), makes attracting top talent difficult (limited equity upside), and makes exits more challenging to achieve (impossible to generate a satisfactory return). As an investor, I’ll admit it behooves me to highlight this, but I personally know of several unicorn companies that regret raising at peak valuations and I expect entrepreneurs to increasingly put less emphasis on headline price.
Tax reform is already beginning to impact behavior. Strategics – both traditional healthcare players and pureplay tech companies – are going to be flush with cash in 2018 thanks to corporate tax cuts. This isn’t breaking news of course, but I am surprised to hear the degree to which senior HR executives have told me the purse strings on their 2018 budgets had been loosened. As a result, I expect innovative healthcare solutions selling to large employers to see an uptick in adoption as their customers look to put dollars to work. Furthermore, M&A coiffeurs will grow and fuel more deal activity, particularly large transactions that move the needle.
Speaking of regulation and reform, the future of ACA remains as uncertain as ever. After the failure of “repeal and replace,” the Trump administration has embarked on a death-by-a-thousand-cuts strategy against the ACA, the deepest of which was the repeal of the individual mandate via last month’s tax bill. While enrollment for 2018 only declined slightly from the prior year, the longer-term sustainability of Obamacare is totally unclear and won’t be for several months. Predicting what will happen has become so difficult that the topic rarely even comes up in conversation, largely because there isn’t much more you can do than shrug your shoulders.
Nevertheless, this lack of clarity does not appear to be doing anything to stifle innovation and enthusiasm in the sector. There is so much we don’t know about what will happen in 2018. Will the ACA survive? Will blockchain find a sustainable use case? How will this week’s partnership announcement by J.P. Morgan, Amazon, and Berkshire Hathaway play out (and will other large tech companies follow with big bets of their own)? The answers to these and a host of other questions are unknown, but it is encouraging that this uncertainty has not deterred entrepreneurs from searching for big ideas. The amount of ingenuity our team witnessed at the J.P. Morgan Healthcare Conference last month was almost overwhelming – and incredibly exciting! At the end of the day, disruption in a market is a great thing for both entrepreneurs and investors. And let me reiterate that Oak HC/FT cannot wait to partner with the companies that see clarity through this confusion.
With that in mind, let me issue an invitation: if you find yourself in San Francisco (or LA, Phoenix, Seattle, Portland, Denver, Salt Lake, Austin, or anywhere else west of the Mississippi!), please do drop me a note. I look forward to learning from you!
Strategic investment positions AXA to accelerate its payer-to-partner strategy
Maestro Health, a leading all-in employee health and benefits company, today announced it has taken a major step forward in its strategy to make health and benefits people-friendly again. Maestro Health will join forces with AXA Group and continue to empower people in the U.S. and abroad to live better lives. Together, they will take steps to transform the U.S. healthcare market by simplifying and personalizing how people shop, enroll and live with their health benefits.
The move comes at a tipping point in the U.S. healthcare market as cost, complexity and consumer engagement come to the forefront—inspiring the changing landscape of industry players. AXA’s acquisition of Maestro Health and its all-in benefits platform, maestroEDGE™, supports AXA’s payer-to-partner strategy in line with its “Ambition 2020” corporate initiative. Once the acquisition is final, Maestro Health will maintain its identity, mission and team, while operating as a wholly-owned subsidiary of AXA.
“Not only is this the optimal step into the next phase of Maestro Health’s history, it’s also the ideal partnership to reinforce our all-in, continuum of care model—and ultimately transform healthcare as we know it today. With the scale and resources of one of the most recognizable brands in the world, we are well positioned to expedite our mission to lower healthcare costs, reduce complexity and empower the consumer more than ever before,” said Rob Butler, CEO and Founder, Maestro Health. “It was critical for us to maintain our culture, brand and innovative identity, yet find a true partner with the unique combination of AXA’s scale, like-mindedness and industry prowess—a synergy that can appeal to all of our current customers and channel partners.”
With AXA, Maestro Health customers will see enhancements in their experience and access to leading product offerings. Additionally, Maestro Health will continue to focus on delivering new and improved solutions and services to the market, designed to further reduce healthcare costs and improve engagement for constituents across the entire continuum of care.
“We are excited about this strategic investment, which reflects the Group’s ambition to dedicate Euro 200 million per year towards innovation. It provides an attractive opportunity to build our presence in the U.S. healthcare market with a new business model that has the potential of improving healthcare quality for millions of employees,” said Guillaume Borie, Chief Innovation Officer, AXA. “Maestro Health has outstanding technology, assets and people, an agile organization and a close-knit culture, providing exciting prospects for our population health management strategy in the U.S. market and beyond.”
With its extensive health plan, care management, and benefits administration experience, Maestro Health has become known across the industry as ‘the most experienced startup.’ Founded in 2013, the company has worked with leading employers of all sizes, in addition to brokers and insurance carriers. Maestro Health currently serves more than 500 groups and 1 million lives on its maestroEDGE™ platform. With more than 300 employees, it has also been recognized with some of the industry’s most prestigious awards and accolades, including Great Places to Work Institute’s “Great Place to Work,” and ChicagoInno’s “Coolest Companies.” It was also named bronze winners in the American Business Awards “Most Innovative Company of the Year” and “Tech Startup of the Year.”
maestroEDGE™ is an all-in, technology-meets-service platform built to simplify, personalize and optimize how people shop, enroll and live with their benefits. The platform, which supports the entire continuum of care to treat the whole member, integrates Maestro Health’s owned and operated solutions across the complete benefits ecosystem. This enables Maestro Health to create an environment that empowers the consumer from the day they on-board at an organization through the entire year, to live healthier and better lives.
“Joining forces with AXA will undeniably make us a better and stronger company not only for our customers, but also for our employees,” added Rob Butler. “People and culture are at the core of what we do, and I am thrilled about this next chapter as it is the perfect long-term scenario to keep the team together and accomplish our mission in the U.S. healthcare market and beyond.”
Triple Tree acted as the exclusive financial advisor to Maestro Health for this transaction.
About Maestro Health™ Maestro Health makes employee health & benefits people-friendly again by delivering an all-in platform that meets todays needs of employers, employees, brokers and carriers. Maestro Health owns and operates six core solutions: (me)BENEFITS ADMIN 2.0™, (me)BENEFIT ACCOUNTS™, (me)SELF-FUNDED BENEFITS™, (me)PEOPLE MANAGEMENT™, (me)BILLING ADMIN™ and (me)ACA SERVICES™. The flexible solutions are designed and unified on a tech-meets-service platform so customers can customize their own HR suite based on what works best for their organization’s unique needs—all to optimize and simplify the way employees and employers shop, enroll and live with their benefits.
About AXA The AXA Group is a worldwide leader in insurance and asset management, with 165,000 employees serving 107 million clients in 64 countries. In 2016, IFRS revenues amounted to Euro 100.2 billion and IFRS underlying earnings to Euro 5.7 billion. AXA had Euro 1,429 billion in assets under management as of December 31, 2016.
The AXA ordinary share is listed on compartment A of Euronext Paris under the ticker symbol CS (ISN FR 0000120628 – Bloomberg: CS FP – Reuters: AXAF.PA). AXA’s American Depository Share is also quoted on the OTC QX platform under the ticker symbol AXAHY.
The AXA Group is included in the main international SRI indexes, such as Dow Jones Sustainability Index (DJSI) and FTSE4GOOD.
It is a founding member of the UN Environment Programme’s Finance Initiative (UNEP FI) Principles for Sustainable Insurance and a signatory of the UN Principles for Responsible Investment.
Annie Lamont, Co-Founder & Managing Partner, and Patricia Kemp, Co-Founder and General Partner of Oak HC/FT, have been jointly named to Institutional Investor’s prestigious “FinTech Finance 40,” a list of top players in fintech investing.
“We are honored to have been recognized by Institutional Investor for our accomplishments in FinTech investing,” says Lamont and Kemp. “As it says on our website, ‘our investment is a lot more than the capital we provide’ and we are so proud of the team and partnerships we have built that make that true.”
Lamont and Kemp were ranked number #25, among an impressive list of the world’s most influential players in fintech banking and investing.
We are thrilled to announce that Billy Deitch will be joining the Oak HC/FT Healthcare team as Principal. Billy will be based in San Francisco and help us continue to identify and invest in winning tech-enabled healthcare companies that are positioned for accelerated growth.
“We are excited to welcome Billy to the team and look forward to leveraging his broad transaction experience across the technology ecosystem,” says Andrew Adams, Co-Founder & General Partner at Oak HC/FT. “His focus on partnering with growing, innovative companies and entrepreneurs in digital health is completely aligned with our mission at Oak HC/FT.”
Billy joins Oak HC/FT from Francisco Partners where he was a Vice President, responsible for all aspects of investment identification, evaluation, diligence, execution, and portfolio monitoring, with a focus on tech-enabled healthcare companies. At Francisco Partners, he served as a board member of QGenda, Nextech, Dynamo Software, PayLease and Plex as well as a board observer of Source Photonics. Previously, Billy was an investor at TPG Growth and UBS Investment Bank.
Billy’s appointment follows recent exciting Oak HC/FT announcements, including Dan Petrozzo, who has joined as a Venture Partner, Andrew Robinson, who joined late last year as Oak HC/FT’s first Executive in Residence, and the launch of Oak HC/FT’s office in Boston.
NEW YORK and SANTA CLARA, Calif. — January 4, 2018 —CLARA analytics (“CLARA”), a leading artificial intelligence (AI) and data science company specializing in building easy-to-use AI-based solutions focused on claims operations for the Property & Casualty and Disability insurance industries, today announced a $11.5 million Series A funding round led by Oak HC/FT. CLARA enables the $800 billion global commercial property and casualty market to improve financial performance by decreasing the billions of dollars in claims leakage that occurs annually.
Today, solutions from CLARA empower workers’ compensation claims organizations to improve the medical management of claimants while simultaneously reducing the costs of claims with easy-to-use AI-based solutions, CLARA providers and CLARA claims. CLARA’s advanced analytic solutions incorporate the latest in AI technology to reduce claims leakage and frictional costs for insurance companies and self-insured corporations by:
Detecting (early) potential litigation and optimizing legal representation to improve outcomes and reduce defense expenses.
Connecting claims to the right providers to reduce indemnity costs.
Ensuring optimal treatment protocol is followed to reduce medical costs and lost time for injured workers.
Ensuring appropriate claims resource(s) from the outset are aligned based on claims complexity to improve outcomes.
Enabling the organization to leverage machine learning to scale the best practices of senior adjusters and managers to the broader organization to improve overall performance.
“CLARA is a first mover in utilizing AI to dramatically improve claims outcomes for the P&C industry. Their technology is highly advanced and has already driven strong ROI for its customers by reducing up to 10 percent of claims indemnity and loss adjustment expenses,” says Andrew Robinson, executive in residence at Oak HC/FT. “We look forward to partnering with CLARA in building their business and to continue to develop and mature solutions for other property and casualty lines of business.”
Jayant Lakshmikanthan, founder and CEO of CLARA analytics, adds, “CLARA brings together a combination of the latest in AI technology, extensive insurance industry expertise, and a design thinking approach to rapidly drive meaningful value for our customers. We are excited to welcome Oak HC/FT to the team and look forward to leveraging their extensive insurance and insurtech expertise.”
CLARA’s customers range from market leading and small specialty focused carriers to self-insureds and TPAs. The solutions are currently focused on workers’ compensation but will soon extend to other lines like commercial auto, general and professional liability as well as disability.
Oak HC/FT is the premier venture growth-equity fund investing in Healthcare Information & Services (“HC”) and Financial Services Technology (“FT”). The fund and its investors contain deep domain experience and are uniquely positioned to provide entrepreneurs and companies with strategic counsel, board-level participation, and access to an extensive network of industry leaders. Mr. Robinson will be joining CLARA as chairman, and Matt Streisfeld will join the board of directors.
About CLARA analytics
CLARA analytics empowers workers’ compensation claims teams to rapidly get injured workers back on track with easy-to-use artificial intelligence (AI)-based solutions. Its CLARA providers search engine is an award-winning provider scoring engine that helps rapidly connect injured workers to the right providers, while CLARA claims is an early warning system that helps frontline claims teams efficiently manage claims, reduce escalations and understand the drivers of complexity. CLARA’s customers include a broad spectrum — from the top 25 insurance carriers to small, self-insured organizations. For more information, visit www.claraanalytics.com, and follow CLARA analytics on LinkedIn, Facebook and Twitter.
About OAK HC/FT
Oak HC/FT (http://oakhcft.com) is the premier venture fund investing in Healthcare Information & Services (“HC”) and Financial Services Technology (“FT”). We are focused on driving transformation in these industries by providing entrepreneurs and companies with strategic counsel, board-level participation, business plan execution and access to our extensive network of industry leaders. Follow Oak HC/FT on Twitter, LinkedIn and Medium.
CLARA providers and CLARA claims are trademarks of CLARA analytics. All other brand names and solution names are trademarks or registered trademarks of their respective companies.