By Rob Nagel
This post also appears on LinkedIn
For two days, MBA Candidates from Kellogg descended on the Bay Area to meet with companies across a number of competencies, industries and sizes. Big, small, public, start-up, healthcare, energy, consumer and Internet stalwarts, these treks ran the gamut in interest and industry.
In my particular case, I co-led a healthcare and biotechnology trek that attempted to touch upon many facets of the industry.
… the business of health is one that is ripe for disruption and yet centers on the most inelastic market known – health and life of the consumer …
We started with a large integrated provider and payer system, known for its closed network and innovative strategy in following a patient throughout treatment and outcomes. Speaking with leadership at such a large company, we were impressed by the degree to which there were “intrapreneurial” efforts, such as developing and deploying health insurance kiosks at malls and pharmacies within a tight turnaround time. We also learned of the benefits of a scalable and tightly controlled network as opposed to the typical fragmentation seen between providers, payers and other players attempting to streamline the health consumer (e.g., patient) experience.
To switch gears, and admittedly rather drastically, we subsequently went to an enterprise health management startup, which completed its Series C funding early this year. As a platform to engage employees and partner across many different players within healthcare, the firm positions itself as the hub that connects all the spokes spread across fitness, wellness, telemedicine, price transparency and claims analysis, to name a few. Its goal is to be the engine behind employee engagement in their own health decisions, with a value proposition to employers of health cost control and employee morale. The culture, one very collaborative and open, excited those of us very interested in disruptive and innovative approaches to the typically rigid brick and mortar business of healthcare.
Having met with a health system and a health startup, we figured to continue the sampling of the healthcare ecosystem, it only made sense to visit a manufacturer, specifically in medical devices. We met with the CEO and members of her team to learn about the product, market challenges and pipeline of their business as they continue to bring to market a product that can drastically improve post-surgery outcomes for their particular therapeutic area. We learned of the various parties involved in bringing such a device to market where providers and payers must be convinced of the benefits, only after successful clearance of the regulatory process of the FDA in the first place. Also shared was the way in which going public shapes the workday and investor base for a company that went from origination of an idea all the way through to revenue generation.
Day 2 began with a recently public enterprise health firm that specializes in transparency and ease of access for employees to their network of providers and health services. We learned of the analytics and user interface used to simplify the myriad of options in a health plan, be it co-pays, co-insurance, or deductibles to name a few, so that the employee with a head cold or cough can see exactly what he or she would pay for a doctor visit (or a telemedicine appointment, for that matter). With a focus on user growth and strategic positioning in the market, the company’s sell to employers is increased productivity (less work absences) and cost control.
We then made our way to a biotechnology firm to learn of its efforts to tell the patient story and provide market access for many therapeutic areas, including various disease states within oncology. We also learned of the R&D efforts to build and follow a molecule from origination through clinical trials. The “ownership” of the molecule and the ability for Kellogg alumni to drive the business decisions around that molecule’s bring-to-market strategy was quite impressive — if not daunting — with responsibility for an entire patient population.
We finished the trek with a visit to a venture capital firm. There, we had the opportunity to talk with the CEO and co-founder of a medical testing software company in which the VC had invested, where its main customer is the pharmaceutical manufacturers attempting to identify patients at an early stage of a disease. She provided substantive insights into the process of collaborating with her co-founders in academia and convincing them to pivot the research into a business. She also spoke at length about what it takes to find not just an investor but the right investor for a true partnership to form. Subsequent to our Q&A, we then were welcomed by two members of the venture capital firm itself to learn about their stories coming out of business school, and how their current roles have been informed by their experiences and education. One is an “entrepreneur-in-residence,” who fields ideas and contributes to the board of invested companies, while another focuses on the capital formation and ways in which the fund can finance its investments. In both instances, we learned a great deal about risk-tolerance and the importance of betting on the people, whether it be in regards to where to work or what idea to invest in.
Our takeaways were plentiful, but a central theme emerged from the two days: the business of health is one that is ripe for disruption and yet centers on the most inelastic market known – health and life of the consumer – so any particular approach is going to be uniquely tailored to the challenges and uniqueness of this industry.
Whether it’s through an app on your phone, a device implanted in your body, an injection taken at a hospital or a post-operation check-up, the feedback loop is deeply needed to personalize and focus the value of the service to the end user. Each person’s health needs are unique and therefore benefit from greater coordination across the divergent space that is the health ecosystem. The way in which you attack this problem or from what particular point in the spectrum you operate is what ultimately defines how you develop and bring to market the solution to improve people’s lives.
Rob Nagel is a first-year student in Kellogg’s Two-Year MBA program. He is focusing on healthcare strategy, entrepreneurship and innovation. He previously was a senior consultant at PwC.