A couple of weeks ago I attended the SOCAP Health Conference held at the New York Academy of Medicine in NYC. It was an inaugural gathering meant to kickstart a financial market that values health.
A couple of weeks ago I attended the SOCAP Health Conference held at the New York Academy of Medicine in NYC. It was an inaugural gathering meant to kickstart a financial market that values health. With sponsors such as the Robert Wood Johnson Foundation (RWJF), the Kresge Foundation, the Federal Reserve Bank and the CDC it promised to be a compelling discourse on applying social finance to one of the major challenges of our time.
It was not what I expected. I was expecting a marketplace for entrepreneurs and investors of all kinds – angels, vc’s, etc – people who understand that risk is the price you pay for opportunity. Instead I found a much more inhibited crowd. Big financial institutions who are risk averse. Big public health concerns who face massive issues yet are limited by restrictive regulations and funding sources. Big foundations who are inherently limited by their vision and mission. It was not heavily populated with daring young men and women willing to risk all for the benefit of mankind.
I was hoping to hear some radical thinking, exploring the possibilities of social finance to nurture disruptive innovation. My attention was captured when the VP of RWJF called for “cataclysmic” change. While her language was strong the commitment though appears to be more muted. Their strategic direction is focused on prevention, not remediation, with an emphasis on children.
What I did hear is that health is almost the forgotten child when it comes to social finance, comprising only 5% of impact investments. I heard about the need to learn each others’ vocabulary as though these 2 industry sectors were meeting for the first time
It took me some time as well to comprehend that the focus was on health, not healthcare. This distinction is not a subtle one and not so obvious to me as someone so immersed in health care and its delivery. This led to some extraordinary discussion and many compelling comments.
In his summary statements at conference end, David Erickson, Senior Researcher Federal Reserve System, emphasized the need to recognize the impact of the social determinants of health on the quality of population health finally confessing “America can’t afford poverty anymore.”
Federal Reserve analyst Ian Galloway led a spirited panel about one of the more talked about financial mechanisms – the Pay for Success Social Impact Bond. In terms of the intersection of wealth and health, this panel was illustrative of the divergent, but not diverse nature of many of the stakeholders. Christina Shapiro, VP Goldman Sachs was quite clear that only proven, evidence based interventions that are measureable would be considered. Capital flowing into social impact bonds is not risk based capital. Social impact bonds may have the potential to unlock a lot of capital for social good, but no one should mistake that money being available for social experiments.
So there’s still a disconnect between the needs of non-profits and government agencies to finance the development of innovative, outcome altering programs. That is the daily challenge facing NFP’s.
Antony Bugg-Levine, CEO NonProfit Finance Fund, an org that provides financial assistance to NFP’s, described how program providers are so restricted to the outcome measures defined by their grant criteria. Then with deep emotion he described the core challenge in developing a new model of the relationship between money and health, “We need to measure what counts not what we’re paid to count.”
When it comes to patients, people living with chronic illness and large consumers of health care services, I felt like a voice in the wilderness. I did not meet anyone from a large national health charity. They may have been there but I didn’t meet them. Patients need treatments and systems that can deliver effective care. For a country that has by far the highest healthcare costs in the world among 11 industrialized countries that needs to find methods to control costs and improve systems, it appeared for the 50% of the population over the age of 45 living with one or more chronic illnesses, there wasn’t an interest in improving access or quality of life despite the fact that this cohort will continue to grow as a percentage of the population.
That even this apparently low level of innovation didn’t consider the needs of this population was distressing. These people are consuming the bulk of the services with real needs that are clearly not fully addressed at costs so inflated as to be ridiculous given the outcomes. And nowhere in this ground breaking conference did I hear discussion about this problem.
There was an excellent presentation by Noora Health, a non-profit that trains family caregivers in India to care for patients at home post-surgery. Their mission was to improve outcomes, reduce readmissions and post-op complications. They succeeded at this. I didn’t hear any sideline conversation about “how do we empower our populations to be able to self-manage more effectively and reduce the burden on the system”. Hopefully a savvy impact investor recognized the opportunity to partner with Noora to sell the service to large health systems in USA.
I also didn’t find a large cohort of individual impact investors. I’ll accept the thesis that health is too scary an industry in general although you would think that a $2.7 trillion industry would offer a few opportunities. Clearly the venture capital marketplace is focused on health IT applications looking for the massive financial returns of traditional vc investments. That hasn’t yet been translated into a social finance definition. Traditional vc’s care less about social returns leaving that as either a government or institutional responsibility.
While I didn’t get what I expected, and various aspects of the unexpected certainly agitated me, the fact that these discussions were happening and the desire for a new discourse on the future of health – not health care – I found exciting and enriching. If a federal reservist can express the need to eliminate poverty as society’s responsibility then there’s hope for future generations. We need all kinds of discussions, not just the one focused on an individual’s needs. This launch pad bringing together the health and finance sectors may not have in itself been disruptive, but it offers the potential for disruptive innovation in the future that’s going to make a difference for future generations. I’ll be watching closely to see how they finally decide what measure they use to decide what counts.
