The market gyrations and the shutdown. The trade wars and global uncertainty.
None of the above has squashed the sunny optimism that a group of healthcare CEOs demonstrated at a roundtable discussion during the annual J.P. Morgan Healthcare Conference in San Francisco last week.
“Everyone agrees that Q4 was ugly but the reality is that was probably temporary and an overreaction to a variety of different things [including the trade war with China,] said Gil Van Bokkelen, CEO of Athersys, a Cleveland, Ohio-based biopharma company developing a proprietary stem cell product to treat certain inflammatory and immune, neurological, and cardiovascular diseases. “The bottom line is that there is clearly a lot of room for opportunity for those organizations that I think are approaching [healthcare] in a value-centric way.”
MedCity’s interview with the four CEOs was organized by New York-based Russo Partners, a public relations firm, that invited two of its clients to the interview while MedCity invited the other two CEOs. Other than Van Bokkelen, the participants were Sean Duffy, CEO of digital therapeutics company Omada Health based in San Francisco; Harith Rajagopalan, CEO of Lexington, Massachusetts-based Fractyl Laboratories, which has developed a medical device procedure to treat diabetes and other metabolic diseases; and Rich Berner, CEO of Sunrise, Florida-based MDLive, a telemedicine company.
Rajagopalan echoed Van Bokkelen’s overall sentiment regarding the economy.
“I was coming here to J.P. Morgan particularly interested in whether there’d be anxiety among Chinese investors or Chinese companies about what Trump’s outward pronouncements might be doing to their sense of confidence and optimism about healthcare investing, but in meetings that I’ve had, I’ve not seen any evidence of anxiety. I don’t have any first hand evidence to support (the gloom),” Rajagopalan said.
For Berner and Duffy, who have both seen their overall businesses grow in 2018, 2019 is all about opportunity despite what may be happening at the macro level. In fact, Berner welcomed a scrutiny on costs and pricing that has been so much of the conversation around healthcare’s transformation.
“For the folks at this table, lot of our businesses are about driving down costs while increasing quality so there is an upside to that increasing price pressure because we are a solutions company,” Berner said.
To which Duffy from Omada Health chimed in, “More price pressure can enable a bit better pitch.”
While the four CEOs from the biopharma, digital health, medical devices and telemedicine worlds were united in their optimism for the year ahead, not all were willing to make a binary prediction on the fate of the Affordable Care Act that saw a challenge from a Texas federal judge last year.
Berner wouldn’t take a bet on whether the ACA would survive but was emphatic that its principles — specifically the move to value-based care — would endure. Duffy basically said the same thing.
“I would exactly echo what Rich shares,” Duffy said. “None of the payer partners that we have talked to have come forward with anxiety about the Texas ruling … and so regardless of what happens with the ACA, what has happened is a) the economic pressures in the health system are changing and b) the country and the citizens of the U.S. have gotten pretty used to the idea of you not being able to, as you create insurance design, discriminate on pre-existing conditions.”
In other words, Duffy added even if the ACA got replaced, “it might be the next rev of the same flavor.”
Van Bokkelen noted that “I think we’ve crossed the Rubicon on pre-existing conditions …and no single judge is going to decide that” given that there is bipartisan support for it.
Only Rajagopalan went a little further than the other three CEOs noting that the ACA is more than likely to survive.
“I didn’t follow the Texas judge’s ruling very closely but what I read makes me think that it is unlikely to be repealed,” he said.
In that context, he is in the company of Dr. Toby Cosgrove, former CEO of the Cleveland Clinic and currently an executive advisor to Google Cloud Healthcare and Life Sciences team.
“There is no chance of that,” Cosgrove declared when asked whether the ACA is going to be repealed, at a digital health panel discussion at the main J.P. Morgan Healthcare Conference.
And that will most likely be music to the ears of these CEOs and others who have built their businesses around payment reform and value-based care and coverage of pre-existing conditions so central to the ACA/Obamacare.
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