General Catalyst VC: This type of collaboration with Intermountain is why we were put on earth



On Monday, General Catalyst, a venture capital firm, announced its third collaboration with a health system that leverages the former’s portfolio strength to foment healthcare’s overall transformation. In an interview before the announcement, the lead partner spearheading the effort, articulated a kind of moral vision that he felt companies like General Catalyst have in powering an industry overhaul that not only reduces costs for cash-strapped health systems and enables improved patient outcomes, but also addresses health equity concerns.

This time, the partnership is with Utah-based Intermountain Healthcare, which will be able to draw from General Catalyst’s “health assurance” network of 102 companies. Those companies have developed tech solutions to address specific pain points that health systems currently have. Being part of the network means that Intermountain will be able to take an ecosystem approach to its digital transformation instead of plugging a hole here and a gap there. At least, that is the vision around “health assurance,” a General Catalyst term that Hemant Taneja, managing partner at the VC firm, explained in a Zoom interview before Monday’s announcement.

First and foremost, it’s about building a healthcare system that’s focused on proactive care because ultimately what consumers want is help, not, expensive sick care. Second is, do it with a deep concerted effort to reduce the GDP of healthcare. You know if the 18% can go down to 8% someday, hopefully, we’ve got more to invest in our communities. And the third thing is health equity.

[Intermountain] first and foremost, believes in the same ecosystem approach that we do. They’re very focused on the idea that they need partners and they need to bring a click and mortars world together.

Among the 102 companies in the network are Transcarent, Olive, Sprinter Health, Commure, and Cadence. All these companies are currently working with Intermountain, according to Taneja. 

“This collaboration between Intermountain and General Catalyst can help turbocharge the movement towards population health and value-based care by connecting us with a network of innovators outside the traditional healthcare space,” said Dr. Marc Harrison, president and CEO of Intermountain Healthcare in a news release announcing the partnership.

For instance, Transcarent is attempting to bypass layers of benefits consulting firms and work directly with self-insured employers to improve patient experiences and reduce costs in several areas including oncology care and surgical care. Olive is an AI-powered tool  that can automate thankless tasks in healthcare such as managing prior authorizations or inventory. The company’s software can also pull up patients’ insurance and contact information as they register for appointments. Sprinter Health is working to overcome the last-mile-delivery problem in healthcare by providing certain services like lab tests directly in the home. Commure has built a FHIR-based developer platform, which allows health systems and other startups to build and deploy their own healthcare applications. Finally, Cadence is a remote patient monitoring company that allows health systems to manage chronic disease patients outside clinic walls and intervene when necessary.

Before the collaboration with Intermountain, General Catalyst has announced similar efforts with Jefferson Health in Pennsylvania and HCA Healthcare in Tennessee.

The venture capital firm is not the only company trying to orchestrate fruitful marriages between startups and health systems. Think of AVIA, healthcare incubators such as MATTER and StartUp Health that are hoping to ignite meaningful connections between entities with novel ideas and those looking for them be they health systems or established life science companies. But without naming any company, Taneja appeared to imply that other efforts are looking at this in a  piecemeal fashion. They are also charging fees for individual consulting projects whereas presumably General Catalyst is bringing a system-wide approach to healthcare’s digital reincarnation.

We’re not doing this to charge these [health] systems consulting fees,” he declared. “We don’t think they have the resources to spend on that type of consulting given how they’re all on the verge of bankruptcy,” he declared. “What we bring [are] deep technologies that we have, the track record of building companies that have actually scaled and products that have scaled.

I don’t think there’s anybody else who has a sense of purpose around us and has that kind of a set of capabilities and ecosystem.  We also have enterprise companies and these [health] systems need cybersecurity. They need data infrastructure. We have all of those capabilities and we often build a lot of these companies. And so, you know, I sort of felt like we were put on earth to really play that role.

But it would be wrong to assume that this is a wholly altruistic effort. There are clear financial benefits in the future that the company can reap. All the companies that are part of the “health assurance” network are General Catalyst portfolio companies. So if they gain traction in the marketplace, they become more valuable they become and the bigger exit they have, helps to richly line the pockets of GC and its limited partners.

“With this kind of a relationship with systems, those companies become successful and we’re definitely one of the largest, — usually we’re the largest shareholder — in these companies, so it obviously benefits us,” he said.

Success of these companies will ultimately depend on hitting internal metrics that Taneja did not expand upon but said is very much part of the equation. Those broadly fit into three buckets – a) how portfolio companies are actually achieving the priorities that health systems have laid down; b) how these companies collaborate with each other to drive synergy overall for the system instead of having a bunch of point solutions; and c) clinical and cost metrics — how these companies are enabling the provider system to keep people proactively healthy or at minimum enabling conditions to  deliver that and how they are reducing cost.

In the past nine months, General Catalyst has cemented relationships with health systems, but could a future collaboration involve large employers who are also grappling with ballooning healthcare costs?

“You know, it’s a really interesting question,” was all Taneja would say.

However, given that employers — especially large, self-insured ones — are actively trying to jump on the value-based care bandwagon, with some directly contracting with providers, don’t be surprised if a future General Catalyst collaboration occurs with an employer.

The more interesting question — if they were truly put on earth to play this pivotal, moral role in healthcare transformation — is whether the health assurance network would ever include non General Catalyst companies. Surely, other VC firms have some cool companies with similar goals as well?

Photo: 9amstock, Getty Images

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