Five questions: Ezekiel “Zeke” Emanuel

In this new series, Digital Health Business & Technology will interview a range of digital health investors, from those who work at venture capital firms and at health system and health insurance venture funds, to individual and angel investors. We will be publishing this series regularly. If you’re interested in participating, email us here.

Digital health investor is one of the many hats that Dr. Ezekiel “Zeke” Emanuel has worn over the years.

He has been an advisor for three presidents—Bill Clinton, Barack Obama and Joe Biden. He was one of the chief architects of the Affordable Care Act. He has been the longtime vice provost for global initiatives at the University of Pennsylvania. He has authored or edited 15 books, including writing a memoir with his brothers, Rahm, former mayor of Chicago, and Ari, a Hollywood talent agent who inspired a character on “Entourage.” He is an oncologist.

And that’s just the tip of the iceberg. Since 2017, Emanuel has also been a venture partner at Oak HC/FT, a Connecticut-based firm that invests in health tech. He has invested in tech-enabled primary care company, VillageMD, cancer-focused OncoHealth, bought by Arsenal Capital Partners, and end-of-life care company Aspire Health, which was bought by Humana.

Emanuel is also a strategic advisor at Clarify Health. He spoke to Digital Health Business & Technology about entering the venture capital world, his views on the digital health investment market, the Clarify-Embedded Healthcare marriage and more. The interview was edited for length and clarity. 

What made you join Oak HC/FT?

I joined for three reasons. First, [President Donald] Trump had just been elected and, having spoken with Trump and his team, I did not see a high probability that the federal government would be initiating serious interventions aimed at reforming the delivery system to reduce costs.  That meant that the private sector, startups and other companies would have to drive transformation in health care.  Furthermore, I was convinced by Bill Gates that transformation required being able to scale promising interventions and that really required the private sector, it was not something that academics or philanthropies could do.  Finally, Oak HC/FT had the right commitments—no drug or device companies, a focus on improving quality and reducing costs. And I knew the principal, Annie Lamont, and greatly admired her. Those three things combined to mean that I could learn a lot by working in venture capital.  And it has proven true. 

What is your take on the digital health investment market?

You don’t have to be a genius to assess the current market. Interest rates are up. Everyone's sort of sitting around. No one's running to make a lot of deals. For companies, that means they've got to be prudent. One thing I’ve learned is that discipline is an important attribute of any company because it emphasizes efficiency. Cutting the burn rate is important. 

But if you've got something special, something that will lower costs or dramatically improve quality, there are investors out there who will be interested. It's not like people aren't investing. I was talking to a group yesterday who said they have an approach that can identify people with a high risk of surgical complications. If that’s true and you can target interventions to reduce surgical complications, that's real savings to the system. 
Not all these innovations are going to work. The failure rate is high. On the other hand, some are probably going to work and probably be something that people would want to purchase. 
 

What are the areas of investment that should sustain through this economic cycle?

Another thing I’ve learned is that different actors in the health community buy at different rates. Doctors never buy. Health systems take a long time to make decisions. Payers are more interested in trying things. Over the last few years, payers have been inundated with a lot of bright, shiny objects. One of them recently told me, “I'm done with bright, shiny objects, I want to know what's going to last.”  They want to know, in five or 10 years, what's likely to stick? When it comes to predicting the future, I’m not batting one thousand, but I am probably a little over .500.  

It doesn't take a lot of brains to say we’re seeing a big emphasis on primary care. It does seem like we're seeing new primary care models that are really working. There are a number of companies out there in that space. Mental health is going to be there no matter what. No one's fully cracked the code there, but I think there are a lot of promising approaches. Home care is emerging. Using remote monitoring technology and home care delivery to provide hospital at home services. That is becoming a one-stop shop. Those are all very reliable. Also, maternity care. This administration and Vice President [Kamala] Harris, in particular, has emphasized this. I think over the next years, there will be an effort to reducing C-section, maternal mortality and infant mortality rates, also decreasing usage of the neonatal intensive care unit. 
 

As CEO of Embedded Healthcare, why did you sell to Clarify Health? 

If you're going to control costs in healthcare, the only way is to get doctors to change their behavior. Doctors are the ones that control 80-90% of treatments and tests. We must change their behavior. How do we change their behavior? We need bring out the best of behavioral economics and make it practical. I don’t think anyone has done this. Focusing on site of service, we ran a pilot with a payer and found three areas where we made meaningful, statistically significant differences in changing physician behavior and achieving savings. That was a pilot, not at scale. We're academics. We can create a startup, but we can’t scale it. We can’t bring to bear the technology necessary to make this microtargeting as efficient as possible. The level of microtargeting needed to scale this requires data and a tech solution.

Clarify offered us that a tech solution and the ability to get information on individual doctors, such as where they practice, what they do and what incentives would make a difference to them. We could then feed it back to them--how much they would save, how much they would earn, how much their patients would save. This required a tech solution and quite frankly, a sales force. I've got no training in marketing. I can tell you all about the behavioral economics we're controlling, but that's different from explaining how it fits into your business plans for the next five years. That’s what Clarify is good at.

What do you hope to get out of this arrangement with Clarify?

We’re focused on site of service. We really want to help doctors be better at using more cost-effective facilities. You can shave a lot of money out of the system and save money for patients by doing that. If we can scale this, it will put pressure on facilities to be more efficient and reduce their cost structure and prices. That's important in the American healthcare system. As Uwe Reinhardt said, “It’s the prices, stupid.”  We’re hoping this is a mechanism to achieve savings and create incentives that award efficiency.