John Noonan

FORCING CHANGE IN SITE OF CARE McKinsey & Company's recent paper on the forces pressuring healthcare, including the possibility of margin compression of up to 13 percentage points for health systems, does a good job of putting numbers around what most operators already feel. Two of the biggest drivers they mention are policy shifts in reimbursement and rising utilization driven by an aging population. The cohort of 70+ year old Americans will grow the fastest over the next 5 years, and it is well established that older patients have more complex needs, more chronic disease, and more touchpoints within the healthcare system. Layer that on top of continued clinical workforce shortages, and the supply-demand gap widens further. From my perspective, optimizing for site of care is the most important lever we have to address this challenge. We can’t quickly reduce how much care older patients need, but we can change where and how services are delivered. Supporting aging patients in lower-cost settings like the home, ambulatory sites, and virtual environments is no longer just a preference or convenience, it’s a necessity. This is where the conversation around site-neutral payments becomes so relevant. CMS is moving quickly in this direction, and hospital outpatient departments (HOPDs) are squarely in the crosshairs. The shift will undoubtedly clamp down further on hospital margins, but it shouldn’t be surprising. We’ve been talking about the demise of HOPD reimbursement for years, and the health systems that will fare best are the ones who are working towards aligning their approach with where patients can be treated safely, efficiently, and at lower cost, rather than relying on legacy reimbursement structures to fill the gap. And just like it doesn’t make sense to try to replicate a hospital or nursing home environment in a patient’s home, we also shouldn’t try to carry the same clinical staffing model into every care setting. Yes, there are non-negotiables when it comes to patient safety and clinical expertise, but there’s also a meaningful opportunity to rethink how teams are built. That means clinicians at every level working at the top of their licenses, thoughtfully involving family members and community resources, and using technology to surround these sites of care with non-clinical operational support. From my health system days, I understand why rising costs, margin pressure, and site-neutral payments feel like threats. While painful, I’m hopeful they can also serve as a positive forcing function, pushing us toward care models that are better aligned with our aging population and the realities of today’s workforce.

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Say you know me without saying it ... "Hey, let's improve healthcare purchasing!" Durable goods, every day disposables, every part of purchasing in healthcare products continues to be broken. Natan Wise and team Conduit Health are improving the spend process for consumers, healthcare providers. This moves $100b in annual spend, but also improves people's lives. You can read our deeper take at XYZ here: https://lnkd.in/gEhfACtB Thrilled to have more money to run with the Drive Capital partnership! And Maybe you want to improve people's everyday lives? Live in NYC? You probably want to work here: https://lnkd.in/gtGEB8Ku

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Nice quote from one of our Partners Andrew Brackin in TechCrunch: “This was one of the biggest use cases of ChatGPT,” Andrew Brackin, a partner at Gradient who invests in health tech, told TechCrunch. “So it makes a lot of sense that they would want to build a more kind of private, secure, optimized version of ChatGPT for these healthcare questions.” https://lnkd.in/gY3TV5VD

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If you’re building at the edge of healthcare innovation, you need to understand how the ground may be shifting beneath you. Averin Capital is hosting a rare conversation between some of the FDA's most influential legal minds of the past 50 years: Peter Hutt - former FDA Chief Counsel and one of the key architects behind the modern food and drug regulatory system. Dan Troy - former FDA Chief Counsel and top advisor to multiple life sciences companies and the U.S. government. Moderated by David Berry, Managing Partner at our firm and one of biotech’s most prolific company builders. They’ll unpack how the FDA’s approach is evolving—and what that means for startups trying to do something new. We’ll cover: • Where regulation is tightening or loosening • How to navigate ambiguity without getting derailed • What smart companies are doing now to get ahead of regulatory risk 🗓 Register here: https://lnkd.in/e-KDH36k This is one of those conversations that doesn’t happen often, but shapes how you think for years. Don’t miss it.

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Transforming healthcare with AI requires industry. Industry requires capital investment. Capital investment requires return. Return requires revenue. Revenue requires reimbursement. Medicare (and transitively private insurance) reimbursement policy for clinical AI will define the incentives for the technologies we build and deploy over the next decade. Our existing fee for service codes are what the military would call cost-plus contracting. We pay for every nail, screw, and hour of labor and don't care if that was a good and efficient way to build the tank or not. Our CMS Innovation Center director, Abe Sutton, believes cost-plus is the wrong path for the future of American healthcare. ACCESS and VBC models pay for outcomes. When we have AI that can manage heart failure can we link payment to making people healthier? Doing so would unleash the might of American techno-capitalism on exactly the thing we care about in society, but there are devils in the details.

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Longevity isn’t about living longer at any cost, it’s about living better for longer. Yet, the gap between healthspan and lifespan in the US is the highest in the world and has grown to over 12 years. This gap is 29% higher than the global average and means that, in general, we are living over a decade of life in a diseased state. I spend a lot of time thinking about how this shift from reactive to proactive care is evolving and what emerging strategies from the elite performance world can be applied to accelerate this transition. The focus becomes less about how long can we live, and more on how long can we maintain strength, cognition, metabolic health, and independence? I’m really looking forward to this conversation with three outstanding people operating in this space. Hope you can join us live, but if not, be sure to register to receive a recording of our conversation. Registration link in comments.

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