Interview with Richard Lungen, Managing Member of Leverage Health
Q: How would you characterize Leverage Health’s current market position?
A: Stronger than ever and with the headwinds in our favor related to healthcare trends we are very optimistic on our future! 2016 looks to be our best year since the company launched on January 1, 2007. The unprecedented opportunities and volatile market dynamics in healthcare coupled with our current portfolio companies’ positive progress, we anticipate a rapidly growing business. After many years delivering on our core objectives by driving accelerated growth for our portfolio of companies, we have accumulated a stable of references in all aspects of our business – payer, provider, investor and our portfolio company partners.
Leverage Health historically focused on payers, with a particular emphasis on commercial payers. Today, we are deep in all variations of payer including Medicare, Medicaid, Commercial, BCBS, Nationals, TPAs, Provider Sponsored, Employers, plus a deep book of business with providers encompassing physicians and health systems. With payers and providers increasingly collaborating, due to the need to clinically mange patients, providers increasingly willing to bear risk, and healthcare simply being local around a providers and geography, we have realized an opportunity to offer more solutions to providers than we would have historically done. We’ve also been able to help our partners develop or retarget solutions for different audiences with similar needs (adapting a payer aimed solutions for providers and vice versa).
Q: What makes Leverage Health different from general consulting firms in health care?
A: First, Leverage Health is not in any way a traditional consulting firm. Our business is solely based on driving our Portfolio Companies’ success. Our economics are only derived from our Portfolio Companies’ growth through our business development success vs a traditional consulting firms project work. We have never charged consulting or research fees to consult to the entities who become customers (payers, providers, etc.) nor do we have any plan to do so. Our income is only earned when our Portfolio Companies succeed! This has best aligned us with the goals of our Portfolio Companies and has enabled us to build meaningful relationships with payers and providers.
Q: What has been the company’s biggest success story so far? Why was it a success?
A: Beyond achieving a wide set of references and market acceptance, as well as, internally building out a great team, there are two success stories that truly stand out:
- We approached one of the largest strategic healthcare organizations to acquire a company which we today are operating, hold a financial stake, creating strategy and are conducting business development services. This milestone is key for Leverage Health, as it reflects our goals of operating and financing companies well beyond business development. We have collaborated with management to grow the internal team, grow revenues and explore further acquisitions to tuck in this already market leading platform company.
- Partnered with a start-up, pre-revenue company that today has many name-brand health plans and providers as customers. This success story is important as Leverage Health took a long-term partnership position with a start-up vs near-term economic gain. RowdMap has become the go-to solution for managing a network, configuring products or evaluating value based and/or risk based provider contracting.
Q: How have these two success stories changed the way Leverage Health does business?
A: These two examples have furthered our goal to get deeper with our portfolio companies for improved collaboration and an evolved partnership model. By focusing on our portfolio companies’ operations, strategy, and finances, we accomplish significantly more over a “sales” only focus.
Q: How do we select Portfolio Companies?
A: Our approach to Portfolio Company selection involves the combination of market dynamics and trends, prospective buyer feedback and rigorous due diligence. We invest substantial time and resources in exploring a potential portfolio company and that company’s overall vertical to ensure its services as well as its internal assets meet our criteria for “game changing,” innovative solutions.
Q: What do you look for in a potential Portfolio Company? How much time do you spend onsite with them before agreeing to partner with them?
A: It is a formula with many elements including company culture and leadership. We look for willingness to partner, integrate the Leverage Health team and make appropriate investments to ensure success and build a successful business.
Q: What is a deal breaker on a potential Portfolio Company? What would make you walk away?
A: First, we make an honest assessment of our own ability to excel at our objective, growing the Portfolio Company. Leverage Health ensures that we have proper bandwidth at the time to be able to take on a Portfolio Company so that we do not fall short to our partner or the market. A deal breaker would likely come out of our proprietary due diligence process related to operational gaps, market headwinds challenging growth, poor financial position that would prevent needed investment in growth, subpar leadership. In addition, a core principal for Leverage Health is to ensure that the cultural match between the Portfolio Company and Leverage Health is excellent. Otherwise the outcomes will be undesirable related to desired growth.
Q: What makes some Portfolio Companies easier to work with than others? Does that always mean we’ll get better results?
A: Culture and Alignment of Goals are the critical attributes beyond operations, product, financials, and leadership. Leverage Health builds deep partnerships with its Portfolio Companies and in doing so both the Portfolio Company and Leverage Health will be dependent on each other for success. We spend substantial time with our Portfolio Companys, working directly within their business and with their people. Therefore it is critical from all levels – Board, Ownership, Management, etc. – that Leverage Health and the Portfolio Company are aligned in our objectives and that we are culturally compatible.
Q: What is next for Leverage Health?
A: Healthcare is more exciting than ever and the opportunities are endless. The key for us is to identify the optimal opportunities and knock the cover off the ball. The way to do that is to get deeper with our Portfolio Companies to ensure mutual success. Our goals include further expanding our already wide network of payers and providers plus third party companies, enabling Leverage Health to accelerate success for Portfolio Companies. We will surely be widening our provider footprint while ensuring that our payer footprint is treated with the utmost respect and service.
Look for Leverage Health to clearly ensure that our Portfolio Companies achieve their desires success. If we do that time and time again we will continue to grow our already successful business.