Leverage Insights

Issue 8, May 2022

An Interview with Leverage Health Founder Richard Lungen

Our Mission: Identify and Grow Companies to Move Healthcare Forward

Intro: Leverage Health saw a record 2021 and we see no signs of slowing down in 2022. We wanted to utilize the first issue of Leverage Insights 2022 to share details about the company’s proprietary PATHways process to prioritize, assess, tune and hyper-focus our portfolio companies. Check out this exciting conversation between Creative Director, Barbara Evans and Founder, Richard Lungen.

Barbara Evans: Leverage Health has developed and implemented a proprietary process that begins with by identifying healthcare gaps and the promising companies who could close those gaps. Why should our audience care about our process?

Richard Lungen: Hundreds or more healthcare service and technology companies launch every year in the United States alone and even more around the world. With so much noise in the market, it is hard for executives at payor and provider organizations to keep up and focus on their core jobs. After 16 years, having facilitated hundreds of partnerships between payors and our portfolio companies, we have figured out how to separate the noise from the solutions that are genuinely making a meaningful impact for risk bearing entities. We are fortunate to have been able to drive material, measurable value to the health plans and health systems we work with through our portfolio companies. Since our inception in 2007, we have used our proprietary four-step process to propel dozens of companies who, in turn, have transformed the healthcare industry.  Leverage Health takes advantage of both our internal understandings and our many relationships within the industry to identify unmet healthcare needs. These are areas where numerous solutions don’t already exist. It’s our mission to narrow the field even further—to the one company best suited to meet that healthcare need at scale.

BE: Can you explain how the PATHways process is conducted?

RL: Absolutely. In a nutshell, we take four steps. One) We PRIORITIZE a deep understanding of the gaps and opportunities in the healthcare market. We need to understand how both impact our clients and our executive relationships. Two) We ASSESS the companies and their solutions using rigorous due diligence and vetting strategies.  Three) We TUNE and validate value propositions to ensure their ability to create value. Four) We HYPER-FOCUS on the detailed matching between customer objectives and portfolio company capabilities. These are particularly important as the market needs evolve, and the portfolio company’s services mature.

BE: As Leverage Health considers the gaps and opportunities in the healthcare market, how do we narrow the field of potential portfolio companies?

RL: We are very methodical and use publicly available as well as proprietary organized data. We rely on both external and internal intelligence to identify a healthcare need. Leverage Health is a data driven business.  Healthcare is a very challenging market to develop market share while the industry is also a very open sector.  It’s challenging because of the many regulatory complexities, the vast number of industry silos, and the fact that the incumbent players are large organizations.  The healthcare industry poses more opportunities than many realize because so many companies are either publicly traded or governed by state or federal bodies. They must report core results to the market and are interested in creating broader value.

We apply our rigorous due-diligence process to discover the few companies who have the potential to meet a need that we have identified through our PATHways process. We look at the fundamentals of those businesses, examining their financials, operations, technology, and strategies to be sure that the company we select can grow and scale a viable business. By asking our external partners—payers, providers, and investors—for their views on a company or product, we create early-adopter opportunities, further assuring our success in developing the business and sales for any company we add to our portfolio.

BE: Can you tell us more about how this process is related to value creation?

RL: Once we find a company that we’re confident will offer a viable solution and successfully extend our brand—we build a financial model that will drive value for that company within a set timeframe. That value results from our ability to create a sales and business development plan that benefits everyone: investors, the portfolio company, the portfolio company’s customers, etc. Our modeling facilitates the creation of enterprise value and predictable success for sales. We work with a portfolio company on more than sales. We’re involved in their positioning and marketing. We build their reimbursement and pricing models, support their brand and their recognition in the market.

BE: Can you share more about the Leverage Health network and the relationships we have established throughout the industry?

RL: It’s extensive, and includes health plans, providers, employers, and all stakeholders. Before we bring any company into our portfolio or help take them to market, it’s essential that the company is ready for Leverage Health and for growth. Our marketing and sales campaigns are laser-focused and include several phases of outreach to our network. We create early wins and adoption points within the payer community. Once a company is inside Leverage Health, it’s our job to support that business—maybe by being on its board or creating an economic strategy. At some point the portfolio company will backfill Leverage Health resources with their own sales, account managers, and staff. At every stage, the payer community must know that the portfolio company remains focused on growth. We’re always there, behind the scenes, supporting an end-to-end process.

BE: Why is it so important for the healthcare community to know we’re always there?

RL: Every health plan is inundated with calls from vendors and its challenging for them to truly assess those vendors. When it’s up to a health plan to vet a vendor, it may take months of procurement. Our rigorous upfront due diligence—internal, external, and operational—offers the health plan a level of comfort about a company on day one. They can be confident that the company and their solutions are viable. They also know that the company is approaching other health plans, too. If they’re a Leverage Health company, it is assumed that we/they are talking with many payers.

BE: Leverage Health has a track record of success using the PATHways process.  Clients can see examples where we’ve helped to implement other solutions that have positively impacted the payer community.

RL: Yes, that’s why I stress all four phases of our PATHways process —Prioritize, Assess, Tune and Hyper-Focus. They are the foundation of our shared success with health plans, providers, employers, partners, and portfolio companies. Our success and our excellent reputation are due in large part to our rigorous process. Our efforts have helped and will continue to help to transform the industry.

BE: Why might we reject a business that is a candidate to become a Leverage Health portfolio company?

RL: There are several reasons that we might reject a company. Through our due diligence, we might not see a sustainable opportunity for a company’s solution, or we may ascertain that it’s not ready for the payer or employer communities. Sometimes, as we further examine the company, we see that the business itself isn’t ready. For instance, they may not be good operators. Just a few weeks ago, I engaged with a company seeking to bring their behavioral health solution to the U.S. On the surface, they seemed great! However, in a follow-up conversation that their CEO didn’t attend, the prospect went flat, and I lost confidence in the business.

Sometimes, in the due-diligence phase we identify issues with a company’s financial cap table or discover that their tech stack isn’t market-ready. Any of these issues would be red flags. Our reputation is invaluable, so we are very protective of it. Leverage Health is also mindful of our capacity, and we may unfortunately decline an opportunity due to our bandwidth because we never want to underdeliver.

BE: Thank you. That was helpful.

RL: One additional thought: you’re going to hear me preach a lot about the four phases of our proprietary PATHways process— Prioritize, Assess, Tune, and Hyper-focus. We identify a healthcare gap and companies well-positioned to close that gap, we use our due-diligence practices to eliminate unqualified businesses, we fine-tune and validate value propositions and then create go-to-market, sales, and enterprise-value plans for our companies. Each phase adds incremental value and builds on the previous step. It takes rigorous adherence to all four steps to maintain our unparalleled success rate. If we execute the four critical phases well, everyone will keep taking our calls, because they want to know what Leverage Health views as the best, most promising opportunities for healthcare today and in the future.

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2022-05-16T20:26:37+00:00

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