Kraus will be part of Vator’s virtual event Future of Mental and Behavioral in May

Interview with Steven Loeb and Bambi Francisco Steve Kraus, partner at Bessemer Venture Partners. Kraus invests in the Healthtech and currently serves on the boards of Bright Health, Hinge Health, Ginger, Welltok, Artemis Health, Groups, Qventus and Alcresta and is a board observer at Collective Medical Technologies.

(Kraus will speak at our Future of Mental and Behavioral virtual event on May 19. We will have high-level VCs and C-level executives from leading mental and behavioral companies like BetterHelp from Teladoc, Amwell, Doctor on Demand and Kaiser Permanente, GSR Ventures and more)

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Our goal for these digital health podcasts is to understand these three general questions as well: How do we empower the consumer? Are we creating productivity that also enables us to reduce overall economic costs? How is this advancement changing the role of the doctor?

Highlights from the interview:

  • Bessemer is technically the world’s oldest venture capital firm, dating back to 1911 and descended from the family of Andrew Carnegie’s partner at Carnegie Steel. The company invests in consumer goods companies, fintech, cloud computing, cybersecurity and space technology and has had its own healthcare practice for over 40 years.
  • Instead of being reactive, Kraus tries to invest proactively, or what he calls “roadmapping,” which means thinking about where the road is going or skating to where the puck will be, not where it is. The company spends a lot of time mapping the market so partners who are not health professionals still know enough to make them available to the health team.
  • The company is already going to be investing an idea in a napkin, as Bright Health did when Bessemer first put money into it for its Serie A.
  • There has to be a lot of behavior change for someone to adopt a digital solution and that is really difficult. Therefore, most companies have 5 to 10 percent of eligible patients. Livongo was successful because it wasn’t a big behavior change for diabetics, but for most others, behavior change is a big barrier.
  • Any major illness is associated with mental comorbidity because if you have diabetes, chronic kidney disease, or back pain, the vast majority have an underlying behavioral disorder that makes life difficult. So even a company like Livongo needs to have a behavioral health offering. This applies to MSK, to cardiology and to almost all branches of healthcare.
  • A roadmap area that emerged last year thanks to COVID includes value-based maintenance; COVID has shown that a lot of care can be taken in the four walls of the doctor’s office, which is crucial for value-based models. It’s cheaper, and it’s also better to keep the consumer in its care when they are away from the doctor’s office. The other area is pharmaceutical and clinical studies, which have been more virtualized.
  • Kraus advises entrepreneurs to first think about the results they want to achieve financially and from a clinical perspective. Digital healthcare companies should think early about what the gold standard is in their field. It takes time, but you should develop evidence points for the results.
  • If we manage to bend the cost curve, the payment model has to be value-based. As a result, we will continue to adopt digital health. If we don’t, there is no chance we will bend the cost curve. That’s the last trick we have, and much of it will come from both governments, including CMS, and then entrepreneurs who provide examples of how the models can work.

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