Private Equity in Healthcare: Duke-Margolis Launches Initiative to Improve Outcomes and Value

The healthcare industry is set to see a significant shift in investment strategies as the Duke-Margolis Institute for Health Policy introduces a groundbreaking initiative aimed at aligning private equity with improved health outcomes. Announced this week, the Duke-Margolis Capital Impact Council brings together industry leaders to develop frameworks that ensure private investments contribute to better healthcare access, affordability, and patient results.

Council Formation and Objectives

The newly formed council, co-chaired by Dr. Cheryl Pegus of Flyte Health and Dr. Mark McClellan, director of the Margolis Center, comprises executives from various sectors of the healthcare industry. Notable members include representatives from The Cigna Group, Echo Health Ventures, and the American Heart Association Ventures.

The primary goal of the council is to create strategies and tools that guide private equity partners towards facilitating improved health outcomes alongside financial returns. This initiative comes at a crucial time, as political trends suggest a potential decrease in public funding for healthcare, making private investment increasingly vital.

Health Value Return on Investment Framework

Central to the council's efforts is the introduction of the "health value return on investment" (HV-ROI) framework. This innovative approach establishes metrics to track an organization's progress in improving health outcomes in tandem with generating financial returns. The framework considers various elements, including:

• Target population
• Impact on healthcare providers
• Time horizon for investment results
• Clinical outcomes
• Access to care
• Provider usability
• Equity considerations
• Community impact

Dr. McClellan emphasized the importance of this framework, stating, "What we're trying to do is bring some pressure, and I think in some ways, to relieve some pressure that's out there among a lot of individual organizations that are trying to do something to get these areas to match up—the financial returns, the health value returns—but are having trouble just scaling that."

Case Studies and Early Success

The council's white paper, released alongside the announcement, highlights several case studies demonstrating the potential of the HV-ROI approach. One such example is the American Heart Association Ventures' investment in Attane Health, a digital marketplace connecting patients with healthy foods, nutrition coaching, and data to address food insecurity and related health outcomes.

Initial results from Attane Health show promising improvements in patient health, with 70% of diabetic users experiencing lowered blood pressure and 90% of those utilizing coaching services reporting overall health improvements. These outcomes serve as key performance indicators within the HV-ROI framework, illustrating the health value potential of such investments.

As the healthcare landscape continues to evolve, initiatives like the Duke-Margolis Capital Impact Council may play a crucial role in shaping the future of private investment in the sector, potentially leading to more sustainable and patient-centered healthcare solutions.