Lisa Suennen on the Connection/ Misconnection Between Consumers and Investors
The International Business Forum’s Consumer Health & Wellness Innovation Summit, chaired by Lisa Suennen, is taking place next week in San Francisco. Suennen is the co-founder of a venture capital firm called Psilos Group and author of the popular blog Venture Valkyrie. In a Q&A she shares her thoughts on being a health care investor dealing with a misaligned system as it evolves, hopefully for the better.
Q. Tell me about your firm, Psilos.
Suennen: Psilos is a 15-year old health care investment firm — we do venture capital and growth equity — focused on companies that improve the health care economy.
Q. Psilos emphasizes that it invests in companies that have a plan to lower health care costs. Your website says that productivity and value for the health care dollar have long been overlooked by the industry. Why is that?
Suennen: For too long there have been two problems. Number one: the misaligned financial incentives in particular among patients, payers and providers. The people who receive the care aren’t the ones who pay for the care. Providers are typically reimbursed more for the more services they provide, whether they’re needed or not. And payers make more money for the fewer services they provide.
And as a result there’s been very little motivation in the system to correct for value. Additionally, and separately, there’s been the long-held belief — which turns out to be quite false — that in order for health care to be better, it needs to cost more. But there’s, I think, now a recognition that that simply isn’t true. We’ve spent tons of money in our health care system for nothing, for waste, for error.
We spend more than twice as much as many other countries and come out much worse on various health care measures. Since the economy contracted and employers in particular, or other people who are paying the bills, recognized that they were paying a lot of money for not a lot of value, there’s been an emphasis on figuring out how to correct that.
Q. At the upcoming summit you’ll be moderating a panel called “Consumer Preferences: Fact or Fiction.” What have you learned about the consumer’s preference versus the investor’s preference when it comes to the products out there?
Suennen: While the lenses should be similar, they are slightly different. Consumers are looking for products and services that solve their specific problems. Investors are looking for things that will make the most money. Now, in theory, those two things should be the same.
But the reality is, while there are many things that consumers want, there aren’t many things that consumers will pay for. And so what investors will look for are things that other groups will pay for.
I think this panel is really to highlight that the focus in this conference is about consumers and responding to their interests in a way that we, in this health care system, talk about a lot but don’t always actually do.
Q. It’s obvious that you enjoy keeping up with your blog. Looking back at your writing over the years, do you think that themes in health care repeat? Or will you never run out of new things to talk about?
Suennen: Well, I write about health care and I write about investing, and both of them are very dynamic fields. So I actually think that while certain themes will remain constant, the specifics of the opportunities and things to talk about are changing.
But it’s definitely evolution, not revolution. Diabetes or consumer engagement, or how difficult it is to make money investing in health care are all themes that will be persistent. But the specifics of those do change over time.
I hope I don’t get repetitive! That’d be awful.