More on Capital Finance

Obamacare architect Nancy-Ann DeParle returns to private equity

DeParle talks to HFN about post-White House life and healthcare investing

Nancy-Ann DeParle may have left the Obama White House last January, but she did not leave healthcare behind.

The former director of the White House Office of Health Reform, since 2011 DeParle had been deputy chief of staff for policy, helping the president develop policy in multiple areas. Still, DeParle is best known as a chief architect of the Affordable Care Act, and a former administrator of the Centers for Medicare & Medicaid Services (CMS) during the Clinton administration.

Earlier this month, DeParle returned to a healthcare focus, albeit in the world of private equity, as a partner with the New York-based firm Consonance Capital Partners. She'll help guide CCP's investment decisions in lower middle market healthcare enterprises.

DeParle spoke with editorial director Richard Pizzi about her healthcare investing strategy as well as broader trends in the healthcare industry.

Q: You recently rejoined the private equity world after a number of years working in the national healthcare policy arena. Why did you re-enter private equity and what are some of your investment goals with Consonance Capital Partners?

A: I was very happily working in private equity, helping to grow really interesting companies, when I got the call from the president to try and get health reform done. But I had a lot of fun (in private equity). One company we grew was in the managed care space, managing 60,000 Medicare Advantage patients and getting great results with them. Another was a hospital company that we built from the ground up, working with physicians and the community.

Working with the president was an incredible experience. Presidents have been trying to do this since Harry Truman, so you’d have to say the odds were long when I went there but I’m proud to say we got health reform done.

Then I stayed at the president’s request to get implementation up and running, and then I became the Deputy Chief of Staff of Policy. It was a very rich experience. But I was ready to get back to working with companies again, to working with management teams. I was fortunate enough to be able to rejoin three of my former partners. This seems like an incredible time to invest in good ideas in healthcare, but it’s not for the faint of heart.

Q: Are there particularly hot sectors in the industry that you’ll focus on?

A: Yes. We’re looking at businesses that have figured out how to manage care efficiently and take cost out of the system. You’re seeing a confluence of a number of trends. First, millions of consumers without insurance now able to get it. Secondly, a real drive for value in healthcare. Things that make care more cost-effective are appealing, whether it’s products that achieve it, or information technology tools that help to manage care. Consumerism is another trend that we see as being very impactful. We’re looking at things that help hospitals and clinicians manage their businesses better – collecting money they’re owed in an efficient way, managing the revenue cycle.

Q: Are there any aspects of the healthcare reform legislation that will push your investments in certain identifiable directions?

A: It’s really too early to say, but two things are clear: reform declared that we would get everyone covered by health insurance, and we need to make sure we get value for dollars spent. You’ll have millions of new consumers with health insurance. What are the services that they’re going to need? What will help these consumers make good choices? Whatever we do, we want to make sure the patient is at the center, and is getting better value for his or her healthcare dollar.

Q: What do you think about the future of independent hospitals in the new reimbursement environment? Will we see more consolidation?

A: That trend was beginning in early 2000. I observed that when I was investing at the time. It’s hard to achieve some of the things we want to in the healthcare delivery system without more team-based care. I would never say that an independent hospital or physician can’t survive, but they will need to work together with others who work on prevention, post-acute care and other aspects of team-based care. Most of the research we have indicates that it delivers a better and more cost-effective result, and it will be what patients want. It’s possible to survive but you have to be smart about partnering.

Another thing that’s changing is the incentives. Your job used to be meeting a set of numbers based on volume of patients. Now the incentive is to manage the health of a population or an episode of illness. We’re experimenting with some of these things.

When I ran the Centers for Medicare & Medicaid Services in the late 1990s, I implemented the Balanced Budget Act, which was the last big reimbursement change for most providers. What’s different is that this time we have a faster way to move on if something doesn’t work.

Q: You mentioned consumerism in healthcare. Do you have any thoughts about the future of mobile health tools that will help patients monitor their own care?

A: I am increasingly using them, and from watching my own teenage children I can tell you that they’re hooked on them. Whether it will apply to the population at large is still something of a question. In the last few weeks, I’ve been speaking with CEOs at insurance companies, and they are all over this trend. They see mobile apps and tools as a way to help manage patient engagement. They are trying to go where people are living these days, which is on their smartphones, their tablets, and giving them something that can help them manage their health.

Q: Are you concerned about patient education in regard to the health insurance exchanges?

A: Sure, it’s a huge change. Most of us believe that those who have been locked out of the market because of pre-existing conditions or because of cost will come and use the exchanges. It’s the younger, healthier people who we have to make sure get there to balance out the costs of the older, sicker population. That’s a bigger task. I am encouraged by what’s going on in some of the states. There are terrific ads running to promote the exchanges in certain states, the health plans are reaching out and community groups are helping. People are underestimating the desire of hospitals and health plans to get this done. They are motivated not just by their bottom lines, but because they have a personal involvement; they are very committed to making sure people know about this. This is something that those of us who have worked in healthcare have wanted to see for a long time.

Q: What will the U.S. healthcare system look like 10 years from now?

A: My perspective is informed by a basic optimism in my nature. What I hope is that it will be a more compassionate system, with all Americans having access to decent, basic, affordable coverage. I think our delivery system will work better to deliver value, and we’ll have clinicians and administrators who feel good about the product they’re delivering.

Show All Comments