The Risks and Rewards of Investing in Women’s Healthcare

The event, hosted at the office of law firm Much Shelist, was sponsored by BDO and moderated by Springboard’s executive in residence for women’s health. Panelists included Ann Ford, Partner, Malecki Brooks Ford Law Group, LLC; Dr. Robert Harris, Southeast Urogyn, a division of Together Women’s Health; Jennifer Lee, CEO, JLC Life Sciences; and Aaron Newman, Director, DC Advisory.

Moderator: How are public policy developments and regulatory changes impacting investments in women’s health, and how can investors, healthcare providers and operators stay ahead of these changes to optimize value for patients and the communities they serve?

Dr. Robert Harris: That’s a tough one—regulatory stuff, when you’re a physician, is something you’re highly in tune with and very irritated about most of the time. But from the standpoint of larger changes, we really don’t know what’s coming, and for us, it becomes a guessing game. It’s difficult to know what to do and in what direction to go, at least from an investment standpoint. It comes down to who gets elected or who’s in charge, and so all that matters.

From a payment standpoint, a lot of the equity issues in healthcare stem from how much providers get paid for things. You can’t really go upside down and take care of problems, so that’s really an issue. From a granular standpoint, provider reimbursement and what insurance is allowed to cover drive a lot of the care that you might be able to achieve or get somewhere.

Aaron Newman: I think we’ve seen a lot of positive trends in insurance coverage in the fertility space, which I spend a lot of time covering for private equity investments. You’re seeing a lot more states mandating fertility services, which are typically paid for out of pocket and are incredibly expensive—$10,000 to $30,000 per cycle. We’ve seen states mandate that those be paid for either partially or, in some cases, fully by the insurance company. We’ve seen that across 20 states, and we’ll continue to see that, in my opinion, as fertility services become much more of a need.

Ann Ford: I come at this panel with a few different lenses, including as both an attorney and investor. I’m an investor in a first-of-its-kind fund called Nurse Capital, whose investors are mostly women. The products are not all for women’s health, but I anticipate there will be more.

One thing I can say, for the lawyers in this room: If you approach investing in healthcare companies the same way you would for many other organizations, you are going to come face to face with regulatory issues. Among the things that are really important in terms of the regulatory landscape for women’s healthcare is the post-Dobbs [the Supreme Court decision that reversed the constitutional right to abortion access] landscape, and what’s going to happen. We don’t know what the administration is going to do at this point, but that is something that it is worth trying to get ahead of.

I also think about the digital innovations in women’s healthcare—period apps, etc.—and the privacy implications for women’s health and the investments themselves.

Jennifer Lee: We have seen significant advancement in women’s health, and we also have a lot of clinical trials right now in the United States focusing on oncology, dementia, infectious disease, etc. What I like about where we are going as a nation is that the Food and Drug Administration is focusing on improving diversity in clinical trials.

Clinical trials—and we’re running about 360,000 as of today—have all these protocols with inclusion and exclusion criteria. We exclude females with certain conditions, so they’re not part of the clinical trials. If we open up the criteria for who can participate, I think that will give us more data on patients, especially women.

We don’t know a whole lot about a lot of things. For example, Asian Americans, or Asians in general, have denser breast tissue, so when we do an x-ray, we don’t always see everything. We’re just realizing there is a difference—a difference across gender and across age. Once we recognize and understand those differences, then we can target that area of therapeutics.

Moderator: Let’s talk about emerging technologies. Since COVID, we’ve seen greater adoption of telehealth digital health platforms, and new technologies are reshaping the landscape of healthcare—not to mention women’s health. What preparations should stakeholders make to leverage these advancements effectively?

Newman: I see this a lot with my physician practice management clients who are trying to serve their patients more effectively. A big part of healthcare is trying to drive down costs and make patients healthier, and having the right types of technologies, whether that’s remote patient monitoring or apps that can treat patients, especially high-risk patients. We’re seeing technology improve those types of patients’ health and their outcomes.

I see this in women’s health with maternal fetal medicine (MFM)—so, high-risk pregnancies—which is part of a broader OBGYN practice. Generally, when someone’s pregnant and they’re having complications, they go to an MFM doctor. And that MFM doctor is charged with managing the patient’s pregnancy in a much more defined way. We’ve seen a lot more remote patient-monitoring apps that are allowing the patient to communicate with their physician on a more regular basis to make sure that their pregnancy is a safe one.

Throughout physician practice management, I think the advancement in technology is going to tremendously help bend the cost curve, which is a huge problem that we’re seeing.

Moderator: How do investors and companies become educated to understand the different regulations that impact these technologies—from telehealth to AI to remote patient-monitoring—and advocate for changes?

Lee: As an investor, when I’m looking at technology, my first questions are: Where is the data going? Who is keeping it? Who owns it?

I just want to make sure that the companies are developing and utilizing technology for a patient’s health, and that the data is protected and well-guarded. I don’t want to be implicated in a company that has a lot of problems. We embrace technology, but when I wear my board member hat, I have to ask those tough questions because, at the end of the day, I want to know what’s happening.

Dr. Harris: I’ll point to one technology area that has been a big deal over the last year. I bet you all have insurance, and you probably have no idea how much anything is going to cost you when you go have something done, right? And then you get something in the mail, and it says the procedure cost $38,000, and you just get angry. And then the bill says at the bottom, “Your insurance provider only allows $2,300 for that.” And you’re thinking, “That’s crazy.”

Now there is this cool technology from a payment standpoint that enables us to load in all of your “allowables.” We can get those now from insurance. We know what Medicare pays in every part of the country, and you load these in. And then, when we as the provider decide what we’re going to do, and the patient asks, “Well, how much is it going to cost?,” the amount owed appears on their phone with a little pay button. It’s like you’re buying something on eBay—it’s kind of a PayPal for medicine.

Those advances are a big deal. As a physician, I’m happy I get paid, and you’re happy you know how much you owe. It’s a transaction like any other transaction, which is rare for medicine. Our patients have been very responsive to that. These kinds of things that aren’t strictly clinical are a big deal, and they’re making medicine more like a normal retail activity.

Moderator: We talked about risks inherent in women’s health, and risks of early-stage life sciences and healthcare investments. When evaluating women’s healthcare ventures, how do you balance the potential for high financial returns with the inherent risks? What red flags and green flags do you watch out for?

Lee: A red flag to me is when a company presents itself as the next Google or the next company that’s going to fix everything. That’s all great, but your data must substantiate it. The FDA spends months repeating everything that you’ve done as a company, and they’re going to make sure that your data is repeatable.

A red flag to me is when a company presents itself as the next Google or the next company that’s going to fix everything. That’s all great, but your data must substantiate it.

Jennifer Lee

JLC Life Sciences

At the end of the day, science data speaks volumes. If we are not able to piece the puzzle together, we might have to run experiments, or you might have to extrapolate the data for us to understand.

Newman: I’ll answer this from the perspective of red flags when I’m talking to private equity firms that are evaluating women’s health investments. I work a lot on the buy side for private equity firms, and one of the red flags that I see a lot when they’re looking to invest in a women’s health physician practice is they’ll say, “Hey, you’re making X now and we’re going to take your compensation down to X minus 50%, because you’re going to get this huge payday, and that’s going to produce a lot of earnings for the company.” That is a huge red flag. There have been a lot of private equity firms that have made bad investments because they’ve cut physician compensation way too much, and it’s caused a bit of a melting ice cube for that investment.

Another red flag is when a private equity firm is looking at buying a roll-up in physician practice management, and the original owner just bought a bunch of practices and didn’t integrate them. The owner just acquired practices all over the country, or maybe all over a specific region, and didn’t integrate them financially, didn’t integrate the accounting, and they don’t have a unified way to compensate the positions. It’s just a huge aggregation of practices but not really a company. Unfortunately, we’ve seen a lot of investors implement that strategy over the past four to five years. That’s causing a bit of a dark cloud over physician practice management investing right now.

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