Hello, this is Kate Stanton, host of The Pulse Podcast. In this episode, I sat down with the co-founder and CEO of Tomorrow Health, Vijay Kadar. Founded in 2017, Tomorrow Health builds technology that streamlines and simplifies how home care is ordered, delivered, and paid for. The company works with over 125 payer partners, and in August 2022, it raised a $58 million Series B round led by Bond. Prior to starting Tomorrow Health, Vijay worked at Goldman Sachs and then at Oscar Health, where he held a number of roles, including general manager of Texas and senior director of care innovation. In this episode, Vijay and I discuss how the passage of the Affordable Care Act impacted his career decisions and interests. His personal experiences interacting with home health care delivery, how Tomorrow Health is shifting incentives in health care, and more. Vijay, thank you so much for joining me on The Pulse today. I’m really excited to dive into how you got to where you are today, as well as learn a lot about Tomorrow Health. It’s a pleasure to be here, Kate. Thanks so much for having me. So let’s kick off our episode, how we start all of ours, which is with the same icebreaker. So when you were a kid, what did you want to be when you grew up? So early on, the dream was to be an F-16 fighter pilot. And rewatching the second Top Gun movie certainly made me a little remiss that I didn’t go down that path. But, you know, we’ll have to settle for healthcare entrepreneur. Yeah, yeah. Pretty, I mean, pretty much the same thing. I’ve heard that a lot of people liked the new Top Gun more than the old one. Did you like one more than the other? I thought the second one was fantastic. But it’s tough to beat the OG on that for me. Yeah, totally. Well, very, very cool. So let’s talk about how your career has progressed. So I’d love to hear about your path to starting Tomorrow Health. And this sounds very much like a job interview question. But as you go through that, I’d love to focus on your motivations for moving from one career opportunity to the next. Absolutely. So, you know, in many ways, I grew up in the healthcare world, was born into a big family of physicians. I like to joke that I was pre-med coming out of the womb. But growing up, I spent a number of years working in and outside of hospitals. So thousand hours volunteering in hospitals in middle school and writing medical research papers in high school, and always loved the direct impact that medicine had. And that was the plan for quite some time, was to be a practicing clinician. But I think that the thing that always struck me was, while as a clinician, you could have extraordinary direct impact, I always wondered how you could most effectively scale that. And in some ways, that’s what drove me to think about other areas of healthcare and how to approach it and impact it from more of an organizational lens. And so I initially started my career formally investing in healthcare. I was at Goldman Sachs in their private equity arm, investing in healthcare tech and services companies. And while I was there, it was around the time Obama had been reelected, it was the tying of the bow that Obamacare was actually going to happen. And incidentally, I got staffed on a small team cross-functionally across the firm to really dig in and understand the law. Everything from what were the actual tenets of Obamacare, how did it impact every subsector in healthcare? And then for us, what were the opportunities for investment? And it was a fascinating process. Had the opportunity to speak with the folks across the firm from healthcare investment banking, to equity research, to some of our policy folks who had been on Capitol Hill as the law was being debated and legislated, and actually sat down for a couple of weeks and read the law end to end, which is something I’m not sure that many congressmen and senators have necessarily done. But it was incredibly eye-opening as to just how much transformation was incoming into the healthcare sector and really across every subsector. And it opened my eyes to just the tremendous potential for innovation in the space. And at that point, was really motivated to be a part of that. Personally, I loved the vantage point of being an investor. I found it incredibly intellectually stimulating. The opportunity to work on a range of different companies and subsectors every couple of weeks or months was a tremendous learning experience. But I also found that the parts of my job that I really enjoyed the most was working closely with management teams and putting myself in their shoes and not necessarily just toggling through and deciding whether the company was going to grow 2% or 3% in a given year, but actually recognizing the business development partnerships and the product development and the strategy that was required to actually bring that to life. And so, at that point, I was pretty deliberate, put together a list of about 80 or 90 healthcare technology or services companies that I found really, really interesting, and either networked my way in or just cold emailed a few dozen founders. And through that process, I had the opportunity to talk to some amazing people. I got connected with Sean Duffy when Omada was a 10-person company, and Zach and Nat at Flatiron when they had just raised their Series A. It’s amazing to see so many of those companies grow and thrive over the last several years. But it was at that time I got connected to Josh and Mario at Oscar Health pretty early on in the company’s journey. I was just immediately struck by the significance and the scale of the vision that health insurers could really play a transformatively different role in the healthcare ecosystem, and that with Obamacare and with the advent of these new consumer-driven marketplaces, it was the opportunity for consumers to actually vote with their feet and choose health insurance products that really met their needs, and with that, to spur a whole new breath of innovation into everything from how networks were designed, how benefits were constructed, and ultimately how patients were engaged in their healthcare journey. And so I joined the team at Oscar pretty early on in 2014, the first few dozen folks there. We were just about two conference room tables at the time, and it was an incredible journey. Over about three years, we scaled back to about 2,000 across the team and driving billion in premium revenue. Had the opportunity to wear a bunch of different hats during the time there. Initially drove efforts on the finance and strategy side, worked on our plan design and pricing efforts, worked with our co-founders to raise our C3s, B, and C rounds. And then as part of the focus on growth strategy, moved down to Dallas, started and launched the company’s Texas division as general manager. We grew that up into Oscar’s largest state division, covering about 100,000 Texans across three markets. And then I came back to New York and helped drive tenants of the clinical strategy at the national level. We started a complex case management program and a range of innovations to transition healthcare to the home. And so that was ultimately the journey up until leaving to start and found Tomorrow Health. Really interesting background. It sounds like you entered your career at a great time with the passage of the ACA. We sometimes forget about how much that has influenced where we are today. I’m in a healthcare reform class where actually Zeke Emanuel teaches it. So I have learned so much about the ACA and just really how transformative it has been for our healthcare system. And my bet is that something like Oscar, to your point with creating the marketplaces, Oscar likely wouldn’t exist without it or it would look really different. So really interesting stuff. And I think last point about that. Something that I’ve learned is this might be a hot take or it might not at all be one, but something that I’ve realized it’s hard to understand healthcare without understanding the payer perspective is there, the ones paying for a lot of care historically have been the ones at risk. So your background at a place like Oscar must have been really formative, not only in building it, but also just really understanding the drivers of what payers care about. Absolutely, Kate. And I’ll just quickly double on one of the points you made, which I think is a really salient one is the reality is in the US healthcare system, healthcare is delivered in line with the way that it’s paid for. The payment reforms have driven such a degree of either innovation or lack thereof that we’ve seen in the system. And I’ve always believed that that is really where major innovation has to start is really understanding the incentives and the motivations that our payment policies are actually driving on downstream care delivery partners. And so certainly I found it at Oscar, having the vantage point of the payer was informative from that lens, but also just the breadth that we cover, right? And when we were building out, when I was down in Texas, building out our care delivery networks, that was everything from working to build our acute hospital capacity in line with a couple of major partners, Baylor, Tennant Healthcare, Ascension. It was our pharmacy networks. It was our ancillary and post acute. It was our home health and DME networks, which was certainly very eyeopening for me through that process. And so I think the payer vantage point also gives you a unique depth across the ecosystem, but principally a really unique breadth across the full spectrum of care that is ultimately provided to members and to patients. Yeah, absolutely. And your point about incentives, we will definitely dig more into that in a bit. So at this point, you’ve been at Oscar and let’s talk about starting Tomorrow Health. So did you have long-term plans to start a company? Had you thought a lot about entrepreneurship and being a founder in the past, or was it more right place, right time, more of that sort of situation? It’s a little bit of both. In many ways, the experience at Oscar was really enlightening and informative for me in my career. It was that major shift from being on the investor’s vantage point and from that investment and advisory lens that is deeply strategic and analytical, but always a step removed from the action to learning what it took to be an operator and be in the hot seat and actually being at the helm of pricing insurance plans and everything that goes into that and getting out there and building networks and working with state regulatory agencies, negotiating with hospital partners. And I think it certainly opened my eyes to two things. One is that the reality of driving change in healthcare is very different than often what it looks at 10,000 feet. So I think that was one big learning. The second was that I just loved the building process. I found it just so incredible to take something from idea to execution. But then in the other way, I think it absolutely is right place, right time. Because I certainly believe as a founder that to build something really, really meaningful and lasting, you have to care so, so deeply about the problem that you’re solving. And the reality is that the solution will evolve and iterate, but the problem is what you remain so committed to. And for me, that inspiration was seeing some of those problems really viscerally firsthand, particularly with my mother’s home-based care. So she had been a stage 3 cancer patient, fortunately doing really well now and in remission. But she was actually diagnosed with stage 3 colorectal cancer about a week after I started at Oscar and had a bit of a tough journey through it. After about a dozen cycles of radiation and chemo, ended up contracting a lung disease from a chemotherapy and unfortunately ended up spending about four months inpatient in the ICU and about three months on a ventilator. And coming home from that, she needed a year of really intensive home-based healthcare. Everything from 14 liters of oxygen to ostomy and wound care supplies, mobility and respiratory equipment, physical and respiratory therapy. And it was incredibly eye-opening as to how challenging coordinating her care at home was. Despite being in the healthcare industry, despite being in a family of physicians, we were working across nearly a dozen different home-based care providers, was driving out to what felt like smaller mom and pop shops with medical equipment scattered everywhere and just found that there was very little guidance to navigate that ecosystem as a patient or as a caregiver. Might have a prescription that said CPAP on it. Turns out there’s two dozen types of CPAP machines with someone with COPD needs is very different than someone with sleep apnea and yet no guidance to navigate that process or that journey. All in, it took us about six weeks to get everything she needed. And over that time, we had to readmit her back to the hospital twice in that first month. That really sat with me for some time. And then while I was back in my role at Oscar, I saw so many of the same challenges, but from the health plan’s vantage point. As I was building up our networks in Texas, we had to contract hundreds or thousands of home-based care providers in every market we entered. When I was driving our care management efforts and we were coordinating our discharges across the country for our patients that were in an acute care setting, I found myself borrowing the phone from a nurse case manager late on a Friday night and really kind of engaging with and negotiating with some of these downstream home-based care companies to get our patients oxygen or an orthotic brace so we could get them discharged ahead of the weekend. And for us, it was just so clear that this was becoming a major challenge at pain point across the company. While we were so motivated, like all health plans, like all risk-bearing entities to transition more care to the home, both because it was the highest value setting of care, but most importantly, it’s where patients wanted to get their care. It just became clear the infrastructure required to do that, the technology and operations that was needed to enable home-based care reliably and at scale was simply lacking. And that has really inspired our vision at Tomorrow Health to restore the home as a patient’s primary place of care and to provide the technology and the operations infrastructure needed to support and enable effective home-based care at scale. So much of what kind of inspired Tomorrow Health was really a combination of these experiences and learnings along the way, and then certainly really becoming exposed to a set of problems very personally that I just became incredibly motivated to solve. Thank you for sharing all that. As a founder, being really passionate about the problem as undoubtedly the strategy will evolve over time. And it sounds like personal experience, but that only made you more passionate about the problem. And in my experience, at least it sounds like yours as well as someone who has really been in the stuff in healthcare and knows the industry pretty well. When people like us can’t figure out how to do it, it just makes me think of all the people who know even less and have fewer resources, re-inspires the importance of the problem. So totally resonate with everything you shared. So you started to share a bit about Tomorrow Health and your strategy and your product, but I’d love to dig into that a bit more. So I’m particularly curious about who does Tomorrow Health serve, who’s paying for it, and within home health, the type of services that the company supports. Absolutely. So I mentioned a little bit earlier, our vision is to restore the home as a patient’s primary place of care. We really believe that to do that effectively, what we need to provide is ultimately technology that is purpose-built to the needs of each stakeholder in the ecosystem, to really rewire that home-based care ecosystem, to deliver much more streamlined, much more coordinated, and much more affordable home-based care for patients and their families. And so ultimately, we work with four different stakeholders as a company, the health plan, referring physicians and hospitals, a range of home-based care suppliers, and then most principally with patients directly. And so we partner with over 125 health plans across the country in a range of capacities to coordinate tenants of home-based care for their members. And when we think about the home-based care space, we sort of break it out into a couple of different areas, products that patients need to heal at home, medical equipment and supplies, things like oxygen, ventilators, wheelchairs, diabetes supplies, clinical services delivered in a home-based setting, and then the remote and virtual care that patients need. And while tenants of our platform serve across that full ecosystem, our principal focus has been around equipment, supplies, and products that patients need to heal at home. And so in working with health plans, I would think about us as a technology layer on top of their existing networks for home-based health care, and we really streamline that journey end to end. And so we improve and enhance the way that tens of thousands of hospitals and physicians order home-based care for their members and take what is today a very disjointed process that can often take up to 90 minutes to complete a single order and multiple rounds of faxing back and forth between folks in the ecosystem down to what is a streamlined 5-minute, 10-minute digitized transaction. We then work to match those orders with the highest quality and highest value home-based care providers across that ecosystem, and then provide a breadth of tools and solutions for those home-based care providers to deliver higher quality, more efficient care. And that’s everything from providing technology to digitize their operations, which can be very manual today, to providing them a whole host of data and analytics around their performance, and then ultimately equip them to deliver higher quality and higher value care. That’s great. And congrats on all the awesome progress you and your team has had over the last few years. Tomorrow Health is most focused on ensuring that patients have the products and supplies they need to participate in home care. So there’s obviously, as you alluded to, a lot of systems and processes that need to be established to deliver home care. So what was the rationale for going after products and supplies first? Is it because without them, it’s hard to really do anything in this space? But I’d love to hear a little bit more about the strategy there. Really driven by two factors. One, some of the personal experience that I noted, and really just seeing firsthand how broken this space was, and recognizing that across the home-based care landscape, it was arguably the most broken, most challenged, most fragmented component of home-based care. And we see that in a number of different ways, right? The average patient experience and NPS score is extremely low in this area, but 72% of patients support significant difficulty in getting the equipment and supplies they need. One out of 10 patients who receives equipment and supplies upon discharge is readmitted back to a hospital or experiences a delay in discharge due to challenges with managing and coordinating that. And so the first was just a really, really challenged status quo, and really the recognition in so many ways that building the infrastructure to support this component of home-based care was not only incredibly meaningful and impactful in its own right, but also laid the foundation for solving some of these broader problems of coordination across the home-based care landscape. And the second piece of it is medical equipment and supplies just impact such a broad swath of patients, right? One out of four aging seniors, so Medicare and Medicare Advantage patients, needs some form of medical equipment and supplies. And for those that need it, they typically need a lot of it. They are using on average about $20,000 to $25,000 of equipment and supplies on an annual basis. And that’s a combination of post-acute and chronic needs. One out of six Americans more broadly needs equipment and supplies. And critically, it touches such a wide cross-section of patients. You know, we provide everything from breast pumps to expecting mothers, billy blankets to newborn babies, crutches and wheelchair for a 21-year-old that tears their ACL, CPAP machines for a 40-year-old that is dealing with COPD, and a range of equipment, supplies and ongoing chronic needs for aging seniors managing a breadth of either post-acute needs or chronic needs. And so it’s really a category that is extremely broad in touching a really wide cross-section of patients and clinical conditions. And so again, the opportunity to really solve this ecosystem both has significant breadth of impact, but also has the capability to build on that foundation to support a wider breadth of home-based care needs. You mentioned that you’re focused on rebuilding the infrastructure. And I think another type of infrastructure is related to incentives, because as you pointed out, the way that we pay for care influences how it’s delivered. So I know on your website and in other settings, you’ve discussed how Tomorrow Health is shifting the alignment of incentives within the various players that you mentioned. So could you provide an example or two of how Tomorrow Health is better aligning incentives and what some of the results of that work has been? First, I’ll just start by taking a step back and saying, I think this is one of the biggest opportunities in the home-based care space more broadly, as we think about the journey forward over the next five to 10 years and how to really drive transformative impact for patient care at home, is how to enable the shift to value, ultimately. And transitioning from traditional fee-for-service or episodic-based payments towards value-based or value-oriented payments. We hosted a conference a couple of weeks ago where we brought together a range of key executives and thought leaders across the space, Sachin Jain from SCAN Health Plan, Sandhya Rao, Chief Medical Officer of Blue Cross of Massachusetts, Eric Hargan, former Deputy Secretary of Health and Human Services, George Barrett, been the Chairman and CEO at Cardinal Health for a number of years and a few dozen others, really to engage around this topic. How do we enable value-based structures in home-based care? What does that look like? One of the most important things in these structures is just making the desired outcomes incentives very, very clear and actually being willing to put your money where your mouth is around that. In this ecosystem, we’ve seen the real interest from health plans around value-based structures and enabling value-based incentives as it relates to home-based care. But in some ways, the infrastructure has been lacking to enable that and to administer that. One of the things that we do around that is the ability to actually measure these outcomes on behalf of providers in a much richer sense and the ability to look at proprietary factors around quality, something that is not well-defined in the home-based care ecosystem and of which there is very little data to date. And so actually collecting that data and assessing and analyzing it, looking at factors around operational reliability, which directly lead to key total cost of care outcomes for patients in this space, whether it’s around prescription to package delivery timelines or adherence to certain therapies, which ultimately keep patients healthy at home and out of the hospital, and intangibly measuring these data points to be able to actually assess when a greater quality is delivered. And then also leveraging the platform we’ve built, being able to drive much greater amounts of growth for high-quality, high-value providers. And so creating not only that incentive system where quality and value can be measured first and foremost effectively, but then there’s a mechanism where that can be rewarded. And so again, coming back to incentives having to be clear and then needing the infrastructure to actually administer and enforce that. So those have been key components of our platform. And we really believe that continuing to drive this, not only across the home-based care space, but in other tenants of care delivery is going to be such an important piece of how we get to the type of healthcare that we all are striving towards. Totally agree that to be successful in value-based care, that requires a pretty high level of new infrastructure in order to support those new models of care delivery. So shifting gears a bit to the larger home care landscape, it seems like home care is being talked about all the time now, unsurprisingly due to the pandemic and how that shifted how we think about sites of care, as well as knowing that the home is a more cost-effective site of care than a hospital or something like that. So you’ve had a lot of experience working with a number of stakeholders in the system, including patients, caregivers, providers, and payers. So in your experience, which groups have been most eager to adopt or even drive the adoption of home-based care? I’ll start with a couple of different overview thoughts, and then we’ll dig into some of the specific stakeholders. I think the first is just recognizing some of the logistics around home-based care, which are different, right? When we think about the home on the care continuum, we think of it as one setting of care. In reality, the home is, of course, tens of millions of settings of care across the country. And so some part of, in my view, what drives willingness to drive adoption is really having that infrastructure and placing those operations in place to drive logistics needed to serve this category very well and very effectively. I think the second is recognizing what types of care are best to be delivered in a home-based care setting. I think it’s part of the belief that a really wide breadth of care can and should be delivered at home, certainly a much wider breadth than we have today. But that’s not everything, necessarily. There will always be a role for Tier 1 acute care facilities. There will always be a need for surgical units and the ability to deliver super high-quality, much more intensive care in a healthcare setting. And so optimizing that effectively is also an open question in this space and something that different stakeholders necessarily disagree upon, but specifically how that translates into the viewpoints of different stakeholders. I think we have really seen a widespread desire and movement towards home-based care, really from all stakeholders, but I would say driven by different motivations. And I do think that’s important to understand the outcomes that folks are looking for here. So first, we’ll start with patients. There’s no question patient preference has always been to get care in the home. For the 1940s, the vast majority of care was delivered in the home, and that really evolved when you had the advent of expensive capital equipment and the common modern insurance ecosystem that really drove and facilitated the amalgamation of integrated hospital systems and care delivery networks, and that’s where the best doctors were. And suddenly, we started to bundle care together, and now, of course, over the last decade, we’re seeing that come to be unbundled again. And if you think about where patient preference is, it has uniformly always been towards the home. As we bundled care, the last several decades, that was not driven necessarily out of the patient’s best interests or motivations, but the business of how healthcare is delivered. And so patients have always wanted care in the home, and that has become only louder and louder after COVID, when it’s been seen what is possible to deliver care virtually and in the home. And I think we’re seeing that dramatically, right? We’re not seeing major care delivery volumes in hospital settings come back in a way that was expected to boomerang, right? We’re seeing that desire for home-based and virtual care persist. Secondly, on the payer’s vantage point, I think for health plans, there is absolutely that motivation to drive care in the home, particularly because it’s the highest value side of care, right? Treating a patient in the home is less than one-tenth the cost of doing so in a hospital, when they’re responding to the desires of their members. I think that the big step function here is going to be around what we described as it relates to the payment policies. Because as long as folks are operating in a purely fee-for-service ecosystem, the focus is around reducing costs to different components of that ecosystem, wherever they lie. In actuality, from a value-based standpoint, you actually want certain forms of utilization to go up. You want more home-based care. You want more medical equipment supplies. You want more virtual care, because that is driving care to the highest value settings, right? But I think we need a little bit of that continued paradigm shift towards value to really see that greater breadth of adoption and acceleration from that stakeholder. I think from the provider vantage point, thinking here about physicians and hospitals is probably the most interesting one, because in some ways, this is where some of the big opportunities and challenges lie, right? On the one hand, you would think that there may be resistance from hospital systems to more care happening at home. I think what we’re seeing right now is, as I referenced earlier, just major challenges in managing capacity. So there is a tremendous desire, actually, to manage more efficient transitions of care to the home. We’re seeing a lot of interest in that. We’re seeing a lot of interest from large integrated hospital systems for technology that can not only streamline that for them, but can also give them and providers greater visibility into the care that is being delivered in the home, and whether that’s through clinical data streams, remote patient monitoring, or others. And so I think we are starting to see providers be quite forward-thinking around this and ultimately providing them solutions that can enable efficient transitions of care and visibility into home-based care will be the unlock to driving their support and adoption over time. Yeah, your point about providers is really interesting, because back to the incentives conversation that entity seems like one whose interests might be less aligned with home-based care, but really cool to hear that they are also getting on board as well. So I’m going to switch gears again. You mentioned earlier in our conversation that Tomorrow Health has raised just under $100 million. You raised $60 million in your Series B in August, and it’s hard to be in healthcare right now and not hear, or actually really in the startup world at all, and not hear about the tough fundraising environment that we’re in, and I think most expect it to continue for a while. But you had some success raising in, I think, at least the beginning of this tough environment. So first question is any tips for other founders in raising right now or in the next year or so? And then I’m also really curious to hear your thoughts on how you think the current funding dynamics will play out in the digital health industry longer term. First, I think how we think about raising and deploying and utilizing this capital. I think in many ways for us, this round was catalyzed by just a huge amount of momentum in the business from a number of different lenses. Continuing to see tremendous interest from health plan and provider partners to leverage Tomorrow Health’s platform and capabilities to enable more effective care in the home in the ways that we described, continuing to see really strong patient outcomes critically and outcomes for our partners, and then the ability to really continue to take that to scale across the country. And so that’s really where our sites focus in terms of leveraging this capital. One, unlocking new partnerships and enabling deepening penetration in existing markets and the entry into new markets across the country. The second is continuing to double down in our core technology. And we continue to believe that technology will be the step function driver of capability and of change in the home-based care space and really unlocking new capabilities for every stakeholder that was just not previously possible. And that is what we think will enable this much more streamlined, much more efficient, much more reliable home-based care ecosystem that we’re aiming to help create. And so continuing to invest in that technology. And the third is continuing to invest in our team. We are hiring across the board right now with a particular focus on business development and growth, product engineering and data analytics, and some core focuses around our operations and enabling our growth across the country. And so that’s how we think about the investments that we will make in our business and our partnerships with this capital as we go forward. In terms of the broader market opportunity and environment, obviously, we’ve seen a massive sea change this year to last year. As someone who really believes in the opportunity for innovation to solve some of these major problems in healthcare, it’s really been a banner couple of years and just seeing tremendous innovation and investment across different ideas and subsectors in the space. And of course, we’re seeing a natural pulling back of that this year. But in some ways, I do think it’s in a way that is healthy for companies and for the market. I think it’s forcing an appropriate level of discipline around investments and a really important drive for focus, I think, with companies and with organizations, and not really trying to do 10 different things at once, but really focusing on the one or two things that will really move the needle for your customers and partners and really focusing to drive greater definition around that. And so I do think it’s obviously a challenging time for many across the ecosystem, but I do think it’s a level of discipline that will drive the right level of rigor that will ultimately enable the scalability of innovation in the space over the next five to 10 years in really meaningful ways. Well, Vijay, thank you so much for taking the time to speak with me. I really enjoyed learning about how Tomorrow Health is laser focused on improving how we order, deliver, and pay for all the things that go into providing high quality home care, as well as learning more about where you’re going. So thank you so much. Thank you so much for having me on, Kate. I really enjoyed it.
