January 21, 2022
[00:00:16] Gary Bisbee, Ph.D.: Well, good afternoon, Rich, and welcome.
[00:00:19] Rich Roth: Hey Gary, it’s great to be here
[00:00:21] Gary Bisbee, Ph.D.: Well, we’re pleased to have you at this microphone. And we’re delighted that you’re sitting on the advisory council of Day Zero. Certainly these days, innovation, entrepreneurism founders is, I think we all agree, necessary to move the ball forward in healthcare. So those of you on the advisory council have deep expertise and investing and healthcare. In your case, you’re the dean of the group, as we’ve talked about. You’ve been doing this for 20 years or more. Why don’t we get to know you a bit better, Rich. What was life like growing up for you?
[00:00:57] Rich Roth: Well, I had a pretty regular adolescent typical experience. I’m from the middle of Pennsylvania outside of Harrisburg. I grew up with my two parents. I have two older brothers who were pretty older. My dad worked in the military. He worked in a factory after that. My mom was basically a receptionist for medical offices and dental offices. And so that was my first touch of healthcare. I ended up cleaning doctors and dentists offices as a young kid at a first job, but my parents were always creative. Actually, when they left their regular careers, they transitioned and became professional clowns for like birthday parties and corporate events and all kinds of things. And that kind of, I think maybe touched a bit of my brain in terms of transformation and what transformation can bring and be. And so, that’s one of the hallmarks of what I’ve been about, I think, in my career is really how do we do transformational change for healthcare to better serve our patients and our communities? And I think entrepreneurs are such a big part of that.
[00:01:58] Gary Bisbee, Ph.D.: I have to ask. So did you ever dress up as a junior clown?
[00:02:04] Rich Roth: I may have learned a balloon animal or two in my time, but that’s about it.
[00:02:09] Gary Bisbee, Ph.D.: Very good. Well, I can see why healthcare and innovation is part of your life, but at what point did you actually say, hey, that’s what I want to do with my professional life?
[00:02:19] Rich Roth: Early on at CommonSpirit, when I first came here and working with Lloyd, our CEO, and our board. I got asked to do something which was a novel assignment at the time, but is really relevant, I think, in today’s society, which is, we have such great measures of finances and accounting and such great measures of quality. At that time, Catholic Healthcare West was like, well, how do we measure community benefit and what we’re doing, socially in society? And so, I got asked an assignment to develop a tool that would be, benchmarkable and analytic the way all of our accounting tools are and finance tools are, and developed was called the Community Need Index, which was the first national tool for measuring social determinants of health in communities as it relates to education status, and access to care, and those individuals that are covered by governmental insurance and diversity and a number of things. And so, developed this tool. And then once we developed it, all these other systems and payers were like, what does that, how do we use that? Could that be, valuable in our work? And so we ended up commercializing that and 50 plus other organizations were using this tool. We published about it. And that really got me thinking about like, wow, you can impact healthcare broader than your own organization through innovation. And so that really drew me on the path to where I’m at today.
[00:03:44] Gary Bisbee, Ph.D.: Well, you’ve certainly been a leader in this space for a number of years. As we said, you joined Dignity, the predecessor to CommonSpirit, more than 20 years ago. Your role now, Chief Strategy Innovation Officer, can you describe that role for us? Rich? What does that entail?
[00:04:00] Rich Roth: Yeah, basically as the Chief Strategic Innovation Officer, our goal is to look, you know, three to five years into the future and really to pull the future forward and to identify the things that we need to be doing, whether they’re services, whether they’re technologies, whether they’re partnerships, whether they’re approaches today, so that we can develop the muscle memory to be successful within the future. And really, you know, that’s the heart of what we do. I don’t think you can go cold into things. I think it’s really important to be a first mover and learn and port skills and competencies. And when you make mistakes and are vested early on, I think those mistakes are less dangerous to all types of organizations. And I think as things become scalable, if you’ve developed those early competencies and your ability to get through those roadblocks and changes, you’re just going to be that much better when things become mainstream.
[00:04:55] Gary Bisbee, Ph.D.: I think when you started, innovation wasn’t as high a priority among the C-suites of the large health systems as it is today. Over the course of your career, what’s caused innovation to become much more of a priority topic for our health systems?
[00:05:11] Rich Roth: I do think I was maybe the first role of strategic innovation in health system. There’s a lot of people that have followed in their own organizations and paths, which is fantastic. You know what I think? Health systems are really good. Hospitals are really good at certain things. I think over time, as the community has different needs, as people have become more personalized in their choices, as need has been unveiled to be much more than medical need, but also social needs and behavioral health needs, the reality is not everyone can do everything. I think the smartest organizations are ones that take advantage of entrepreneurs and the unique business model ideas they have, the talents they have, the novel technologies, and then bring that together with what health systems do well, which is, real doctors, real nurses, real clinical care situations every day. I think if you can partner those things together and tap into the energy and competencies of both sides, you’re more likely to better serve your community. And I think that trend, as hospitals have become more than just medical care and a bed and really are about quality of life, you need to have entrepreneurial-ism, you need to have partners.
[00:06:25] Gary Bisbee, Ph.D.: Rich, how do you develop your investment agenda, that is the areas of investment that you’re looking for?
[00:06:32] Rich Roth: We sit down with our leadership. I think of it as a big funnel. We sit down with our leadership. I call it strategic innovation because it’s really vested in our strategy. So what are the things that we’re really trying to accomplish, whether it might be moving to value-based care, whether it might be greater focus on health equity, whether it might be caring for people in a more accessible and low cost way. I mean, those all have to be vetted and understood with leadership teams and part of our overall strategy. So that’s always step one. And then from there, it’s how do you look in the external world with what’s going on? How do you look amongst our own employees? We’ve had fantastic intellectual property work, that we’ve created things that have scaled across the country. Then, how do you tap into the VC community, the PE community, other communities, other systems, and what they’re doing, and really, when you have those macro themes, ultimately you have to translate that into something that’s actually practical and meaningful, whether it’s an effort or a partnership or a joint venture or risk-based relationship or an equity investment. But, to me, it starts with making sure that it’s aligned with strategy and then ends with making sure you’re aligned with your operating team. I don’t believe in innovation in vacuums. I don’t believe in innovation centers that are standoff all by themselves. I think things need to be real and they need to be invested in operations. And so to me, vested in your strategy, vested in your operations are the bookends. And then the middle is how you figure out how to do it, which often requires working with great founders and partners.
[00:08:03] Gary Bisbee, Ph.D.: There’s a lot of interest in digital health these days. Where does that stand on your priority agenda, Rich?
[00:08:10] Rich Roth: I believe people want a holistic care journey. So it may be nice to have a digital capability for this one item, this immediate need. But ultimately as people progress their lives, they have more intense issues that they’re dealing with. And so I think digital provides great access. I think it needs to be there when you need it. But I think it’s best as part of an overall care model and not a standalone thing on its own. And I think that’s somewhat of the danger of the way the world’s evolving today. And for the people that create those digital things, often younger in their lives and careers, and maybe don’t understand kind of the full holistic realm of health that you’ll be tapped into. I kind of laugh at a lot of companies when they start in different directions and I’ll kind of say, alright, I’ll see you in two years when you’re trying to do a health system partnership. And that usually plays out. It usually plays out. Maybe it’s five years, but at the end of the day, I think they realize you can only go so far.
[00:09:09] Gary Bisbee, Ph.D.: Yeah you’d be a great advisor to all these young companies. I’m sure you’re approached all the time for doing that. Just in terms of how you think about a particular investment, let’s say you’ve got the topic. It’s right in an area that you’re looking for. They’ve got a good sense of comprehensiveness and so on. How do you make a determination to actually invest in a specific company?
[00:09:36] Rich Roth: When CommonSpirit invests, really the first thing is, are we working with the organization? So we don’t believe we have unique value that a financial investor might have. I mean, they have people that have done tons of work on doing due diligence on companies and analyzing markets, but our value rests in the strategy and the understanding of how it works within care sites and would we, as a like example of healthcare in the United States, scale something like this? And we believe that that is true, as likely other organizations would. And so, obviously there’s an eye towards, what is the valuation and what is the market, and all those other types of things, and who leads the investment. But at the end of the day, is it, in large measure, it seems like it’s something worth betting on from an investment standpoint.
[00:10:24] Gary Bisbee, Ph.D.: Where does the leadership team, and particularly the CEO, weigh in here? How important is that in your calculations?
[00:10:31] Rich Roth: Yeah, Lloyd is a fantastic leader, obviously a legendary leader in the industry and one of the things he’s always espoused is partnerships and the creativity of others, given us a real opportunity and financial support and leadership support. And I think that’s just really critical. That has always been part of his ecosystem, figuring out, what can we do well as CommonSpirit and what can others do, and of course always coming together, whether it’s, entrepreneurial work, whether it’s the work that he’s led with Morehouse School of Medicine on the health equity side, which is very meaningful. But ultimately, it’s that one plus one equals way more than two. And if you can do that, that’s a phenomenal way to impact society positively.
[00:11:15] Gary Bisbee, Ph.D.: I know you sit on, it seems like, a number of boards of companies that you’ve invested in. How do you find the time to get your work done and sit on these boards?
[00:11:26] Rich Roth: Yeah. Well the good news is, often I sit in an advisory capacity, not a fiduciary capacity, so there’s other board members that deal with much more deep things that we do, but we do like to keep an eye on the work. The main piece is, ultimately, these partnerships are invested in operations. And so I would say the people that are doing the most time-intensive, most disciplined work are the operating partners that own these relationships within our organization. And I’m on there to have broader context, broader support share lessons learned from other types of efforts. But, I think it’s important to sit on boards simply because you get to hear and see and understand how these companies are really trying to impact society, trying to fulfill their missions, working with other systems. Occasionally another system solves something in a way we never could. And then that’s a learning for us. In the health system world, especially today, it’s very easy to stay fully internal. But the reality is, just like you’re trying to serve your community. You can’t do that just as the core operations of the hospital. I think just as you’re leading a system, you can’t do that talking to your own people. You have to really have this external point of view.
[00:12:34] Gary Bisbee, Ph.D.: Well getting back to Day Zero, where our advisory council members like yourself will be interviewing founders, is the supply of founders increasing, Rich? Are there more people interested in founding companies?
[00:12:48] Rich Roth: Absolutely. I mean, always there have been great founders. I think the volume today is phenomenal and I think the source… So many of the barriers to entry that have existed over the last seven to ten years ago are gone, whether that be technical building blocks of company, whether that be access to capital, whether that be networks. I mean, a lot of that is just so much more available to entrepreneurs than it’s ever been before. And for that reason, we’re seeing a lot of creativity from different circles, more from the same circles. Top of the funnel was never a problem given the amount of things that are being created, but figuring out the right ones is more of the greater challenge.
[00:13:31] Gary Bisbee, Ph.D.: Sure. What about diversity of founders? Has that been evolving over time?
[00:13:36] Rich Roth: We have definitely seen evolution of diversity. I think it started with female founders, and now, individuals of color in greater measure. The good news is there’s venture funding directly specific to diverse populations, which we wouldn’t have seen before. For CommonSpirit, we actually have a diversity statement that all companies that we invest in have to sign up for, which includes sharing information about their employee base and their board, but actually developing tangible goals to increasing diversity. Diverse companies are better companies. They understand customers better and understand society better. We’ve had a few companies where we’ve sat someone from our organization representing certain communities on the board as a requirement of our investing, because we wanted them to increase their focus on caring for BIPOC populations or vulnerable populations or whatever the course may be. And so, I think that’s just a really important hallmark of what a successful company is going to be and representation is a hundred percent part of that. And so both the teams and their boards, we have to start there.
[00:14:48] Gary Bisbee, Ph.D.: Well, we’re delighted you joined the advisory council for Day Zero. What attracted you to that? Why did you join us, Rich?
[00:14:56] Rich Roth: I continually believe our ability to expand networks and tap into the latest entrepreneurial minds and ideas is incredibly important. I think we have a responsibility being in this career for a long time to help seed those individuals, to help provide guidance and advice. And I think interviewing these founders, really kind of demystifying their journey so the next generation can understand how person X or person Y was able to have an idea in the back of their head and translate it into a company is a great service. So I’m excited to help along the way.
[00:15:35] Gary Bisbee, Ph.D.: Super. If we’re sitting together 10 years from now, how important do you think innovations and entrepreneurship and so on, how important do you think that ultimately will be to the direction of healthcare?
[00:15:50] Rich Roth: Health systems will always play a critical role in care. Hospitals will always be here. And whenever someone says we’re going to disrupt the hospital, I kind of roll my eyes. I’ve heard it, like, since the Clinton era, like it’s been forever, it hasn’t happened. I don’t think it will happen. I think the pandemic proved how important hospitals are. But, our societies need so many more services and the pandemic also proved that in terms of where our weakest links are. And, at the end of the day, we have creative scientists, creative technology professionals, creative caregivers that are going to have to solve problems and challenges. Quality is not high uniformly across the country. Cost is not low uniformly across the country. These will be problems that we’re going to continue to solve. Equity is not uniform across the country. And so at the end of the day, we need great new minds to help solve these problems. And I think entrepreneurial-ism, innovations are always gonna be a part of it.
[00:16:46] Gary Bisbee, Ph.D.: Well, Rich, I love your perspective and your wisdom. Thank you for joining us today. It’s been an excellent interview. I have one last question if I could. And that is, for all of the founders and entrepreneurs, and particularly those that are starting out or early stage, what advice would you have for them?
[00:17:06] Rich Roth: I guess my biggest advice would be, remember you’re in an ecosystem and you’re going to need friends in that ecosystem in one way, shape, or form. And so whether that’s health system partnerships, whether that’s payer partnerships, whether that’s both, I’d put a lot of thought to that early on, because a lot of people think they can exist outside the ecosystem. And I just don’t think that’s a possibility.
[00:17:30] Gary Bisbee, Ph.D.: Yup. Spot on. Rich, many thanks, much appreciated, and Happy Holidays coming up.
[00:17:37] Rich Roth: Thanks Gary. Happy Holidays.