Please see below for the latest installment of our interview series, A View From the Top. This series features interviews with C-suite leadership of private equity-backed portfolio companies. This installment features Greg Bellomy, president and CEO of CareATC. To recommend a leader for a future interview, email Holly Buckley at hbuckley@mcguirewoods.com.
As a reminder, our 17th annual Healthcare and Life Sciences Private Equity and Finance Conference is February 19 and 20 in Chicago. The save the date is available here. Please contact us for more information or to indicate an interest in participating on a panel.
Q: What do you believe is the most significant current challenge to growing your business and what will be necessary to overcome it?
Greg Bellomy: Education of employers and their advisers (i.e., brokers and consultants) will be our biggest challenge. Healthcare has largely been built around an economic model that has driven behavior of providers and insurers.
The notion was that people would access what they need in a rational manner, and so long as providers were compensated in a manner reflective of their skills and regional market conditions, it would be a fair and balanced model for care. This notion also contemplated that carriers would be satisfied with covering their costs and enjoying a reasonable profit margin.
As payers attempted to control costs, providers began looking for ways to capture additional revenues and margins by controlling downstream revenue sources, such as surgery centers, dialysis clinics, radiology and the like. This created an incentive for increased utilization of services that, although state of the art, might not be appropriately utilized. Since carriers were compensated on a percentage of costs/fees paid, there was little incentive for them to fundamentally change how care was delivered. In fact, they are now trying to control more of the spend and participate in margins across the continuum.
In short, no one was really working for the employers and their covered employees. The model we follow at CareATC is simple and very different. We are paid to provide the appropriate care in the appropriate setting; to do no more and no less than what is clinically appropriate. We measure our success based on our ability to drive down total cost of care and improve the health and wellbeing of those we serve.
As simple as that concept appears, implementing it is not as easy as it sounds. It requires collaboration and cooperation with the employer around a number of elements. Plan design, employee education, risk stratification, engagement strategies and plan administration all have to be looked at differently. It’s not enough to build a clinic and make it available. You need to modify and reward the right behavior to see meaningful results. This takes effort and a commitment to change. The reward for doing so is a true reduction in healthcare spend and ultimately a happier and healthier workforce. Most employers have no idea that these solutions are available to them; thus, our challenge.
Q: What do you believe is the most important personality trait in a leader?
GB: I’m a fan of Peter Lencioni. In his book The Ideal Team Player, he describes the desired attributes as being hungry, humble and smart. Intuitively, I sought these characteristics with my leadership team, but didn’t have a framework for how to think about them. Looking back at the teams that were most effective and sustainable, I saw they had leaders that put the wellbeing of the organization and their teams ahead of personal interests. There were those who could drive better financial or key performance indicator results, but they usually achieved it through brute force versus leadership. Invariably, things would break down over time. Pairing these attributes with a clear vision for success and being able to make it relatable to a meaningful mission makes for an effective and dynamic leader.
Q: You have worked at a high level in various healthcare sectors. How do you quickly learn the most important things about an industry?
GB: For every healthcare organization, there are four stakeholders who must be served:
- Patient
- Payer
- Provider
- Bank
For the patient, we must understand the individual’s need and how to best meet it in a manner that delivers a positive experience. For the payer, we must demonstrate that we are exercising fiscal responsibility with the available resources that are afforded to meet the need. Providers want to make a difference, feel valued for their skills and not be commoditized. Finally, whoever is providing the financial resources to meet the needs has to believe the capital is being put to good use with a reasonable return on investment.
Understanding the industry dynamics relative to these stakeholders’ needs and wants helps you understand where to focus your energies. In doing so, you have to look at the trends within your sector and how they correlate to broader healthcare trends. Everything in healthcare goes through cycles. Knowing where the particular sector is in the cycle and how it correlates to the broader trends helps you understand where future opportunity may exist.
Armed with this information, you can typically ascribe an equation or formula that speaks to the motives of each stakeholder and postulate a thesis that describes what the ideal state looks like for all concerned. Then you must test the thesis and see if your assumptions are correct. Then you need to determine what the gaps are in the model you have today versus your thesis and define a plan to get there. Unless you have substantial buy-in with the core stakeholders, your probability of success is low.
Q: What is your best tip for recruiting talent?
GB: My field of vision for hiring talent is focused on the need three to five years from now, not today. My guidance to my teams is to hire two levels up from what they need today. If the person they hire is only competent to perform the task needed today, they are setting themselves up for a problem in the future. Hiring talent that understands the goals of the organization and is motivated to grow with the organization is a much smarter way to go.
Q: What healthcare trend will cause the most change in the next 10 years?
GB: Technology and disintermediation of the traditional healthcare service delivery chain or continuum of care is going to yield amazing results qualitatively and financially. The technology you wear on your wrist knows more about your health and wellbeing than what your doctor could possibly tell you in a typical patient encounter. Little things like sleep patterns and gait patterns, not to mention heart rate and other biometric data, can accurately predict the probability of an adverse event when normalized against a peer group and your historical data. Unlocking the data and using artificial intelligence tools to alert patients and providers will unquestionably lead to better outcomes and lower costs.
Similarly, creating engagement strategies with patients around how to manage their health and wellbeing in a non-fee-for-service environment, where there is total transparency around costs and outcomes, will change purchasing and utilization patterns. It is conceivable, and it is already happening, that employers will create a “virtual health plan” and eliminate carriers and plan administrators from the service equation as they add more cost than value for the relative spend. Employers now want to understand the financial incentives of the various stakeholders embedded within their plan design and will begin taking control over provider network contracting and purchasing of routine items, such as medications. This will create a more competitive and higher-quality product in the future as their claims administration cost for providers will be substantially less. In addition, the employers can steer utilization that allows for economy of scale for the providers, leading to the market becoming more efficient and effective.
About Greg Bellomy
Greg Bellomy has 20-plus years’ experience as president and CEO of some of the most influential healthcare service companies in the country. Most recently, he joined CareATC as president and CEO in the spring of 2019.
Being on the spear tip of healthcare innovation is his passion and what drew him to CareATC. Innovation and leading transformational change in how care is delivered is the common thread in his experience. CareATC is uniquely positioned to fundamentally change how healthcare is delivered for millions of insured but underserved people secondary to the dysfunctional economics of main street healthcare.
Bellomy has enjoyed tremendous success as a division president of a company that was ranked No. 2 on the Inc. 100 Fastest-Growing Companies and division president of three publicly traded companies on the NYSE and NASDAQ. He has led two private equity/venture capital-backed companies as president and CEO. Bellomy has also served as a senior operating adviser for LLR Partners.
To contact Greg Bellomy, email gregbellomy@careatc.com.
