How Concierge Medicine is Pushing the Boundaries of Traditional Healthcare with Todd Kimmel, MD & Founder and Daphne Che, Principal at Montage Venture

Authored by Jodie Salzberg

The healthcare industry is undergoing a transformation with the advent of technology and innovation. Venture capital firms are taking notice and investing heavily in companies that are utilizing these advancements to provide superior and innovative healthcare services, as there is a growing demand from patients, providers, and payers alike for elevated experiences, better utilization of data, healthier outcomes, and transparency.

As a byproduct of these demands in conjunction with rising costs of insurance premiums, concierge medicine is emerging as the new care delivery model with exceptionally strong margins, making it a go-to investment for VCs. This development is revolutionizing the healthcare industry and providing patients with more personalized, accessible, and efficient medical care.

Todd Kimmel, Founder and Managing Director at Montage Ventures is joined by Daphne Che, Principal, in this installment of SpotlightOn to discuss their thesis of healthcare investing, the intersection between medicine and patient-experience, the state of talent in the healthtech industry, and the founder mindset.

Tell us about Montage Ventures, its inception, and how you came to identify the central thesis of your fund.

Montage Ventures is an early stage venture capital firm that invests primarily in financial technology, e-commerce, marketplace, and healthcare startups.

At its inception, we saw an opportunity to focus on under-explored domains in tech and capitalize on the reluctance to engage with early-stage companies in these emerging sectors. There was a clear gap in the market for a seed fund to support companies in these industries, particularly those that were aimed at addressing the financial needs of the next generation consumer in crucial areas like housing, healthcare, and banking, and that is how Montage came to be.

Our initial focus was on fintech and healthcare, which then expanded to consumer and e-commerce, as these industries share common characteristics: they are heavily regulated with specialized executive networks, and have large markets with high value profiles. And while the business models were already well understood, there was a scarcity value because firms were not covering these areas at that time.

When you look broadly across the healthcare and wellness ecosystem, what sub-sectors have the most opportunity for impact?

Concierge medicine is a powerful model in the healthcare industry that is paving the way for the consumerization of healthcare. Consumers are more willing to invest in their health now than ever before and are seeking high-quality services at an affordable cost, fueling the demand for this model.

However, healthcare is the only major personal expense category that doesn’t have a one-to-one relationship. You get a lawyer, you pay on an hourly basis, you get a recruiter, you pay a fee. You know exactly what you’re going to pay relative to the service being provided. But when you walk into a doctor’s office, you don’t know what it’s going to cost, whether you’re getting the full value of what you’re paying, when you’re going to need to pay for it, and who is going to pay it for you. It’s a very confusing system.

Concierge medicine is the conduit to that one-to-one relationship with your care. When you’re paying out of pocket and don’t like the service you’re getting, you can cancel it and go to a provider that will provide you with the right care. That’s what we’re moving towards and that’s where the system should be; you should have a base underlying insurance coverage for basic and catastrophic coverage, and then it’s a per diem, a la carte menu where you can choose the quality of care that you want.

With Sollis Health, one of our portfolio companies, you get the experience of going to a beautiful location and having the full attention of a healthcare professional who is giving you 24/7 on-demand care. It’s not that traditional hospitals don’t deliver excellent care, but when you go to the emergency room, you can expect to wait five to six hours before you’re seen due to the fundamental access problem we have in our current healthcare system.

Talk to us about the defensibility around concierge medicine. Why is it better for physicians and the broader healthcare ecosystem as a whole?

At present in this country, there is a huge supply and demand issue. Too many people are coming to the emergency room, the urgent care, and even their primary care physicians for non-emergency medical issues, and because of that, we’re overworking doctors, nurses, technicians, and other trained medical staff.

If you’re a traditional ER doctor at a busy ER, you’re seeing anywhere from 30 to 40 patients a day, sometimes more. If you’re a doctor at Sollis Health, you’re seeing seven to eight patients a day, and can actually spend quality time with your patients to deliver excellent care. That’s not to say that traditional healthcare workers don’t care the same, they just don’t have the time to.

Additionally, with concierge medicine, you’re typically not seeking reimbursement from insurance, so it takes out the pain of notetaking and the administrative burden of submitting claims to payers. Any physician will tell you that managing collections and insurance payments takes up 40–50% of their time, which is time they could give back to providing great care for patients.

How do you see the macro economic environment affecting the healthcare space, whether it be the concierge, consumer, or wellness sector?

Healthcare is a bit insulated from a market correction as the same number of people are going to get sick regardless of what is going on in the market.

Ironically, payers and providers are more willing to embrace technology in a downturn than they are during a growth cycle because they need to find ways to cut and manage costs. There’s no better leverage than the implementation of a technology solution as opposed to using human labor. Going forward, I think we will see more and more AI, machine learning, and data science come into the healthcare environment to take on both menial tasks, like administrative work, and more advanced tasks, like clinical decisioning, and make them more efficient.

When you look at the pool of innovative founders of game-changing companies that come to you for funding, what are some of the qualities that stand out to you and make THE difference in when you invest vs when you don’t?

I look for individuals who are outsiders to the industry but insiders to the problem; someone who can clearly articulate the company’s genesis story and why they have a passion for that particular space. That doesn’t mean that you have to be an extrovert or a great public speaker, but you do need to have expertise in identifying the problem that your company is trying to solve. Specifically for early stage founders, there needs to be a balance between having an ambitious vision of wanting to change lives and make a huge difference, and the reality of how this vision will be operationally carried out.

While the emphasis is always on the people, there also needs to be the right market opportunity. You have to have an idea that’s worth fighting for. So we look for this combination of a large enough market opportunity paired with a team that has the ability to work hard and advance the goal.

Amid an economic downturn and recession fears, what advice do you have for founders looking to build in Healthcare?

My advice is always this: it’s great to have a big world domination vision, but you have to start your business with a core value proposition. Right now, it’s all about the consumerization of healthcare, but getting to the consumer is very difficult to do. You can’t do it all at once, so the more you can narrow down the scope of what you’re trying to accomplish, the more impactful you’ll be early on.

Start with a geography, a condition, or a group of people, prove that you can change the game for that payer or provider by making it less costly to take care of that demographic, and then once you can show that you have the ability to impact a hundred covered lives, then a thousand, and then a thousand more, you’ll have no problem being successful in this space. It’s rarely about the technology that you’re bringing to the table and more about your ability to communicate your message to the right decision makers within the organization.