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How the California Health Care Foundation is Closing the Innovation Gap

Despite being the nation's largest health insurer, Medicaid remains largely overlooked by investors and entrepreneurs, who typically focus on developing solutions for private and commercial customers. To improve both access to health care and the value of that care, the California Health Care Foundation is working to make the case for why entrepreneurial companies and investors should consider the safety net as a tremendous health care market that is a ripe opportunity for innovation. Their story is a compelling reminder of all of the ways foundations can influence systems to improve health.

The California Health Care Foundation (CHCF) has a history of thinking about entrepreneurship as a means to create positive change. Located in Oakland, California, they are deeply immersed in the entrepreneurial culture of the Bay Area. Since 2008, CHCF has made investments in companies that can improve access to care or quality of care for the state’s most vulnerable populations. CHCF’s investment in Omada Health, for example, supports a pilot diabetes prevention program serving the Medicaid population.

However, as CHCF’s Health Innovation Fund team reflected on their work, they saw an opportunity to effect change beyond their own investments and grants by encouraging more entrepreneurs and investors to invest in solutions that improve health care for marginalized communities.

CHCF realized that they were well-positioned to serve as an effective bridge between two stakeholders that usually don’t interact with one another—entrepreneurs looking to create the next breakthrough in health care and safety net health care providers serving low-income, marginalized populations.

CHCF has strong connections with individuals who work in the federally-qualified health centers, public hospitals, and Medicaid insurance providers. These networks give them insight into the actual challenges that health care providers and insurance companies face in caring for Medicaid enrollees, including addressing the many social factors that affect their health outcomes. The CHCF Health Innovation Fund team also speaks the language of technology and investment and has robust networks among Silicon Valley’s tech companies and venture capital firms.

The typical health entrepreneur usually has limited knowledge of the Medicaid market. Leaders in safety net health care systems have limited opportunity to communicate their patients’ needs to innovators who could address them. Bridging this gap provides an opportunity to shift some of the energy of the private sector toward solving challenges for the most vulnerable. The appeal to entrepreneurs is that if they can make a product work in the safety net—with its unique needs related to language barriers, limited time for patient visits, and constrained staff and facilities resources—it will likely also be applicable to the market overall. 

Together with FSG, CHCF set out to identify and consolidate information about what safety net providers and plans needed from the private sector to adapt to the changing health care landscape, and specifically to more effectively address social determinants of health. FSG supported CHCF in speaking with leaders from health clinics and hospitals in California’s safety net to understand how they are addressing social determinants of health, what challenges they are facing, and how new products and services would improve their work. With the help of policy experts, health investors, and entrepreneurs we were able to help identify major prospects for improved innovation to support safety net providers and plans overall, and specifically in addressing social determinants.

The insights resulting from those stakeholder conversations can be found in two new reports authored by CHCF and FSG that summarize unmet provider needs, key principles for designing high-value innovations and the greatest opportunities for high impact innovation. The first, Medicaid Pilots Open Door for Innovation in California, provides an overview of the new policy incentives and trends driving California's payers and providers to innovate in delivering health care. The second, Addressing Social Factors in the Health Care Safety Net, dives deep into specific opportunities and challenges for innovators seeking to address the social determinants of health. CHCF has bundled these reports into a series called Primed, which they plan to build on in the future, and released an accompanying interactive infographic spotlighting successful innovation at work in Medicaid. We hope these resources will stimulate conversation among health technology accelerators, entrepreneurs, and health care investors about opportunities to make an impact on the health of the most vulnerable. 

We also hope CHCF’s work will inspire other foundations to consider how they can use their unique expertise and relationships to strategically address complex problems and make positive change in their communities.

Learn more about FSG’s U.S. Health Practice >

Read Primed: Addressing Social Factors in the Health Care Safety Net and Primed: Medicaid Pilots Open Door for Innovation in California >

Lauren A. Smith

Managing Director

Abigail Stevenson

Associate Director