The Great SVB to Healthcare Discussion Pivot

I’m not gonna lie…I don’t even really know where to start with everything that has happened in the past week or so. However, I don’t think I can write this newsletter issue without addressing what happened, nor should I. The past week was nothing short of a diverted disaster for the startup ecosystem.

I’ve had a lot of people ask what the team at Vol. 1 Ventures thought, so Ian and I created a video earlier in the week for folks. Feel free to give it a watch and let me know your thoughts. (I’m also in the process of developing new audio and video content for our premium subscribers so excited to see what neat stuff I can create for y’all!)

For me, the SVB failure brought back a lot of PTSD from my time in law and finance during the ‘08 market crash. Seeing everything fall apart before your eyes is very traumatic and I sincerely feel for everyone going through it right now. I think Ian and I were able to mobilize resources so quickly for Vol. 1 Ventures because we had seen this all before. I’m really proud of how we handled this crisis and I believe that if we handle everything with the same calm collectedness our level heads will get us through a lot. So shout out to Ian for doing a great job over the past few weeks. I’m really proud of the work he’s done on behalf of the ecosystem!

Even though Vol. 1 Ventures does not bank with SVB we still were impacted. A significant number of our portfolio companies held monies there in some form. We are also impacted as humans as many people we care about are employed or even funded by SVB. Those human impacts can get lost in all of this but they can be the most important.

When I was a founder, I did bank with SVB. They were immensely helpful during my fundraise - from bringing me potential investors to taking a look at my cap table and projections, they went above and beyond. Even after my startup shuttered and I needed information for our dissolution they got me information so quickly. You can never forget true kindness and I am very thankful that I was able to work with the folks at SVB.

So now what, a crisis has been diverted but what do we do now? Honestly, so many folks need to take a really hard look at their actions before, during, and after now in the aftermath of what happened. When the sun rose on Monday we entered a new world in the startup ecosystem. We are in a new reality. Regulators and agencies will now be looking at every, single aspect of our ecosystem under a microscope. The world outside of our tech bubble thinks that we moved too fast and broke everything. And whether we acknowledge it or not, what everyone else thinks does matter. If folks villanize an industry or sector it has a chilling impact on innovation. We have to now batten down the hatches and prepare for a very unfriendly world at large.

So now that we have another “Black Swan” event down…back to our regularly scheduled programming.

How Does Healthcare Get Paid For?

Part 2: Practice Guidelines & Medical Societies

(Feel free to take a look at Part 1 here if you need a refresher since so much has happened since we last talked about this topic!)

Now comes the least well-known part of this whole shebang - practice guidelines from medical societies. Practice guidelines are by faaaaar the least well-known, but quite frankly they are the most important part of a product’s journey to getting into the hands of medical professionals.

Medical societies are in and of themselves a bit of a confusing maze for most folks new to healthcare. They don’t all operate the same and each has a different flavor of administrative red tape. They are also incredibly secretive and gatekeep almost every piece of information you might need. In short, almost every medical society infuriates the industry side of things. Truthfully, it can sometimes feel like the Illuminati of healthcare.

Every medical subspecialty has a professional society that is responsible for creating practice guidelines that help determine what the standard of care should be for their members. Medical societies create committees of practitioners in their respective areas of care. These committees are usually created by the society’s board of directors or nominating committee. It is a great honor for a physician to be a part of these committees. But…they’re time-consuming and usually one isn’t chosen until they are well-known in their field so many committee members are later in their careers than you imagine. Some societies are doing a great job of integrating younger members into committee service, while others still struggle. This can mean that some societies have significant lag when it comes to including technological advances in their guidance. It also goes without saying that some societies also allow more external lobbying from industry than others so some societies’ practice guidelines are weighted differently by payors once they are released. If a medical society allows industry-sponsored research it also can mean that payors will take their guidance less seriously and wait for societies with more stringent research parameters to weigh in before they change payment structures.

These committees are responsible for creating practice guidelines that help determine the standard of care for their members. These guidelines are developed based on the best available evidence and expert opinion, and they are intended to help healthcare providers make decisions about patient care. Usually, practice guideline committees meet throughout the year to work on new, prescient guidance and to update previous guidelines that no longer should be considered the standard of care due to new developments in medicine.

Practice guidelines, once complete and published, are used by payors to determine whether a particular service or treatment is medically necessary, and they can also be used as a defense in malpractice cases. In addition to setting standards for patient care, medical society practice guidelines can also be used to help inform the development of new medical products and services. Basically, if a medical society releases a practice guideline that states that your device, product, pharmaceutical, etcetera should be the standard of care, it means that doctors are now basically required to use it in the continuum of care. Once you’re the standard of care, you can pursue contracts and codes for your services with as much ease as one is allowed within healthcare.

Payors use a complex system of codes and fees to determine how much they will reimburse healthcare providers for medical services. Healthcare providers use specific medical codes to describe their services, and these codes are then used by payors to determine how much they will reimburse the provider. The amount reimbursed can vary depending on factors such as the provider's location, the patient's insurance coverage, and the type of procedure or service being provided. FDA clearance or approval is not the same as reimbursement, and even if a product is cleared or approved by the FDA, it may still not be covered by insurance or reimbursed by payors. Reimbursement is determined by a separate process, which can also be difficult to navigate for healthcare providers and patients alike. Why would anything in this process be easy ya know!

So how does a company get one of those fancy code thingies for their products? Stay tuned for Part 3 on Payors next…and I hope everyone has a nice and calm weekend!

xoxo,

Stevie