When Cigna launched its venture capital fund in 2018, it did so not only in search of the financial perks but with an eye on a front-row seat to the latest in healthcare innovation.
Tom Richards, Cigna's senior vice president and global lead of strategy and business development, heads up Cigna Ventures' work, and he told FierceHealthcare that investment decisions aim to find potential partners that can make the customer experience easier.
"At the end of the day, healthcare is still too expensive and too complicated for the parties involved," he said. "We’re looking to make it affordable, predictable and simple."
The opportunity to achieve those goals is possible with both large and small companies, he said. Companies that are still in their startup phase may require some additional feedback and nurturing to grow, but the end result can be quite valuable in moving the needle on some of the industry's biggest problems, according to Richards.
"I just think there’s so much innovation going on in the marketplace, both within large companies and small companies," he said. "The opportunity to partner and help solve some of the issues we have in healthcare is huge."
Here's more from our conversation:
FierceHealthcare: Why did Cigna want to launch a venture capital arm?
|More about Tom Richards
Family: Married with four children
The most important part of his morning routine: I like to run. I wouldn’t say I do every morning, but it’s definitely my most important part.
A few words to describe his management style: Servant leader. I really try to help my team to be successful.
Advice he'd give his younger self: I guess "dive in." Thankfully I think I've largely followed that advice over the course of my career.
A book he recommends: "The Innovator's Dilemma" by Clayton Christensen
Biggest pet peeve: People with big egos.
Favorite thing to do on a day off: I love to hike with my wife and my dog.
Tom Richards: It’s tied directly to our mission and our strategy. We’re looking to partner and invest with innovative companies and have those companies help improve health, well-being and peace of mind—which is Cigna’s mission. By partnering, we really feel like we look for opportunities where we can help the entrepreneurs grow and where the entrepreneur can help our clients, customers and providers.
We’re really looking for a win-win situation.
FH: What are some of the investments made to date?
TR: They tend to fall in three general buckets: digital health, care delivery or care enablement or insights and analytics. On digital health, one of our early direct investments is Omada, which is obviously a digital diabetes prevention company. They’re a great example where we led their C1 round almost three years ago. We were not really a customer at the time. We had piloted with them, but we thought the company looked really innovative and promising and like it offered a lot of value to our customers and clients. We are now their largest customer.
We work with them on product innovation. We’re very integrated with them, so we transfer data to them and them back to us. So, it’s a really, really tight partnership that I think has made us better, and it definitely added value to our customers and clients.
In the care delivery and care enablement space, we’ve got several different companies that are in different stages. We’ve got some real startup companies, like Contessa or Cricket Health—both of them are pretty early-stage. And then we’ve got MDLIVE, which is obviously a large telehealth company where Cigna has been a customer of theirs for years. With the investment we made in MDLIVE about a year ago, we’ve taken what I'd say was a vendor relationship to a strategic relationship.
We’re helping them to develop. Telehealth has traditionally been more urgent care. We’re looking beyond urgent care to deliver primary care for customers that want that. I'd say being an innovative partner to bring something pretty innovative to the marketplace.
In the insight and analytics space, we have, again, several different companies. The one we announced most recently was Arcadia, which offers data aggregation and insights within our Medicare Advantage space.
FH: What does Cigna Ventures look for in a potential investment?
TR: They’re solving a big problem or attempting to solve a big problem, that they have a great team and that we can make each other better. Again, we’re not a passive investor, so let’s solve big problems have a great team and help each other grow.
FH: Does Cigna provide other support to a company it invests in?
TR: It’s very company-specific, but it generally includes, first of all, a board observancy so we can stay close to each other. Cigna has obviously a lot of depth and breadth of talent; we have a lot of smart people. So, in many cases, we’ve been able to bring experts to the table to help the companies solve problems.
In most of the Cigna investments we have customer relationships as well, so we’re able to provide revenue, and again, and ongoing source of innovation.
FH: You’re also heavily involved in the integration with Express Scripts. What has that process been like, and how do you get your arms around integrating two companies of this size?
TR: It’s one of those things that it takes a village, if you will. There have been hundreds of people involved in the integration. I was heavily involved in a lot of the early investigation planning. It’s going extremely well. I think ahead of schedule. [There are] maybe three things that I’ve kind of learned along the way. The first is to assume good intentions. I find that 99% of the time people are trying to do the right thing, but it might not be 99% of the time that people assume that. You'll almost always be proven right.
Second: Listen, which is kind of stuff you learned in kindergarten but I think it’s easy to forget it. It’s really important in business generally, but I think it’s especially important where you’re trying to bring two organizations together.
And the third is about just kind of honest open dialogue and having that fortitude to be honest about things. It helps you find common ground and to solve the problems much more quickly and collaboratively.