May 4, 2020

McGuireWoods Interviews Women’s Health USA CEO Goran Dragolovic

Read our CEO Goran Dragolovic’s latest perspective on challenges to the business of women’s health in this current COVID-19 pandemic and his thoughts on what will happen next, and new opportunities that may emerge, for the category.

The interview below is part of a series from McGuireWoods that features interviews with C-suite leadership of private equity-backed portfolio companies. To recommend a leader for a future interview, email Holly Buckley at hbuckley@mcguirewoods.com.

Q: What is your thinking around value-based care in women’s health and how Women’s Health USA intends to change the market in that regard?

Goran Dragolovic: When you consider that women consume 30 percent more healthcare spend than men, and when you combine that with the fact that women are now overwhelmingly the healthcare decision-makers for both themselves and their families, it is remarkable that women’s health has not been receiving greater attention within population health and value-based discussions and efforts. Even on an episodic basis, the legacy obstetrical “case rates,” which dominate commercial reimbursement methodologies, are rather modest and pedestrian in their scope and objectives.

At Women’s Health USA, we believe there are significant opportunities to expand the value-based care paradigm to women’s health through innovative ways to engage, compensate and incentivize the OB-GYN and other women’s health providers.

One of the unique features of the obstetric episode is that you start with one patient and end with two or more. That creates a unique set of challenges. In addition, the rapid increase of higher-risk pregnancies due to the rise in obesity and other comorbidities can mean you have four different specialties potentially impacting this event: obstetrics and gynecology, perinatology, neonatology and pediatrics. And, unless you’re extremely well-organized and coordinated, you’re going to run into challenges.

As I noted, the legacy value-based arrangements have focused on the traditional obstetrics case rate for the nine-month episode. We believe in opening our aperture to include the prenatal period, the delivery and perhaps a one-year post-delivery care for the mother as a more appropriate measure of the obstetric bundle. This would warrant more care coordination between specialties and could meaningfully improve the existing gaps in care, reduce total cost of care, reduce NICU utilization and enhance patient experience. We’d be able to more effectively manage higher-risk pregnancies in the earlier days and better position both the mother and baby for a more effective first year.

Obviously, this approach would require bolder thinking and realignment. It would also require a new set of total cost-of-care measures that would go beyond physicians to account for facility costs, diagnostic and technical components, and utilization of the emergency room in the prenatal period. Such an approach would generate more significant results along the Triple Aim metrics.

Furthermore, there is both a real need and a material opportunity for value-based arrangement within Medicaid obstetrics. Medicaid currently finances half of all births in the United States, and when you include pediatrics, you have one of the largest expense line items within Medicaid. And the existing clinical results for obstetrics are remarkably poor.

As the world’s wealthiest nation, we have some of the most embarrassing statistics for maternal and infant mortality among all the industrialized nations. Many of the underlying drivers and causes are largely legacy misalignments on how Medicaid obstetric care is currently delivered and compensated. To achieve the kind of results that are needed, a “population-based value-care” delivery model represents the best option in our view. And for population health initiatives to succeed, the OB-GYN providers must have a significant voice in how the care is organized and delivered, including a completely new set of provider engagement, compensation and reward models.

Q: How is COVID-19 challenging your business and the businesses you serve?

GD: This “once-in-a-century event” will strain any industry and business to a degree most of us couldn’t have appreciated beforehand. In this moment, we’re witnessing the significant challenges confronting the private practice of medicine. Terms like liquidity and access to capital have become the parlance of physicians seemingly overnight. The COVID-19 pandemic is also bringing into stark relief the importance and value of scale/size for stability during moments of major crisis and uncertainty, and the tenuous position that is inherent to the small private practice of medicine. As a result, we will likely see an accelerated shift of small practices into larger entities, be it integrated hospital delivery systems, larger practice platforms or “Optum-like” vertically integrated delivery models.

Our ability to anticipate where our market is shifting and to position ourselves ahead of the pack is now a critical exercise. What it demands from all of us is that, in addition to focusing on the crisis of the day, we now spend a good amount of time focusing on where the country and our healthcare sector are heading and how we can best prepare ourselves for it.

Q: What healthcare trend will cause the most change in the next 10 years?

GD: This COVID-19 pandemic will certainly create a lasting effect that extends well beyond the next few years and long after the economic turmoil has settled down. Those who lived through the Great Depression were permanently changed. Their views, behaviors, attitudes and thoughts permanently shifted. The same dramatic shift will take place now. Patients, providers, employers, health plans and hospitals will change in ways we can’t yet fully appreciate.

Furthermore, COVID-19 is also exposing some of the glaring weaknesses and limitations of the U.S. healthcare system. Access, coverage and national/state coordination of health resources are all found wanting in the midst of the pandemic. These factors all point to the fact that healthcare is on the cusp of momentous changes. How will our healthcare delivery be organized going forward? How can we monitor patients around the clock? How will we identify higher-risk patients? How will we match them to appropriate resources faster? How can we be more efficient with our resources so we can better focus on those who need it more and reduce the load for those who need it less, and do so without compromising outcomes for the entire population?

Predicting and anticipating those changes could possibly be the difference between failing and succeeding, because a shift of this magnitude creates unique opportunities but also threats. And if Shelby Davis is to be believed — that “you make most of your money in a bear market, you just don’t realize it at the time” — then this pandemic will prove to be arguably the most opportune moment in healthcare since the advent of Medicare.

This portentous moment is further amplified by two major technological developments: the advent of 5G and the expansion of artificial intelligence. These technological tools and capabilities will certainly accelerate the rate of innovation and development of new solutions for healthcare. From predictive analytics, to risk-stratified real-time matching of resources and needs, to telemonitoring and telemedicine, I am convinced that COVID-19 will spawn an entire category of new healthcare businesses and solutions in the months and years to come. And we’re looking forward to lending our small voice to this collective effort and pushing the envelope of women’s health where possible.

Q: You have always been a visionary, “think-outside-the-box” leader. How have you implemented that creative approach in your role at Women’s Health USA?

GD: First, I was very fortunate to inherit an extremely competent and capable team when I joined Women’s Health USA 2.5 years ago. Since women’s health was a new sector for me, I am able to rely heavily on their subject matter expertise as I continue to learn about this sector. My general approach in life and career has been to proceed with a sense of awareness of just how little I know about any subject. And it certainly is the case here.

At the same time, I have an insatiable curiosity to understand how everything works, how things are organized and why they are organized as they are. It’s like taking a toy apart to better understand all the components and how they function together.

I think it’s equally important to have a deep conviction that progress and evolution toward improvement are never-ending. There is always a better way, and “continuous improvement” should be our posture in life and business. It is with this combination of attitudes and approaches that the team and I are attempting to maintain an environment where creativity flourishes. We are trying to stay true to these principles as we lead our business of women’s health. The current moment will certainly test these principles. Our ongoing curiosity and conviction to lean into the challenges that lie ahead will be an absolute requirement going forward if we are to continue our success.