Sandra Hernandez, the second ever President and CEO of the California HealthCare Foundation (CHCF) joined me at the Health Tech Forum‘s Innovation Conference in South San Francisco to talk about the Foundation’s support for companies that are innovating for the common good. Here is the link to video interview. She said that for the last 5-6 years, CHCF has been running an Health Innovation Fund for early-stage companies that have new tech tools or products that could improve care for a large a number of MediCal (California’s Medicaid program) or low income populations; or, that have the potential of creating efficiencies and/or generating significant savings.

CHCF Health Innovation FundThe entrepreneurs leading these companies often come out of the delivery systems themselves. They have identified a problem and have an idea of how to solve it in a different way. “In very early stages,” she said, “we look at them and ask ourselves is this a technology that can significantly improve care delivery, specialty care, transitional care, pharmaceutical services, or whatever within the safety net delivery system.”



CHCF tries to match the companies with organizations where their product can be piloted. They provide early stage loans to fund a formal evaluation of the outcomes of the pilot and to help get the company off the ground. This kind of debt also allows them to pilot further, to go deeper. In the end, the hope is that their business model gets embedded and ideally scaled within a safety net delivery system.

The companies the Foundation supports do not have to be non-profits. Sandra says, “We are looking for entrepreneurs who are interested in a business model that could benefit large populations of low-income people that are served by the Safety Net, whether uninsured or covered by MediCal.”

She continued, “these delivery systems are at capacity and we have just expanded insurance. How do we make sure that that coverage gets to meaningful care? You may have a primary care home, but do you have access to dermatology or other types of specialty care?


Providing wraparound support

The Foundation makes early stage investments in the $500,000 to $1 million range, usually in the form of debt. The funding is typically over a 5-year period of time. “During that time, we are helping the company both get their legs and think about how their business model could apply within the Safety Net.”

Amongst other things, the Foundation makes introductions, helps make connections for pilots, and works with them to improve their technology. They also help their portfolio companies understand how Federally Qualified Health Centers and public hospitals are financed. All of this is possible because of relationships and experience CHCF has developed over 17 years of grant making programs. Sandra explains that “we provide wrap around support. We want to see that these companies have a viable product.”

When I asked if they were an incubator or an accelerator, she responded that “we fund incubators and accelerators. We are more trying to serve as a matchmaker…the Safety Net is not ordinarily thought of as a viable market…We are trying to connect these entrepreneurs early on in their business so they can think about how they might scale their technologies in a meaningful way and achieve a bottom line of something that the Foundation’s mission is committed to.”


Portfolio companies

CareInSyncSandra points to CareInSync, as an example of a company they funded. CareInSync’s mobile platform reduces readmissions and improves care transitions by enabling care teams to collaborate on plans for patients transitioning between settings. She says, “we gave them early debt, they then got bought by a company [Hearst] that put them on their platform and we got fully paid back…they are still serving the population that we introduced them to early on.”

Some of the other companies in their Innovation Fund portfolio include Direct Dermatology (a telemedicine company that provides remote dermatology consultations, expanding access to convenient and affordable specialty care), Omada Health (digital therapies to inspire behavior change), Propeller Health, formerly Asthmapolis, (tools to track, manage, and research asthma and COPD), and PipelineRx (a telepharmacy company that offers safety-net and rural hospitals access to remote pharmacy consultations).



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