General Catalyst’s Candace Richardson: Moving the Healthcare Industry Away From 'Sick Care'
Thesis BriefsHealthcareCandace RichardsonGeneral CatalystHomeward HealthEleanor HealthCityblock HealthMedicaid

Terra Nova Insights Team,

General Catalyst’s Candace Richardson: Moving the Healthcare Industry Away From 'Sick Care'



The healthcare industry is faced with increasing labor shortages, systemic inequities, and costs that are economically unsustainable. Candace Richardson, principal at General Catalyst, believes innovative payment models and technology, along with clinically-validated care models, can deliver on the promise of "Health Assurance." This term refers to the healthcare industry's evolution from “sick care,” to a resilient, proactive system designed to help people stay well, bend the cost curve, and make quality care more affordable and accessible.


Why is Health Assurance such an important category moving forward?

  • The consumer experience in healthcare is decades behind other industries. “Whether it’s picking health insurance, scheduling a medical appointment or having visibility into out of pocket expenses, navigating the U.S. healthcare system is a pain,” according to Richardson. “Consumers are rightfully demanding the types of experiences they have grown to enjoy in other aspects of their lives like e-commerce and banking. The market is responding to this demand with more and more healthcare companies leveraging technology and data to provide their customers easier access, greater choice and more personalized experiences.
  • Government sponsored models are pushing for value-based care and health equity. “There is a steady stream of payment models coming from CMS that are enabling an accelerated shift to value-based care,” Richardson says. “These range from disease specific models like Comprehensive Kidney Care Contracting (CKCC) to broader models like ACO REACH, which allows providers to take risk in traditional Medicare. It’s particularly exciting to see health equity directly written into some of these models. For instance, ACO REACH requires all participants to develop and implement a robust health equity plan to measurably reduce health disparities.”

What are the business models that might be attached to this category?

  • Value-based care payment models can align stakeholders across the value chain. Richardson points to Homeward Health as an example of this broader stakeholder convergence. “When Homeward improves health outcomes for people in rural markets at lower costs it’s beneficial to both the community, health plan partners, and Homeward. Value-based contracts afford them the flexibility to provide services (e.g. transportation and food) that we know impact health outcomes and costs, but aren’t traditionally reimbursed in a fee-for-services system,” says Richardson.
    • Richardson cites the shift to aging in place, new approaches to rural healthcare, healthcare workforce transformation, integrated mental care, and the operationalization of value-based care as among the most pressing issues in this space today.

What are some of the potential roadblocks?

  • Value-based care contracting is complicated and often highly bespoke, and the infrastructure to succeed in risk is still nascent. “We’ve seen the most maturation in primary care. In specialty care and behavioral health, value based contracts are still fairly new, which means there’s no playbook when you negotiate with payers,” says Richardson. “Once you have contracts signed, there is also a considerable amount of data and analytics required to appropriately risk stratify the populations you’re serving, engage them and deliver care that will result in better outcomes and savings. Companies like Eleanor Health, which delivers care to people with substance use disorder (SUD), are pioneering total cost of care value based care contracting in behavioral health.”
  • Negative macroeconomic trends bring challenges but also opportunity. “Heading into a challenging macroeconomic environment means longer sales cycles, and a higher bar for ROI as margins come under pressure,” she says. “It also means that payers of healthcare — whether it be employers, health plans or the government — will be even more eager to partner with companies that can demonstrate they can impact outcomes and drive savings.”


saidbyblock~ via email correspondence
Candace Richardson

General Catalyst makes healthcare investments aligned with our Health Assurance thesis. Our goal is to create consumer-centric, data-driven healthcare designed to help people stay well, while bending the cost curve.

Within healthcare I’m interested in delivering and coordinating care for everyone, including historically neglected groups. A large portion of the United States’ $4 trillion annual healthcare expenditures is driven by healthcare services, meaning the actual provision of care, making it a critical component of reducing spend. Moreover, Medicare and Medicaid represent roughly a third of this spend with both on track to exceed $1 trillion of annual spend each in 2023 and 2028, respectively. This level of spend and the pace at which it is growing is unsustainable. Luckily the government, regardless of political party for the most part, and the private sector are aligned around the need to curb spending while also improving access and quality.

As part of this, there has been a new wave of innovation around healthcare services that tackle upstream drivers of poor health outcomes and avoidable expenses. Examples include peer-support led care teams, the integration of physical,  mental and social services, and the increased adoption of value-based care payment models that incentives higher quality care in conjunction with reduced spend.


Q: What do other market participants or observers misunderstand about these categories?

A:  For founders, it’s realizing that there are often groups of people or organizations that have done this before – perhaps at a smaller scale, with limited technology, or in a different geography. We have a lot to learn from them. Examples are nonprofits, programs at the VA, community organizers or people working in public health. There are huge lessons we can learn if we go outside of the bubble of VC-backed companies. With healthcare services, we are rarely completely reinventing the wheel.

What’s new is the scale we are trying to achieve. The question is: can we take something at a local level (like point-of-care diagnostics in Rwanda or community initiatives to screen for prostate cancer in barber shops– things people have been doing for years) and use tech and capital to build scaled, enduring businesses that impact more lives. Let’s learn from and collaborate with the people who have done this before.

A lot of the nuances around value based contracting will be new. It will be hard. You need to work with investors that deeply  understand your business and go-to-market, and are willing to roll up their sleeves. Finding a true anchor commercial partner is also critical. What you’re building should be solving one of their key strategic priorities. They should feel like co-builders who are on this journey with you for the long-haul.

Q: What can you say about the time horizon for the adoption of this thesis?

A: The next five years will be critical. At that point we will have much more visibility into the performance of specialty value based care, programs like ACO REACH, and the impact of the emerging mental health interventions on physical health and total cost of care spend. We are on a longer 30-year journey to transform the healthcare system to one that is truly consumer-friendly and dignified.


  • Investing in the future of Medicaid is a massive opportunity. “We are early investors in Cityblock Health, which we believe has really emerged as a leader in the space,” says Richardson. “Medicaid is a large market with over $700B of annual spend and 70M beneficiaries or roughly 20% of the U.S. population. Unit economics are challenging given the lower reimbursement rates but there are ways to make it work. It takes a whole-person, tech-enabled approach towards engagement, embracing alternative payment models, and leadership teams that thrive in operational and regulatory complexity. Last but not least, you have to deeply care for and understand the individuals you are serving. Don’t make assumptions about what they need or want. Ask them.”


Cityblock Health, Eleanor Health, Homeward Health

The 2022 EVC List honors the top 50 rising starts in venture capital. Terra Nova’s Thesis Brief series showcases each investor’s insights and category expertise.

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