“What’s really going to drive success is our ability to stay focused on these initiative areas and drive that value back into our membership,” interim CEO Brett Moraski told Becker’s.
The innovation consortium was launched in October by four major nonprofit health systems: Renton, Wash.-based Providence, Dallas-based Baylor Scott & White Health, Winston-Salem, N.C.-based Novant Health and Houston-based Memorial Hermann Health System.
Whittled from a list of about 85 possibilities, its first three initiatives will focus on specialty pharmacy services and population health management in addition to financial experience.
“It’s been a very intentional strategy; we’re not trying to do everything,” Mr. Moraski said. “We’re not out there like a private equity fund trying to do deals and return capital, but we are trying to build equity value.”
Longitude Health is owned and governed by the four health systems, with the CEOs of the systems serving as Longitude’s board members.
“So when they make the investment in Longitude Health and we in turn make that investment into building out these [operating companies], they own them,” Mr. Moraski said. “They get the benefit of the equity appreciation of those businesses over time that may or may not be sold or transacted — as opposed to working with an outside vendor and really ceding that control and that value.
“What we believe we do that’s unique is allowing them to really capture that value and be able to recycle it back into their missions and their communities whenever it’s appropriate for them without the burdens of a typical private equity timeline. It doesn’t need to be three to five years or seven years; it can be appropriate for the situation.”
Longitude’s initiatives are focused on areas that can “create impact over the first 12 to 24 months” of its formation. Mr. Moraski said these are areas the health systems believe carry significant near-end opportunities, “or just real challenges that operationally, if we are able to achieve what we believe that we can, then you can really move the needle not five years down the road, but one to two years.”
Though the goal is to see results in the short term. Mr. Moraski said these initiatives are meant to be “durable, long-term business that start with [Longitude’s] members and where their needs are, but we believe ultimately will be attractive to other not-for-profit health systems who have similar needs to drive customers outside of the members.”
Longitude Health could expand to add more nonprofit health system members down the road. Those would be split into two tiers, Mr. Moraski said. Tier one systems will allocate a higher amount of capital and will also have a board seat. Tier two systems will allocate less capital and will not have a seat on the board. There likely would be a cap on the number of tier one systems at 10 to 12 systems, Mr. Moraski said.
“As we move forward, the idea is we want member systems that are not competing,” he said. “They’re in different geographies where sharing best practices is just easier.”
Mr. Moraski said that in the latter part of this year or early next year, Longitude will roll out its second cohort, which will likely feature between two and four initiatives.
