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Five Questions with Andrew Lindner, managing partner and co-founder of Frontier Capital

  • Employer-provided healthcare supports corporate wellness consolidation
  • Frontier’s Viverae explores potential transactions
  • PE firm eyes deals in RCM, cost-containment and tech supporting shift to value-based care

Andrew Lindner is a co-founder and managing partner of Frontier Capital, where he helps lead the Charlotte, N.C., firm’s healthcare IT and vertical SaaS investment activities.

Regardless of how the Affordable Care Act is (or isn’t) tweaked, the continuation of employer-sponsored healthcare has created new opportunities for the PE community. Frontier intends to join in, partly through its Viverae platform. His firm in 2009 injected $6.5 million into Viverae, which helps companies control healthcare costs through programs that keep employees accountable for their health and well-being.

Frontier’s investment in AccessOne also aligns with a strategy that involves helping patients navigate the complex healthcare system and providers get reimbursed.

  1. Many predicted the demise of employer-provided healthcare when the ACA was implemented. That hasn’t happened. Why?

Employers are continuing to provide healthcare largely because of the whole prisoner’s dilemma. The public exchanges haven’t been that successful. There’s a lack of desire to be the only company in town not offering healthcare coverage because it’s become so ingrained in employees’ minds as a natural benefit. Instead, employers have turned inward and heightened the intensity of trying to push more responsibility down to the employee, primarily in the form of high-deductible plans and private exchanges.

  1. What investment opportunities have emerged as responsibility for the cost of care shifts to patients?

If you’re going to now get an employee engaged in healthcare, you’ve got to get them some tools to navigate the system. Things like Healthcare Bluebook or Castlight Health offer basic tools that allow a patient to shop both by price and quality for a healthcare provider for a given procedure. A tool like Teladoc allows you for free or next to free to have that healthcare consult with the doctor. Now what’s starting to evolve is guys like Castlight, which provides price transparency, buying Jiff, more of a benefits enrollment administration provider. You’re starting to see a consolidation of these point solutions into a hub that has all those tools.

  1. What does this mean for corporate wellness providers?

So many of these point solutions are used on a very episodic basis. Wellness is ongoing. It’s counting steps for you or days till you need the next incentive. For that reason, wellness is getting hot again. It’s a natural hub.

Corporate wellness used to be a hard-to-quantify ROI. People are starting to recognize the link between behavioral health and physical health. The definition of corporate wellness has expanded to corporate well-being. Enterprises are demanding less superficiality and deeper, meaningful solutions to improve the health outcomes of employees. It’s one of the few interventions that you can attach a tangible reward to.

  1. What are your plans for Viverae?

We’re actually looking to make acquisitions at Viverae. It’s hard to get paid for wellness if employers offer it for free. Smaller, undifferentiated wellness players stranded gives us an opportunity to make acquisitions and drive some really good cash flow.

The real opportunity for consolidation is in that mid-market space. Clients want everything rolled into one. There aren’t but a few of scale with $40 million and up in revenues and we’re one of them. In the near term we’re definitely focused on making an acquisition or two, or proactively taking it to market.

  1. In which other HCIT verticals is Frontier seeking investments?

Three big areas are revenue-cycle management, cost-containment and technology solutions that help manage healthcare on a value-based means. Rather than getting reimbursed procedure by procedure, these companies figure out how to get reimbursed in the context of providers being reimbursed based on value.

Action Item: Contact Andrew Lindner at +1 704-414-2880.

Andrew Lindner, co-founder and managing partner at Frontier Capital. Photo courtesy of the firm.