Medicaid Needs More Innovators! Digital Health Interviews: Kat McDavitt (Kovalchik)

It’s Digital Health Interviews, and we continue to introduce you to amazing digital health experts as well as share their knowledge and insights that hopefully help you to make your startup journey a little bit easier, so you’ll avoid some of the mistakes and failures other founders met. In this episode, host Alex Koshykov introduces guest Kat McDavitt, a successful healthcare consultancy business owner. She details her experience, starting as a freelance copywriter in health IT and eventually founding Innsena.

From Architecture to Healthcare

McDavitt expressed surprise at the hiring boom in healthcare, a sector seemingly immune to the recession’s effects. This discovery marked the beginning of her long-standing involvement in healthcare technology, spurred on by the high-tech act, part of the American Recovery and Reinvestment Act. Her work at Dodge Communications, spanning seven years, involved extensive communications and strategy work for various health tech companies, fueling her interest in the intersection of policy, technology, and healthcare.

However, the acquisition of Dodge Communications marked a turning point. While beneficial for founders and stakeholders, McDavitt found that it did not align with her career aspirations. This led to the inception of her own company, Innsena, which focuses on growth in the Medicaid and public health markets. Innsena, co-run with her business partner Leslie Kirk, primarily assists startups targeting underserved populations in these sectors.

Innsena’s Success in a Challenging Year

Kat McDavitt sheds light on how her agency, Innsena, achieved significant growth in 2023 despite a challenging period for the digital health industry. She emphasizes the vital role of her team: “They’re great! I did not do it by myself.”

McDavitt explains that their success stemmed from a strategic focus on government-funded programs, especially during times when private funding was declining. “Often when you see private money decline, you see public money increase,” she remarks. This approach was particularly effective as the agency navigated the uncertainties in the market, with McDavitt noting, “We made a big effort to shift the balance of our work.”

The agency’s portfolio is described as a mix of private and public funding, with an emphasis on Medicaid and public health. She concludes by emphasizing the importance of reputation and relationship-building in their field: “Our reputation is all we have at the end of the day and my team is hyperfocused on making sure that we deliver and that we have that amazing reputation.”

Balancing Business with Early-Stage Support

McDavitt expresses a fondness for early-stage startups, acknowledging the financial challenges they often face in affording services like those offered by Innsena. She describes Innsena’s sweet spot as being companies, typically in the Series A to C stages, that can sustain a long-term partnership.

Innsena’s approach to client engagement is based on a retainer model. McDavitt notes, “We’re not going to do a three-month project and hope it worked out. We’re going to be there for the long term, we help our clients to build those relationships.” This approach is particularly suited to more mature startups that have secured significant funding.

However, McDavitt also highlights her willingness to assist early-stage companies, recognizing the importance of supporting new entrants, especially those in the Medicaid and public health sectors. She offers, “I am always willing and my team is always willing to help early-stage companies... Happy to point you in any direction, happy to give you a call, and happy to do a consult.” This openness to guiding newcomers, even those who might not yet be able to afford Innsena’s services, underscores their commitment to the broader goals of improving healthcare through digital innovation.

Public Health Innovation: Strategic Communication and Understanding

McDavitt points out a common misconception among investors and companies: the narrow view of public health as primarily grant-funded and limited to transactional functions, such as vaccine and immunization registry work, especially highlighted during the pandemic. She emphasizes, “Public health is so many things! It’s cancer, it’s behavioral health, it’s SUD, it’s all those things.”

Highlighting her communications expertise, McDavitt advises startups to articulate their public health focus in a manner that is easily understandable and relatable. She suggests avoiding broad and generic terms and instead focusing on specific health issues, like cancer or opioid use disorder, to make a stronger impact. “Just the way we talk about things makes a big difference,” she notes, underlining the importance of effective communication in engaging investors and stakeholders.

McDavitt also mentions the success story of Indiana’s public health program, noting that their approach to avoiding the direct mention of “public health” in their messaging contributed to their success.

A Call to Innovate in Medicaid and Public Health

Addressing the challenges and opportunities in the areas of public health and Medicaid, McDavitt shares her observations from the JP Morgan conference. She notes a general hesitancy among investors towards Medicaid and public health, expressing her disappointment in the prevailing sentiment.

Despite this, McDavitt urges founders not to be deterred. She emphasizes that the level of funding in these areas remains consistent and encourages startups to explore opportunities. Drawing from her experience in a master class with Startup Health, she reassures startups: “You shouldn’t be scared of it.”

Highlighting the potential of Medicaid, McDavitt addresses common concerns about its complexity and the multitude of markets, reminding us that each state represents a unique opportunity. She encourages startups to do their research and engage in these sectors, emphasizing their relatively untapped potential: “This is a big pond with not a lot of fish if we’re talking about Medicaid and public health.”

McDavitt also points out that success in these areas is based on building relationships rather than sheer sales force. She offers assistance to startups, showing her commitment to fostering growth in these fields: “We will help you, we will introduce you to the right person, we will listen to your pitch.”

Her passionate appeal to digital health founders underlines the significant need for innovation in Medicaid and public health, emphasizing that over half of U.S. births are covered by Medicaid. McDavitt concludes with a call to action, inviting startups to reach out for support in navigating these sectors.

Focus and Value Understanding

McDavitt emphasizes the critical importance of understanding a startup’s unique value and maintaining a clear focus. She observes that many startups fail because they diversify too much in an attempt to acquire different customers, leading to a non-scalable and disjointed business model. “Every day we’re making a different flavor... Sometimes we switch from soup to we make chili,” she analogizes, highlighting the pitfalls of lacking a coherent business strategy.

Reflecting on her time with Collective Medical, McDavitt underscores the significance of identifying and committing to a niche. Collective Medical focused on care coordination in emergency departments, a segment that was not highly funded but had a gap in the market. Despite suggestions to expand into other areas like Medicare, they stayed focused on their initial market, which eventually led to their success and acquisition by a major player in the industry.

McDavitt’s advice to digital health startups is to find their niche, understand what they excel at, and stick to it. She warns against pivoting without a solid reason, suggesting that a well-defined focus is more likely to lead to sustainable growth and success. “Focus and understand what you’re good at,” she advises, indicating that a clear, dedicated direction is often a key ingredient in the recipe for a successful digital health startup.

Digital Health in 2024: AI Advancements and Cautious Optimism for Investment

McDavitt begins with a cautious optimism regarding the overall investment climate in digital health for 2024. She hopes for an increase in general investment, although she expresses skepticism about significant growth in funding for Medicaid and public health sectors. Regarding technological trends, McDavitt foresees the continued prominence of Artificial Intelligence in healthcare. She doesn’t anticipate revolutionary breakthroughs but expects AI to further streamline and improve operational efficiencies, such as scheduling and administrative tasks. This, she believes, is crucial due to the existing staffing shortages in healthcare, as AI can help free clinicians to focus more on patient care.

McDavitt also touches on women’s health, an area she hopes will receive more attention and investment. Despite the buzz around it, she remains somewhat skeptical about seeing significant investment growth in this area within the year.

Another area McDavitt finds promising is the utilization of tech-enabled services in enhanced care management, particularly with the recent healthcare policy changes in states like New York and California. She believes these developments present great opportunities, especially for the Medicaid population.

Essential Advice for Digital Health Founders

McDavitt stresses the value of networking and engaging directly with customers and industry stakeholders. She points out the complexities of the healthcare sector in the U.S., suggesting that even experienced founders can benefit significantly from interacting with a diverse range of people in the field. “Meet people and ask for help,” she advises, underscoring that success in digital health often hinges on understanding and responding to the needs and perspectives of customers and buyers.

She observes that successful startups are those that deeply understand their customers and buyers, who might not always be the same entities. This understanding comes from direct communication and building relationships.

Highlighting a common pitfall, she notes that many startups haven't engaged with their potential customers, such as hospital administrators, which can lead to a lack of direction and relevance in their products. Offering a solution, McDavitt expresses her willingness to facilitate these crucial connections: “I’ll introduce you to them!”.

The Mission of the Zorya Foundation

In the concluding part of the interview, Kat McDavitt introduces the Zorya Foundation, a non-profit organization she founded to support women in the healthcare field. The fund, named after the Slavic goddess of the dawn, reflects McDavitt’s personal and cultural heritage, with her familial roots in Ukraine.

The Zorya Foundation’s primary mission is to provide cash grants to women healthcare workers, especially nurses and CNAs, to assist them with childcare and caregiving responsibilities. McDavitt highlights the critical role of childcare in her success, acknowledging that many women in healthcare do not have access to such support. This lack of childcare often forces women out of the workforce, particularly at crucial stages in their careers.

McDavitt shares a personal story, recounting times when she struggled to balance her career and motherhood, particularly during the challenging night hours. The dawn, symbolizing hope and resilience, played a significant role in her ability to persevere. She wants the Zorya Foundation to embody this spirit of hope, providing the support that keeps women in the workforce and enables them to continue their vital roles in healthcare.

The previous episode with Gil Bashe: What 2024 Disruptive Tech Will Change Health + Investment Tips