Q: What problem does Renalogic solve?
We help manage the human and financial cost associated with chronic kidney disease (CKD) for self-funded health plans. Chronic kidney disease has grown exponentially during our lifetimes due to rising obesity rates and other related health issues. Today, more than thirty-seven million Americans have CKD (an astonishing 40% are unaware of it). On the financial side, because dialysis is covered by Medicare, CKD consumes 1% of the federal budget. For patients who have not yet qualified for Medicare reimbursement for dialysis and remain covered by their employer’s health plan, the cost for a company could be as much as $500,000 per person, per year. Because of the unique mechanics of the dialysis market, although self-funded patients make up only 15% of the 450,000 US patients on dialysis, they generate more than 50% of revenues for dialysis providers. This inequity in pricing is what Renalogic attacks. Applying a proprietary methodology, Renalogic effectively reduces dialysis bills by an average of 80% for our clients.
Q: How is Renalogic differentiated in their market?
Three things really set Renalogic apart:
1) First, Renalogic is solely focused on chronic kidney disease. This is all that we do and has been for 20 years. That affords a level of expertise and depth of knowledge not common among our competitors.
2) Second is our combination of clinical and cost containment services. There are organizations that focus on claims re-pricing and those that focus on care management. However, bringing together both re-pricing and care management is highly differentiated in the self-funded world.
3) Lastly, we utilize a proprietary cost containment model that is not used by others in the industry. This legal and financial “special sauce” differentiates us in the market and allows us to achieve 80+% savings.
Q: What trends are you seeing?
The biggest macro trend is that chronic kidney disease continues to grow. This creates greater demand for our services. At the same time, the number of companies and entities that self-insure is expanding – there was a time when most companies under five hundred employees would not self-insure, but now smaller companies with as few as seventy-five employees are self-insuring. Renalogic sits at the intersection of the growing cases of CKD and an increasing demand for self-insured health benefits. Another macro trend impacting this market is the increased level of sensitivity to health care costs. Employers are utilizing more cost containment and care management options for the self-funded environment than before, and people are proactively looking for solutions more so now, than ever.
Q: What attracted you /Why did you join?
I am Renalogic’s first CEO since the founder. This is the fourth time in my career that I have taken the reigns from the founder, and I like the challenge. I like to preserve and leverage what made a business special under a founder and build upon that in an investor-backed environment. I found the business problem and the industry dynamics at Renalogic intellectually fascinating, and the mission to be morally and emotionally fulfilling. Here I have an opportunity to impact people whose lives are changing radically due to chronic kidney disease and to be helpful in a very direct way. Finally, it has been a chance to work with Carrick. I have known the team members professionally for 4-5 years and we had been looking for an opportunity work together.
Q: Tell me about your road map?
I think about growth in three phases.
1) How do we do “more and better” of what Renalogic does today?
2) What else can we be doing in chronic kidney disease, and how can we bring more services around CKD to self-funded employers?
3) How do we take what we learned about CKD and move into other disease states?
Q: How has Carrick Capital Partners supported you and assisted Renalogic?
I characterize Carrick’s approach to investing and supporting operators as “purposeful pragmatism.” They are relentlessly focused on the challenges at hand, and how to achieve sustained growth, without the ego and politics of so many other investment firms. It is a relentless focus on how to achieve results and a commitment to collaboration that is appreciated by operators. Theirs is a no-nonsense approach to building a business. Obviously, the infrastructure and support they provide is exceptional, but the biggest piece is the intellectual partnership in collaborating to grow a great business.
Q: What is your advice for other growing businesses considering private equity?
Look at the firm’s track record of results, the types of businesses in terms of the focus and business model where they have had success and look at the background of primary lead investors and board members. Make sure there is a match between partner backgrounds and your business model. But at the end of the day, these all pale in comparison to the personal connection and alignment of values. You are going to be working closely with these people for 4-7 years, so an alignment of values and perspectives is critical to effective long-term execution.
Q: What is next for Renalogic?
What is next for us, is getting ready to go out into the world. We have an expanded team, with clinical accreditation and experience, entering our 21st year of operations. We are ready for the next phase of growth for the company. We have been a small, focused organization. We are now ready and building the infrastructure to get to the most rapid growth phase in the company’s history to help more people with CKD and the employers that employ them.