What I Learned about Digital Health Investment from Spending a Night in a Homeless Shelter
In 2017, investors poured almost $6B into digital health. 2018 is on track to surpass 2017. The vast majority of deals focused on improving access to or increasing the quality of health care.
While it has been the focus of digital health investment, health care only accounts for 10% of the risk of premature death. The more impactful drivers on mortality include social and environmental factors, genetics, and individual behavior.
Of the digital health technologies seeking to address the more influential drivers of mortality, the revenue path of least resistance led entrepreneurs to service people with high purchasing power and ignore those in poverty. At best, digital health investors have ignored the major health determinants. At worst, they have exacerbated health disparities in the US.
In an interview last year with Chrissy Farr from CNBC, I criticized investors for missing big investment opportunities by overlooking markets involving people in poverty. The concept is not new; C.K. Prahalad wrote an entire book showcasing “The Fortune at the Bottom of the Pyramid.” As in Prahalad’s book, I made the case with Farr that investing in technology solutions serving the needs of the poor can simultaneously grow investors’ wealth and create value for those in need.
As often happens with her writing, Farr’s article sparked a small tweet storm culminating in a challenge to investors to spend a few weeks homeless to better understand the needs of socially complex populations and the markets that may emerge in meeting those needs.
One courageous investor, John Prendergass from Ben Franklin Technology Partners took me up on my challenge. We arranged to stay a night in a Baltimore City homeless shelter together. John would get the chance to broaden his investment theses. And I would get a chance to design better experiences for some of the clients at my methadone clinics who have housing insecurity.
Both John and I had experienced some financial hardship growing up. His dad grew up in the foster care system and worked his way up to become a nurse anesthetist. My family emigrated from Ukraine as Jewish refugees and lived in subsidized housing during our first few years in the US. But neither John nor I had ever been homeless before. Our night together changed my understanding of what it means to be homeless. It was a night I will never forget and never want to experience again.
Our Approach
John and I took this exercise very seriously. We didn’t want to be tourists partaking in poverty porn. Rather, we were entering people’s lives, lives that we respected greatly and we aimed to optimize our learning so that we could give back as productively as possible.
To make the stay at the shelter maximally educational, we utilized the Stanford D-School framework for human-centered design (HCD) and focused on tools within the realm of “building empathy.” Our objective was to learn about the needs, motivations, fears, and desires of the end-user, in this case, a homeless individual. The two tools we used to better empathize included 1) deep immersion and 2) the exploratory interview.
Deep immersion, or walking in the shoes of the end-user, allowed us to view end-users and their behavior in context. We looked for “ah-ha” moments, key insights that helped us better understand the end-user. We looked for things that were unexpected, surprising, or missing.
To get an authentic experience, John and I wanted to blend in. Several days prior to our immersion, I drove by the shelter and observed the type of clothes people were wearing. Based on the precedent set by shelter tenants, we selected our clothes to be as inconspicuous as possible.
During the immersion, I conducted exploratory interviews through informal discussions with about 20 shelter tenants to better learn about the their experience with homelessness. The interviews were informal discussions. After each interview, I scribbled my observations with a cap-less pen in a small black notebook, which, besides my clothes, water bottle, cellphone, and black trash bag, were my only positions.
The purpose of the interviews was to gain empathy and deeper insight into the end-user’s specific needs. I focused on developing rapport and hearing stories to help me understand peoples’ lives. In the interviews, I explored the bio-psycho-social aspects of individuals’ health as well as their desires, fears, and other emotions and experiences. I used open-ended questions like “Can you tell about the first time you came to this shelter?” and the perennial customer-development question, “What keeps you up at night?” Writing that question makes me shudder with the memory of the cold that kept me up that night.
Cold
The shelter experience taught me that there is more than one way to be cold. The first form of being cold was something I was familiar with: facing the outdoor environment. John and I stood for several hours outside waiting to be transported from the main shelter to the satellite shelter where we would actually sleep. It was a gray and drizzly fall day with early afternoon temperatures in the high 50s. It was periodically windy as the temperature dipped into the low 50s toward the evening hours. Since we were under an overpass, we were protected from the rain and a gentle jog-in-place was enough to ward off the wind chill.
The second form of being cold was new to me: sleeping in the cold. I’ve gone camping in New England in the early spring when there was still snow on the ground. And I’ve slept at my in-law’s house, which is kept at an unnecessarily low-temperature year round. I’ve always had the benefit of adequate layers of clothing as well as a sleeping bag or heavy covers. But during my night of immersion, all I had were sweat pants, a hoodie, and a thin, unsavory blanket provided by the shelter. There were no heaters. About one in four windows were permanently ajar. And the low temperature slipped into the high 40s. To add insult to injury, the toilet paper dispenser beneath the dysfunctional window was empty.
While some shelter tenants seemed prepared for cool weather, many others, John and I included, only had the clothes on our backs and were at the whim of the weather. We were cold, but it wasn’t dangerously cold. No one was at risk of developing frost bite.
The middle of February, however, would have been a different story. With the average low temperature on a February night in Baltimore at 26.1 F, this immersive experience would have been intolerable. To make matters worse, the policy at the main shelter queuing station is that everyone stays outside unless the temperature, with or without windchill, is below 28.0 F.
One man that I interviewed who was in his early 30s and a long time visitor to this shelter, stayed at this shelter last winter. He described how everyone huddled up in tight circles during those cold months while they queued outside. When I asked him about the worn-looking heat lamps that were set up outside, he exhaled a grunt with a lifted eyebrow and half smirk, “those damn things don’t work, they just there to tease us.”
Hungry
Part of the reason why the cold in the afternoon may have been more tolerable than at night was the distraction of hunger pains. I understood food-insecurity generally well through second-hand information from my patients. But feeling hunger was very different from hearing about it.
There is an important distinction between the control of choosing to defer eating and the terrifying uncertainty of not knowing when your next meal will be. I’ve experienced hunger during demanding 36-hr shifts in residency and during Yom Kippur fasts. But I had control over whether or not to eat. My homeless immersion experience taught me, albeit in a fleeting way, a new dimension of hunger. The flutter of anxiety from uncertainty in my chest added to the cramping of hunger in my stomach to trigger a state of survival in my mind.
The immersion experience started at 10:30am. That was when I took the last bite of a 6-inch subway sandwich. After that bite, I did not know then next time I would eat. Between the cold and all of the other learning, I didn’t notice the hunger until around 6pm. It was around that time that an older, heavy-set man, was walking around selling peanut butter crackers for $1. I wished I had cash. I briefly considered bartering my water bottle, but it was half-consumed.
Some people purchased the crackers. Others perused nearby trashcans. And a few others had various assortments of canned foods they would snack on. One man had some deli turkey meat to hold him over.
Later that evening, around 8pm when we were all waiting for dinner to be served at the shelter, my stomach was audibly growling. To distract myself from hunger, I asked my roomate, a Baltimore native in his mid-50s, what he had to eat that day. With a smile of missing teeth he replied, “A slice of cake!”
After my initial chuckle at the cariogenic response by the toothless man, I was saddened by the thought that my roomate likely didn’t have a choice about what he ate. It was either eat calorie-rich and nutrient-poor cake, or be hungry. And at that point, I would have gladly endured some cavities if it meant my stomach would feel less empty.
Dinner at the shelter consisted of canned green beans, corn bread, refried beans, and an unclear type of meat. The meal was topped-off with a red drink which tasted like Hi-C. John and I ate outside on a half-dry table with another man who shared some of his life story. In retrospect, the plate of food was one of the less savory meals I’ve eaten and also one for which I was most grateful.
Trapped
The hunger and the cold were unpleasant but tolerable. But the hopelessness of being unable to escape this poverty trap was hard to bear even for one night.
Most of the men I interviewed did not work. All of them wanted to. But the requirements of surviving without a home precluded any chance of securing or sustaining a job.
In order to secure a spot at the shelter for the night, we had to get in the queue by no later than 230pm. On a mild, fall day, the shelter was already reaching its capacity of 80 people. On a day with bad weather, the line would have started even earlier. How can anyone hold down a steady job if they have to leave work in time to get in the shelter line by 230pm? How can anyone secure a job when you don’t have a permanent address or the ability to prepare yourself in the morning to look decent for an interview?
Of the two men with whom I spoke that did work, it was ad hoc work and was in construction or maintenance. These two men periodically slept at friends and neighbors, so they had a place to put their things.
About 15 of the 80 men were in florid psychosis, talking to themselves, at least partly out of touch with the reality around them. It was hard enough to survive the harsh reality of cold, hunger, and homelessness. The schism from the facts of existence experienced by these men with disabling mental illness, on top of the physiologic stressors of homelessness, put them at serious risk for morbidity and mortality.
Homesick
The toll of the immersive experience was more significant than I expected. I had been through some challenges in my life. Some were acute, short-lived obstacles. Others were long treks up figurative hills. The homeless experience surprised me because I felt something I rarely feel: homesick.
I regularly attend at the hospital overnight and I don’t get homesick there. I periodically go on week-long business trips. And I only get homesick toward the last 1–2 days, if ever. But I was only away from my family for one night and half-way through it I wanted to get in an Uber and just go home.
I realized the morning after the overnight, when John and I had breakfast in a hipster cafe to debrief from our experience, that the homesickness was a major motivator for me to suck it up and focus on learning. I also realized how days, weeks, or even months of cold, hunger, uncertainty, and despair can transform homelessness into hopelessness. Imagine staring at these walls night after night. How would that make you feel over time?
Key Insights for Digital Health Investors
What are the “jobs-to-be-done” (JTBD) for people that are homeless? The data from my immersion and interviews suggest that the JTBD for homeless people are not tracking their heart rate, Face-Timing their doctor, selecting a better health plan, or finding the right gym membership. People with housing insecurity want to avoid being cold, feeling hungry, and being trapped in poverty. And an overwhelming latent need for them is having mental and behavioral health problems addressed to stave off anxiety, depression, or hallucinations so the people can get back on their feet.
There are glimmers of hope that the investment community is slowly opening its eyes to the market opportunities and social impact in serving the bottom of the pyramid. One example is the formation of HealthTech4Medicaid (HT4M), a recently formed national nonprofit that brings prominent health tech CEOs together to improve quality and access for Medicaid recipients through enabling technology.
My wife and I personally invested in two of the companies in HT4M, CityBlock Health and Solera, through Social Innovation Ventures, an angel fund we started with the singular investment thesis of eliminating disparities.
Additionally, the consultancy, Avia, recently kicked off the Medicaid Transformation Project which is a national effort to transform healthcare and related social needs for the most vulnerable. They have partnered with 17 health systems over a 2-year period to accelerate the adoption of technology to help achieve the triple aim for Medicaid recipients.
And there is a growing list of new and existing institutional investors that are refining their investment strategy to solve the problems experienced by people in poverty. This insightful group of investors includes TownHall Ventures, Sandbox Industries, Ascension Ventures, Providence Ventures, Norwest Venture Partners, and the California Healthcare Foundation.
Limitations
Since this is not an academic article, I will not be exhaustive in identifying all of the limitations of this qualitative exploration. First, it is important to note that feeling cold, hungry, trapped, and homesick/hopeless are just a small sample of incomplete user stories applicable to the homeless population. Second, we only shadowed men and only for one night. The experience of women and children likely has different nuances. Third, these findings may not be generalizable to other geographies, climates, or state’s with different policies on homelessness.
Conclusion
The homeless shelter shadowing experience highlighted that the primary challenges experienced by homeless individualized are more aligned with the upstream health determinants of social and environmental factors and individual behavior, which comprise 60% of premature mortality risk, than factors related to healthcare access.
My experience, and that of the people I interviewed, showed that the biggest concerns facing homeless individuals were feeling cold, hungry, trapped, and homesick/hopeless.
A bright spot in this immersion was the experience of complete strangers’ kindness toward one another. I witnessed one man gift a shirt to another man whose shirt was worn out. A man with deli turkey shared his lunch meat not only with three other men, but also the dog of one of those men. Even when people were in survival mode, they showed a pack-mentality and helped out their fellow man. The sociology of this small group of 80 men did not show a dynamic of man-versus-man, but rather men bound together against the systems around them.
I implore other investors to follow John Prendergass’ lead and begin building empathy with people that you don’t know and don’t yet understand. Please note his terrific thread about this experience from his perspective.
Medicaid alone spends almost $600B per year for almost 75M beneficiaries. If appropriately monetized, that is almost 600 unicorns worth of exits. And that doesn’t even cover the problems that need solving in HUD housing, SNAP nutrition benefits, and other systems funded through public and non-public dollars flows.
Upon publication of this blog, I anonymously donated $200 to the shelter that unknowingly hosted me. I am grateful for the shelter’s kindness to people it serves, it’s creativity with limited resources, and for teaching me invaluable lessons that will help me be a better CEO, investor, and physician, and a more appreciative husband, father, and son.
