The Duke-Margolis Center at Duke, for health policy, has formed a new entity called the Capital Impact Council (CIC). It's got an illustrious board, and the CIC has just released a 30-page white paper that is a roadmap for successful investing and ROI in healthcare.
Find the CIC here:
https://healthpolicy.duke.edu/CIC
Find the white paper here:
https://healthpolicy.duke.edu/sites/default/files/2025-03/Margolis%20CIC%20Framework.pdf
Read about it at Fierce Healthcare here:
In a Nutshell
To grossly simplify, you know that Investment A requires $10M input, and should return $20M in 3 years. Same financials for Investment B. But CIC methods show that Investment A will prevent 500 strokes, and Investment B will prevent 1000 strokes. So "B" has better "healthcare per capital" statistics.
Context: Negative articles about private equity in healthcare - here, here, here, here. Look for special issue on private equity in healthcare forthcoming in May 2025.
###
AI CORNER
###
The Duke-Margolis Capital Impact Council (CIC) has released a pivotal white paper introducing a new framework—Health Value Return on Investment (HV-ROI)—designed to guide private equity and venture capital investments in health care toward measurable improvements in health outcomes, access, affordability, and community resilience, alongside financial return. The HV-ROI framework emerges at a time when public funding for health care is increasingly constrained, and the role of private capital is expanding. While private equity’s track record in health care has been uneven, the CIC, composed of seasoned investors and health policy leaders, proposes HV-ROI as a structured, evidence-informed approach to ensure that capital drives value-based care transformation rather than solely profit.
The framework is built around two core components. First, the Health Value Model and Evidence component requires a baseline analysis of an investment’s potential to deliver health impact, grounded in clinical literature, real-world data, and stakeholder input. This analysis considers dimensions such as population health needs, provider experience, equity, affordability, and sustainability. Second, the framework emphasizes tracking Health Value Key Performance Indicators (HV-KPIs), which are quantifiable metrics—such as clinical outcomes, patient engagement, reduced ER visits, or improved health equity—that organizations can use to monitor progress alongside financial metrics over time. These tools are intended to help investors make more informed decisions and report transparently on their impact.
Case studies from CIC members illustrate how the framework is already being used in real-world settings. For example, Attane Health, backed by American Heart Association Ventures, has demonstrated improvements in blood pressure and self-reported health outcomes among patients with diabetes by addressing food insecurity through digital coaching. Other examples include maternal care startup SimpliFed and behavioral health app Sober Sidekick, both of which show promising health outcomes linked to strategic private investment. By applying HV-ROI in such cases, investors and operators can validate not only the business case for their innovations but also their societal value.
Ultimately, the white paper argues that embedding health value assessments into investment decision-making is not just possible but essential. In a future where value-based care becomes the norm, investors who prioritize both financial and health returns may also see the most sustainable long-term gains. The CIC calls for wider adoption of HV-ROI principles, supported by shared case studies, common metrics, and ongoing collaboration between investors, policymakers, and health care leaders. This framework positions private capital not as a threat to public health goals but as a vital partner in achieving them.
###
What's important? What's missing? What are weak points?
###
Excellent questions. Here’s a deeper analysis of the Duke-Margolis HV-ROI white paper—focusing on what’s most important, what may be missing, and where the weaknesses lie.
✅ What’s Most Important
-
The Core Concept of HV-ROI
The idea that health outcomes and financial returns can and should be jointly assessed is the white paper’s core contribution. It provides a practical, structured framework for evaluating whether investments actually improve health—not just generate profit. -
Institutional Legitimacy & Cross-Sector Buy-in
The involvement of trusted entities—like Duke-Margolis, major health investors (Cigna, KP Ventures), and respected figures like Cheryl Pegus and Mark McClellan—gives the initiative credibility and positions it to influence norms across the private equity sector. -
Case Study Integration
The inclusion of early real-world examples (e.g., Attane Health, SimpliFed) moves the framework beyond theory. These stories help validate that HV-ROI is feasible and actionable. -
Timing and Policy Context
The white paper acknowledges that with federal health budgets under pressure, private investment will become more central to care delivery innovation. This makes the HV-ROI framework especially timely in shaping the next wave of capital flows in health care.
🕳️ What’s Missing
-
Enforcement or Accountability Mechanisms
The framework is voluntary and self-regulatory—there’s no mention of how HV-ROI assessments might be audited, made transparent, or required in funding cycles. This limits its teeth as a governance tool. -
Benchmarking and Comparability
While the paper mentions tracking KPIs, it does not yet provide standardized benchmarks (e.g., What is “good” performance? How do we compare across investments?). Without these, data from different companies may be inconsistent or non-comparable. -
Equity-Specific Metrics
Equity is cited as a goal, but the framework would benefit from clearer definitions or metrics tied to equity performance—e.g., reductions in disparities by race/ethnicity, income, geography, etc. -
Exit Strategy Alignment
There's limited discussion of how to align exit incentives (e.g., IPOs, M&A) with long-term health outcomes. What happens to HV-ROI goals when companies are sold? This is a real-world challenge in PE/VC-backed health care. -
Provider and Patient Voice
The white paper is investor-led and policy-heavy. While there are references to impact on providers and patients, their perspectives aren’t centered in the development of the framework. This may limit stakeholder trust or relevance in the field.
⚠️ Potential Weaknesses
-
Adoption Risks
HV-ROI may appeal to mission-aligned funds, but mainstream private equity firms—especially those operating on short time horizons—may resist the extra complexity or delay in ROI measurement that HV-ROI entails. -
Operational Burden on Startups
For early-stage companies, collecting health outcome data, equity metrics, and community impact KPIs can be expensive and distracting. Without funding or support for measurement infrastructure, startups may struggle to comply. -
Possibility of “Health-Washing”
Without rigorous standards, investors could cherry-pick favorable health metrics to justify deals that do not meaningfully improve health. In other words, there’s a risk of superficial use of the HV-ROI label. -
Underdeveloped Link to Value-Based Care Payment Models
While HV-ROI is aligned in spirit with value-based care, the white paper does not directly connect the framework to ongoing payment reforms (e.g., ACOs, bundled payments, Medicare Advantage innovation). Strengthening this tie could add strategic depth.
Would you like recommendations on how to improve or extend the framework—either from a policymaker, investor, or startup’s perspective?
YES
###
Excellent—here’s a set of tailored recommendations for how to improve or extend the HV-ROI framework, viewed through three distinct lenses: policy makers, investors, and startups.
🔷 1. Policy Makers: Drive Standardization and Incentives
What to Improve
-
Standard Metrics & Benchmarks: CMS, HHS, or NIH could develop or endorse core HV-ROI KPIs (e.g., risk-adjusted readmission rates, health equity scores) to allow benchmarking and comparability across investments.
-
Public Reporting Expectations: Encourage or require public disclosure of health impact KPIs for entities receiving government-linked funding (e.g., Medicare Advantage startups, Medicaid managed care).
How to Extend
-
Link to Value-Based Payment Models: Align HV-ROI adoption with value-based payment contracts (e.g., ACO REACH, Medicare Shared Savings Program), creating a bridge between payment reform and private investment.
-
Incentivize via Tax or Grant Policy: Offer incentives such as tax advantages, CMMI innovation funds, or priority review for PE/VC funds and companies using validated HV-ROI practices.
-
Create an HV-ROI Certification or Seal: A government or quasi-government body could develop a voluntary seal of approval—akin to ENERGY STAR—for investors and companies that meet transparent HV-ROI standards.
🔷 2. Investors: Strengthen Credibility and Risk Management
What to Improve
-
Independent Evaluation Partners: Collaborate with academic institutions or third-party evaluators to validate health outcomes, reducing concerns of bias or selective reporting.
-
Portfolio-wide HV-ROI Dashboards: Aggregate HV-KPIs across companies to manage portfolio-level health impact risk, much like ESG reporting for environmental/social governance.
How to Extend
-
Embed HV-ROI in Term Sheets and Exit Criteria: Make health KPIs part of investor-company agreements and carry terms, not just pre-deal due diligence. This ensures alignment over time and across leadership changes.
-
Collaborative Data Sharing Platforms: Create industry-wide consortia (similar to the Sustainability Accounting Standards Board) for HV-ROI benchmarking and shared learnings.
-
Tie GP/LP Reporting to HV-ROI: Venture firms could include HV-ROI summaries in their quarterly reports to limited partners (LPs), appealing to impact-minded institutional investors.
🔷 3. Startups & Operators: Make HV-ROI Feasible and Actionable
What to Improve
-
Practical Tools & Templates: Develop lightweight HV-ROI planning kits (with sample KPIs, dashboards, and outcome calculators) that early-stage companies can use without major cost or staff burden.
-
Operational Capacity-Building: Funders or CIC members could offer grants or shared services (e.g., analytics support, access to public health data) to help companies track and report outcomes.
How to Extend
-
Narrative Use of HV-ROI in Fundraising: Founders can use the HV-ROI model to frame impact stories during fundraising—especially for Medicaid/underserved market plays—to differentiate from competitors.
-
Incorporate into Product Roadmaps: Treat HV-KPIs as product features. For example, a digital health app could build dashboards showing users’ improved health metrics, which also feed investor reports.
-
Join Learning Collaboratives: Encourage startups to participate in peer working groups or open-source forums sponsored by Duke-Margolis or leading investors, creating a real-time feedback loop for evolving HV-ROI norms.
🧩 Cross-Cutting Suggestion:
All three stakeholders—policy makers, investors, and operators—would benefit from a national HV-ROI clearinghouse, possibly hosted by Duke-Margolis or a neutral convener. It would provide:
-
Case studies and dashboards
-
Data submission templates
-
Peer comparisons
-
Research partnerships
Such a resource could accelerate the legitimacy, usability, and spread of HV-ROI as a norm—not just a proposal.
Would you like this adapted into a 1-pager for any of those audiences?
