#322: Yoni Shtein of Laguna Health, on Developing a Tech-Enabled Home Recovery Solution, the Hospital Unbundling Thesis, and Value Alignment

Welcome to the Just Go Grind podcast. I'm your host, Justin Gordon, the Director of Marketing at Vitalize Venture Capital. On today's episode, we have Yoni Stein, CEO and co-founder at Laguna, a technology-enabled recovery solution providing a dynamic member experience and integrative clinicians to shorten recovery times and reduce costly readmissions. We dive into a wide variety of topics in this episode. Let's get to it. Yoni, welcome to the show.

Thank you. Good to be here.

Yes, thanks for coming on. Laguna Health, we're gonna talk all about it. But for people who don't know about it, what is Laguna Health, Yoni?

We help people transition from surgeries and hospital home and recover confidently in their home between the clinical and often more importantly, the behavioral and emotional challenges that people experience in the months after recovery.

I read a little bit about it in terms of the company and the numbers around it, the stats around it as well, just with like the percent of people that can be, you know, safer having to go back to treatment again. It's probably, it's pretty crazy with that. But for you in starting this, how did that begin in the first place? Where'd the idea come from? How'd you start Liquid Health?

Yeah, yeah, thank you. So my co-founder and I go back and she's this brilliant Olympic athlete who turned an engineer and then got into healthcare. And I spent years actually as an investor and I had family events around hospital discharge and struggling to recover. And she had personal sports injuries that she had to deal with kind of from an MSK standpoint. And, you know, when we got going, it was kind of the beginning of 2020 and kind of COVID was, you know, washing over the planet, so to speak. And it was a very interesting moment in time to start contemplating what is known now as the hospital unbundling thesis and considering how can you provide kind of pre or post-acute level of care in the home and really understanding that home is where care should be, all else being equal. And then we got really excited about kind of that transition from acute settings, be it surgery or inpatient, to the home and the type of challenges that people experience at home and how can we be helpful in scale.

Okay, starting the company though too, one thing I always think about from a founder perspective, you mentioned your co-founder, How'd you agree that you were going to work together and what did that look like? Because a lot of people are like, one, it's hard to find a co-founder and two, deciding that that's the one you're going to work with for the next decade of your life. Take me through that side of things, Yoni.

That is so true. I would say quite lucky on that front. As a friend of mine told me, in entrepreneurship, you need 3 things. You need to work hard, work smart, and be lucky. I gotta check the box with Yael, my co-founder, on that front. We met each other 15 years back as software engineers at Microsoft and kind of knew at that point that pinky and the brain must do something together. Yael is the brain, to be clear, in the analogy. But as we got reunited at kind of end of '19, and we were close for the whole time, We've explored multiple stuff together, and it's kind of—I would say—it's not just kind of finding the co-founders interesting; it's the dating/diligencing, and it's—and it's plain to see in that process if you run it almost as intensely as is the entrepreneurial roller coaster. Then you get to see; then you get a glimpse into how will this look like and evolve in real life, so to speak. And that was incredibly exciting. And kind of early on, I saw that we— the way I used to call it, we argue well. And the reason I say argument is kind of this very confrontational-sounding aspect. But entrepreneurship is so hard. Having no ego and being very constructive in discussions and argument is absolutely critical. And then you get to break new ground together. While building trust even more. So all that is to say is a bit how we met each other and how we diligence, so to speak, to know that this is right.

Okay, Yoni, so you figure that out, you're like, okay, co-founder, great, check. Idea, you know, there's this problem you want to solve. This is a really big problem though. Where did you get started in terms of what the product would look like? What would your first solution be? Because it is such a massive problem, you can look at all over and where you would go about this. How'd you decide to focus in? Like, where'd you focus in on to start with?

Sure. We knew that people were transitioning from hospitals to homes since the dawn of history, the dawn of acute facilities and hospital, and certainly over the last decade since the advent of ACA, Affordable Care Act, and HRP, Hospital Readmission Reduction Program, quite a bit of focus has been thrown on this issue. And I would say kind of the first class, the first vintage of companies in the space certainly focused on post-acute, but really more with an eye towards providers and post-acute, subacute providers and transitional care, less so on individuals going home, less so on behavioral aspects. And that is exactly where we focus because we've dove into the evidence-based research to find out that the nuances, the aspects that get people in what I would call avoidable trouble, which is the trouble we care about, right? We care about the rising risk that is impactable, that we can actually be effective about it. And over 50% of them are affectable, so to speak. All of that is driven by the emotional, behavioral, and contextual challenges. And knowing that, we understood how— we had a thesis, if you will, at that point, how the clinical model should work. And then we went and found the phenomenal leaders, clinical leaders who agree with us, if you will, who know more about this than us, say, of course, Let's go and do this. This is a— as one of my mentors once told me, this is a problem worth solving. And you want to validate that both from the business opportunity incentive alignment, and also in terms of your ability to move the needle to have a workable tech-enabled solution, which is usually the angle you want to take in digital health offerings.

You mentioned the clinical expertise on that side of things. How did you go about finding them and like getting that validation slash like, I think their buy-in in terms of helping you? Because obviously, you need the help from a lot of different people and stakeholders in order to make this work. Like, how did you go about that?

I would say, I would say, everything in the early stages of a company falls into kind of work hard, work smart, be lucky. As in, as in a lot of that is of difficult to codify. We found early on a phenomenal behavioral health leader, which was a result from working extremely hard and meeting hundreds of people in a span of 3 months that got us in front of this phenomenal leader that then led us to the Chief Medical Officer and President that we have today, Dr. Alan Spiro, who's a renowned expert in the space and was, among others, the founding CMO of Accolade and led data at Blue Health Intelligence, etc.

Okay, this obviously has to make sense in a lot of different ways for different people. And also, the business model has to make sense, because if you don't have that, obviously, it's not sustainable, it's not going to be an actual business. Take me through that side of things. What the business model was, did you always know it was going to be the the way you ended up going about it? Has it evolved since? I'm curious about that.

Absolutely. It actually evolved a lot. And I find it as a kind of tech and business geek, I find it absolutely fascinating. In digital health, it is a very business-intense environment. And again, being the business geek that I am, I find it stimulating. Early on, we understood that there was a thesis, if you will, there's a potential, and now we've demonstrated it, of making a real dent in this problem of helping people transition home and recover well, avoiding unnecessary preventable complications where kind of the known big and the most expensive complication is one of a readmission. And to go and demonstrate that and build a business model around it, I would say kind of all of that, we've done quite a bit of actuarial research with Santa Barbara Actuaries, both in the commercial and Medicare populations. What we've hypothesized early on from a business model standpoint is that we can take full risk on this population. To your question, what has changed or evolved, we've learned since that you certainly want to be able to do that if you can, but not everyone are necessarily interested in that. And probably some of the best things you can do is certainly talk about risk because if nothing else, it demonstrates your conviction in what you're doing. Otherwise, you would be crazy. to speak, to assume risk. You'd certainly not be making money. But at the same token, offer several other points on the spectrum of value, including offering PMPM, because for some it is just the most simple, if you will, clean and typical model to price offerings. And so that is what evolved since, I would say, our understanding of how does the market approach this? And how do they view on your conviction in the value that you're driving? And how would they like to contract regardless of that?

With the company too, you mentioned in 2020, you start this, and then in May, you announced a $6.5 roughly million round. And obviously, people announced their round after they've already closed it. So some timeframe in between there. What's actually helped, helped you grow? I mean, since the starting and launching to then you know, raising capital and then like what's fueled the growth and helped you obviously get to that point, at least to have the validation enough to grow and raise capital? What's kind of fueled that along the way, Yoni?

Absolutely, absolutely. I've been thinking about that quite a bit. We've intentionally built the offering very much kind of from the ground up, from starting with that clinical thesis, and then wanted to have our first customers really validating the clinical and economic impact of it. To do that, we've engaged with North Shore University Health System out of Chicago, with Mayo Clinic, really focused on demonstrating the impact here. That has fueled a lot of growth for the company and as kind of in the market, and as importantly, in a kind of methodic company building such that business and clinical and product leads and the technology is a massive value enabler, right? Kind of that's kind of the fascinating part in digital health in general, and certainly in Laguna case, the data and technology is what drives this impact at scale. 'Cause many problems in healthcare you can throw people at, so to speak, and it will be certainly effective or could be effective, But not necessarily economic or scalable or efficient, not a good business, and so not sustainable. And technology is a massive enabler in our ability to do that, to stratify the population, to be very sophisticated in the engagement technologically and all of that.

What has been the impact? I mean, since you started, you mentioned 2020 is when you started, obviously a lot of traction since then. Like what types of things are you seeing, kind of the lessons around the impact you're having already with Laguna Health?

Of course. What we've been measuring and focusing on predominantly is on the engagement rate, on how many people we can touch repeatedly in the months after, and how we can be effective for them compared to the control group. And that's what we've been demonstrating. We'll be publishing later this year studies in peer-reviewed journals that we can engage most of the people and for them avoid over 50% of readmissions compared to the control, which is quite significant compared to most other methodologies out there. And certainly, as you consider about kind of the dollar implications of it.

On that note, Yoni, I mean, what is the actual experience in terms of using Laguna Health, you know, patient using Laguna Health? What does that look like for them? I'm curious to know more of those details around the product.

Of course. So we actually try to start before the discharge and actually even before they get admitted. And you can do that when you're focused on specific conditions and on scheduled or elective admissions, certainly leveraging technologies like UM and ADT, or utilization management and admission, discharge, transfer feed, which is now becoming more and more prevalent. At that point, that would be the first moment for us to engage if we're selling through the employer. The benefit is communicated through benefit communication. Well, not the first, not the last benefit solution being communicated to the members.

Mm-hmm.

And at that point, that would be the moment of what we would call the interception or acquisition of the member. So ideally would be accompanying the individual before they get admitted. Reason that is important is at that point you will obviously not have the discharge information. They have yet to be discharged. But as I mentioned earlier, some of the biggest challenges are not as much the physiological clinical ones, but more the Emotional, behavioral, and contextual. And that is a very timely opportunity for us to engage early, build that empathy and trust that is so lacking in the ecosystem, such that at that point when they get admitted, we can have a warm handoff, which we've been doing both at Mayo and North Shore with the team at the system. And at that point, we'll be obtaining the discharge information. Now, the discharge information is at the core of the digital experience, that one of the core features, if you will, is what we call the DNA. By no coincidence, that would be the Dishard Note Analyzer. And that is really kind of the core step-by-step breakdown of the Dishard information, make it into a very easy-to-follow and actionable step-by-step in front of you. In addition to all of that, there's a variety of content that is available to you. And the app is really the Recovery hub and communication across multiple modalities with a team of clinicians, Dr. Alan Spiro. Now, it's also important to consider the clinical model that I mentioned earlier and the type of expertise you want to have in-house to drive that clinical model. And essentially, we have a combination of licensed clinical social workers and RNs. And these would be the people who would be driving that engagement in the months after. And I say months in plural, Because despite CMS's definition of 30-day readmission penalty as kind of this line in the sand, most people take way longer to recover. And certainly as it relates to the commercial population and return to work and being back, you know, on their feet productive. And so we usually focus actually on a 90-day episode.

I want to dive deeper into the team. I know you mentioned your co-founder in the beginning and how you started this. But anyone who's built a startup knows the struggles of building a team, hiring, growing, and finding the right people on board. Just take me through, Yoni, how that's been for you, how you've gone about that. I know you've been on the investor side before, you have different experience too with that. I'm just curious as to how you built the team itself for Lugano Health.

Absolutely. So we built the company in a bicoastal manner, as I think about it. One is the Atlantic coast, if you will, one is the Mediterranean. We wanted from day one to tap to the best pools of talent and build everything data product and engineering out of the Israeli side that you have overseas, and everything business, clinical, and ops close to the main market, which of course is the US healthcare ecosystem for us. Some of the key leaders we're fortunate to hire in the States, so Dr. Alan Spiro, who's the Chief Medical Officer and the President of Laguna. Justin Swant is the Chief Business Officer. All of these people and more are people that I think very similar to your question about founder dynamic or co-founder dynamic was very important for us to diligence and make sure for both sides that this is the right marriage. People often make the analogy, right, between marriage and a startup. This is often much more intense. Of a roller coaster, if you will. And all of us have been around, and it was important for us to make sure that there's a deep values alignment, business alignment, and that we're able to work remotely across time zones and actually make it into something that makes us stronger. Because it's certainly challenging, but if you have the right culture in place and the right processes, you're actually able to do more.

So for everyone, you know, now adapting and adjusting and trying to figure out this hiring, and I've talked to different founders who have— it's interesting how founders have found a way around that and found different ways to operate now. I talked to one group of founders who they had basically hired their team in Latin America. They're like, talent's great. We speak multiple languages. Latin America made sense for them. And I was like, that's great. The arbitrage also on cost is great for their startup. I've seen other people do the same thing, fully remote. Some people are doing a hybrid approach. For you having done this from the beginning of different coasts, you mentioned it's tricky with the systems and processes you have to put in place and building the culture around that. Anything for other founders out there that's been helpful for you guys in terms of that and growing the team dynamic and building that culture? I'd just be curious about that.

Absolutely. I'm smiling because this is probably one of the most important things in my view, at least, and on my mind constantly. I think in general, being in the same office or remotely building a company correctly is certainly a make or break. It eclipses most of other challenges, not to take anything away from the many challenges fellow entrepreneurs are dealing with day to day.

Yes.

But doing this right will set everything else in the right motion. And doing this wrong is probably an existential risk. All that is to say, to my comments about culture and processes, there must be cultural alignment, values alignment, deep appreciation of pure excitement to go and build and tackle the problem versus politics or ego. And make no mistake, despite these characteristics, all of us ascribe them often to kind of larger corporates. People are people and different people are different. And it is critically important to find the people for whom it matters less or maybe does not matter at all. And they have Analogous excitement about the problem and do not care as much about all these things or friction in the way and can dive right in. And that's also a great fit for early stage, if you will. That's on the one side. Processes are really interesting. There's a fine line there that is critical to hit. No processes, chaos. All processes you can't move. You don't want to move that way. Finding the right balance of kind of the minimally required meetings and how to leverage teams working remotely in a collaborative manner that invites discourse online or offline. Online, I mean kind of live meetings and offline, of course, means these days digital online tools. but kind of not live face-to-face.

Yeah, like synchronous, asynchronous.

Bingo. Thank you. Exactly. If you can do that, magic happens. And I often say less meetings, more productivity. And you want to make sure that you have some meetings. You want to make sure you want to— you have some meetings, but more productivity. Last, perhaps kind of bonus, if you will, investing in travel is probably one of the best investments You can make. You certainly need people being close socially. It doesn't mean that they need to be close socially every day, every week, but doing that once a month, once a quarter, depends kind of on company culture, etc., is probably a very high ROI investment.

Yeah, I think about companies like, I think, Automattic. I think they did it from the start. They were a company that wanted to be— they were distributed from the beginning. Matt Mullenweg has mentioned that. I think It was either quarterly or something like that. It might have been that company, but quarterly meetings with the whole team or something like that where you had like kind of all hands get together, meet people, be like, oh yeah, this is the company we're building for the next decade, whatever. You know, it is nice to have that. And I also will echo on the part that like for us at BioEyes Venture Capital, like we started having more just the meetings with the whole team once a week and we weren't— or once every other week. We were, you know, it was kind of dispersed because we have a bunch of part-time people on our team as well. We have a few full-time, but it's a small team. You know, we're not Andreessen Horowitz on that side of things, but bringing people together to, you know, feel that camaraderie and build that culture and people understand what the different pieces are of the whole thing. It's like the whole analogy with the elephant. We only see part of it. Like you'd see a whole different elephant as opposed to seeing everything at once. And so I think it's important to have that. So I just wanted to hammer that point home. So I appreciate you sharing that. And I know we're almost out of time. I'm just curious, you know, what are some of the things that you're looking for in a founder? What's next for Laguna Health? Where are you trending towards, Yoni? I'm curious.

So this is an interesting time, right, in the world and certainly in the economic markets we live in to be really focusing on the kind of back to basics, if you will, on the value driving for your customers and your members, and to make sure that your customer base reflects that, that your investor base reflects that. And that the entire company is aligned around that. Accordingly, we're focusing predominantly on employers, plans, and risk-oriented providers. We're kind of the common thread, the common denominator, if you will. All of them pay very close attention to recovery and bad outcomes of recovery because this drives 20% of total spend. And to my comment earlier, a good chunk of it is preventable. That is what is on the horizon for the company. That is what we're— the northern star, if you will, driving that commercial ramp up and up and building the company in and around that. That is what will drive the commercial team, clinical team, and R&D.

Yoni, where's the best place for people to learn more about Laguna Health and also connect with you if they'd like to?

Of course, our website is pretty up to date. Actually, we're updating it even more this week. LagunaHealth.com. I can be reached most hours of the day and night at Yoni, Y-O-N-I, at LagunaHealth.com.

Awesome, Yoni. Thank you so much for that time. Really appreciate it. Of course.

This was fun. Thank you for having me.

Thank you so much for listening to this episode of Just Go Grind. If you want to follow along on the socials for all things Just Go Grind and with me as well, you can find Just Go Grind on Instagram and Twitter. @JustGoGrind. You can find me on Twitter @JustinGordon212. Find me on Instagram @JustinGordon8. Thank you so much for listening. Have a great day.

Bye.