Dr. Gary Gottlieb is an Executive Partner at Flare Capital Partners, a venture capital firm dedicated to healthcare services and technology. In addition to serving as Executive Chairperson at Author Health and Cohere Health, Dr. Gottlieb is a Professor of Psychiatry at Harvard Medical School. His distinguished leadership in healthcare includes roles as President of Brigham and Women’s Hospital, CEO of Partners HealthCare (now Mass General Brigham), and CEO of the global health organization, Partners in Health. Dr. Gottlieb completed his BSc at Rensselaer Polytechnic Institute, and attended medical school at Albany Medical College before completing a psychiatry residency at NYU. He also earned an MBA from the Wharton School.

Dr. Gary Gottlieb, Executive Partner at Flare Capital Partners

The Pulse: Based on your experience leading both a major healthcare system and a global health organization, what lessons do you think each sector can learn from each other?

Gary Gottlieb: The American healthcare system has been shaped by a focus on specialized, institutional care, driven largely by massive capital investments and the fee-for-service (FFS) payment model. The U.S. excels at translating scientific advancements into lifesaving treatments for the sickest patients. Its ability to intervene with advanced technologies and continuously test new approaches is unparalleled. However, this focus on specialized care has impeded the development of public health, primary, and preventive care. The vision and the design of the ACA and innovations in value-based care are pushing us in the right direction.

In contrast, global healthcare for the poor operates out of necessity to prioritize population health management and prevention. For example, in resource-limited settings, Partners in Health focuses on strengthening and building systems from the ground up to deliver care close to where people live. Community health workers, deeply embedded in their local environments are foundational. They know every family, anticipate health needs, provide access to nutrition, vaccines, child and maternal health, the treatment of non-communicative diseases and they help to ensure adherence to treatment for diseases like malaria, HIV, and tuberculosis.

There are important lessons to translate back into the U.S. healthcare system. Bringing care to the home, focusing on community-based models, and moving upstream toward prevention are key. In global health in impoverished environments, there is no choice but to do this efficiently with limited resources, and we are now attempting to reverse-engineer those successes here in the U.S.

Ultimately, both sectors share the same mission: bringing the best and the brightest people to care for the sickest and the neediest populations and translating science to improve the human condition. The difference lies in resource availability. In global health, the problems are a lack of infrastructure and funding. The U.S. system is now attempting to adopt some of these lessons by moving care closer to patients and emphasizing community-based approaches.

The Pulse: Given the healthcare industry’s tendency to remain set in legacy ways, how has your approach to driving change evolved over time, whether that be from a business model perspective or otherwise?

GG: Change begins with understanding the culture, incentives, and specific challenges within an organization. In all of medicine and healthcare, leadership requires inclusion and a deep respect for the expertise of others. You cannot rely on traditional hierarchies to drive change.

Over the years, I’ve worked with colleagues to adopt tools like balanced scorecards and lean management techniques to bring structure to decision-making. For example, at the Brigham, we implemented an automated balanced scorecard to measure key performance indicators, such as infection rates, resource utilization, and HR-related activities. It became a shared evidence base that everyone could rely on for benchmarking outcomes and driving accountability.

In global health, some of the most effective tools rely on accompaniment of the people we are privileged to serve. At Partners in Health, we partnered directly with governments to rebuild hospitals, clinics, and public health systems. We prioritized local leadership and empowered community health workers to drive change from within. The ability to adapt to local needs, respect culture and existing systems, and deliver care efficiently is always critical and even more so when we are guests in others’ homes and countries and especially when resources are limited.

No matter the environment, the same principles apply: empathy, patience, and inclusion. Driving change requires understanding the pain points of frontline providers and recognizing the challenges they face daily. Whether building a hospital in Rwanda or implementing electronic health records in the U.S., disruption is difficult. Leaders must balance innovation with an understanding of how change impacts workflows, culture, and human-centered design. Adding to this, the degree of digital comfort by generation in medicine is dramatic.

In order to support healthcare providers to drive sustainable change, whether through improved technology, workflow design, or leadership, it’s important to be acutely aware that they work under conditions of severe uncertainty and carry an immense emotional burden.

The Pulse: How do you see financial challenges impacting hospitals’ ability to invest in innovative tech or care models, and how would you advise startups selling into hospitals in today’s environment?

GG: Hospitals face enormous financial pressures. Rising labor costs, fixed capital expenses, and shrinking margins leave little room for discretionary spending. Many non-profit hospitals and systems carry significant municipal bond debt, with assumptions based on pre-pandemic financial conditions. Meanwhile, the federal deficit/debt adds further uncertainty to Medicaid, Medicare, and NIH funding, which are already under strain.
For startups selling into hospitals, it is critical to understand the actual pain points of hospital leaders and identify a strong internal champion who can advocate for your solution. Products must demonstrate clear, credible, and near-term return on investment (ROI). Hospitals do not have petty cash for new investments—every dollar is coveted. Your solution must not only solve a meaningful problem but also fit within tight budget cycles and be backed by evidence of clinical and financial impact.

You must also be aware of the hierarchy and bureaucracy in hospital systems. The person who understands your product best might not have direct budget authority, and decision-makers often require buy-in from multiple stakeholders. Selling into healthcare is challenging, not because your product isn’t valuable, but because of systemic hurdles like capital constraints, entrenched workflows, and competing priorities.

In the current FFS system, diagnostics, procedures, and infusible therapeutics drive financial margins. Pressure on these margins limit the ability to manage escalating labor and other operating costs. And the labor issues aren’t going anywhere. Hospitals are sitting on very expensive capital where fixed costs cannot be reduced easily. Startups must approach hospital leaders with empathy and a deep understanding of their operational and financial realities to effectively position their solutions.

The Pulse: How can hospital leaders navigate the tension between traditional FFS models and the push towards value-based care (VBC), especially given the high costs associated with this site of care?

GG: I think there are several issues to consider, and they vary depending on the institution. The positive side is that more than 50% of hospital-based revenue has already shifted to ambulatory care, which is generally less costly. However, the transition to VBC has been slow. Many hospitals haven’t embraced it fully, cutting off some of the gradual transition opportunities that the Affordable Care Act (ACA) envisioned through CMMI and other experiments.

Now, with over 50% of Medicare beneficiaries enrolled in Medicare Advantage (MA), we’re seeing additional challenges. While MA was intended to reduce overall costs, per capita expenditures for MA members is now greater than they would have been if those people were covered by traditional Medicare. This has the potential to undermine at least some of the fiscal policy objectives driving the transition to VBC.

Provider consolidation has also played a role in these shifts. While consolidation can catalyze improvement in efficiency, care coordination, and population health management, it risks creating monopolistic pricing power. At the same time, hospitals face pressure from payers with monopsony power, especially in markets dominated by two or three payers.

To navigate these tensions, hospitals need to rethink their resource allocation. The goal must be to reduce unnecessary capital investments in centralized, high-cost facilities while strengthening lower-cost, community-based care closer to patients. This could involve shifting routine and even tertiary care out of academic medical centers and reserving those institutions for highly specialized quaternary care. Expanding services like remote care, home health (and hospital at home), ambulatory care, and transitional care outside of traditional bricks-and-mortar hospitals will be critical.

Interviewed by Vikram Chari, December 4, 2024.