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June 29, 2010

My Bodyguard: Bullying, Cyber-bullying and CSEE – The Center for Social and Emotional Education


The movie My Bodyguard was a pretty big hit when I was a teenager in the 1980’s, and I remember seeing it and cheering for Clifford (Chris Makepeace) in his battle with the incessant bullying dished out by Moody (Matt Dillon).  It’s a pretty good movie.  Sure, the kids get their revenge on the bullies, something I doubt many bullying victims actually seek, but it does a great job of capturing the eeriness of bullying.  I remember wondering whether the bullies I grew up with rooted for Matt Dillon, who plays the bully with an absolutely perfect creepy heartlessness, and who, of course, gets his in the end. 

My Bodyguard (Adam Baldwin), Moody (Matt Dillon), Clifford (Chris Makepeace)

I might be all grown-up but bullying continues, in both direct and virtual form; yes, today’s kids bully online too.  Yesterday the New York Times launched the first article of an ongoing series called Poisoned Web, with an expose’ covering “cyber-bullying” – a newly coined term that covers all sorts of creative abuse that takes place through texting and on social networking platforms like Facebook.  

Bullying has also gained national notice because of the case of Phoebe Prince (see the April 15, 2010 People Magazine’s cover story: Bullied to Death? Phoebe Prince: Her Final Days) who committed suicide on January 14, 2010 after months of being bullied by her classmates in the western Massachusetts town of South Hadley (near Springfield).  Phoebe faced both direct confrontation and cyber-bullying, through negative Facebook messages and texts.  

Phoebe Prince’s suicide has spawned a wave of anti-bullying legislation through the US, including a new Massachusetts statute passed on May 3, 2010, and another passed in New York just yesterday.  The New York Times article does a good job of exposing some of the legal boundaries, many of them free speech related, to combatting forms of bullying that stop short of physical violence.    

Over the years we have come to learn that there are long-lasting social effects to incidences of bullying.  Its existence severely subverts the social atmosphere in schools and the emotional development of kids, regardless of whether they’re the ones doing the bullying, getting bullied, or just passively watching.  Today we know that nearly 9 out of 10 kids say they have seen someone bullied and at least 10% of all kids are bullied on a regular basis.  The National Crime Prevention Council reports cyber-bullying is a problem that affects more than 40% of all American teens and that, of those affected, almost 60% do not tell their parents or another adult (teacher) about the incident.  We also know that bullies are 4 times more likely to evolve into criminals and that being bullied can cause children to experience fear, depression, loneliness, anxiety, low self-esteem, physical illness, and in some cases, even, as noted in the Phoebe Prince case and others, suicidal thoughts or even suicide. 

We also know that bullying can be reduced by up to 50% when there’s a school-wide commitment to end it.  

One organization committed to working to reduce bullying in schools is New York-based CSEE (The Center for Social and Emotional Education).  George Igel, MD, psychiatrist, fellow healthcare investor and Chairman of the Board of Trustees for CSEE first introduced me and my partners at Psilos to CSEE a few years ago and we have been supporting its work ever since. 

CSEE was founded in 1996 at Teachers College, Columbia University and their mission today “is to measure and improve the climate for learning in schools to help children realize their fullest potential as individuals and as engaged members of society.”  One of these initiatives is to develop the tools and resources to create a school-wide climate intolerant of bullying.    

CSEE’s bellwether program is called BullyBust, an awareness campaign designed to reduce bullying in schools by teaching students and adults how to stand up to bullying and promote Upstander Behavior including:  helping others who have been bullied, stopping untrue or harmful messages from spreading, making friends outside of current cliques, and befriending new students, to name a few (See the 10 ways to become an Upstander here.  Also see a library of student produced “Upstander Videos” here).


The BullyBust program has recently teamed up with the hit Broadway musical Wicked to bring the Witches of Oz (Elphaba, the Wicked Witch of the West, faced discrimination when she was young because of her green skin and strange mannerisms) to classrooms across the country to teach important bully prevention strategies.

If you are intested in seeing Wicked please use the code “CSEE” when purchasing tickets and a portion of the sales proceeds goes to support BullyBust. 

Meanwhile, in case you’ve forgotten what it feels like to face the wrath of the bully, check out My Bodyguard


June 25, 2010

Inside Value-Based Healthcare – Part 1: Moral Hazard

Value-Based Healthcare.  There, I said it…

I had fun on Wednesday sitting on the healthcare reform panel at the Dow Jones Limited Partners Summit.   The conversation centered on investment trends in healthcare as updated for the passage of PPACA, during which I blurted out the concept of value-based healthcare, a pretty complex and to some extent novel concept, and a cornerstone to many of Psilos’ VC investment strategies.  This was subsequently reported, and to Jennifer Rossa’s credit, she provided enough detail around my comment to correctly convey the concept.

There are important nuances, however.  This post is the beginning of a series that will explore the ins-and-outs of Value-Based Healthcare.

Value-Based Healthcare: Definition #1:

Value-Based Healthcare, or more specifically, Value-Based Health Insurance Design, its sobriquet being simply, Value-Based, intends to mitigate the Moral Hazard inherent in low cost-sharing health insurance coverage.

If we were to take an insurance or advanced finance class together we would spend a lot of time talking about Moral Hazard and Adverse Selection, the two primary business risks that underpin managing financial institutions, insurance companies and banks included.  Failure to manage these risks properly can lead to disaster (in fact, recently Moral Hazard and Adverse Selection got the better of the mortgage banking business, a primary cause of the financial crisis).

Moral Hazard reflects the reality that a party insulated from a risk (like an insured or a borrower) will behave differently than if it were fully exposed to the risk.

Adverse Selection reflects the reality that the very nature of a party’s desire to seek insulation from risk reflects a greater risk of loss.  For example, parties that are either sick or expect to get sick have a higher demand for health insurance.  Similarly, parties in the market for a mortgage that have a concern that they may default are more attracted to low-down-payment mortgages.

Underwriting models are designed in part to set prices to countervail the risks of Moral Hazard and Adverse Selection.  This is more easily accomplished in an underwriting model where each policy gets priced individually, like automobile insurance.  In this model individuals are placed in broad price cohorts based on age, gender, style of car, etc., and then adjustments to the policy price are made based on individual attributes like historical driving record.  Moral Hazard and Adverse Selection are less prevalent in insurance markets where policies are individually underwritten and where the underwriter will be the party that ultimately pays the claims on any policy.  Absent these conditions the risks of Moral Hazard and Adverse Selection will always be lurking.

Such is the case in the current market for employer-based health insurance (also called Group Model health insurance).

Let’s start with Moral Hazard.  Today many employer-based health insurance models feature low cost-sharing, meaning that patients pay a very small amount of the health resources they consume.  Here the economic question is whether the value of a healthcare service exceeds the out-of-pocket cost to the patient, which is a small fraction of the actual costs.  Moral Hazard comes into play because the insurance insulates the patient from full payment, thus altering behavior toward increased healthcare consumption, a phenomenon some believe is encouraged by the fact that providers (doctors and hospitals) are generally not at risk either and are paid on a fee-for-service basis.

Consider what might happen if the out-of-pocket costs to the patient were raised.  In insurance markets where patients could opt out and choose not to buy insurance, an increase in out-of-pocket costs would certainly result in some people, probably the healthiest, declining coverage.  This would cause premiums to rise, because the insured pool would be sicker on average, causing more of the healthiest people to decline, increasing the risk of the pool, increasing the premiums, and so on, into an Adverse Selection spiral.

In health insurance markets we need the healthiest people to stay in the market in order for the underwriting to work at reasonable levels of insurance premium.  This is one of the reasons why health insurance is provided by employers.  Employers, or coalitions of employers, are able to deliver large enough populations of sick and healthy people for the underwriting to work.  The participation of large numbers of employees mitigates Adverse Selection and as a result many large employers choose to self-insure (tax incentives is another reason employer-based health insurance dominates – more on this another time).

Nonetheless, in employer-based health insurance we are still left with Moral Hazard, and research seems to back the notion that its degree is inversely correlated with the percentage out-of-pocket paid by patients (low out-of-pocket = high Moral Hazard = high healthcare consumption).

So the question becomes, if we are looking for an employer-based health insurance model that will counter increased healthcare consumption (and believe me, we are), why not just increase the out-of-pocket payments and reduce Moral Hazard?

It turns out not to be that simple.  Please give this some thought and we’ll dig a little deeper next time…

June 15, 2010

President Bill Clinton at AHIP

Filed under: Healthcare — Steve Krupa @ 4:02 pm
Tags: , ,


This was my third time seeing Citizen Bill Clinton speak publicly. The first was at the American Red Cross Centennial Ball in October, 2005, a few months after the disaster that was/is Hurricane Katrina; the second was on-site in New Orleans, along with Bush Sr., in May of 2006.(1)  Over the past four years, and much to his credit, Clinton has honed a consistent message, one he is assured to deliver, regardless of his audience’s predilections.

AHIP (America’s Health Insurance Plans) is a collective voice for almost 1,300 health insurance companies, a lobbying group that holds an annual convention and trade show designed to address the pressing issues of and the new technologies/businesses in the health insurance market.  AHIP states that one of their major policy goals is to expand access to high quality, affordable coverage to all Americans, yet it is clear that the AHIP collective was one of the many losers in the recent policy debate regarding PPACA (re: our new healthcare reform law), with their only major policy win being, in my view, the elimination (delay) of the “public option” from the enacted law.

It’s a nice position in life to get paid handsomely to address former foes.  No doubt many members of the AHIP collective had much to do with President Clinton’s own form of healthcare reform failing in the first half of his first term (1992-94).  Putting its primary content aside for just a moment, Clinton’s speech was peppered with two wheedling, audience-specific themes: the first, an invocation of thanks to the AHIP collective for supporting healthcare reform, or the rhetorical equivalent of praising someone for handing over their wallet while being held at gunpoint; and the second, a win-one-for-the-Gipper pep talk praising AHIP’s members as the chosen few who know that improved healthcare quality and lower healthcare costs can coexist, a sentiment that I know from first hand experience many of the AHIP collective struggle to affirm.(2)(3)  By injecting these two themes into what was essentially a speech outlining Clinton’s view of the world’s humanitarian challenges, the ex-president succeeded, brilliantly I believe, in conveying the following message, like it or not: we are committed to making things more equal in the world (the US included); healthcare reform is one step in that direction; and, as part of the process, we are offering you a second chance to re-build your industry around the needs inherent to this objective.  There was no gloating, just a warm embrace and a subtle nod or two – folks please get with the program and get it together – all this for the standard public appearance fee of the popular ex-President, which sources state range in the area of $150,000.

It’s also a nice position in life to do what you want to do and talk about what you want to talk about.  In terms of air time, Clinton’s cajoling served as mere tasting notes to a speech primarily concerned with his current world view and its alignment with the work of his William J. Clinton Foundation (a nongovernmental organization with over 1,100 staff and volunteers in over 40 countries).  A few notable points from his speech, titled Embracing Our Common Humanity, include:

  • The belief that the past decade of crises and changes in the US economic system, up and to the recent (current) recession, has alienated white non-college educated males in the US, who as a group are struggling for hope and optimism and are one of the primary sufferers of the massive unemployment trend.
  • That there is an underlying fear that America, a historical underdog turned post-WWII perennial favorite, may not be winning anymore, as developing countries like Brazil, Russia, India and China challenge our economic supremacy and terrorism challenges the capabilities of our military.
  • That the world is an incredibly interesting place where we continue to advance beyond our imaginations, noting in the years since his first taking office as President: the evolution of cell phones from a 5 lb device to today’s smart-phones accessing a pervasive Internet; and the advancement in genetic engineering to our current realization of synthetic organisms (to list just a few).
  • That despite the world’s being an incredibly interesting place, we still have trouble dealing with three major problems: (a) instability; (b) inequality and (c) climate change (and here I note that these three challenges line-up with many of the Clinton Foundation’s programs including his work to rebuild (or build) Haiti and to reduce global greenhouse gas emissions, the latter of which he believes is a cause to the current climate change).

With respect to healthcare reform specifically, Clinton acknowledged that the law is a vague beginning that is reliant on a second phase of specific programs.  These programs will have to address the real issues of cost and quality that he knows AHIP’s members understand, but that are not clearly understood by the public at large.  According to Clinton, making the new healthcare law work requires innovation, an American specialty that will bridge the gap between “what the government can provide and what the private sector can [currently] produce.”


(1) For a transcript of Clinton’s May 2006 speech in New Orleans, click here, and for a transcript of George H.W. Bush’s speech at that same event, click here. Both are short, sweet and excellent, with Bush Sr. winning over the day despite Clinton’s rock star status with the Tulane student body.

(2) The belief that quality healthcare can be delivered at a lower cost is one that many people, not just insurance executives and underwriters, struggle with, especially consumers (patients). Generally, many patients find evidence-based medicine terms like “quality guidelines” and “quality standards” confusing and continue to believe that more and newer care is best. Patients are also reluctant to believe that their doctor could provide anything but sound medical advice.

(3) The vast majority of the new businesses exhibiting at AHIP have as their very purpose improved quality and lower cost.  Our insurers’ skepticism resides in a history of failed attempts at accomplishing this objective on a broad scale.  As I have noted many times in this blog, this objective can be met within subsets of the healthcare economy today. Broader deployment is the challenge and necessity presented by PPACA, a law that will financially bankrupt the US without massive improvements to the cost-quality relationship in healthcare.

June 4, 2010

Favorite Albums of the Decade (2000-2009) – # 7 – Animal Collective – Merriweather Post Pavilion

Merriweather Post Pavilion

Animal Collective is special.

And weird.

And maybe psychedelic.

Or maybe folk, like avant-garde folk, sort of like experimental art music, sometimes it sounds like rock, often times you can dance to it, the vocals almost always remind me of The Beach Boys, the song structures and the lyrics, however, do not.

It is a “collective” (not a band, really), because they are not always ALL together.  They like to have other projects, creative outlets, the freedom to play and experiment without one another, and the freedom to come and go as they please.  Over the past decade, the collective, in whole or in part, including solo stuff, has released over 13 albums.

Each of the collective has an alias:

Sometimes they wear masks and pretend they are animals, or other things.

Each is from Maryland (Merriweather Post Pavilion – the album name, see above – is also a famed music venue located in the woods between Baltimore and DC – I think Hendrix and Janis Joplin played there once).

Each knew the other as kids, transplanted separately to NYC and formed the collective in 2000-ish in a loft on Prince Street (a few blocks from my place, b/t/w).

Not ALL live in New York any more, only 2.

Each is now in their 30’s.

The collective is a deep part and a major influencer of a very vibrant, US-based alternative (rock/folk) music scene, much of which is housed in NYC, and Brooklyn in particular (primary neighborhoods:  Williamsburg, Ft. Greene, Red Hook, D.U.M.B.O.).  This scene features tons of bands/collectives, many growing in popularity, slow and steady.  If you are young and you are NOT into hip-hop, classic rock or American Idol-esque pop, this might be your scene.  You also might be a hipster.

It is often hard to tell what instruments the collective plays.  I know there are bass and drum sounds.  My friend Jason thinks they play computers.  I think they do, sometimes, sometimes I know I hear guitars though.  To me, their signature sound is in the vocals, they are gorgeous, and most of the time they are not computers.

Up and to the release of Merriweather it was a challenge for me to recommend the collective.  Its greatness was not obvious, and for some it still may not be obvious, in the same way Kid A can baffle even the most sincere music fan.  Nonetheless, I think it’s time.  It’s music for the patient, the hungry, the anti-pop, those with ears craving something new.  It’s also damn catchy and beautiful.

The lyrical themes of Merriweather center around love, loss and family, which I don’t think is weird at all, and doesn’t feel very hipster, does it?

Here’s my introduction to the band and the record, a tune called My Girls.


There isn’t much that I feel I need
A solid soul and the blood I bleed
With a little girl, and by my spouse
I only want a proper house

I don’t care for fancy things
Or to take part in the vicious race
But to provide for mine who ask
I will, with heart, on my father’s grave

I don’t mean to seem like I care about material things
Like our social stats
I just want four walls and adobe slats for my girls

June 2, 2010

The OmniGuide Laser

Filed under: Healthcare,Technology,Venture Capital — Steve Krupa @ 7:34 pm
Tags: , , ,

Happy Physicist Yoel Fink

Here’s a fun shot of a very happy (and brilliant) CEO Yoel Fink, who runs one of our (Psilos’) portfolio companies, OmniGuide.  This picture was featured in a article that just came out and it reminded me that I have yet to post on Yoel’s company.

OmniGuide falls into the medical device segment of our healthcare investment portfolio.  Over the past 40+ years VCs have invested in incredible medical devices and diagnostic inventions that have led a revolution in medicine, extending life and improving lifesyle.  Unfortunately, our current healthcare related financial crisis is one of the unintended consequences of this revolution.

In anticipation of an era of financial constraints on the healthcare system, our investment approach is to back new medical devices that not only provide a new standard in quality outcomes, but also reduce cost to the health system and align the economic incentives of payers (insuers, gov’t, consumers), providers (doctors and hospitals) and patients (consumers).  OmniGuide’s BeamPath laser technology is a product that does just that and more.

Below is a 5 minute video of a report on CNN on how a Wake Forest surgeon found OmniGuide’s BeamPath and used it to remove what was believed to be an inoperable brain tumor.

What I think you pick up from this video is that OmniGuide has developed a one of a kind medical invention that saved a life that was unlikely to have survived previously.  While this is incredible, we were attracted to investing in the company because the CO2 laser operates with virtually no collateral damage, making it the perfect scalpel for operating near sensitive tissue (think the brain, the prostate, the uterus, the ear, the eye, etc.).  Also, the newfound ability to bend this laser enables its use as a minimally invasive surgical method.  These two features together reduce the trauma from a procedure and improve the surgical efficiency, producing better outcomes (higher qualilty) and better productivity (reduced hospital costs).

In this case, it just so happens that OmniGuide’s technology is also groundbreaking in and of itself.  Yoel figured out how to bend a CO2 laser without energy loss, something that was thought to be near impossible, and then manufacture his perfect mirror to a size that produces a 10s micron laser profile, enabling its use in minimally invasive surgery.

For more on OmniGuide, click here.  Awesome.

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