Episode 15: Advocate Aurora Enterprises: Commitment To Whole Person Health (Podcast) – Food, Drugs, Healthcare, Life Sciences

In this episode, Foley Of Counsel Mike Lappin talks with Michael Grebe and Scott Powder of Advocate Aurora Health,
to discuss Advocate Aurora Enterprises, a subsidiary of Advocate
Aurora Health responsible for advancing the system’s purpose of
helping people live well through a commitment to Whole Person
Health.

Mike Lappin is Of Counsel and a business
lawyer with Foley & Lardner LLP. Mike practices primarily in
the areas of Mergers and Acquisitions, Corporate Law, and Health
Care. In 2009, Mike joined Aurora Health Care, the largest health
care system in Wisconsin, as its first general counsel, and later
was promoted to Chief Administrative Officer. In 2018, Aurora
merged with Advocate Health Care, the largest health care system in
Illinois, to form Advocate Aurora Health. At the request of the
Advocate Aurora Co-CEOs, Mike led the successful integration of the
two systems which resulted in hundreds of millions of dollars of
annual synergies and laid the foundation for the organization to
effectively navigate through the COVID-19 pandemic.

Michael Grebe is the Chief Legal Officer
at Advocate Aurora Health, and is responsible for leading the Legal
Department and providing counsel to the Board of Directors, and
Executive Leadership Team. Michael joined Aurora Health Care as
Chief Legal Officer in 2017 and prior to that served as General
Counsel at HUSCO International for two years.  Prior to
joining Husco he had a career for more than 20 years at Quarles
& Brady, where he provided legal counsel to clients across a
variety of areas focusing on corporate and transactional matters,
as well as serving as Chair of the Business Law Practice and a
member of the firm’s Executive Committee. Michael was named the
“Corporate Counsel of the Year” in Wisconsin by Best
Lawyers in America.

Scott Powder is the President of Advocate
Aurora Enterprises, and is responsible for leading Advocate Aurora
Health’s whole person health strategy, which includes the
development of a consumer health and wellness division, growth of
new and adjacent revenues and corporate venture investing. A
national strategic thought leader, Scott has served as the Chief
Strategy Officer of Advocate Aurora Health prior to the formation
of AAE.  Scott joined Advocate Health in 1993 where he held
multiple business development and strategy positions, including
Chief Strategy Officer, Vice President Business Development for
Lutheran General Hospital, and Vice President Business Development
for Advocate Medical Group.

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Mike Lappin

Hello everyone, my name is Mike Lappin. I’m an attorney at
Foley & Lardner practicing in our transactions and health care
groups. I’ve been practicing law for almost 30 years, primarily
as a transaction attorney. I joined Foley about two months ago, and
11 years before that, I was deep into health care. I served as the
Chief Legal Officer and then Chief Administrative Officer of Aurora
Healthcare-the largest health care system in Wisconsin–and then as
the Chief Integration Officer and Chief Administrative Officer of
Advocate Aurora Health, the system formed by the 2018 merger of
Aurora with Advocate Healthcare-the largest health care system in
Illinois. I’m very pleased today to be joined by two of my
former Advocate Aurora colleagues, Scott Powder, who is the
President of Advocate Aurora Enterprises, and Michael Grebe, the
Chief Legal Officer of Advocate Aurora Health. We’re going to
discuss Advocate Aurora Enterprises, which was launched recently as
an investment arm of Advocate Aurora late last year, but first a
little context.

As I’m sure most of our listeners know the health care
industry is going through a period of significant transformation.
This transformation has been driven by a number of forces,
including the economics of health care, changes in technology, and
changing consumer demands and expectations. And we can see this
play out in the industry in many ways, such as the continued
consolidation, which has been getting a lot of attention these
days, changing locations of care, moving care outside of hospitals,
and new technologies to monitor, treat, and interact with
patients.

And this is even before the COVID pandemic hit and it is very
well that that this pandemic could exacerbate many of these trends.
To me, as a transactional and health care lawyer, one of the more
interesting trends though is that, while hospitals and health care
systems continue to grow and enhance their traditional business of
providing care in hospitals and clinics and other settings,
they’re moving into new and different businesses under a much
broader umbrella of health, wellness, and health care services. And
that is what we’d like to explore today. Before we do that, let
me have our guests introduce themselves. Scott, why don’t I
start with you?

Scott Powder

Thanks, Mike. It’s great to be here. I’m Scott Powder.
I’m President of Advocate Aurora Enterprises. Before that I was
Chief Strategy Officer for Advocate Aurora Health and served in
that same role for Advocate Healthcare prior to the merger and
creation of Advocate Aurora Health, and I’ve been in health
care for nearly 28 years now.

Michael Grebe

Thanks Mike. I’m also very happy to be here. As you
mentioned, I’m the Chief Legal Officer for Advocate Aurora
Health. I joined Aurora in early 2017 in that same capacity after
practicing in private practice for more than 20 years and working
as a general counsel at another Milwaukee area business before
joining Aurora.

Mike Lappin

The way we’re going to approach this discussion is to talk
with Scott about various aspects of Advocate Aurora Enterprises,
and then I’ll turn to Michael to get some input on some of the
legal issues that he faced. Let’s start at the beginning. I
mentioned before that Advocate Aurora is a large health care system
in Wisconsin and Illinois. Can you give us a little more background
on the system?

Scott Powder

As both of us mentioned, Advocate Aurora Health was created in
2018, April 1st, so just a little over three years ago,
and it was the merger of really two large health care systems in
adjacent states. It was somewhat pioneering in health care in the
sense that there hadn’t been a lot of cross-state (I’ll
call them) “mergers of equals.” Oftentimes it’s been
either large multi-market systems, or gobbling up smaller players,
or a lot of in-state mergers, but doing a merger across state lines
with two well-respected health systems was somewhat unique in
pioneering. There hasn’t been a lot of that, so that’s the
creation of Advocate Aurora Health.

I’d probably say the interesting thing to me is when we-as
both you and Michael will recall-both predecessor organizations
were called Advocate Healthcare and Aurora Healthcare. When we
renamed the system, it was Advocate Aurora Health, not that
we’re not in the health care business, but we acknowledged at
the time and continued to acknowledge. It certainly plays out in
what we’re doing at Advocate Aurora Enterprises, that our role
is more than just great health care, it’s to positively impact
the health of the people we serve, which of course is impacted by
care, but it’s impacted by many other things. I find that to be
particularly interesting talking about where Advocate Aurora Health
is going.

Mike Lappin

That’s a great point, Scott, and I think that leads directly
into the creation of Advocate Aurora Enterprises. That was a
concept that came out of the strategic plan that was developed upon
the consummation of the merger. As you said at the time you were
the chief strategy officer and led the development of that plan.
Can you talk a little bit about the plan, the key elements of it
and how that led to the development and implementation of Advocate
Aurora Enterprises?

Scott Powder

You spoke to this at the very beginning. We’ve had a point
of view about where we saw health care going as we created Advocate
Aurora Health, and as we launched the strategic planning
immediately after the merger, and a big piece of that point of view
is that a person’s health and wellbeing is ultimately, as I
said, impacted by great medical care, but probably even more
impacted by things that are outside of traditional care delivery.
Things like access to secure housing, financial security, food
security, access to good food and nutrition, personal lifestyle
decisions, levels of stress, ability to sleep, things of that
nature.

So we knew when we created Advocate Aurora Health, we actually
were very explicit that our purpose is to help people live well,
and knowing that our purpose is to help people live well and that
this point of view that health is impacted by a lot of things other
than not just care delivery. We said, “we’re going to need
to participate in the broader health ecosystem in some form or
fashion.” So that was one of the big conclusions from the
strategic planning process that we embarked on.

The other kind of important piece of this is the care delivery
business is a really tough business for a lot of reasons. One,
heavily regulated. Two, at the end of the day your sources of
payment, your revenue, typically at least 40, 50, sometimes even a
larger percentage comes from the federal government, so unlike
other industries where you can set prices and impact your revenue,
we really don’t have that ability for a big chunk of our
business and health care. And the costs are going up dramatically.
There’s labor shortages, which always impacts our cost
structure. There are specialty pharmacy and drug prices are going
up, medical devices are going up, and so our revenue isn’t
going up nearly as fast as our expenses, and over the long-term,
that’s a really challenging position to be in for any
organization in any industry.

So, we sort of acknowledged that in addition to needing to
participate in this broader ecosystem as a mechanism to really
fulfill our purpose, we also recognize that there’s a financial
imperative as well to diversify our revenue and seek new
opportunities for revenue growth and profitability, which is
important. We’re a tax exempt organization, but that
doesn’t mean that we deliberately lose money. We need to
generate a surplus to be able to reinvest in technology equipment,
clinical programs and services, and things of that nature that
allow us to better serve the communities that we operate in.

That is where a lot of the Genesis of Advocate Aurora
Enterprises came from. The idea in a nutshell, was that if
we’re going to fulfill our purpose of helping people live well,
and if we’re going to participate in the broader health
ecosystem, we need an entity that is specifically focused on that.
We designed Advocate Aurora Enterprises to really build a presence
in what we call the consumer health sector. So investing in,
acquiring, and building businesses that are serving consumers
broader health needs, not just pure care delivery, and we set it up
specifically as a separate subsidiary because we’re serving
people differently than we do in our core care delivery
business.

Our marketing strategy is different, our funding strategy is
different, the kinds of companies that we’re investing in are
very different than things we’ve done in the past. And we felt
there was really a need for a certain amount of autonomy and
separation without losing the connection to the core, which again,
I can talk about in more detail.

Mike Lappin

Can you get to that a little bit of what really is Advocate
Aurora Enterprises? I refer to it in my introduction as an
investment arm, and that’s what I seen it referred to recently
in several articles, but I’m not sure that that description
really does it justice.

Scott Powder

I think that’s right, Mike. I am still trying to figure out
what’s the right one or two word description of what we are, so
let me try to unpack it a little bit and maybe you’ll come up
with a better descriptor because we do look a little bit like an
investment arm, but that’s not really the whole story.

In a nutshell, we are a for-profit subsidiary of Advocate Aurora
Health, and our goal is to build over the long-term a
company that operates in, invest in, and grows consumer health and
wellness products and services. We’ve identified three
particular areas that we’re focusing on-and I can go into those
in more detail, but the quick summary is-aging independently, the
second is parenthood, and the third is personal performance.

So for each of those, again, we’re trying to build a
portfolio of companies and products and services for the long-term.
When people hear investment arm, they think of us often as kind of
an in-house private equity or venture capital arm, meaning we go
out, we find attractive companies to invest in, and then we look to
exit and generate a financial return for our limited partners. In
this case, our limited partner is in effect Advocate Aurora Health,
and that is not entirely accurate because we go into these as
long-term investors with a buy and hold mentality, because again,
we’re trying to build a business, not necessarily get in and
exit in a defined period of time. It doesn’t mean that exits
won’t occur, but we’re certainly not going in with that in
mind, so that definitely distinguishes us from classic investment
arms, and that’s why I can’t quite figure out what to call
us.

Mike Lappin

If you’re looking for the lawyers here on the call to give
you some help in that, when marketing comes to us that usually
it’s a problem.

Scott Powder

That’s true. I hear you loud and clear. I’m waiting for
Grebe to give me, tell me what I can and can’t say on this.

Mike Lappin

You’ve mentioned a little while ago about the purpose of
Advocate Aurora of helping people live well. What are the goals for
Advocate Aurora Enterprises? I assume you have some financial
goals, but I’m particularly interested in what would your
non-financial goals be? How do you help fulfill the purpose?

Scott Powder

You’re right. We do have financial performance objectives,
but those are not the sole objectives. If they were, we would truly
be a private equity or venture capital arm simply trying to get the
highest return on invested capital. But, we start with what we call
our strategic objectives.

The first one is probably going to be the most interesting to
measure over time, and the hardest to exactly figure out, but we
call it healthy days. So there is a metric that the CDC developed a
number of years ago that they call healthy days where you literally
ask people over the past 30 days, how many days have you perhaps
been compromised from a physical health standpoint and how many
days has your mental health not been great?

And then you sort of do the math: 30 minus that number of days,
and the differences is how many healthy days did you have? Our goal
over the long-term is to increase the number of healthy days that
the people we serve enjoy. And so, again, it’s a very broad and
self-reported metric on health. That is our first and foremost
strategical [goal], and over time, I hope to add additional ways of
measuring health and wellness among the people that we serve, but
that’s at least a starting point. So that’s part one.

Part two, and again, another strategic goal is we are trying to
impact the total cost of care for the people we serve. So one of
the unique things about Advocate Aurora Health is that we’re
probably one of the largest participants in what’s often known
as value-based care. Of the roughly 3 million people we serve,
nearly half of them come to us under some value-based contract, and
nearly half of those come to us under a contract in which we have
significant financial downside risk. In effect, we are at risk for
the total cost of care for the people we serve, which is
interesting because my job within Advocate Aurora Enterprises is to
develop services, and companies, and products that actually can
help manage that total cost of care. So that’s where you get
some real strategic alignment between what Advocate Aurora
Enterprises is doing and what Advocate Aurora Health is doing. So
those are two examples of non-financial goals that we are trying to
impact.

And I’d probably say the third one, which bridges into
financial a little bit, is we’re trying to increase the number
of people we serve and the depth of our relationships with the
people we serve. I think, you know this Mike, the health care is
very oftentimes very episodic. I can count on less than one hand,
how many times I interacted with my health care provider, which
happens to be Advocate Aurora Health over the last year and a half.
And obviously some people interact more than I do, but they tend to
be episodic in nature, and there’s usually time in between, and
care delivery addresses certain aspects of health, but not the
entire ecosystem of health.

So we’re trying to kind of fill that interstitial space
between episodic visits to the health care provider system by
filling in the gaps with other health and wellness services on a
more frequent basis. One way we measure that as what we call
“share of wallet,” which is a sort of a retail measure of
how many times and in what ways are we interacting with the people
we serve beyond just traditional care delivery, and does that
generate more revenue?

It bridges into financial, but it does have its roots in, are we
building deeper and more frequent relationships with the people we
serve?

Mike Lappin

Michael, let me bring you into the discussion here. When I
listen to Scott talk about a new business, a different business, a
for-profit business under the Advocate Aurora umbrella, one of the
first things I think about as a business lawyer is, is how is this
going to be governed both from a kind of a management over
oversight perspective and from a board oversight perspective? I
know you were involved in those discussions, can you talk a little
bit about the different ideas and concerns that you were
considering as you worked through those issues?

Michael Grebe

We just heard Scott share a very compelling vision of Advocate
Aurora Enterprises. How Advocate Aurora Enterprises will support
the broader mission of Advocate Aurora Health and maybe most
importantly how that mission is going to benefit our patients in
our communities. I think what Scott lays out is really a pretty
exciting vision, and frankly, a significant part of the legal
department’s job is just to support Scott and his team, and
putting in place structures, management arrangements other legal
structures that give his team the best opportunity to be as
effective as they possibly can because the benefits of Advocate
Aurora Enterprises being effective extend far beyond just Advocate
Aurora Health.

Having said that, the business that Scott describes is different
from the core business of Advocate Aurora Health, whether it’s
operating as something of a private equity funder, a VC investor,
or some of the other things Scott walked through it necessitates an
approach that is distinct from the standard hospital system
governance.

So what we have tried to do is really two things at the same
time that exists somewhat in tension, but I think can be mutually
supportive. One is to create a structure that permits Advocate
Aurora Enterprises to act nimbly and quickly in a way is both
responsive to, and business aware, in terms of the different
context of Advocate Aurora Enterprises as opposed to Advocate
Aurora Health.

And we’ve tried to do that both in terms of establishing
smaller, different governance teams and in entities having a
separate board that is permitted to operate with more nimbleness
than the broader organization. But also tying what Advocate Aurora
Enterprises does back to Advocate Aurora Health in terms of things
like making sure that we are being mindful of potential liability
that could attach to Advocate Aurora Health. Making sure that there
is appropriate governance, compliance, legal oversight of the
business operations at Advocate Aurora Enterprises.

So those two things exist in some tension as I mentioned, but I
think that we’re getting it pretty close to right in terms of
protecting the organization but also giving Scott and his team, the
absolute necessary latitude to operate nimbly in the business
environment that he operates in.

Mike Lappin

Beyond governance, were there other significant issues from a
legal perspective that you dealt with in relation to the formation
of Advocate Aurora Enterprises?

Michael Grebe

In connection with the formation of Advocate Aurora Enterprises,
there are a few specific issues that the legal department and the
lawyers had to address, one, which Scott alluded to, is the fact
that Advocate Aurora Enterprises is a for-profit entity.

Doing that helps shield Advocate Aurora Health from some
liabilities arising out of what again is a very different set of
business operations that is likely to continue to diversify
significantly. It gives Scott and his team the opportunity to
partner, potentially, with outside investors in terms of the
corporate structure and the management team in their ability to
conduct business a little more independently.

Something Scott and I have talked about, I think there is also
something of a public perception that either in the market, or more
broadly, that is benefited by having Advocate Aurora Enterprises
stand on its own to some extent, and be able to hold itself out as
that more nimble entrepreneurial organization. That’s something
that we’ve tried to establish through management arrangements,
again, through different forms of legal or compliance oversight
while still providing protection to the organization. And I think
is going to prove to be very beneficial to, again, not just
Advocate Aurora Enterprises but our patients and communities for
all the reasons that Scott described.

Mike Lappin

Thank you, Michael. Scott, coming back to you, you mentioned a
few minutes ago three different areas of focus for Advocate Aurora
Enterprises. Can you elaborate on that please?

Scott Powder

One thing I sort of go back to that Michael Grebe just
referenced that I’d just add one comment, and that is that
point about being held out and being perceived as maybe different
and perhaps nimbler than the core business is actually a really
important insight. So we just announced a couple of deals that I
can tell you more about, but one of the deals was an auction
process where the private equity firm was looking to exit and they
brought in an investment banker and sort of sent out offering
memoranda to a whole bunch of different players. And one of the
questions that came up repeatedly, I’ll just say was, we were
one of the few, maybe the only strategic investor to participate in
the process. And we kept getting asked to what extent are we going
to be able to complete our activities and put our offer on the
table and do our diligence in a timely manner, because just as a
rule of thumb, strategics are typically viewed as slower and less
nimble and less able to get deals done than some of the investment
oriented organizations. So the fact that we actually ended up
consummating that deal and were successful and sort of met the
timeline requirements, that is incredibly important particularly in
those kinds of processes, so I just thought I’d reinforce
that.

But to your question, so three that I mentioned, I’ll go a
little bit deeper that the theory on these is that we wanted to
identify areas in consumer health, where there is we believe large,
unmet needs and challenges, where there is significant growth, and
where we have capabilities in our core business that might be
helpful in allowing us to compete successfully in these particular,
what we call, categories or sectors.

So that was kind of the general thinking of how did we identify
these? The first is aging independently. So the idea of helping
seniors age safely in their homes and providing them and their
loved ones with peace of mind. And obviously that’s an area
where there’s huge unmet need. Every person probably over the
long-term wants to stay in their home as long as possible, and as
someone who had to deal with aging parents with health challenges,
knowing that there’s ability to provide support and
infrastructure, particularly when you’re remote from your
parents, is critical. And there was almost an unlimited amount of
money that I’d be willing to pay to help keep my parents safely
and effectively in their home, so that’s one.

The second is parenthood, the idea of helping people navigate
everything from trying to get pregnant, the actual pregnancy
journey, the delivery, and then trying to raise a happy and healthy
kids in a more confident manner. And again, huge challenges, lots
of information out there, and raising kids particularly now is more
challenging than ever and there’s more issues and more
complexities, so helping people do that and being a trusted source
of information and services is really an interesting
opportunity.

And then the last is personal performance. So this is the idea
that by aligning mind, body, and nutrition, you can help
individuals achieve their peak performance and accomplish their
personal goals. We all know, and I think the pandemic has sort of
reinforced this that, access to good food, having mental
resilience, managing stress, and taking care of your body are
critical to performing your best whether it’s in your role in
work, your job, or just in your own personal fulfillment, or in
your relationships with friends and family.

So those are the three areas that we are focused on today. I
would say they are all evolving they’re fluid. We have specific
growth strategies for each of those areas but those strategies will
evolve and over time we may have to drop one, we’ll certainly
probably add categories over time, so this is an ever evolving
strategy.

Mike Lappin

Before you talked about the difference between Advocate Aurora
Enterprises and a private equity firm as you look at opportunities,
private equity firms usually have a very relatively narrow band of
types of deals that they would do, whether it’s a control deal
within certain industries within a certain size range, from what
you’ve described it sounds like you have a much broader range
of investment and opportunities that you’ll be pursuing.

Scott Powder

That’s right. We have a lot of flexibility in what we can
do. We can be a minority equity holder. We could have a controlling
interest. We could do a full acquisition and own all of the equity.
We also can even do what we call corporate venture investments
where we’re taking a much smaller slice of equity on the front
end, but I will say that we like to try to get to 20% equity
because if you’re not at 20%, you don’t have the ability to
have an income statement impact. And part of my job is financial in
nature, and generate over time an accretive and recurring stream of
cash flow for the organization, so having the ability to record the
activities on our income statement is important. But again,
that’s still gives me a lot of flexibility in a pretty wide
range of transactions that I can look at.

Mike Lappin

When you talked about the transaction you just completed and it
being a competitive process, how do you differentiate yourself from
other potential buyers or investors you’ve talked? One of the
things you mentioned is the expertise that you bring to the table
as a health system. Is that one of the things you focus on?

Scott Powder

I would say yes. That is certainly something we bring to the
table. And obviously every transaction is different-and the
transaction we’re referring to is Senior Helpers where we
acquired that company–that was basically almost all of the equity
was owned by a private equity firm that had reached the end of its
life cycle, and they were looking for an exit. In that case, they
quite frankly-I don’t want to put words in their mouth-but I
don’t think they really cared what about our clinical expertise
or any of that. I think what differentiates there is they’re
looking for maximizing their return on investment, so did we have a
competitive offer and could we get the deal done, and all that kind
of stuff, so you have to be a little bit careful in some of these
cases. All that, what we think is great advantage around clinical
expertise and reputation and relationships with, and as I
mentioned, 3 million people that we serve today, those are all
great things, but in certain transactions doesn’t mean a lot to
the seller.

On the other hand, we also announced, I will say this, the
Senior Helpers team that is now part of Advocate Aurora
Enterprises, appears to be thrilled with the some of those things
that I mentioned. They love the idea of being able to access
geriatric expertise and care around seniors and some of the
clinical programs that we have, some of the capabilities of serving
people in the home that compliment what Senior Helpers do. So I
think that those things are differentiators. It didn’t
necessarily help us win the transaction, but I think it’s going
to help us going forward, post-transaction.

On the other hand, we also just completed an investment in
Foodsmart, which is a digital food and nutrition platform that came
out of that personal performance category. And in that case, we are
a minority equity holder, and they are extremely excited about some
of those differentiators that we bring to the table, the ability to
bring some clinical expertise to their program. For example, we
have a research institute within Advocate Aurora Health, and
Foodsmart would like to expand on some of the clinical trials that
they’re doing where they couple their food and nutrition
activities with certain drugs to, again, have a better long range
efficacy. So they get excited about that capability that we have.
They love the idea that we’re a huge player in value-based
care, and can we help them prove out some of the positive impacts
that access to good food and nutrition will have on total cost of
care. So, it depends on the transaction, but those are things that,
again, make us different than a typical financial investor.

Mike Lappin

You just mentioned the two recent transactions that you
completed, and I think good examples of different ends of the
spectrum. One a hundred percent acquisition, and one on minority
investment. If you want to expand a little bit on either of those
investments and why they were attractive to you, that would be
great, and one of the questions I have is when you look at this-and
you obviously will look at the businesses independently and how
they stand on their own-but how important is it for you when
you’re looking at an opportunity like that to relate it back to
the rest of Advocate Aurora, and how it promotes, or works with,
the rest of the system, and the interactions there?

Scott Powder

I already mentioned Foodsmart, so what they do is they have the
ability to provide consumers with a tele-health consult or series
of consults with a registered dietician, and dietician helps you
design a meal plan that meet your personal needs that could be
related to chronic disease. It could be just trying to improve
fitness. It could be weight loss et cetera. They help you identify
through a huge database of recipes what worked for you, and then
inside the platform that translates into a shopping list. You can
press a button and it translates into a food delivery order. So
it’s a really convenient way, takes out a lot of the friction
of getting access to food, and one of the cool things they’ve
done they integrate food stamps and they allow for price comparison
between different groceries and delivery options. It’s a way to
allow people who struggle economically to very easily or much more
easily sort of get financial support and pick the most economical
way to get access to food. We think it’s super cool and fits a
whole bunch of not just personal performance, but there’s
clearly nutrition plays a huge role in aging independently, and
plays a huge role in parenthood, both maternal nutrition, nutrition
during pregnancy, immediately after delivery like child nutrition,
et cetera.

And then the second, Senior Helpers, again, they’re one of
the largest providers of in-home personal care, essentially aimed
at seniors to help keep them, either delay or hopefully avoid
altogether, needing to leave their home and be put into an
institutional setting. So they’re providing support services in
the home: light duty household chores and support for activities of
daily living. So, again, both of these kind of fit the strategy,
and to your question, we kind of look at this as three levels of
potential synergy, the first, and kind of the one that everyone
goes to, is what is the synergy between these companies that
we’re investing in are requiring and the core business of
Advocate Aurora Health. And what I would say there is in both of
the cases of the first two deals we’ve done, we think there is
synergy with the core, however, as a general philosophy, while all
other things being equal, we want there to be synergy with our core
Advocate Aurora Health business. It’s not a prerequisite; the
way I look at is we are building our own business and consumer
health, and by definition, it’s almost always going to have
synergy with the core, but it’s not again a prerequisite.

So if we find a great company in one of these categories, and it
doesn’t have synergy with the core, but it makes sense for what
we’re trying to do in consumer health, we would we have the
ability to pursue that. The second layer synergy is really within
the category itself. Presumably over time, and we’re in our
journey, but we’ll assemble, and acquire, and invest in more
companies in one particular category, and we want to find a synergy
between and among those companies. So now that Senior Helpers is in
the fold, we are looking at companies within aging that provide
different services, but that would be synergistic for the clients
of Senior Helpers. So that’s the second layer of synergy.

And then the third one is cross-category synergy. I mentioned
our first two deals, and since we did the deals simultaneously,
actually yesterday, we introduced the CEOs of the two companies to
each other. They’re both really interested in each other’s
capabilities and think that there’s some interesting synergy
opportunities between Foodsmart and Senior Helpers, and vice versa.
So that cross-category synergy is really, to me, kind of the holy
grail of what we’re trying to accomplish within an Advocate
Aurora Enterprises.

Mike Lappin

I take it that’s the ecosystem you mentioned at the
beginning.

Scott Powder

That’s exactly right, and as it all comes together, I’m
envisioning that as we mature and we bring more companies in,
we’re going to start seeing a lot of cross pollination between
and amongst the companies within the category across categories,
and again, ideally also helping be synergistic with Advocate Aurora
Health.

Mike Lappin

Michael, let me come back to you. I’m very familiar with
your legal department, it’s a great department, but they’re
built to serve a traditional health care system enterprise with
hospitals, and clinics, and surgery centers, and urgent care
centers, and the home health business. Now you’re having to
help Scott and his team with developing this for-profit
entrepreneurial very different business that you’ve had to deal
with before. How do you as a department and your attorneys pivot to
support him and to meet the needs that he has?

Michael Grebe

That’s a great question. I think the short answer,
sincerely, is we need to do that with humility. It’s my view
that there is not a better legal department at any health system
across the country. I sincerely believe that, and I believe that
that’s too, regardless of, or perhaps in spite of the
leadership of the department. But we are a legal department, as you
pointed out Mike, that has been developed and exists to support a
health system, and the businesses that Scott is talking about,
including Advocate Aurora Enterprises itself, are not within that
traditional model.

So it is I think, imperative for us to keep our eyes open, and
again, act with humility and understand that there are legal issues
that are going to arise that we do not have the capability of
handling in-house, or I should say we don’t have the capability
of handling them in-house with the level of expertise that is
required.

So one of the things we need to do in the near term, that we are
doing, is partner with our outstanding law firm partners, and work
with them and bring in that expertise where needed. Scott referred
to Senior Helpers has a significant franchise component to its
business. Not surprisingly, we don’t have a lot of franchise
law experience within the legal department, so it’s important
for us to find that, and supplement what we’re able to provide
internally. As Advocate Aurora Enterprises grows and invest in more
in different businesses. I think that it’s likely that that
need will grow for us.

At the same time, that’s something of a shorter midterm
approach. One of the things that Scott and I have talked about is,
as Advocate Aurora Enterprises develops and matures, there may be
areas that we’ll need to add internally where we will need new
members of our team. We’re able to support effectively what
Scott and his team are doing. I couldn’t map that out right
now, but it’s certainly something that we keep our eyes open
for going forward.

Mike Lappin

Thank you, Michael. One final question directed at Scott, but
Michael, you can weigh in too, I know the strategic plan that was
developed really had a timeframe about to 2025. If we were having
this conversation in 2025 looking back as to what’s happened,
and we say that Advocate Aurora Enterprises has been a great
success, what would you be talking about Scott as what’s
happened?

Scott Powder

I think a lot about that because I think if we don’t lay out
a sort of compelling and aspirational set of objectives and goals
for five years out, it’s hard to then say, are we doing the
right things today to move towards that? So certainly one of the
things that I think will be a measure of success is if we have made
some kind of impact on healthy days for the people we serve.

I mentioned that earlier, and if we’re improving, if
we’re kind of fulfilling our purpose of helping people live
well, they should be telling us that they’re experiencing more
healthy days. I mean, it’s as simple as that. And I understand
that’s not always possible for everyone given their
circumstances, but overall, we should be improving the number of
healthy days. I haven’t quite figured out exactly how much we
should be impacting, but if we show an improvement, I think
that’s at least a start.

The second is we need to be serving more people. And it’s
hard to kind of figure out exactly what the right number is because
a lot of the businesses we’re looking at-and Foodsmart’s
good example of that-they interact with people through digital
platforms. You can interact with a lot of people that way,
you’re not bound by geography. On the other hand, are you also
having deep connections with them and ongoing, lifetime
relationships? So probably some kind of metric that we’ve
increased, not only the number of people we serve, but we’ve
increased what we will call the lifetime value that they represent
to us so that they’re staying with us and that they’re
continuing to find new ways to do business with us. That’ll be
another measure of success.

And clearly a third is, have we created a portfolio of
companies, and products and services, that is generating a
meaningful and accretive cash flow for Advocate Aurora Health. I
don’t want to ignore that part of this is to, in fact,
contribute to the financial health of the organization. So I think
if we’ve done all three of those things, I think people would
be cheering for us.

Mike Lappin

Michael, anything to add to that?

Michael Grebe

As a legal department, we take a lot of pride in supporting
Advocate Aurora Health systems mission and values. It’s very
meaningful to us. What Scott is doing, not only drives that and
supports those mission and value ideas, but it’s exciting work,
and it’s interesting work. For the lawyers on the team,
it’s really enjoyable to be able to engage with Scott and his
team, and the companies that they’re looking at acquiring or
investing in, and being involved on something that’s a little
closer to the cutting edge of whole person health and how we really
live out that mission to help people live well. So it’s
something that we enjoy and are looking forward to a lot more of in
the future.

Mike Lappin

Thank you. And with that we are out of time, I would really like
to give a big thanks to Scott and to Michael for sharing time with
us today, and really appreciate talking to us about the new and
exciting venture Advocate Aurora Enterprises is becoming and one of
the leading health systems in the country and really plowing new
ground in health and wellness can be going forward. So again, thank
you very much.

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