Health equity is one of the hottest topics in healthcare today. Removing structural inequalities from the delivery of care and improving care outcomes among women, people of color, and LGBTQ people is a high priority for forward-looking health systems.

Daryn Dodson is CEO and founder of Illumen Capital, an impact fund of funds addressing systemic inequity by reducing racial and gender bias in investing. And healthcare is one of his primary focus areas.

We interviewed Dodson to better understand bias in investing, why he focuses on healthcare, the market potential and investor growth in healthcare technology, and why diversity is important in healthcare investing.

Q. Your firm addresses systemic inequity by aiming to reduce racial and gender bias in investing. Please talk about this bias in investing.

A. At a high level, only 1.4% of $69 trillion is managed by women and people of color. Furthermore, over the last 40 years, there have been studies and data that have demonstrated how funds led by women and people of color perform at or above their white male counterparts on average.

The bias in the asset management industry that Illumen Capital examines answers the question why, after 40 years of data, there hasn't been a shift to capitalize on this tremendous opportunity of overlooked and underestimated talent. This is the thesis that we're testing with Illumen Capital right now, and the cornerstone on which we built the firm.

If we could invest in leading fund managers and work with them to reduce their implicit biases, we could create a competitive advantage for funds to outperform financially and create more equitable leadership throughout the field. Ultimately, this would lead to a $30 trillion shift to women- and people of color-led firms.

By working alongside our fund managers and investors, Illumen Capital shares our bias reduction insights and enables our partners to apply these learnings across their portfolios – ultimately influencing a more optimal rebalancing in the asset management business.

Q. One of your firm's primary focuses and investment themes is the healthcare technology space. Why is this, given your goal of reducing bias?

A. Illumen Capital is an impact investor. Our investments are made with the intention to generate positive, measurable social and environmental impact alongside a financial return. Naturally, one of the best prospects of making the world a better place is to improve health and wellness for customers, patients and beneficiaries across the world.

Healthcare also is a large market that is exponentially growing with both cultural and demographic trends. When we look at the effects of landmark events, such as COVID-19, and frankly, the killing of George Floyd, bias becomes even more pronounced across multiple investment themes and industries, but perhaps none so pronounced as the healthcare system.

By examining industry verticals and associated racial disparities in healthcare outcomes across life insurance, drug development and clinical trials, we have found that well-intentioned professionals who are dedicating their lives to the betterment of humanity are still being stunted by their own biases.

Therefore, one of the important commitments of Illumen Capital's investor community is to address biases in their respective portfolios, enabling them to better identify overlooked and underestimated entrepreneurs, as well as to improve society through multiple impact areas, including social determinants of health.

Q. What has been the market potential and investor growth in healthcare technology?

A. Healthcare technology is not only a massive growth area for venture investment, but also across all private markets. Last year, we saw PitchBook track more than 4,000 investments into health tech companies, which was more than $50 billion of capital invested across a number of different sectors such as digital health, medical devices, clinical data, analysis, home care services and aging care.

Furthermore, the pandemic shocked the healthcare industry in a number of ways, which opened up potential for additional innovation. For example, clinical trials across many organizations were halted during the shutdowns when a number of elective healthcare services were reduced and mitigated.

However, companies that previously had exposure to, or that have strategies around, decentralized clinical trials and virtual clinical trials were able to keep their trials running and moving. This led to increased investor and industry appetite for decentralized clinical trial solutions.

Additionally, we have seen consumers become increasingly more comfortable with virtual care, contributing to a rise in appetite from pharmaceutical companies, healthcare providers and investors to provide innovative health interactions and solutions into the mainstream.

Q. Why is diversity important in healthcare?

A. Racial discrimination has shaped so many institutions that perhaps it should be no surprise that healthcare is among them. Considering wellness is a human-centered field, it is essential to increase diversity and representation in order to decrease existing systemic biases.

The repercussions of racial bias and lack of representation in healthcare are that people of color receive less care – and often worse care – than white Americans. This includes lower relative rates of health coverage; communication barriers; racial stereotyping based on false beliefs; and inconsistency in patient outcomes. Right now, there is a dearth of data and information around reducing biases, which is part of the reason why Illumen Capital exists.

I'd also like to reference the Congressional Task Force which was created as a result of NYU McSilver Institute for Poverty Policy and Research's Executive Director Michael Lindsay's research that was studying the relatively high rates of Black youth suicide. Suicide rates among Black youth were up 127% between 1991 and 2017.

Although diversity in healthcare is a complicated issue today, we see just the tip of the iceberg into a system that is deeply rooted in American history. Therefore, we partner with Impact Experience to host convenings for the funds we invest in and our investors, many of which have a healthcare focus, in Montgomery, Alabama.

We take a deep dive in studying the periods of slavery, lynching and mass incarceration and how they contribute to the imbalance of the asset management industry. In fact, we focus on the horror of the history of the Black women slaves who were experimented on by Dr. Marion Sims and honor these women for their contributions to today's gynecological innovation.

The goal of these experiences is to reduce biases and shift these systems rather than reinforcing the legacy of the past.

Twitter: @SiwickiHealthIT
Email the writer: bsiwicki@himss.org
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