Andrey Ostrovsky, MD, FAAP is the Managing Partner of Social Innovation Ventures and former Chief Medical Officer of the US Medicaid program. Social Innovation Ventures is investing in health solutions, art projects, and housing.

With a background in entrepreneurship, medicine, and research, Dr. Ostrovsky brings a unique perspective to investing — which he shares in this second part of the Investing Cheat Codes series.

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Read Part 1 of the Investing Cheat Codes Series featuring Casey Albert and SteelSky Ventures.

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In Full Health (IFH): What led you — either personally or professionally — on your path in medicine, entrepreneurship, and later in investing?

Andrey Ostrovsky: I had an experience taking a break from medical school for a year where I worked in San Francisco on a project to combine data with policy, and that gave me a taste for how change can happen in a really meaningful way for health systems outside of the academic, nonprofit, or government space. So, the entrepreneurial route became very appealing and an efficient path to achieving public health goals and health equity goals. I helped co-found my first company, did a lot of learning, and deepened my appreciation for how market forces can be used to drive social good.

From there, I knew I wanted to influence the way dollars float. I wanted to create opportunities to grow businesses and support founders beyond perpetuating the usual types of founders that were founding companies. I wanted to broaden the aperture of folks that are founding companies. I’ve been investing for 5 years now.

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IFH: Prior to your work with Social Innovation Ventures, you were also an entrepreneur yourself, co-founding Care at Hand, an evidence-based predictive analytics platform that used insights from non-medical staff to prevent aging people from being hospitalized. What did you learn during your time with Care at Hand that has informed your investing?

Andrey Ostrovsky: One lesson is the importance of timing. The company we were building was relatively early for its time, literally when the Affordable Care Act was born. The financial incentives to keep the elderly out of the hospital really weren’t fully kicked in at that point in time. That was a big value proposition we were trying to create to avoid avoidable readmissions. We were just a little early.

The other insight was that we built a software company when what we should have done was build a service company that had technology augmenting it. And now that is becoming the norm in digital health where there are many service businesses that are tech-enabled. Had we started that way or pivoted to that, I think we would’ve had much more impact and much more financial success.

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Community Connections

Dr. Mark Smith has been such a great, generous mentor when it comes to public health, investing, and leadership. Additionally, if it wasn’t for Dr. Patrick Conway I wouldn’t have been “voluntold” to take my Medicaid role and learn as much as I was able to learn. Lastly, Dr. Marketa Wills, the Chief Medical Officer at Johns Hopkins Healthcare, has such an incredible operating mind. We actually wrote a really interesting piece about art and health together and I have learned so much from her.

Andrey Ostrovsky, MD, FAAAP
Managing Partner, Social Innovation Ventures

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IFH: In addition to funding health and medtech companies/nonprofits, Social Innovation Ventures also funds visual art and film projects. Can you speak to how you came to this intersection of investments?

Andrey Ostrovsky: My motivation in investing overall is I want to have financial returns — and in achieving financial returns, I want to close health equity gaps and equity gaps overall and ultimately improve social cohesion, and make the world a better place.

I know health care pretty well, and so investing in health services and health tech companies is a place where I think I do a reasonable job of knowing how to do due diligence as a company and in making educated guesses about the future of where health care is going.

Investing in art was a diversification strategy for investing, as simple as that. The way I invested in art was informed by the values that are applicable to my investment thesis. I know much less about art than I know about health care, and fortunately, I have some fantastic partners. In particular, CPM gallery and dear friend and colleague of mine, Vlad Smoken, who’s a gallerist and an artist — he basically sources almost every art deal that I invest in, in terms of visual art.

I’ve also broadened to film, and currently have three film investments including Sweetwater, which is about the first Black NBA player, Nathaniel Clifton. These investments are diversification strategies, but the folks I’m investing in are diverse writers, directors, casts, and stories that are being told. Yes, this is money being put to use to make more money, but doing it in a way where we’re building social cohesion, being inclusive, and supporting folks and their cultures that are different from mine.

IFH: You also have begun investing in housing as well. How does this contribute to your overall goal of health equity?

Andrey Ostrovsky: My housing investing is part of a long research project to see if there’s really a play for investing in housing as a means to improve health and health equity. I wanted to better understand what it meant to be a landlord before making any big bets on health and housing play. I’ve invested in real estate predominantly in Baltimore where there are lower-income families that are being served.

Inarguably, housing overlaps with health, and vice versa. But what I’m learning is that it is very challenging and may not be actually cost-effective to use health care dollars to pay for housing. There are really only a few geographies where you can build a scalable business model that’s merging housing and health — like Maryland, which is globally budgeted for Medicare dollars.

On a national level, unfortunately, my hypothesis is being invalidated, but I started this wanting to understand what it means to really support tenants. When someone can’t make rent, what does it look like to plug them into employment support — instead of evicting them? It’s a housing-first model to health, and there is still more to understand.

IFH: What have you learned through your last five years of investing?

Andrey Ostrovsky: The major thing that I have learned is that the hypothesis I started out investing with appears to be correct.

The hypothesis was that investing in companies that are run by diverse founders and are trying to serve populations that are in the public payer space have really compelling addressable markets to go after. If done well, they’re able to generate really interesting revenues and positive cash flows while creating value for patients.

While this is not a statistically significant sample frame, I believe that there is a trend toward something that is reproducible. I think over the next 5 years we’ll see if that really is reproducible, especially through an economic downturn like we’re having now.

I’m hopeful that the financial success of this type of investment model can be reproduced and scaled up by institutional investors and that health care investing evolves to more systematically incorporate diverse founders.

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