Lessons from Cesar Herrera, Co-founder and CEO of Yuvo Health, on helping FQHCs engage in value-based care arrangements
This episode is part of Pear VC's series on Medicaid, covering the basics that founders need to know to build innovations that support communities in need.
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This series aims to demystify Medicaid, starting with insights from federal and state agencies, FQHCs, and managed care organizations, before exploring successful founders' strategies. Read our primers on the key players and innovations here, and stay tuned for upcoming posts featuring interviews with key opinion leaders, purchasers, and startup founders.
This week, we're excited to get to know Cesar Herrera. Cesar is the co-founder and CEO of Yuvo Health, a value-based care enablement organization for FQHCs.
Yuvo Health is an industry-leading healthcare organization that partners with community health centers to help them gain an advantage in value-based care, a healthcare model that prioritizes patient-provided quality and outcomes of care over the quantity of services delivered.
Founded in New York City in January 2021 by a fully BIPOC team that has experienced the power of quality care firsthand, the entire company shares a common goal of bringing fair, quality care to underserved communities. Yuvo Health empowers health centers to succeed in value-based care arrangements by qualifying for meaningful value-based care contracts and achieving success in those arrangements with a dedicated Population Health partner — and with Yuvo Health taking on the risk in doing so.
Yuvo has raised $28M to date from AlleyCorp, Mosaic General Partners, New York Ventures, HLM Venture Partners, Route 66 Ventures, VamosVentures, AV8 Ventures, Watershed, GreyMatter, Social Innovation Fund, and others
Cesar's journey in healthcare spans over two decades, beginning with strategy and policy consulting at Kurt Salmon Associates, Booz Allen Hamilton, and Booz & Company. He also worked at Horizon Blue Cross Blue Shield of New Jersey, where he spearheaded marketing and competitive strategy initiatives. He then transitioned to Head of Existing Business at Zocdoc, and then Healthify, where he served as Chief Solutions Officer, shaping his vision for Yuvo Health.
Cesar holds an MBA from NYU Stern School of Business, along with an MPH in Health Policy and Management from Johns Hopkins Bloomberg School of Public Health.
In this episode, we learn about Yuvo’s approach to facilitating value-based care revenue for FQHCs, key lessons from Yuvo’s first partnership and how Yuvo supports FQHCs.
Here is the recording if you would like to listen!
Cesar’s Background in Healthcare Policy
Cesar began his career in healthcare policy at the Centers for Medicare and Medicaid Services (CMS), focusing on Medicare and the shared savings program. He later transitioned to the private sector, working with health systems and health plans. His work concentrated on vertical integration and integrated care delivery models, aiming to improve the implementation of value-based care.
After graduate school, Cesar joined CMS to work on policy initiatives. Though new employees rarely get to choose their assignments at that career stage, he was fortunate to work on something that ignited his passion – innovation in Medicare. This timing coincided with Medicare Advantage's rapid growth, which prompted CMS to explore new approaches to care delivery and insurance for elderly patients.
While Cesar's policy experience helped him understand strategies for incentivizing quality care, he realized that change at the federal level moves slowly. This motivated his transition to the private sector, where he could implement these strategies more directly.
On Serving Community Health Centers
Cesar was drawn to the mission of serving community health centers (FQHCs) that provide essential care for individuals on Medicaid or those without insurance, because he was once one of these patients. Having grown up without health insurance for most of his early life, his local community health center was his and his family’s primary source of medical care.
Across the US, 20 million people need primary care but lack access to community health centers. This challenge inspired Cesar to find ways to support these centers in reaching more patients.
While community health centers already basically practice value-based care, they aren't properly compensated for it. Unlike other healthcare providers, they face restrictions on taking downside risk—meaning they can't participate in value-based payment arrangements that would better align their incentives with insurers. Cesar aims to enhance these centers' ability to engage in such payment models.
On Crafting Your Ideal Job Description
Cesar has held roles like Chief Solutions Officer (a hybrid of head of product and head of strategy) and Head of Existing Business (focused on account management) at various startups. He advises those interested in a similar career path to stretch themselves and embrace new challenges.
He shares that his career path hasn't been linear—transitioning from account management to product strategy isn't common. Yet each role presented an opportunity for growth and development.
“But I felt like those were really interesting challenges for me. Those were areas that I thought I wanted to continue to grow and develop in. And I didn't stop myself from taking the initiative and asking for those roles or being considered for those roles.”
He advises against forcing yourself into a box. You can pursue multiple interests as you grow and develop your career—in fact, that varied experience can help make you a better CEO.
How Yuvo Health Works
Cesar explains that FQHCs serve a critical need in the community. They provide care to over 30 million people, predominantly those who are under- or uninsured. They offer primary care and wraparound services regardless of ability to pay. However, their financial model is strained and unsustainable.
As we discuss in a recent episode of Pear Healthcare Playbook, FQHCs rely on three pillars of funding: grants, billing for provider services, and 340b revenue. These funding sources aren't sufficient for innovation. FQHCs aren't legally permitted to take on downside risk, which prevents them from engaging in better value-based care payment arrangements with payers—even though they already provide value-based care. Cesar wants to help FQHCs receive proper compensation for their work.
Yuvo helps by acting as the risk-bearing entity for the FQHC and contracts directly with health plans across all lines of business (Medicaid, Medicare, Commercial) for various risk models through to global capitation.
Yuvo then partners with FQHCs to delegate full risk for their patient population. In addition, they provide the FQHCs with supportive infrastructure—including technology, analytics, care management, patient engagement and outreach, risk adjustment, and coding—essentially serving as an MSO for value-based care. This enables both the FQHC and Yuvo to succeed in these risk arrangements and channel additional revenue back to the FQHC.
Why are FQHCs not allowed to take on downside risk?
Upside and downside risk are key financial arrangements in value-based care models. Upside risk (one-sided risk) allows healthcare providers to share in savings if they meet or exceed quality and cost targets, without exposure to financial losses. Providers retain a portion of the difference between projected and actual spending when staying below specified thresholds while maintaining quality. Downside risk (two-sided risk) involves both potential gains and losses: providers share in savings when targets are met but face financial penalties if they exceed spending thresholds or fail to meet quality goals. To offset the increased risk, downside risk models typically offer greater potential rewards.
FQHCs are uniquely regulated, as they must provide primary care services by law. As safety-net providers for uninsured individuals, they receive government funding to subsidize this care. Cesar believes this funding comes with the condition that health centers shouldn't risk receiving less than their standard rate.
Yet this arrangement rests on a flawed assumption—that government funding covers all care delivery costs. In reality, it only covers about 60-65% of operational costs. This means FQHCs must secure additional revenue through grants and private sources to maintain their operations.
Volume and Economies of Scale
Yuvo provides services that FQHCs would otherwise need to build in-house. Yuvo offers these services at no charge because they create negotiating leverage with health plans. By aggregating the volume served by multiple FQHCs, Yuvo can negotiate more advantageous financial arrangements and better targets.
This allows FQHCs to compete with large health systems that have hundreds of millions of dollars in cash reserves to make investments necessary to succeed in value-based care.
What are the key features that Yuvo provides that drives value?
Yuvo serves as a comprehensive support ecosystem for FQHCs, offering three key benefits:
Access to downside risk value-based care arrangements, as previously discussed
Immediate guaranteed revenue, since Yuvo assumes the risk and provides performance-based payments to FQHCs upfront—eliminating the typical 20-month waiting period
Tools to enhance FQHC scale and capacity:
Primary care extension through telehealth partnerships
Tech-enabled solutions that streamline operations and reduce administrative burden
Securing first partnership with Centene
Yuvo Health secured a partnership with Centene (the largest managed Medicaid care organization in the country) in 2022, during the company's early days. While they didn't initially have a relationship with Centene's national plan, they focused first on New York City, where Fidelis serves as one of Centene's largest local plans.
Their cold-calling strategy proved surprisingly effective. Yuvo leveraged their existing relationships with FQHCs that represented a significant patient population for Fidelis. The New York regulatory environment worked in their favor—regulations required a minimum percentage of Medicaid beneficiaries to be under risk arrangements, which encouraged MCOs to pursue partnerships like the one with Yuvo.
The key lesson learned, however, was that health plan contracting typically takes much longer than anticipated to fully execute, even when the initial pitch of Yuvo Health's value proposition resonated deeply with the health plan.
On regulatory challenges
“The general challenge for innovating in Medicaid is scale, relative to Medicare.”
Cesar believes that scaling is more challenging for Medicaid than Medicare because each state manages Medicaid differently. With Medicare, you can scale your model across all 50 states since it's federally managed. For Medicaid, you need to achieve minimum scale in each state independently, as each state's Medicaid policy stands alone.
Consequently, Yuvo cannot expand into all 50 states at once—it's a significant regulatory challenge. The company must be strategic about which states to enter and in what sequence. For example, even New York's neighbor Connecticut doesn't have managed Medicaid. This variation among states requires developing individual go-to-market plans for each state.
Obstacles and Opportunities in Medicaid
Cesar points out significant opportunities to expand value-based care alternative payment models, particularly in states approaching their procurement deadlines. These states can reassess their regulatory policies to determine what's working and how they can better leverage alternative payment models.
States can learn from various models emerging from CMMI and secure matching funds to support the expansion of these innovative programs. However, Cesar notes that certain policies can create barriers for MCOs trying to develop new programs with providers and that state agencies should re-evaluate these policies on a regular cadence.
On SDOH data
Cesar believes there is significant room to improve how healthcare providers integrate social determinants of health into their work.
His experience at Healthify gave him insights into how community-based and social service organizations can effectively collect and use health-related social data.
While many FQHCs gather this valuable information, they often lack the means to track it systematically or integrate it into their clinical records. Instead, social needs screenings frequently end up in paper notes or remain as informal knowledge.
Advice for Founders
“It is incredibly important to know the ‘why’ in innovating in Medicaid … It’s not for the faint of heart.”
Cesar advises founders in this space to carefully examine their motivations. He emphasizes being intentional and deliberate about serving this population, as the business isn't straightforward and often contains unique elements that don't scale easily.
Most importantly, he stresses getting to know your patient population deeply—beyond just analyzing claims data. Understanding patients' daily lives and experiences is crucial.
Interested in learning more about Yuvo Health? Learn more on their website, and LinkedIn.
Sponsor note: This is the Pear Healthcare Playbook podcast. This season is brought to you by Banc of California. Banc of California partners with leaders to help them identify the right products and services for their business needs.