May 9, 2023 · 51m · a16z
When Two Giants Intersect: Healthcare Meets Fintech
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
Host Steph Smith joins a16z General Partners Julie Yoo and David Haber to examine how fintech infrastructure, embedded financial software, and recent price transparency regulations can solve systemic inefficiencies and financial opacity across the U.S. healthcare system.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. The host holds 19.4% of the talking time here. How this is scored →
The host as informed peer 2.9 Guest teaching 4.2 Guest disagreement 0.2 The host pushing back 0.2
speaking balance: gold is the host, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 12:19 Julie reframes host's blame premise
Julie gently rejects the host's premise that one party is uniquely to blame, pointing out that no stakeholder willingly accepts blame and detailing how pandemic dynamics impacted providers and payers differently.
Hardest push from the host ▶ 17:52 Steph presses on price transparency resistanceSteph refuses to accept price transparency as an unmixed good without hearing the counterargument, asking what valid concerns existing incumbents raise.
Biggest teaching moment ▶ 13:20 Julie explains contracting price inflationJulie educates the host on the dark art of payer-provider contract negotiations, explaining how rates are artificially inflated upfront because parties expect them to be negotiated down.
The host holds their own ▶ 45:54 Steph links ROI underwriting to preventative careSteph demonstrates strong subject domain synthesis by directly linking Julie's long-term ROI thesis to why insurers historically refuse preventative care coverage, earning explicit validation from the guest.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | The host as informed peer | Guest teaching | Guest disagreement | The host pushing back | Why |
|---|---|---|---|---|---|---|
| Microsite Resource Announcement for Healthcare x Fintech | 2 | 1 | 0 | 0 | Steph welcomes the guests and introduces the episode's focus on healthcare and fintech before asking them to share their professional backgrounds. The dynamic is welcoming and introductory with no friction or high technical probing. | |
| Analyzing the Core Breakdowns in the Healthcare System | 2 | 4 | 0 | 0 | Steph asks where the healthcare system breaks down most. Julie provides an educational breakdown of the core three-party trifecta (providers, payers, patients) and how incentive misalignment causes pricing opacity. | |
| Key Economic Statistics and the Burden of Medical Debt | 2 | 5 | 0 | 0 | Steph requests macro statistics to ground the discussion. Julie and David educate the audience on $4.3T annual healthcare spend, administrative bloat, and the reality that half of Americans carry medical debt. | |
| Regulatory Tailwinds and Price Transparency Reform | 4 | 5 | 1 | 2 | Steph asks insightful follow-ups regarding systemic breakdowns and why incumbents litigate against price transparency. Julie details the dark art of contracting dynamics and how regulatory mandates like price transparency force market shifts. | |
| Impact of the No Surprises Act and Cures Act | 3 | 4 | 0 | 0 | Steph specifically directs the conversation toward the No Surprises Act and Cures Act. Julie explains out-of-network billing protections and how patient data access laws eliminate manual faxing. | |
| Fintech Infrastructure and Case Study on Juniper | 2 | 5 | 1 | 0 | Steph asks how modern fintech infrastructure can be applied to healthcare. David explains embedded financial primitives and provides a case study on Juniper advancing working capital to clinics based on claim reimbursement data. | |
| Emerging Opportunities and the Financial Operating System | 3 | 5 | 0 | 0 | Steph synthesizes recurring provider problems and asks where else startups can address data opacity. Julie and David outline opportunities in neo-carriers and building a financial operating system for healthcare. | |
| Advice for Founders: Hybrid DNA and Capital Strategy | 3 | 4 | 0 | 0 | Steph raises a practical concern for founders who lack crossover experience in both fintech and healthcare. Guests explain why hybrid founding teams are necessary and how regulatory capital requirements affect runway. | |
| Grand Challenges: Underwriting Long-Term ROI Therapies | 5 | 5 | 0 | 0 | Steph recaps the episode themes and asks for grand challenges in the space. Julie details the duration mismatch in underwriting GLP-1s and gene therapies, and Steph insightfully connects this to why insurers decline preventative care. |
Statements from this episode (28)
Haber: The best investment opportunities lie between fields of expertise
“One of my sort of core beliefs, I think both in life, but specifically in investing is that opportunities live between fields of expertise.”
Haber: Fintech is a horizontal layer, not a vertical sector
“I've always viewed it candidly more as a horizontal than as a vertical.”
Yoo: Separating care from payment causes healthcare's core incentive misalignment
“And so the point there being that the people delivering the service And receiving the service are not the people paying or, you know, sort of privy to the payments flow of those services. And that very bifurcation is what causes so much of the incentive misali…”
Yoo: Healthcare costs were historically impossible for consumers to determine
“Until recently, it was nearly impossible to figure out what something cost.”
Yoo: US healthcare spending reaches $4.3 trillion annually, 20% of GDP
“4.3 trillion dollars every year, which is roughly about 20% of GDP is spent on healthcare.”
Yoo: US healthcare dollar yield is far lower than other developed nations
“The yield of any, of a given healthcare dollar spent in the U.S. Is far, far lower than all other developed nations in the world”
Yoo: Administrative collection tasks consume one-third of US hospital revenue
“Roughly about a third of every dollar of revenue collected by a hospital is spent on Administrative tasks required to collect it, you know, meaning really you're only seeing roughly about a 70% yield on, on every dollar that you're actually supposed to get pai…”
Haber: Half of all Americans currently carry medical debt
“Half of Americans, you know, carry medical debt today.”
Haber: 20% of medical debt holders believe they will never repay it
“20% of them don't believe they'll ever be able to pay it off.”
Yoo: Half of US hospitals operated at a financial loss in 2022
“Last year, I think it was literally 50% of hospitals were in the red.”
Yoo: Healthcare regulation acts as a tailwind for startup innovation
“Healthcare is one of those domains where I think regulation can be a tailwind for innovation and category creation.”
Yoo: Price transparency reforms will take years to transform healthcare
“I think we have still years for it to really seep through the system and address a lot of the challenges that we described earlier.”
Yoo: Patients previously paid hundreds to access medical records on CD-ROMs
“So it used to be the case that, you know, you'd have to potentially pay a couple hundred dollars, somebody to get access to your own medical records on paper, you know, or even like a CD-ROM.”
Yoo: Cures Act incentivized new wave of medical record startups
“Now there's a whole, you know, this is a great example of a, an act that actually incentivized a whole bunch of startups to come out of the woodwork and create Apps that allow you as a patient to basically collect all your medical records from multiple provide…”
Haber: Every healthcare company will eventually become a fintech company
“Certainly one of our core theses at ASICS and Z has been that every company is going to become a fintech company. And Julie and I have been riffing that, you know, Either every healthcare company is already a fintech company or is certainly going to become a f…”
Haber: Healthcare startup Juniper takes a 3% to 5% take rate
“By the way, they get paid three to five percent just for that, right, for delivering that technology and improving efficiency, which historically has been a very manual, you know, process for a lot of these providers with, you know, a couple of folks in the ba…”
Yoo: Healthcare expenses are typically a company's second-largest P&L cost
“What's the number two line item in their P&L outside of payroll? It's typically healthcare expense, right? Because you have to cover your health insurance benefits for your employee base by law.”
Yoo: Tech-native health insurance neo-carriers represent a huge market opportunity
“We think there's a huge opportunity for sort of neo carriers, so to speak, right? So upstart health insurance products to be built in a tech native fashion. That number one does focus on user experience. Number two does use data in novel ways, whether it be on…”
Haber: Healthcare fintech's biggest prize is a unified financial operating system
“Healthcare FinTech's biggest prize was the financial operating system for healthcare. And I think the core kind of ethos was you have a lot of patient data, right, living in practice management systems or in an EHR that are often unbundled or kind of separate …”
Yoo: Large health system CFOs often lack financial visibility to cover payroll
“Turns out it's a relatively universal problem. This notion of kind of a system of record, a source of truth for the finances of healthcare providers. And, you know, that, and that has such, you know, significant implications on like broad swaths of workforce, …”
Julie Yoo: Healthcare fintech startups require hybrid DNA on founding teams
“We think that the only way to get it right is really to have hybrid DNA on the founding teams of these companies, such that you truly have expertise on, on both sides of the aisle, so to speak.”
Haber: Embedded fintech playbooks from vertical software apply to healthcare
“I think you've seen that play out over the past, you know, five plus years in areas like vertical software, where again, you know, companies have started by solving kind of a software workflow in lots of different categories, and then it become kind of layerin…”
Julie Yoo: Healthcare insurtech startups face strict state-by-state reserve requirements
“If you're building an insurtech business in healthcare, there are regulatory requirements around cash reserves and, you know, what kind of financial profile you need to have as a business to be able to stand up and it's state by state as well.”
Yoo: Incumbent health insurers have not solved cross-plan treatment underwriting
“We've spent a lot of time with incumbent insurance carriers. They have not figured this out yet.”
Yoo: Medicare Advantage retention gives insurers stronger incentives for preventative care
“Medicare, you know, seniors tend to be on the same Medicare Advantage or Medicare plan for much longer, obviously, because they're not changing employers. It's really just their own individual plans. You have much more incentive to invest in preventative care …”
Haber: Incumbents Are Accelerating Adoption of Third-Party Tech Solutions
“The culture of these institutions are changing very quickly, right? Their recognition that they're not going to build everything in house or that they can't, and their willingness to adopt third party technologies is just accelerating.”