Jan 2, 2019 · 17m · a16z
a16z Podcast | The Business of Healthcare
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this panel hosted by a16z, General Partner Vijay Pande talks with CEOs Sean Duffy (Omada) and Rajiv Singh (Accolade) about lowering healthcare costs, leveraging data and human coaching, and building defensible enterprise digital health businesses.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. How this is scored →
The host as informed peer 3.8 Guest teaching 4.0 Guest disagreement 0.3 The host pushing back 1.5
speaking balance: gold is the host, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 12:18 Rajiv refutes direct software equivalence
Rajiv lightheartedly refutes Vijay's query comparing Concur travel expense software to healthcare, emphasizing that healthcare is vastly different and more complex.
Hardest push from the host ▶ 0:52 Vijay calls dual cost-quality claim bullshitVijay directly confronts the guests by asserting that promising both lower healthcare costs and higher care quality usually 'sounds like bullshit', forcing them to justify their core value proposition.
Biggest teaching moment ▶ 7:10 Sean details MACRA regulatory impactSean educates the host on how bipartisan MACRA legislation puts significant hospital system revenue at risk, driving rapid adoption of new digital workflows.
The host holds their own ▶ 10:34 Vijay elaborates on data network moatsVijay adds expert commentary to the guests' discussion on moats, observing that data network effects never go off patent compared to traditional pharmaceutical patent windows.
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 |
|---|---|---|---|---|---|---|
| Decreasing Costs While Improving Quality of Care | 3 | 4 | 1 | 3 | Vijay opens with a provocative framing, challenging the guests that offering lower costs alongside higher care quality sounds like bullshit. Sean and Rajiv accept the challenge constructively, using epidemiological data and GDP stats to demonstrate why tech-enabled models make this possible. | |
| Balancing Technology with the Human Touch | 3 | 5 | 0 | 1 | Vijay references E-Room's law to question how human coaching and software are balanced without inflating costs. Rajiv educates on turning simple transactional calls into broader clinical engagements, while Sean outlines Omada's algorithmic coach workflows. | |
| Macro Trends and Digital Readiness in Healthcare | 3 | 5 | 0 | 1 | Vijay asks a Goldilocks timing question regarding why digital healthcare models are viable right now. The guests provide detailed industry context, pointing to bipartisan initiatives like MACRA and shifting consumer behavior around web and mobile engagement. | |
| Building Scalable Moats and Data Advantage | 5 | 3 | 0 | 1 | Vijay demonstrates notable domain expertise by extending the discussion on moats, adding that data network effects do not go off patent like traditional pharmaceuticals. The guests explain how longitudinal data and control-versus-pilot outcomes build defensibility. | |
| Non-Drug Therapeutics as Digital Care Pathways | 4 | 4 | 1 | 2 | Vijay asks Sean to justify non-drug therapeutics for chronic conditions and asks Rajiv how Concur travel software experience applies to health. Rajiv playfully rejects the premise that travel software is similar to healthcare before breaking down complex health payment silos. | |
| Empathy and Stakeholder Alignment in Enterprise Healthcare | 5 | 3 | 0 | 1 | Vijay synthesizes the discussion on standard of care, proposing that once digital interventions prove higher efficacy, failing to provide them becomes an ethical issue. Sean and Rajiv explain their outcomes-based and PMPM reimbursement structures. |
Statements from this episode (14)
Rajiv Singh: U.S. healthcare spending grew from 10% to 19% of GDP
“20 years ago, 25 years ago, healthcare was 10% of GDP. Today, it's 19% of GDP.”
Omada Health generates automated daily coaching prompts from patient data trails
“Every single night in our platform, we analyze all the data and then every coach wakes up with a list of suggestions based on the data trail of each person that they're managing, right?”
Digital health startups avoid the baggage of salaried primary care physicians
“The advantage that both of us have for our businesses is we're starting from kind of a clean slate where you don't have to deal with the baggage of already having 10,000, you know, 2000 primary care docs on salary and managing that immense workflow shift that …”
Rajiv Singh: Value-based care transition will survive presidential administration changes
“Here's one thing we know, I believe, that the work that CMS is doing, the work the private sector is doing in terms of moving to value-based care, that's not going to stop.”
Sean Duffy: Preventable chronic diseases now kill more globally than infectious diseases
“You look at, like, Gates Foundation, right? Historically very focused on infectious disease. They're realizing that preventable chronic is killing more people than infectious now and are really dialing up efforts to help.”
Sean Duffy: Enterprise healthcare reimbursement requires peer-reviewed clinical trials
“Peer-reviewed trials and publication, you know, is very tough to convince the medical director community in, you know, in enterprise healthcare to work with us and reimburse our program until we've kind of gone down that road.”
Sean Duffy: Omada Health possesses the largest longitudinal digital health dataset globally
“We've enrolled the largest longitudinal data set of these sorts of programs in the world”
Rajiv Singh: Accolade proved value via 25,000-person actuarially matched pilot studies
“The first set of Accolade customers were all control versus pilot tests. Where we take a group of 25,000 people in a population and compare them to another 25,000 who the actuarial said looked exactly alike.”
Vijay Pande: Data network effects offer a permanent moat unlike drug patents
“The intriguing thing is about, ah, data network effect never goes off patent.”
Sean Duffy: Healthcare cannot be disrupted from the outside without existing stakeholders
“There's no, like, disrupt from the outside shortcut. It's kind of disrupt from, by working with the existing stakeholders and empathizing with them and understand, you know, what drives them and their needs.”
Rajiv Singh: Healthcare winners must focus on consumers, not just enterprise buyers
“The companies that will succeed will fundamentally serve someone who's not paying for their own healthcare, who's not their buyer, but when you lose track of that buyer, when you lose track of that consumer, you lose your way.”
Sean Duffy: Omada aims for 80% U.S. medical policy coverage by 2022
“And then commercially, you know, I was talking at, you know, the company is, you know, I want in five years, 80, 80% of Americans in the U.S. To have us in their medical policy.”
Sean Duffy: Omada charges zero PEPM, relying entirely on outcomes-based pricing
“We don't charge any PEPM, so we regularly sign contracts for like a 100,000 lives. We have no revenue until we get someone in the door, and then we have an enrollment fee that helps come discover something different across, and then it's outcomes-based pricing…”