The Exchanges

Q the tone. It feels like listeners maybe don't need this reminder, but if we started with a couple statistics of where we are now, like almost as if the output of that funnel, of those actors, of those incentives, Are there any facts or statistics that either of you have run into that again, kind of just set the foundation or almost like the reality that we're in within healthcare?

A Yeah, I mean, I'll just start with like the, the headline number of healthcare costs and healthcare spending in our country, 4.3 trillion dollars every year, which is roughly about 20% of GDP is spent on healthcare. And I think the key thing there is not necessarily how much we're spending because, you know, if, if we were spending that much and getting amazing service and amazing outcomes, Then we would all want to pay more for it because we were getting value. But I think the, the challenge in our country is that our healthcare outcomes are actually getting worse. I don't know if you guys saw the stats recently on life expectancy, you know, decreasing over the course of the last couple of years, obviously largely driven by the pandemic, but the yield of any, of, of, of a given healthcare dollar spent in the U.S. is far, far lower than all other developed nations in the world, which is a sad, sad state of, of affairs. So I think that's probably like the headline stat, you know, that we should start from. And then, you know, related to what I said earlier, I'll probably call out additional stat, which is, you know, just the administrative waste and bloat in our system due to the fact that we have this complex trifecta of payer, provider, patient results in a tremendous amount of spend that is completely unnecessary and or just pure administrative overhead. So, you know, the sta…

AI assessment note: “4.3 trillion dollars every year, which is roughly about 20% of GDP is spent”

Q we use that term again, broken for quite some time. But it does feel like maybe certain things have changed more recently. Or at least there may be certain unlocks that allow founders to maybe step in and build within this intersection of healthcare and fintech. And so what gets you excited today about perhaps new openings within this arena and what may have changed over the last few years?

A It's rare that people talk excitedly about regulation, but healthcare is one of those domains where I think regulation can be a tailwind for innovation and category creation. Um, there's lots of historical examples of this. I think the most Traditional example that a lot of people point to is electronic health records, you know, did not really exist in adoption, major adoption, until, ah, the meaningful use, um, law came into play, where the government literally paid financial incentives to doctors to adopt digitized technologies for medical record storage. So that was really the sea change that, you know, drove, you know, so much of the digitization of our, of our infrastructure layer of healthcare. Similarly, right now, we have a number of regulatory tailwinds that are driving payment reform, payment related reform, I should say. And so, you know, we have things like a price transparency law that went into effect over the last couple of years that forced, uh, hospitals and insurance companies to publish their contracted rates. It was hugely controversial. There's still lawsuits in play. People are still pushing back, but the fact of the matter is we now have, you know, thousands of hospitals and hundreds of payers who have published all this data. Obviously they're publishing it in forms that make it very, very difficult to parse. And so entire companies exist to Actually, um…

AI assessment note: “we have a number of regulatory tailwinds that are driving payment reform”

Q would agree, you know, Julie, you used the word irrational, but I think other people may apply terms like clunky, maybe even broken. Um, but to your point, David, they may not know the depth of that particular industry and they may not understand why it might be broken. And so maybe we can kick things off there. Julie, where do you think the healthcare system breaks down the most?

A Yeah, you're absolutely right that it's pretty much all broken. Or, I mean, the other way that people oftentimes talk about it is that it's actually working as designed. Um, and a lot of that, you know, sends back to the way that payments are designed and, and processed exacerbates, I think, a lot of the, the challenges that we experience as consumers. I often take the, the system view to this space. I'm, I'm very enterprise focused in the companies that, that I primarily spend time with. And when you look at it from the system lens, you know, the, the core trifecta of stakeholders in our healthcare domain, very simply put, would be, The following. So one is you have obviously the providers, the actual doctors and nurses and all of your care providers and services companies that actually deliver care. They are obviously key stakeholder. You've got your payers, which are, you know, largely either insurance companies, private insurance companies, government funded insurance, and then, you know, arguably even consumers to some degree are payers themselves for the out of pocket component of what we, what we pay for healthcare. And then of course the third party being the patient themselves. 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 th…

AI assessment note: “that very bifurcation is what causes so much of the incentive misalignment”

Q the tone. It feels like listeners maybe don't need this reminder, but if we started with a couple statistics of where we are now, like almost as if the output of that funnel, of those actors, of those incentives, Are there any facts or statistics that either of you have run into that again, kind of just set the foundation or almost like the reality that we're in within healthcare?

A Yeah, I mean, I'll just start with like the, the headline number of healthcare costs and healthcare spending in our country, 4.3 trillion dollars every year, which is roughly about 20% of GDP is spent on healthcare. And I think the key thing there is not necessarily how much we're spending because, you know, if, if we were spending that much and getting amazing service and amazing outcomes, Then we would all want to pay more for it because we were getting value. But I think the, the challenge in our country is that our healthcare outcomes are actually getting worse. I don't know if you guys saw the stats recently on life expectancy, you know, decreasing over the course of the last couple of years, obviously largely driven by the pandemic, but the yield of any, of, of, of a given healthcare dollar spent in the U.S. is far, far lower than all other developed nations in the world, which is a sad, sad state of, of affairs. So I think that's probably like the headline stat, you know, that we should start from. And then, you know, related to what I said earlier, I'll probably call out additional stat, which is, you know, just the administrative waste and bloat in our system due to the fact that we have this complex trifecta of payer, provider, patient results in a tremendous amount of spend that is completely unnecessary and or just pure administrative overhead. So, you know, the sta…

AI assessment note: “headline number of healthcare costs and healthcare spending in our country, 4.3 trillion dollars”

Q we use that term again, broken for quite some time. But it does feel like maybe certain things have changed more recently. Or at least there may be certain unlocks that allow founders to maybe step in and build within this intersection of healthcare and fintech. And so what gets you excited today about perhaps new openings within this arena and what may have changed over the last few years?

A It's rare that people talk excitedly about regulation, but healthcare is one of those domains where I think regulation can be a tailwind for innovation and category creation. Um, there's lots of historical examples of this. I think the most Traditional example that a lot of people point to is electronic health records, you know, did not really exist in adoption, major adoption, until, ah, the meaningful use, um, law came into play, where the government literally paid financial incentives to doctors to adopt digitized technologies for medical record storage. So that was really the sea change that, you know, drove, you know, so much of the digitization of our, of our infrastructure layer of healthcare. Similarly, right now, we have a number of regulatory tailwinds that are driving payment reform, payment related reform, I should say. And so, you know, we have things like a price transparency law that went into effect over the last couple of years that forced, uh, hospitals and insurance companies to publish their contracted rates. It was hugely controversial. There's still lawsuits in play. People are still pushing back, but the fact of the matter is we now have, you know, thousands of hospitals and hundreds of payers who have published all this data. Obviously they're publishing it in forms that make it very, very difficult to parse. And so entire companies exist to Actually, um…

AI assessment note: “healthcare is one of those domains where I think regulation can be a tailwind”

Q alluded to earlier, which you're giving, in this case, the company access to that information so that they can utilize it more effectively. Are there any other themes that you'd call out here in terms of how founders can look at this industry and say, ha, there's this data opacity. Let me solve that. Or any other gaps that you see that are maybe also just waiting to be addressed?

A So many. So we actually wrote a piece, um, a few months ago, uh, called Payviters Unbundled. And so what we did was we looked at the biggest companies in the healthcare space and even in, in like markets in general. Most of them are large insurance companies that also have a provider can put into their business. So they're called Payviters because they're sort of vertically integrated across Insurance and, and care delivery services. And we sort of did a breakdown of what are the drivers of their, of their business models? What are the kind of key components of them? What are opportunities to basically do what they're already doing, 10 X better as a startup and directly compete, but then also articulated a number of underserved areas that, you know, those incumbents are not really paying attention to where there's sort of white space opportunity for startups. And so, you know, a couple of examples there, core insurance products are, you know, Obviously a place where there's a lot left to be desired in terms of everything from user experience to the cost, the set of services that you get as part of an insurance plan. But we also recognize, especially from, you know, seeing insure tech play out outside of healthcare, you know, it's a really hard business to build and a really hard business model to get right. And so that said, you know, we think there's a huge opportunity for sor…

AI assessment note: “we think there's a huge opportunity for sort of neo carriers, so to speak”

Q would agree, you know, Julie, you used the word irrational, but I think other people may apply terms like clunky, maybe even broken. Um, but to your point, David, they may not know the depth of that particular industry and they may not understand why it might be broken. And so maybe we can kick things off there. Julie, where do you think the healthcare system breaks down the most?

A Yeah, you're absolutely right that it's pretty much all broken. Or, I mean, the other way that people oftentimes talk about it is that it's actually working as designed. Um, and a lot of that, you know, sends back to the way that payments are designed and, and processed exacerbates, I think, a lot of the, the challenges that we experience as consumers. I often take the, the system view to this space. I'm, I'm very enterprise focused in the companies that, that I primarily spend time with. And when you look at it from the system lens, you know, the, the core trifecta of stakeholders in our healthcare domain, very simply put, would be, The following. So one is you have obviously the providers, the actual doctors and nurses and all of your care providers and services companies that actually deliver care. They are obviously key stakeholder. You've got your payers, which are, you know, largely either insurance companies, private insurance companies, government funded insurance, and then, you know, arguably even consumers to some degree are payers themselves for the out of pocket component of what we, what we pay for healthcare. And then of course the third party being the patient themselves. 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 th…

AI assessment note: “the people delivering the service And receiving the service are not the people paying”

Q alluded to earlier, which you're giving, in this case, the company access to that information so that they can utilize it more effectively. Are there any other themes that you'd call out here in terms of how founders can look at this industry and say, ha, there's this data opacity. Let me solve that. Or any other gaps that you see that are maybe also just waiting to be addressed?

A So many. So we actually wrote a piece, um, a few months ago, uh, called Payviters Unbundled. And so what we did was we looked at the biggest companies in the healthcare space and even in, in like markets in general. Most of them are large insurance companies that also have a provider can put into their business. So they're called Payviters because they're sort of vertically integrated across Insurance and, and care delivery services. And we sort of did a breakdown of what are the drivers of their, of their business models? What are the kind of key components of them? What are opportunities to basically do what they're already doing, 10 X better as a startup and directly compete, but then also articulated a number of underserved areas that, you know, those incumbents are not really paying attention to where there's sort of white space opportunity for startups. And so, you know, a couple of examples there, core insurance products are, you know, Obviously a place where there's a lot left to be desired in terms of everything from user experience to the cost, the set of services that you get as part of an insurance plan. But we also recognize, especially from, you know, seeing insure tech play out outside of healthcare, you know, it's a really hard business to build and a really hard business model to get right. And so that said, you know, we think there's a huge opportunity for sor…

AI assessment note: “we think there's a huge opportunity for sort of neo carriers, so to speak”

Q You mentioned lawsuits and some pushback. Just because I feel like listeners might be curious, what is on the other side of that? Like, it seems like maybe an obvious reform that we should be able to see how much something costs if we're paying for it or someone is paying for it for us. So what was on the other side of that?

A Yeah, I think there's, you know, again, I have some degree of sympathy for these, you know, businesses, like effectively what we're doing is taking proprietary contracts and publishing them on the web, right? So, you know, there's been a lot of pushback from the parties to those contracts, which are the payers and the providers who say those are our, you know, it's proprietary data and we should not be forced to publish such data in a public forum because those are, that's, that's our competitive advantage in our market is that we're able to negotiate special rates with With our counterparties and, you know, we, we lose all of that competitive edge if, if we're, we're to put it out there. So that's the crux of most of the pushback from the incumbent lens is, is really that sort of propriety. The counter argument is that there had been previous laws that required, you know, things like estimates, like upfront estimates for consumers. If you called your hospital, you were, you know, sort of mandated to be able to present a, an estimate prior to coming in for a certain procedure or a certain set of services. And, you know, from a consumer lens, like, those never really got implemented or enforced in a way that was reasonable, in my opinion. I remember, you know, in my past life, we, when that law went into effect in the state of Massachusetts, we actually did a bunch of, like, sec…

AI assessment note: “that's our competitive advantage in our market is that we're able to negotiate special rates”

Q not healthcare or vice versa. And that might sound intimidating to not really understand. Let's say if you are coming from FinTech to understand the like complexity, the deep complexity that exists in this world. And so, how would you think about that? How would you think about what problem is worth solving, depending on a founder's background, or how they can further get immersed in this really interesting intersection?

A Simply put, if you're from healthcare, go find your David Haber, and if you're, go find your Julie Yu. Um, but in all seriousness, I think, like, first of all, we should acknowledge, like, it is a very, like, each individual space is super hard, let alone, like, the intersection. You know, there's just a lot of esoteria that, Makes it really challenging to know just off the cuff. As, you know, as David mentioned, we truly do believe in this kind of intersection thesis, and 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, of the aisle, so to speak.

AI assessment note: “the only way to get it right is really to have hybrid DNA on the founding teams”

Q You mentioned lawsuits and some pushback. Just because I feel like listeners might be curious, what is on the other side of that? Like, it seems like maybe an obvious reform that we should be able to see how much something costs if we're paying for it or someone is paying for it for us. So what was on the other side of that?

A Yeah, I think there's, you know, again, I have some degree of sympathy for these, you know, businesses, like effectively what we're doing is taking proprietary contracts and publishing them on the web, right? So, you know, there's been a lot of pushback from the parties to those contracts, which are the payers and the providers who say those are our, you know, it's proprietary data and we should not be forced to publish such data in a public forum because those are, that's, that's our competitive advantage in our market is that we're able to negotiate special rates with With our counterparties and, you know, we, we lose all of that competitive edge if, if we're, we're to put it out there. So that's the crux of most of the pushback from the incumbent lens is, is really that sort of propriety. The counter argument is that there had been previous laws that required, you know, things like estimates, like upfront estimates for consumers. If you called your hospital, you were, you know, sort of mandated to be able to present a, an estimate prior to coming in for a certain procedure or a certain set of services. And, you know, from a consumer lens, like, those never really got implemented or enforced in a way that was reasonable, in my opinion. I remember, you know, in my past life, we, when that law went into effect in the state of Massachusetts, we actually did a bunch of, like, sec…

AI assessment note: “that's the crux of most of the pushback from the incumbent lens”

Q not healthcare or vice versa. And that might sound intimidating to not really understand. Let's say if you are coming from FinTech to understand the like complexity, the deep complexity that exists in this world. And so, how would you think about that? How would you think about what problem is worth solving, depending on a founder's background, or how they can further get immersed in this really interesting intersection?

A Simply put, if you're from healthcare, go find your David Haber, and if you're, go find your Julie Yu. Um, but in all seriousness, I think, like, first of all, we should acknowledge, like, it is a very, like, each individual space is super hard, let alone, like, the intersection. You know, there's just a lot of esoteria that, Makes it really challenging to know just off the cuff. As, you know, as David mentioned, we truly do believe in this kind of intersection thesis, and 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, of the aisle, so to speak.

AI assessment note: “only way to get it right is really to have hybrid DNA on the founding teams”