16 – Healthcare Recognized as #1 Inc. 5000 | Consumer Financial Health in 7 Charts | Ideas to Make Needed Improvements in Medicaid

Marcus: [00:00:00] We’re back episode 16, excited to be here.

Vic: Beautiful day. Perfect day for being this dark studio recording. It’s

Marcus: not a dark studio. It’s well lit. Um, so this weekend I’m not going to be here cause I’m handling more important family matters, but Nashville soccer club.

Vic: Yes. Biggest game in the history of the team.

Marcus: Yes. I mean, we’re a baby team in terms of like history, right? So, but I mean, what a, what a run we’ve had in the, in the league’s cup this summer, it’s been unbelievable.

Vic: Well, I know. I don’t know, not very well known players coming, coming to play. He hasn’t lost yet. Right. Uh, he hasn’t lost. He

Marcus: has not lost an MLS.

He scored nine goals in six games. Yeah. Um, you know, do you have a plan to beat them? Uh, we’ve got great defense. Yeah. So, you know, I think a lot can be said for that. Uh, we have been scoring more goals. We signed a guy who came from the Premier League, um, Nottingham Forest name is Sam Sturridge. And in [00:01:00] both of his appearances, he scored a goal so far.

Yeah. Um, so that’s really good. You know, you have to have to score goals to win. You can’t just like defend. Yeah. So I think part of the deal is we got to score goals. Um, but. You know, it’s exciting. It’s exciting. And, and I’m just, I’m just excited to see how it’s

Vic: exciting for the city. Yeah. Everyone is like buzzing about it.

You know, my wife who didn’t know who messy was two days ago. Now she’s, uh, getting a Jersey and we’re watching the game Saturday and excited about it. I hope we give him his first lost.

Marcus: Yeah, me too. Me too. So anyway, just had to shout out Nashville soccer club. Shout out, uh, John Ingram. Yeah. Uh, our friend and, and, uh, majority owner who has done an exceptional job as the steward of the club.

Um, I’d send him a text and just say that to him. Cause he really has done a great job. He’s done a very good job for, for, for a first time sports team owner. Yeah. He has done an exceptional job.

Vic: And hopefully we have the team. [00:02:00] They may have the best player in the world, but we maybe have a better team Saturday.

Marcus: Look, um, and, and this has been a big rivalry. I don’t know if you know this because you don’t know that much about MLS soccer history. I always think Columbus is who I want to be. Well, well, Cincinnati is probably Our really big for the supporters cincinnati. It’s like our big rival. Okay, and we um, we actually Beat cincinnati in route to this.

Yeah to get right. Yeah to get here. So that was

Vic: a mid season tournament

Marcus: League cup, which so that that win was tremendous because they’ve been a thorn in our side. I mean I went to our last Usl game which was the second division league that we were in before major league soccer Our last match in the usl was at cincinnati in the playoffs in a shootout You And we lost in the shootout and in the leagues cup, we won in a shootout, right?

Cincinnati. So I was so thrilled about that. And, um, yeah, now just to sort of see us March through beat two very, very strong Mexican league teams, um, at home [00:03:00] and now go to the finals. It’s, it’s been, and the team’s really.

Vic: Beginning of the season was maybe a little bumpy, but they seem like they’re coming together.

Team is

Marcus: gelling, team is gelling. Yeah. So anyway, I’m, I’m just excited about that. I had to, I had to mention it

and while we are talking about other, uh, while we’re talking about Nashville, uh, other things to be really proud of, uh, Nashville has the number one company on the Inc 5, 000.

Vic: Yeah, that’s right. And I, we know. Both Bill Frist and Brad Smith, they’re great people. They’ve done other companies. We’ve watched this company grow and it’s, it’s really impressive to be number one in the egg 5, 000.

Uh, they’re real and they’re taking care of a really important area. Medicaid and Medicare dual recipients often [00:04:00] in rural areas. It’s a hard problem and to see them have the success is great.

Marcus: Yeah, it’s fantastic. I mean, I think it says a lot about, uh, what happens when you have people who really understand the healthcare system, uh, approach it with, Innovative solutions and venture capital, right?

And for, for this to be in a time where everyone’s talking about AI and we’re talking about social media for, for a healthcare company focused on the Medicaid population to be the fastest growing company in America is a big deal. It’s great. It’s a big deal.

Vic: And then there’s in the top 10, there were three.

Yeah. Healthcare companies and they have, uh, maybe 15 different industries, right? So three out of the top 10 seem pretty good for healthcare. It’s very good. And then I got to throw in a couple of our three of our portfolio companies were in as well. So

Marcus: in the 5, 000, yeah, go ahead and name

Vic: them. Yeah. [00:05:00] So, um, evidence care, script drop, and I’m blanking on the last one.

Oh, optimize health. Great. Yeah. So all three, uh, great companies. Two of them came up through jumpstart foundry into capital one. We found Foundry stage, but all three are great led by great teams. Happy for them.

Marcus: Well, congratulations to, uh, Brad and Bill and congratulations to all the healthcare companies on the Inc 5, 000.

And certainly congratulations to the jumpstart portfolio companies on the Inc 5, 000. Uh, it’s, it’s, it’s. It’s exciting. I mean, listen, we’re going to talk about how challenging this industry is, but when we see companies in the healthcare space, innovative companies be being recognized as the fastest growing, I think that’s only going to attract more capital, more talent to come help us solve this massive, massive problem.

Right. And to me, it’s really, really exciting that the number one company is tackling not just healthcare, but tackling Medicare and Medicaid. That’s, that’s [00:06:00] really, really cool.

Vic: Yeah. They’re helping people. And they’re making a bunch of money and it’s nice to do both.

Marcus: Okay, so that was really cool. I think another really great story in the healthcare innovation space is this story about Moonlake Immunotherapeutics.

Vic: Yeah, so they, uh, they went public through a SPAC. Which, you know, I’ve been critical about. There are a lot of SPACs that we’ve done a bunch of shows on

Marcus: SPACs, but this is a

Vic: really successful SPAC, right? They have a great technology. It’s in skin, uh, autoimmune skin disease. There really isn’t a good answer for that.

And they came out with new results. Uh, in the last couple of days, I think it was two days ago. Um, that they really can help patients. And so they’re sort of progressing through the FDA process. They really have this one. I mean, they’re one, one drug company. And so they needed it to work and it seems like it’s working really well.[00:07:00]

They’re already getting, uh, lots of suitors trying to acquire them. I don’t know. I have no inside information. I don’t know if they will stay independent or join up, but it’s great to see. Again, innovation really making a difference. Autoimmune is a really hard. Class of diseases. And you have a portfolio company in this space.

Marcus: View health. And, and they’re, you know, one of my favorite companies and part of why I love them so much is because they’re focused on autoimmune. You know, there’s, when we look at disease states, disease, state specific companies, uh, there is so much going on in cancer, you know, as there should be. There is so much going on in diabetes and just, just general metabolic syndrome, you know, health, heart disease.

Yeah, yeah, yeah. I mean, the top.

Vic: Several diseases like that have been correctly have been worked on for a long time, but autoimmune is really hard to diagnose. It’s hard to treat. It’s growing. Um, I think our [00:08:00] somehow our modern environment is causing our bodies to attack ourselves. I don’t really I don’t think anyone fully understand how

Marcus: that one of the big problems is we don’t understand.

We can’t get conclusive evidence. Obviously, when you talk about the environment, That becomes political, so it’s very, very difficult to, to make much progress on that because it’s just a political issue, the environment and they’re, they’re,

Vic: they’re hard to diagnose, hard even to perceive as a patient that you have it.

Marcus: Yeah. So, and some of them can’t be identified. Like we know it is an autoimmune disorder, but we don’t know what exactly. Right. Yeah, right. Because they present differently.

Vic: Yeah. So it’s hard to know if 30 years ago. This was in the population and we just couldn’t see it, or if it’s accelerating and more prevalent, it feels like it’s more prevalent, but I don’t know if we have good data for that.

Marcus: Yeah. So, so I would say two, two great things about, well, maybe three great things. One, uh, here’s a SPAC that seems to be turning out well, so that’s good. Uh, to a company focused on the autoimmune space. Um, you know, [00:09:00] this is a space that providers don’t have a ton of answers for. The patients are generally.

Underserved just because of the the unpredictable nature of these disease states and the fact that they’re chronic in nature. They flare up at times that are generally pretty unpredictable. Yeah, and so what ends up being the primary course of. You know, remedy is pharmaceuticals. Yeah, it’s, it’s, it’s, that’s how we’re approaching this.

And drugs like Humira are very, very successful drugs from a economic standpoint, but they are very expensive drugs and they cost payers a lot of money. Um, and so. We really need more solutions, more pharmacological options. We need more options. We need more options in this space. You know, we need, we need them for the patients.

We also need them for economic reasons. There needs to be more competition in this space to help, um, people living with autoimmune diseases, uh, have better control over the flares and the [00:10:00] symptoms.

Vic: Yeah. And I think like on ecology, Okay. It would be great for docs to have a, you know, several tools to use as opposed to not much to do except try to get some rest and see if you can not have stress.

That’s

Marcus: right. That’s right. And then the third thing, uh, that’s really great is that this is a biotech story. That’s a good, which we have not had a lot of good biotech stories. And, you know, we may have touched on this a couple of times in previous shows, but, um, the capital markets for biotech are rough right now, and it’s largely just a supply demand issue.

There are way more assets out there than there is smart capital for those assets. And that’s, that’s largely, we’re not going to talk about the fed, but that’s largely because of the fed increasing rates. People are not that interested in these really unproductive economic assets, uh, like biotech. So. Uh, that’s, that’s a problem because we have all this technology and all this innovation that could really, really change things.

We’ve spent a lot of times talking about, uh, uh, talking [00:11:00] about, um, we go V and, uh, uh, you know, Zen bake over the last couple of shows, you know, there’s still more things we can do on the farm on the pharmacological frontier in, in biotech, in genetics, in personalized medicine. There’s a lot more we can do.

That can offset some of the challenges we’re having around labor availability and access to care and things of that nature, but not when we don’t have capital willing to step up and push these things through the regulatory pathways.

Vic: Well, the, the entire. Industry structure, right? So the the big pharma companies are they don’t do a lot of new discovery Invention r& d the biotech industry does that

Marcus: that’s right.

Vic: Pharma is more distribution scale marketing Educating docs pat, you know manufacturing, of course Yep, you know globally and that’s a really important function. They’ve moved away from the core r& d You discovery of new things [00:12:00] because the venture backed and um, kind of grant backed biotech industry did that for a long time.

And unfortunately that is very susceptible to, to, to rates and the cost of capital and seeing a win like this, we need more of them, but that will encourage people to do more. Absolutely. That’s a great thing.

Marcus: Yeah. So, so, so that’s good. Uh, and then stat news came out with a story this week, talking about how hospitals are dialing back on venture capital investing.

Now, we, we talked last week about how the pressures we’ve been talking for many weeks about how the pressures on health systems. Uh, around their profits around their inability to merge so that they can kind of get their financial house and their balance sheet in order is going to create interest level issues in innovation, right?

Like they’re so worried about being able to keep their future. Okay.

Vic: Yeah, the cash on hand in place. Think about how to make things better two years from now. I can’t survive now.

Marcus: And this story, [00:13:00] uh, in stat news, I think is a pretty good indicator that we’re, we’re tapping into something here. They

Vic: were, I think they might’ve been listening to us.

Marcus: So, so, I mean, a couple of, uh, of stories here, you know, they talk about New York, Presbyterian’s venture fund, uh, once managing roughly 40 million in assets was essentially dissolved. Um, they, they’d mentioned Providence ventures, uh, and we’ve, we’ve, we’ve known that story for a while. Yeah. Yeah.

Vic: Providence Ventures was a really good hospital system venture company, and they, they cut back.

They, they, a lot of the talent left is just cut back.

Marcus: Yeah. And they quoted our friend, uh, Tom Castles at, uh, Rock Health Advisory saying pulling back is a silent trend. It’s simply the lack of action rather than an announcement that we’re pulling back. Right. So, which, which I think, I think that’s right.

Yeah. I think that’s right. Uh, that’s frustrating.

Vic: It’s frustrating because it’s. I mean, wherever you see, so I want them to value it more and invest more in it, but it’s also just not going to [00:14:00] be good for the health systems. Like you can’t cut off your creation of new solutions, new ways to deliver care, new ways to work with your staff by not investing and then think it’s going to all just magically get better.

It’s it’s not. It takes us. investment of time, people’s attention, hiring people and capital to, to figure it out. So cutting back is going to really hurt the health systems two years, three years, four years from now.

Marcus: Yeah. Agree.

Vic: And we’ve talked about it a lot, but just to, I think the payers and honestly, some of the digital health companies are really investing much faster now.

And I’m concerned that health

Marcus: systems need to keep up well, in the case of the payviders, it’s starting to compound, right? Like the benefits they’re getting are starting to compound, right? Because a, they, they didn’t have any, uh, legacy baggage, right? That they needed to, uh, To unwind, they got to kind of start from at a minimum kind of 2010 [00:15:00] standards of care.

Right? Right. Uh, so that, that was a benefit to, they were dealing with all this data, actuary data and, and then, you know, the data they had the right to as the payers, you know, from a claims perspective and just their membership based. So they’re leveraging all this data, uh, and their balance sheets have been strong based on different, you know, economic windows that we’ve, we’ve had over the last 20 years.

And so they’ve been able to invest, they’ve been able to acquire, uh, you know, fast growing, innovative, uh, uh, you know, companies and you put those three things together. That’s a pretty tough force for health systems to, to go up against.

Vic: Yeah. I mean, I think it’s a lot easier given the scale the payers have.

It’s a lot easier for them to find a high margin places to deliver care to practice and get used to it. Maybe they’re doing, um, I don’t know. They may pick some, some like surgery, uh, ambulatory surgery center to get into or something that’s [00:16:00] not, uh, an ICU floor. And then they slowly build competencies. To get into delivering more and more complex care over 10 years.

That’s an easier roadmap to roll out than a health system trying to figure out how to manage, how to find data, manage populations and get enough scale across the country. There’s only a few health systems that have that kind of scale that could do that. And I don’t think they have their data, their balance sheet or their tech lined up really.

Marcus: Certainly not in the same place that the pay dividers do, right? Certainly not in that same position. So this is, this is a predictable trend and also a disappointing trend to see happen. And, uh, you know, I, I mean, I, I think it’s not necessarily a willingness issue. I think it really is just, there’s too much pressure.

You know, if there’s too much pressure,

Vic: well, the compounding works in both directions, right? Yes. The boards of these health [00:17:00] systems, I think they are really concerned probably rightly about sustainability, just delivering our core mission. They can’t think about something in the future.

Marcus: That’s right.

That’s right. All right. So Moving to the consumer market, uh, wall street journal came out with this really nice article that is, uh, framing up consumer, uh, finances in seven charts. Uh, it’s really kind of, I like that. So it caught my attention.

Vic: Yeah.

Marcus: Yeah. This is, this is a great, great article. Uh, the, the headline for anyone who wants to go check it out is a time to worry about consumer debt.

What is going on in seven charts? Um, so we, we talked last week about the credit card balances. Uh, uh, breaching 1 trillion. Right. Uh, there’s certainly more to the story than that. A couple of people have come out with counter stories talking about that’s true, but also the ratio of savings to credit card debt now is significantly better than it’s been at any point in the last 20 years.

So

Vic: that’s, that’s sort of chart too. Yeah. We [00:18:00] have much better savings than we had 10 years ago, but it’s coming down. It’s declining. And the reason it went up is there was a lot of STEMI checks, you know, in their pandemic and people got a bunch of money. They didn’t spend it all on big screen TVs, but it’s slowly coming out over time.

Marcus: That’s right. Yeah. So it is true that the ratio is better than in past times, but the trend Is that this is coming down. And I think what’s really interesting is that it’s coming down in all bands, right? So the, this chart has got it broken down by, uh, by, uh, by income, by household income. And it doesn’t matter if you make less than 50 K or you make greater than 250 K in your household, it’s coming down.

Now it is coming down. Very quickly for the households that make that earn less than 50k a year.

Vic: Yeah. Yeah, of course And you can see the stimmy checks. Yeah, like it’s

Marcus: like right

Vic: and it’s obvious

Marcus: right, right All right. So chart three is uh, this is the

Vic: scariest

Marcus: one. Yeah. Yeah Yeah, so a [00:19:00] percentage of us consumer balance is moving from current to 30 days plus delinquent during the quarter So of course It’s just worth noting that 30 days plus is the point at which your credit starts to get dinged And

Vic: often there’s extra penalties and all sorts of kicking in.

So,

Marcus: so the, the, the bad, you know, snowball starts right at the 30 days late moment.

Vic: Yeah. You’re, you’re, you’re hustling to not get over 30 days late. So the people that are 30 days late, they can’t find the money. They, they need to figure out something.

Marcus: Right. So this chart, uh, These are great charts, by the way.

Uh, this, this chart analyzes four different types of, uh, consumer balances, auto loan, credit card, mortgage, and student loan. Uh, student loan is flat because, you know, nobody’s paying their student loans. That’s forbearance forever, you know, for the next four weeks, right? Is it four weeks? Is that when it runs out?

Vic: Oh, my gosh. It’s September 20th, 18th. Oh, my gosh. Wow. And it’s going to be hard for people. Wow. Because it [00:20:00] Wow. Average, they haven’t made those payments are I think the average is 1300. So if you are living paycheck to paycheck, all of a sudden, now you got to pay 1300 a month more. And so that student loan, no one’s delinquent now.

But that’s going to change in four weeks.

Marcus: So the most obvious thing on this chart is the rate of change, uh, in terms of the, the balances and the delinquencies on auto loans and credit cards, which credit card is like kind of a straight line. Yeah. Uh, and, and auto loan is almost a straight line. Uh, so that’s pretty terrifying.

And then the mortgage, uh, delinquencies are going up at a, at a reasonably scary clip as well. Yeah, I mean, the

Vic: consumers, yes, maybe I guess maybe you heard from some of our audience that we didn’t touch on the savings, but I don’t think consumers are very strong. I mean, there’s not strong and seem to [00:21:00] be weakening pretty quickly.

Marcus: Yeah. Yeah. So that’s that’s obviously a bad thing. Bad chart. Okay. This fourth one is, uh, the number of consumers with new foreclosures or bankruptcies. This is good. Somewhat good news. Well, it’s, it’s, it’s going to take a while for the bankruptcies to kick in. Right. We’re just starting to see those delinquencies pop up, but the bankruptcies are going up.

Yeah, they are going up and this is consumers. Not, this is not companies. Right, right. Yeah. Um, so it, it is starting to trend up after basically going down for the last 10 plus years. Right. Yeah. Generally going down as, as a trend, if you were to smooth that line out

Vic: with, with, you know, zero interest rates and lots of money floating around, you can refinance, you can figure out something and then that’s going to change with this new rate environment.

Marcus: All right. Uh, us student loan balance changed from the previous quarter.

Vic: Yeah. So I don’t know if [00:22:00] I fully understand this balance. Um, it went down dramatically in the last quarter.

Marcus: Is, is, is that because there was a, there has to have been some forgiveness that was kicked in because the Supreme Court backed down the Biden thing.

And then did they not divide and not circle back and do something around? He did, he did something for people that work in nonprofits

Vic: that can’t be that many people.

Marcus: Wow. I mean, it, it says your student loan balance is contracted by 35 billion in the second quarter, the biggest quarter over quarter drop in at least two decades.

So, so something happened

Vic: there.

Marcus: I wish they would have called out what happened there. That that seems like a miss here. We’ll have to circle back next week and talk about that. Cause.

Vic: Yeah,

Marcus: I mean, I’m mostly worried about 35 billion decrease in that budget in the I’m sorry, in that overall that level, something happened immediately.

Vic: Yeah, I’m mostly [00:23:00] worried about the payment starting again. Yeah, this chart looks really good and I don’t fully understand it. So that’s

Marcus: that’s certainly not coming from payoffs. Yeah, that’s that’s definitely no, that’s that’s not what’s happening. Okay. And then, um, the average monthly us house, uh, homeowner principle and interest payments on outstanding mortgages.

So this is going up. This is pretty predictable, um, interest rates, rates. So that that’s pretty straightforward. Uh, and then the final one is percent of us consumer balances moving from current to 30 day, uh, interest rates. 30 days plus delinquent during the quarter by state. And they’re just really focused on Texas, Florida, California, and then the national than the rest of us.

Vic: Well, they’re trying to say that the really hot states where there’s a lot of population are having trouble. I’m not sure how heat affects consumer delinquencies.

Maybe it does.

Marcus: Yeah, that’s interesting. Well, I think, I think the big, the [00:24:00] big headlines for me here were really the auto loans and the credit card. That rate of change was, was pretty significant and does not look good. That’s not, that’s, that’s a, that’s a scary trend.

Vic: Combination of a trillion in credit card debt.

Which, sure, is only a little bit more than the 900 billion that was two months ago, but still, a trillion is a different, you know, it catches my attention more, and then the rates for credit cards are going up, and delinquencies are going up. That sort of three part thing makes me nervous. Agree. So

Marcus: just kind of, I mean, to me, this is, this is a related story.

It’s, it’s not directly related, but I do think it’s, it’s interesting, uh, to, to try to butt up against this general consumer credit debt worry. Uh, this, this, this discover finance. Yeah,

Vic: discovered came out over the last 30 days with [00:25:00] just a a series of really bad news items, so They disclosed that they have been overcharging merchants since 2007 300 to 330

Marcus: 365 million dollars

Vic: and then the fdic which regulates them put a consent decree consent order on them Which which means they they’re going to dig in and really they don’t You They don’t trust their records.

Of course, they don’t trust it on the consumer

Marcus: side, not the consumer

Vic: side, right? And so that was 30 days ago. And if you go up, you can see the stock, um, 30 days ago started to go down. Of course, with that problem.

Marcus: Yeah.

Vic: And then on Tuesday, I think sometime this week, the CEO resigned, like the CEO out of nowhere, stood up and admitted this wrongdoing and kind of took the medicine for the last 28 days.

And then all [00:26:00] of a sudden he resigned and so I don’t have information, but I don’t I don’t think those things fit like either He should have resigned 30 days ago, or I think something else probably is going on that has not yet been disclosed. So the stock has gone down another bunch.

Marcus: Yeah. I mean, this is a, a story that rhymes with Wells Fargo.

Yeah. It’s bad. It’s

Vic: systematic over decades. Bad acting. I’ll say fraud. I think, you know, I don’t think the wall street journal said fraud, but cause that word probably is too

Marcus: Yeah. And, and, and I think, I think the reason why we wanted to bring this in, we’re going to take a turn probably for the, for the show from this point forward to just sort of talk about how Americans are doing right.

You know, as, as we, we talked about the American consumer, you know, how Americans are doing. And, um, it really does seem like the [00:27:00] pressures of the environment right now are, are more than, you know, Then we’ve dealt with in a long time and, and they’re, they’re, they’re like, they’re not these obvious things, right?

It’s just mounting surrounding pressures from all sorts of angles that are hard to track in any one, uh, any one storyline, right? But they, they’re closing in on the average American and making life really, really hard to navigate. Yeah, I think your

Vic: margin for error is decreasing dramatically, right? So, um, I mean, discover has been cheating for since oh, seven, right?

Um, but there’s something about when interest rates come up and the economy is challenging now, I mean, Buffett said, like, when the tide goes out, you see who’s swimming naked. That’s kind of what’s happening. There’s pressure now and people at discover, [00:28:00] there’s a whole bunch of stuff in the closet that, that.

Was not right and now it’s coming coming out into the light. And I think we’re going to see more and more of that as you get interest rates higher. And as the economy is under pressure, there’s just a lot. There’s just a lot of room for failure, like one misstep and it all falls apart. And that’s probably good in the long run.

I mean, discover shouldn’t be cheating the merchants and I don’t know what they’re doing to consumers, but probably not good. Um, but it also is too much pressure on these companies for, uh, the long term probably,

Marcus: you know, we, we, we’ve talked about, it’s impossible to get away from the fed because the implications, we

Vic: were trying not to talk about the fed,

Marcus: but it’s, it’s, it’s, it’s.

It’s just too central to the storyline. It’s too central to the storyline. So, you know, we’ve talked about [00:29:00] how the rates are impacting banks, and we know that banks are critical assets to the, um, the, um, the economic well being of the communities that they sort of society. Right? Yeah, right. So, right. So, The banks are hurting.

We know that we’ve been talking week after week about how the health systems are hurting, right? And the health systems are also critical to the health of the community. We’re going to talk about that a little bit later in the show. And now we’re talking about just the consumer debt. Levels, right? And we know what kind of stress comes with debt.

Um, you know, I don’t, I don’t know about you. I have had really bad credit. I’ve had, I’ve had a 500 credit score, you know, in that range. Cause I was going through a divorce and you know, I’m very thankful to no longer be in that club and have washed away all that stuff, but I’ve been there and I can tell you, man, that is a rough place to be.

[00:30:00] That is a really, really rough place to be just the general stress that, that accompanies not being bankable, not being credit worthy, you know, only being able to sort of take care of your financial needs via your wages. Right. Um, and those wages that you make a significant percentage of those going to interest payments, right.

That seemed to never go away. Um, I mean, all of that eats away that all eats away.

Vic: Compounding Interest on the positive side is incredible, right? You invest in your 401k Or something and it it makes seven percent eight percent ten percent over 40 years And that’s a really powerful thing to build wealth that works in the inverse too.

Like if you have a credit card with 3, 000 of debt that you don’t [00:31:00] pay for a month It all starts racking up in the the compounding works Against you in the next month, you owe 3, 400. And then you start like taking an extra shift and maybe you pay 300 more, but you never catch up. You’re like, there’s more interest than you can keep up with.

And unfortunately, I think a lot of individuals are having that happen to them. And a lot of it happens to the company level too. We talked about the health systems. Kind of falling behind that investing in innovation versus the payviders that are investing in it, they get more data, they get more experience than they know what worked.

It didn’t work. They invest in what did work. They’re sort of on the positive side of that. I think it’s just sort of the same. Same dynamic at the individual level or the company, whether it’s a for profit or nonprofit, it’s the same dynamic. If you’re struggling to pay your workers or the health system right now, you can invest in something that’s going [00:32:00] to be a couple of years down the future.

That’s right. And then you don’t get that benefit and it all works against you.

Marcus: Yeah. So this, this is a, this is a generally scary trend that we’re, that we’re sort of trying in

Vic: this economic environment with the fed, with, with debt levels and interest. I think we’re going to see more and more companies that have been hiding stuff that now that the tide goes out, we, we, we can see what’s going on.

Marcus: You know, I, I think you and I have both struggled a little bit with The just with the fact that like on a week over week basis, we come in here and we have these conversations and it feels like we’re being overly negative. I was searching for positive stories. Yeah, and we started with the ink one trying to like be good.

Yeah, no, no. And that that is exciting, right? I mean, but you and I are in the venture capital business. I think because we’re optimists, maybe even to a fault, right? Like just just like our general personality, our general [00:33:00] disposition. Yeah. I see the

Vic: glasses half full.

Marcus: Like I want to have it work. That’s right.

I really think that, like, we are Are in a very challenging window. I’m excited for when this window will end, but at the moment, we’re in a pretty challenging window. I mean, these, you know, these facts are, they just are what they are. And our economy underlies, you know, we’re, we’re going to start in a little bit here talking about the health of our country, the people in our country, how we’re doing, um, and it’s impossible to disconnect that from our economic wellbeing, it’s, it’s just.

It’s impossible that they’re directly connected. And so these, these trends to me, I’m just going to go ahead and say there’s going to be a connection and a correlation to increased, you know, health issues that we’re going to be seeing. There’s no

Vic: question. There’s no question. So, I mean, [00:34:00] the way I think about it is that health is one of the foundational things.

To life, if you don’t have health, I mean, we saw in the pandemic, if you don’t have health, you can’t go to work. You’re stressed about your safety and you’re trying to run around and see a doctor. You gotta take off work to do that. If you don’t have your finances in order, that creates anxiety, stress.

That affects your health. Maybe you, you might eat a bunch of chips. For me, I would eat salty things. Like I’ll eat a bag of chips or something that I know I shouldn’t do, but I’m just, you know, it’s an easy way to have some comfort in that five minute moment. And I don’t necessarily get drawn to batch of grapes.

Right. So the things that are kind of correlated together, and I think, um, the only way through it is to try to. Build that foundation stronger and invest in [00:35:00] people, try to help them recover their finances, help them recover their health, get them to talk about their fears, talk about what they’re going through.

Doesn’t necessarily fix it, but maybe it’s less pent up anxiety, help them understand where they can get more healthy food, or help them get a ride to the doctor. And the problem is it’s, I don’t know that it’s a quick fix, like it’s going to be lots of small things that help over time. And, I mean, you and I are both trying to invest in companies that are going to help.

Make an impact in a material way in pieces of that, but there’s a lot of stresses in the world right now and in finances. There are in health. There is, I think, overall, behavioral health is, you know, the next pandemic that we’re not talking about society wise that we should be talking about. So I don’t know.

I want to be optimistic. [00:36:00] And part of the reason I like doing this podcast, it forces me to it. Read the news in a very different way. Like if I have to come on and talk to you about it, I need to read the damn thing much more carefully than I would otherwise. And it’s hard to find, you know, Sunshine

Marcus: out there.

Yeah. So, so last week we talked about the Medicaid, um, disenrollment issue. Yeah. And, uh, I think we talked about the different categories of which people who were being disenrolled might fit in. What is

Vic: procedural reasons?

Marcus: So we talked to all of that.

Vic: Right. And they have responded.

Marcus: That’s right. And we said, look, some of these people, they found other plans on the market.

Some of these people, they’re employed. And so they’re under group group plans, blah, blah, blah. And we, but we did talk about the fact that certainly some percentage of, you know, these, these people are. [00:37:00] Now without insurance.

Vic: Yeah, right. I mean, what I was mean. So before I get married, I was not very good at dealing with my personal finances.

My wife does it now. But when you are behind when you’re 30 days delinquent and you’re not sure how you’re going to pay those things, you may not open the mail at all. So like the notice from the state Medicaid. Oh yeah. Just as in the pile or other things. And I don’t want to open all those bills. And so the, I think a lot of people that might need to open it and they still might need coverage.

They just don’t open the mail.

Marcus: Right. And so, um, my, my dear friend, uh, Dr. Catherine Gergen Barnett, who we affectionately call KGB. Um, uh, she is a, uh, physician. In Boston and, and, uh, I met her through the Aspen institutes, health innovators, [00:38:00] fellowship, and, um, we were just hanging out this weekend in Nashville and she shared an article with the group talking about these issues like

Vic: Aspen fellows do on a Saturday and

Marcus: talking about these issues.

That’s exactly right. Because, um, this is her life, you know, she spent the last two decades as a primary care, you know, family. You know, medicine physician, uh, in underserved communities at safety net hospitals at, you know, uh, FQHC is right. So, so she, she wrote an article about how states can thoughtfully unwind Medicaid coverage.

Right. And, uh, she’s a great writer, so it’s, it’s in the, it’s in the Boston globe. Um, so I would definitely recommend people go read it, but I wanted to just call out the five suggestions that she made. In terms of, you know, lessons that are critical to revisit that we should be thinking about in this context.

So these are lessons that she pointed out from the pandemic that could be leveraged in this [00:39:00] situation of, of, you know, Medicaid, um, churn. Uh, so I’ll just kind of go through them. So the first one, and I, I’m, I’m actually going to read the whole paragraph associated with it. So, uh, the first one, trust the experts in the community, let lead, let community leaders tell state leaders, what works in each community and Through both appropriate language and cultural approaches for re enrollment change communication strategies, people often do not read letters sent to their homes.

States must creatively use different platforms of communication, such as social media messaging on public transportation, et cetera, to inform communities about Medicaid re enrollment and why it matters show up where people live, play, learn, and worship. States must work with leaders from public libraries, community centers, schools, and centers of faith, and have them be partners in this effort.

Build on the public private partnerships that were critical during the pandemic. When Massachusetts needed to disseminate more COVID tests, it worked with private entities like CIC Health to quickly erect hundreds of [00:40:00] testing sites in schools and communities. Government cannot do this important work alone.

Finally, use the power of stories. We cannot understand what we have not lived. State leaders must listen carefully and thoughtfully to those in our communities who have experienced the devastating impacts of insurance loss and use their stories to continue to drive this critical work.

Vic: Yeah. And she did, I mean, we don’t need to go through it, but she did it in this article.

Where she talked about one of her patients over 10 years And the impact on his health when he missed when he was off For some reason he went off the rolls and then back on And the it’s much easier for me as a reader here in tennessee to understand What’s going on in boston by hearing the story of one like real person that that she describes through a story um, these are things that we teach entrepreneurs stars About getting, getting an [00:41:00] understanding of their customers, building empathy with what they’re dealing with every day in order to get their.

New innovative thing adopted and used and it strikes me these same lessons Should be used by the the various medicaid Agencies to find the people and if they have a job somewhere else then great That’s that’s the point is to give them a safety net and then they go off and get a job and they’re fine But if if we’ve lost them and they’re just not opening their mail We got to try to find them.

Marcus: Yeah. And, and I love your point because in the absence of stories, when you’re just talking about data points and numbers and percentages, it doesn’t matter. But the minute Catherine says, let me tell you about one of my patients,

Vic: here’s what happened to him.

Marcus: That’s it. Like, you can’t look away from that.

You can’t dismiss that. Like that actually happened.

Vic: Yes.

Marcus: Right. There’s a real person

Vic: and he’s suffering. And he didn’t do anything wrong, except he is poor [00:42:00] and struggling and has a lot of responsibilities and not many resources to to navigate them. And so the I think Medicaid’s purpose is to try to help those people.

That doesn’t mean we have people that don’t need it on the rolls. But we have to find the people that need it and get them the covers they need.

Marcus: That’s right. All right. So with that, we’re going to take a break and, uh, let Doug tell you about jumpstart foundry, where you can get involved in actually making something better in healthcare.

Doug Edwards: Thanks guys for the opportunity to talk about our pre seed fund, Jumpstart Foundry. My name is Doug Edwards, CEO of Jumpstart Health Investors, the parent company of Jumpstart Foundry. We’re so excited to be able to talk about, uh, early stage venture investing, certainly the need for us to change the crazy world of healthcare in the United States.

We are spending 20 percent of our GDP, north of 4 healthcare with suboptimal outcomes. Jumpstart Foundry [00:43:00] exists to help us find and identify and invest in innovative companies that are going to make a difference in healthcare in our country. Every year, Jumpstart Foundry invests a fund, raises a fund, and deploys that across 30, 40, 50 assets every year, allowing ease of access for our limited partners to invest to help us make something better in healthcare.

Some of the benefits of Jumpstart Foundry is there’s no management fees. We deploy all the capital that’s raised every year in the fund. We find the best and brightest, typically around single digit percentage of companies that apply for funding from Jumpstart. And we invest in the most incredible, robust, innovative solutions and founders in the United States.

Over the last nine years, Jumpstart Foundry has invested in nearly 200 early stage, pre seed stage companies in the country. Through those most innovative solutions that Jumpstart Foundry invests in, we also provide great returns and a great experience for our limited partners. We partner with AngelList to [00:44:00] administer the fund, making that ease of access not only with low minimums, but the ease of investing in venture much better.

We all know that healthcare is broken. Everyone deserves better. Come alongside us with Jumpstart Foundry, invest in making the future of healthcare better, and make something better in healthcare. Thank you guys. Now back to the show.

Marcus: All right, we’re back. Um, so The New York Times really powerful, really powerful story, uh, opinion, but it is, it is a story actually, because it covers the lives of several people living in, uh, the Delta in Mississippi.

I mean, this,

Vic: I forget the guy’s name. This is a really

Marcus: good Nicholas Kristoff.

Vic: He, he uses KGB his advice. And so it gives real stories from the Mississippi Delta.

Marcus: Yeah.

Vic: Um, and just seeing these people with. An amputated foot or leg because they have [00:45:00] diabetes and they haven’t been taken care of. First of all, it’s really sad, just as sad.

Marcus: Yeah. The story is called, how do we fix the scandal that is American healthcare? Um, it’s, you know, one of the things the New York times does well is, uh, sort of the cinematic treatment that they give to the article. So the photography is, Incredibly compelling. The writing is very, very strong. Kristoff is a, you know, award winning journalist and, and, and, uh,

Vic: you scrolled through the, the, the images, but if people are listening, we’ll link to the, to the story.

It’s worth, uh, seeing it because there’s a lot of powerful images of people.

Marcus: Yep. And, and so I, I, I also, because it’s, I think it’s powerful. Writing. Yeah. Um, I want to just read the first three paragraphs. It’s not just that life expectancy in Mississippi, 71.9 now appears to be a hair shorter than in Bangladesh, 72.4.

Nor that an infant is some [00:46:00] 70% more likely to die in the United States than in other wealthy countries. Nor even that, for the first time in probably a century, the likelihood that an American child will live to the age of 20. All that is tragic and infuriating, but to me, the most heart rending symbol of America’s failure in healthcare is the avoidable amputations that result from poorly managed diabetes.

So, you know, the first thing I just want to say is, first of all, those are three brilliant opening paragraphs as someone who, who writes. Yeah, that’s powerful. But what I think is so incredibly powerful about it is he had to know that saying these things about life expectancy and about, you know, children’s, you know, children’s likelihood of living to 20 dropping, [00:47:00] those are really terrible things and their data points, right?

But they’re not the bad. They’re not the worst thing. They’re not necessarily the thing that would. That might actually tack on someone’s personal experience. When you talk about amputations that result from poorly managed diabetes, the really sad thing is that happens so much in America today. A large percentage of the people that read this article will have someone in their family for whom that has happened to for me, it was my grandmother on my dad’s side of the family, um, who, before she passed away, lost both of her legs.

Uh, and then was in a nursing home and, you know, the key being poorly managed diabetes, right? Lost both of her legs and then as a result of, you know, not being properly attended to had horrendous bed [00:48:00] sores, you know, and it’s impossible for that sentence to not conjure up that memory. And that is a truly infuriating memory for me.

Um, so I, I just want to highlight what great writing this is because it compelled me to then say, okay, I’m going to sit down and read this entire article and then look at the pictures and hear the quotes and be very, very moved and enraged, quite frankly.

Vic: Yeah. It’s, um, it’s not acceptable and yet it’s been going on for a long time in Mississippi, but in Tennessee.

So, I mean, my grandma was in North Carolina,

Marcus: you know,

Vic: and so Mississippi is probably the worst. That’s why he called it out Tennessee. I can’t remember it now, but the number one thing, so we used to know the head of 10 care, um, and now, now it’s changed out. But, um, [00:49:00] we, I spent a lot of time sort of talking to health systems, payers.

Medicaid leaders about what are the problems they need, they need fixed. And in 2016, the number one problem that 10K wanted to address is unnecessary amputations. Uh, diabetic foot is the nice way to say it. It means that the diabetic patient was not managed well when they, they had their foot amputated.

It’s terrible for the patient. They, they typically live 10 months longer. Because it’s so not for health because it’s so depressing and their life changes. I can’t get around. I can’t do anything and it’s very expensive And so it’s bad all around. It’s bad financially. It’s bad. Emotionally. It’s bad society and 10k couldn’t figure it out.

We have started three or four companies to try to address it. It’s real. It’s hard because there’s so many inner intertwined [00:50:00] challenges We’ve had some success, but there’s still a lot of people that are not taken care of.

Marcus: Yeah. So, I mean, this,

Vic: this image, I mean, the whole thing, the

Marcus: whole thing, it is, it is, you know, the stories, the quotes, the pictures, uh, and then it gets to this chart here.

That that then goes kind of back, get you away from the Mississippi story and kind of brings back the whole story of American health and how we’re doing from a life expectancy perspective. Right? And it, it, it bats us up against other places in the world where people live longer than Americans. Right?

That’s, that’s kind of the whole

Vic: and you kind of know, Japan. They eat really well. It’s one sort of cultures, one almost very, very small set of genes. They all have the same easy, somewhat easier to treat and they, they’re fairly wealthy, similar to us. I’m not surprised about Japan and South Korea, Australia, but then you, you [00:51:00] see some of the countries that are ahead of us and it’s, it’s honestly just embarrassing.

So Tennessee,

Marcus: which

Vic: is very low, We are behind Iran, and, and Morocco, Malaysia, Turkey, Algeria, we’re, we’re worse than all those, and life expectancy is probably the best way just to sort of take a one, one stat across all kinds of populations, and we’re not performing well, I mean, we have so much more money, resources, educated people, compared to these other countries.

And yet we’re not taking care. We’re not using it effectively to take care of our people.

Marcus: Yeah Uh, this is a you know, again another great graph and uh, a very frustrating graph because [00:52:00] um, It’s it’s it’s good to Be able to see the distribution amongst the states in the united states. Yeah Um, it is in

Vic: massachusetts where

Marcus: your

Vic: friend is practicing is pretty good

Marcus: Well, you know that was one of the conversations we had You This weekend was, was just, um, the difference between states and the difference between what she’s able to do in Massachusetts versus what she might be able to do if she were here in Tennessee.

Um, but look, these bottom States, right. Um, you know, Louisiana, Alabama, Arkansas, Kentucky, West Virginia, Mississippi, Oklahoma, all of these States I just mentioned, the life expectancy is 74 to 72. Um, and. You know, at the top of the chart, Vic mentioned Japan and Australia, life expectancy is 84. There’s no, there’s no, no American state that high.

The highest American state is Hawaii, which is, um, you know, north of 80, 80 years old. And then, you know, in that 78 plus band, we’re looking at, um, [00:53:00] Washington state, California, Oregon, uh, Massachusetts, Utah, Connecticut, Minnesota, You know, New Hampshire, Colorado, Rhode Island, Vermont, uh, Idaho. So, you know, there look, I, I don’t want to make this political, but, um, there’s a band of blue trifectas that are, that are at the 78 and, and, and over level, and there’s a band of red trifectas that are, that are in the, you know, 74 and below, um, there could be a policy.

Thing to look at there. Um, it just is what it is. I’m not, you know, I’m, I’m not necessarily able to, to go in depth and say what those policies might be, but that’s the benefit of a, of a chart like this, right? Yeah, I mean, is to is to cause us to ask some questions.

Vic: That’s right. There’s something that those states that are really low are doing wrong.

And I don’t know that I can diagnose it [00:54:00] from here.

The fact that someone in Mississippi lives 12 years less on average than people in Australia, that’s not acceptable to me. Like, Mississippi is one of the 50 states in the richest, most powerful country in the world. We, it’s our job to take care of our citizens. We have to try to do that. And I think this article is showing that we’re not treating diabetic patients.

Well, it, it, there’s all of these contributants called, you know, generally called the social determinants of health that are hard to access. And I just said, uh, I’ve started a couple companies trying to address diabetic foot and there’s moderate progress, but not, not great. Um, but we have to figure it out.

There, there has to be, [00:55:00] they have diabetes in South Korea, but somehow they have managed it.

Marcus: Poorly managed is the descriptor on diabetes that is the trigger for the unnecessary amputations, you know.

Vic: There’s all kinds of contributors. There is politics, but there also is, you know, maybe we shouldn’t put sugar in everything.

Marcus: Hold on. I mean, last week when we were looking at the Medicaid disenrollment and the Medicaid churn, It was pretty clear that we had Some states that were doing an abysmal job relative to other states. Yes, right. And so it’s clear that there is a difference in the way that some states approach health.

And, and, and, you know, it should be on the table for us to discuss that. It should be on the table for us to compare that. Like at the end of the day, we are the United States and we should be [00:56:00] looking not just at what other countries are doing. What are other states doing? And how might The lower performing states benefit from adopting some of the practices of the better performing states.

That’s part of why I wanted to share Catherine’s article, because, you know, she’s in one of those better performing states, quite frankly. And it’s a state where, you know, she has a lot of optionality. I mean, if you ask her about sort of, you know, the despair that, that many of the people that she serves are dealing with, it’s very real.

It’s not, there’s no, There’s no panacea. There’s no utopia in the United States of America. You know, there, there’s, there’s, uh, inequality and, and suffering and poverty everywhere. Okay. But the, the, the political environment and the policy infrastructure and the willingness to innovate and to try some of these things that is not evenly distributed around the United States.

And so that’s, I, Okay. That should, it should be on the table for us to talk about, because look, for us as, as healthcare innovators, you know, if it’s going to be so uneven from a state to state basis, [00:57:00] we have to think about that, right? We have to think about the same remedies we’re able to deploy in a certain set of States.

We may not be able to deploy in a different set of States. You know, our capital may not play the same way. And I think you’re actually seeing that, especially in like these Medicaid. Focused, uh, organizations where if you look at the states that they pick, um, you know, I look at like a city block and obviously they’re focused on urban centers, city block.

Right. Um, but let’s look at the jurisdictions that they decided to, to go in first, right. You know, are there any specific policy angles and Medicaid, you know, models that they’re leveraging and utilizing in those states that might be differentiated, right. That, that might give opportunities for more. More innovation, especially capital driven in an obvious

Vic: one is did you expand Medicaid or not?

I mean, that’s just the don’t even think about it. Um, and I mean, I don’t know. I think that there is value in [00:58:00] Driving incentives for people to be Smart to try to make money. I mean i’m a vc. I think it’s helpful to sort of give economic benefit to people But they’re also it has to be balanced with a social safety net We we have to have a certain of course level of health care that every every person if you are In the united states.

I don’t care if you’re legal or citizen or not legal if you happen to be here We should take care of you And that’s just a human right thing that we should take care of people and and we we don’t have An agreement on where that line is and each state is delivering it in very different ways And we’re in tennessee the number one company in the inc 5000 Is headquartered a couple miles away?

I think ten care which is our medicaid establishment does a [00:59:00] pretty good job And we are not high up on this And then we have the biggest for profit sort of number of hospitals In the country And so it’s, it’s not necessarily the capabilities. Tennessee has plenty of healthcare capabilities, but somehow we’re not translating it to the actual people.

And I think Catherine’s, um, article has exactly right for reaching out to see who should be enrolled in Medicaid. But it’s, it’s the same set of things to reach out to diabetic patients, right? Like you need to go to their church and teach them about. Checking their feet for scrapes and cuts and cutting their toenails.

It’s basic stuff because people lose feeling in their, in below their knee. And so when they’re, when [01:00:00] one toenail cuts the side of the foot, they don’t feel any pain and then they can’t, typically they’re big enough that they can’t easily bend over to clean it that well, or even see

Marcus: it,

Vic: or even really see it.

And they don’t feel it. And so a small cut typically is what happens a little scrape, but then it gets infected right and Two months later. It’s it’s really hard to control and then they have to empty the foot And so the same idea is about going to where they are using story finding community leaders like the minister or the You know high school teacher that you know, some of these people are not that old.

I mean they Hey There are diabetic patients that are not managed that are in their teens and 20s and we have to find a way to get through to people so that they, they want to learn what, what we can do to [01:01:00] help. And then we need more services to help them.

Marcus: Yeah. And look back to another one of Catherine’s points.

Um, government can’t do this alone. Right. You know, she highlighted how, how the state of Massachusetts worked with CIC Health and that, you know, what en enabled them to sort of distribute all these different, you know, covid testing sites. Right. I mean, the government cannot do this alone. Right. You know, it is going to take innovative organizations partnering with the government to turn this around.

That’s full stop. You know, doing what we’ve been doing has gotten us here. Yeah. We, we are as a country and unfortunately. The established health systems are turning off their venture capital programs because they are so stressed by the, you know, inadequate Medicaid, uh, Medicare rates that they’re getting right.

So we’re going to need new companies that have different cost cost structures. That [01:02:00] are asset light, that are technology heavy, um, that can be distributed, that can go out into communities and not necessarily, you know, require communities to come to them, uh, and can make an impact, make a measurable impact.

Vic: And I believe in, in sort of the markets ability to deploy resources in an efficient way. And also, in the U. S., we are using a basic free market environment to deliver health care. We have non profit, but we also have for profit. No other country, or at least no other significant country, has that. And that is wonderful in the sense that we get really world class institutions that are doing things In the sort of health care centers of the country that are Unmatched, right?

We we have the best the [01:03:00] best quality health care in the world, but we haven’t really done a good job Managing how we deliver care to the people that don’t have unlimited money And that’s part of the using a market based approach. We have to have that safety net and for a while We had social security medicare medicaid But it As the disease states have gone from acute to chronic, it’s just not the same.

I mean, if you break your leg, they can patch you up. But chronic care, you need much more consistent, ongoing education. We have to teach people to think about their life in a different way. We have to be present for people. Yes. We have to be

Marcus: present for people. And we don’t pay for that. We do not pay for that.

Vic: And if you pay for it, the free market will start delivering it. That’s right. I mean, I think it’s fairly [01:04:00] straightforward. No politician will utter the words that we have to redo Social Security and Medicare, but we do. I mean, it’s, it’s, you can see from the chart, it’s not working. It’s not working. It’s not working.

And I don’t mean cut benefits to an 80 year old. I mean, we need to deliver better fucking care.

Marcus: Yeah. And so Structure it differently. Yes. Right. It’s not about the dollar amount. It’s about how it’s structured. We will save money. Yeah, totally. Well, again, that’s why, that’s why you need to turn to the innovators.

Yes. They are incentivized to save money.

Vic: Yes. CityBlock’s a good example. They’re delivering better health and they’re saving money. Both.

Marcus: That’s the model. Okay, so final little, uh, tidbits we’re going to cover here, which is, which is related, right? So

Vic: South Carolina is on the lower end. Yes.

Marcus: Yeah. And by the way, we’re not punching in South Carolina.

We live in Tennessee. It

Vic: just happens. The next [01:05:00] story is based in South Carolina.

Marcus: Yeah. Yeah. Yeah. So, uh, so Prisma health and United healthcare negotiation over health coverage, uh, Prisma, uh, apparently sent a letter out, um, to all their patients, all their patients that said, you know, just letting you know that beginning of January, One 2024, uh, unless we reach new agreements, you know, United will no longer include Prisma Health as a, as an healthcare provider.

That’s

Vic: what they’re saying.

Marcus: And I told you this, this reminds me of like, uh, I don’t have it anymore, but I used to have dish network. And, uh, you know, whenever, like, I don’t know, ES esp n Yeah. Like one day, like I would turn on the NF L’s going

Vic: to

Marcus: leave. Yeah. Right, right. Yeah. I, I would turn on the TV and one day, like I’d go to ES ESPN expecting SportsCenter.

Yeah. And I just get like this message saying, right. Saying unfortunately due to Dish Networks, unreasonable .

Vic: Right,

Marcus: right. You know, yeah. Here’s a number to call and complain. Right, right. Exactly. Exactly. Yeah. So, so this definitely feels like that kind of tactic. Right. Um, and, and, and then they put it on their website, [01:06:00] you know, saying, you know, Hey, we’re good.

You, you know. Our hospitals and physicians will be out of network for the following plans, and it lists, you know, you know, healthcare, the Medicare Advantage, so, um, you know, I think that well, I think two things because we’re gonna we’re gonna go into an extended story about United Healthcare in a second, but I think two things one.

I think this is a obviously a negotiating tactic. Yeah. Um, that, you know,

Vic: it’s perfectly acceptable. It’s a negotiating tactic.

Marcus: It’s Yeah, yes, negotiating tactic. But I do, you know, you had brought up to me the story about how locally, um, there was an, uh, Yeah, that that

Vic: walked away from Vanderbilt.

Marcus: Yeah. Yeah.

A group that they had 80 percent concentration. Yeah. Um, and they walked away and then it literally did disrupt availability of surgeries. Right. And so, um, I don’t know enough about South Carolina’s coverage to, to say this with strong confidence. But my understanding is that Prism is a very, very big company.

Big, [01:07:00] strong health system in South Carolina. And, um, and I don’t believe that Optum has, uh, a really strong presence in South Carolina in terms of like the Optum care business model,

Vic: which is owned by UHJ. So, yeah. Right.

Marcus: So, so I think that this feels like that kind of, Hey, we’ve got the network and we’re just going to go ahead and message to our patients because they have a stronger brand relationship with us than we think they do with you.

Um, from a negotiation perspective,

Vic: it has a PR team too.

Marcus: Yeah.

Vic: So they pull up there. They, they, um, commented to the reporter.

Marcus: Oh yeah. Yeah. Good comment.

Vic: And basically said. Prisma Health is demanding a 24 percent price hike over 15 months, that would increase healthcare costs by 63 million, with more than 46 million coming from the budget of self funded employers.

You know, so, we’re committed to keep negotiating.

Marcus: Yeah, they just dropped the numbers.

Vic: Yeah, so like, it was, uh, Kind of [01:08:00] fear and this mean payers doing bad things. And then you just said, well, it’s 24 percent increase. Did you get 24 your wages this year? Right, right. Exactly. It’s all posturing. But I think the, the reason to bring it up is that it would be much better for both United and Prisma to stop fighting over this and just deliver care.

To the people in South Carolina,

Marcus: well, look, I mean, so I don’t have prisoners books, but again, my sense is probably that there is some desperation on their business model that that led to this negotiation. I don’t know the management team. I don’t I don’t know this. I don’t know. This is really that well at all, but yeah.

I can’t assume first knowing what we know about the state of health systems in America, that this is them purely gouging for profits, right? My sense is they are losing, you know, they’re [01:09:00] probably losing money.

Vic: They are definitely losing money. They, um, maybe could manage their

Marcus: system better. Yeah, that’s an entirely different, that’s an entirely different conversation.

Vic: Well, but that affects, like, do you need to raise 24%? Yeah. Well, this is, well, this

Marcus: is what, this is what many of these management teams at health systems know to do is demand higher rates, right? Just that’s their, that’s their tactic as opposed to innovate. You know, find a fit, you know, inefficiencies, make the, take those as opportunities to, you know, create more margin, create net new revenue lines, right.

That are, that are ambulatory in nature or technology driven. Um, those are things you can’t really do when you’re winding down your venture businesses and your venture investments. Right.

Vic: Yeah. So we don’t know where this will end, but it was, it’s interesting. Just to see the, kind of the bickering.

Marcus: Yeah.

And then part two of sort of the United healthcare story [01:10:00] here is we missed this because this, this rolled out, uh, August 1st, uh, but, uh, United healthcare put out a, a, a release saying that prior authorization reductions, uh, will equal nearly 20 percent of all overall volumes. So they are, they’ve found codes across their commercial plans, their, uh, exchange plans, their Medicare advantage plans, their community plans.

So that’s. You know, um, the Medicaid plans, they, they have found swaths of codes and they’re not the same. Cause I’ve looked at the different plans and you know, like for the commercial plan, there’s a bunch of like genetic testing is there. Radiology is there. Um, there’s a bunch of, uh, site of service, you know, um, procedures that are in there and they’re sort of different stuff on their Medicare advantage, um, different, different blocks of codes.

So somehow, because. United U H G broadly is just an incredible data driven company. I think they’ve figured out, you know, prior auth is actually not [01:11:00] helping us. And it’s certainly going to be a popular thing to drop off on these, on these codes, patients

Vic: and doctors, and everyone hates prior author. Like, like my doctor wants me to have this diagnostic test and I’m going to, I want to get it.

Marcus: I want to get it. Yes.

Vic: And then. I get stopped, get stopped, and I have to call and get it, get a prioritization. It’s really a delaying tactic to sort of cut back on utilization. Yeah. At least that’s how I view it. Yeah. But

Marcus: well, it, it also, sometimes you don’t get the prior off. Yeah. Sometimes they don’t give it to you.

Yeah. Right. I’ve had that happen MRI, actually. Yeah. And so it was not with United people

Vic: hate it. And I think they hate it because they want to get whatever their doctor’s telling them, whether that’s. evidence based medicine or not. Right. I trust my doctor. Right. And, well, I know intellectually that there’s thousands of new papers [01:12:00] every week that come out, that UHG is probably ingesting and understands all the evidence, and my poor doctor can’t read them all.

I still trust him. He’s, he or she is the one that I know. I went and saw them, and they want me to do this thing. Right. And now this mean payer is, is not allowing it, or at least not allowing it without reviewing it all. So people hate it. My. Belief is that united is really smart and has a lot of data And I think they are saying fine.

You don’t like prior off. We’re gonna cut back on prior off.

Marcus: Yeah, it’s a it’s a it’s a great Move, it’s a great PR move. Well, it’s more than a PR move. I mean, I think it’s it’s uh, It’s a it’s it’s you’re literally taking one of the biggest complaints Yeah off the table at least for a large, you know series of codes, uh across these plans and

Vic: we looked at it There’s a lot, I mean, it’s a lot of codes.

It’s a lot of codes. It’s a lot of codes. They used to have automatic pre auth required. Right. That now [01:13:00] they’re saying. And then there’s another date in November. It’s pretty fast. Yeah, they’re gonna not do that anymore. Yeah. Um, that is great. And I also believe that they probably are running their business still too.

Appropriately manage the risk, of course. So, of course, they have other lever. I read does they have other levers to pull and they don’t need this, like, kind of very blunt. It’s a crude

Marcus: instrument. That’s right. That’s right. They are evolving. Leveraging data, um, to, to be able to manage the risk that prior authorization was in place to manage in a much more elegant way.

That’s, that’s what this says, right?

Vic: Yeah. And then if you go down sort of buried, the thing that I really was interested in is this gold card program for provider groups that meet eligible requirements. So if you’re eligible in the United [01:14:00] Health group policy as a provider, I think that means you. Don’t submit a lot of claims that are rejected.

Yeah. You

Marcus: probably don’t have a lot of like, you don’t have a lot of ways and abuse issues and things like that. Yeah.

Vic: Then you get the gold card and that allows you to get more things pushed through without any prior off. Right. And that sounds great. It’s

Marcus: a fast pass at Disney.

Vic: Yeah. Except what if you’re not a gold card provider?

Marcus: Well, I mean, you might not deserve to be a gold card provider, right? I mean, you know, like, let’s, let’s just take it on its face. I mean, it could just simply be your performance does not merit the trust.

Vic: For instance, you, you have, and we have found multiple claims where you were not following evidence based guidelines and you order this genetic test for which there is no change to the treatment.

So that’s a very common thing. Like there’s this new genetic test. It’s really [01:15:00] cool. We’ll learn what the, what the, what the genetic makeup of this tumor is, but I’m not going to change your treatment. And so I think United Health Group would say, well, that why would you go through the process of making the patient go down there billing for it when if there’s no treatment change?

There’s no real point to it. And so if you establish your track record, probably over millions of claims, that you are doing best efforts or lots of claims. I mean providers over 10 years will have a lot of claims. Oh, yeah. Yeah fair point. Maybe it’s not millions Significant number of claims we have enough we can say this system or this provider group or this individual doc Is on balance?

really following evidence based care or And these other groups are not, that probably is good overall for

Marcus: the system. Well, it’s, it’s, it’s certainly an evolution. I mean, I think, I think most people will say prior off, It’ll be

Vic: interesting to see if [01:16:00] other payers,

Marcus: It will be interesting to see if they cut it because it will signal whether or not, This is a unique capability that United has in terms of, you know, they’re, they’re just actuary data machine learning, you know, models, um, or if they’ve just sort of decided, like, after years of looking at it and, and, you know, retrospect, it doesn’t really make that much of an impact.

And the

Vic: cost for us to field these calls from mad patients and doctors, we authorize. Three quarters of many way, right? Yeah.

Marcus: Yeah. So, so interesting. You know, just an interesting development in the, in the overall landscape of payers and providers and, you know, I mean, I’ve said on this

Vic: pod previously, I think that United and other payers are really going to, you know, Use big data and AI to do a much more effective job at, um, you know, kind [01:17:00] of questioning claims that actually should be questioned and then let claims that go through that, that should.

Yeah.

Marcus: Well, to, to that point, when we were talking about AI and where it can be used by innovative companies, sort of two things. One, I know we talked about prior auth. Yeah, as one of the areas, but two, we have talked about how AI for startups, because it’s really going to be large organizations that have the data and have the ability to like crunch all these numbers that are really going to benefit from AI for the most part.

Um, and I think this is an example, you know, we, we talk about it. In the, in the non healthcare space, how a lot of AI is going to accrue to, you know, your Googles and those kinds of organizations, but this is a perfect example of, well, you know, let’s not plan on venture backed companies solving prior off because United is just going to do it.

Vic: Yeah, I mean, I think if, unless you have [01:18:00] some proprietary data source. And I, I question entrepreneurs when they claim to have a proprietary, it has to be actually like no one else has this, you scraping the web, you can stop right there. That’s not proprietary. Right? Right. But unless you have a proprietary data source, open AI and Thropic, I mean, the big systems are already known, they’re way ahead.

And it’s billions of dollars. Yeah. And then you’re not going to get an advantage. And so, The only time a startup can have an AI thing that I think works if they’re sort of adding to that base large language model with some, some special data, and I’m looking for that. But I haven’t found one yet. There aren’t that many.

Marcus: Yeah, it’s going to be interesting because this, this is one of those instances where. We can assume certain things that exist in the healthcare industry will always be there and that they sort of serve as scaffolding for [01:19:00] problems for us to solve. But what if prior auth just goes away in the next five years?

Like the payers just all do away with it. Yeah, then that that whole problem set, it’s just not a problem anymore. There’s no more money to be made there. Right? So it it is something to just Pay attention to and think about and just keep in mind these these different workflow things. It would be good Oh, no, it would be

Vic: good.

I want to make money, but i’ll be happy to make money in some other area

Marcus: Well, you you think it would be good, but you don’t have a prior auth You know, efficiency based company that just assumes the prior office is a My portfolio, that’s right. That’s what I mean. That would be terrible Right, yes, right Um, all right, man.

Good show. Good show. Yeah

Vic: All right. So saturday big game saturday big game. We will see y’all next week with nashville being the champion. That’s right Until next week. [01:20:00] Bye