18 – Rethinking “Cancer” & Correcting Embedded Racial Bias | Reinventing Start-up Strategies | HCA & Google Collaborate on AI Innovation

Marcus: [00:00:00] Episode 18, Vic, I’m going to Vegas tomorrow

Vic: to defend your champion, your world championship. I’m going to everyone’s out to get you this year.

Marcus: I’m going to compete, not defend anything. I’m going to compete. Um, but you are the reigning, I’m the number one seed. Yeah. And you won, and you won last year. Yeah.

Vic: So I, I consider that raining.

Marcus: Yeah. I’ve trained as well as I can train. I think I’ve not skipped training and, um, I just got sick like for one week. So I missed a couple of training sessions, but if I was able to train, I trained and I’ve been, uh, very dedicated and getting a lot of sleep. And so,

Vic: and you’re, I really should be more

Marcus: nervous.

I, I, I don’t, I mean, you know, I. I feel confident, but you also never know who’s going to show up. And so, you know, I think just that unknown is the [00:01:00] only, that’s the only variable, but the

Vic: problem with being, uh, You know, returning as the champ from last year’s, everyone is studying film of you and you don’t know who’s going to show up.

Correct. What was your seed last year? 14. Yeah, right. There’s some, there’s some 14 seed that’s like working on a new move. Yeah.

Marcus: I, I absolutely expect him. You know what I mean? I’m expecting him and I’m, uh, that’s the fun

Vic: of it. That’s the

Marcus: challenge. That’s why you’ll be

Vic: celebrating. Is it Sunday night or Monday night when you’re?

Uh,

Marcus: it’ll be Saturday night. Saturday night. It’ll be Saturday night. Um, but yeah, it, it, it is interesting. It is a very, very different thing to quote unquote, defend. That it is to you when you’re first, it’s a very, very different, different thing.

Vic: Well, we were talking about this, uh, offline a couple weeks ago, but just that whole training process of you’re, you’re fighting against another guy, even if it’s here in Nashville, just sparring, and you can’t be [00:02:00] thinking about what you’re going to do in, you know, in the A portfolio company board meeting in a week, you’d have to be totally focused right then.

And you get kind of immediate feedback on if you’re doing well or not. Well,

Marcus: yeah. Yeah. Well, you know, I feel like I’ve, I’ve done a good job of putting issues to bed, letting everyone know I’ll be out of office until September 11th. Um, cause we’re going to, um, We’re just taking some downtime next week after all, all this, all this good stuff.

Well, I have

Vic: a lot of confidence in your ability to defend. And also I’ll say on Saturday night, I’ll be hanging around, I don’t know, eating pasta. And so it’s really impressive that you’ll be, uh, out there fighting other guys, trying to choke them out.

Marcus: Well, you know, thank you very much. It, uh, it does add perspective.

I will, I will say just before we sort of jump in, you know, getting to this point, You know, we’re 48 hours out. Um, I’d say [00:03:00] the, the overwhelming feeling is, is a feeling of gratitude, like for my ability to even do this, you know, and, and to me, it, it just, um, it really brings home the importance of the work we’re trying to do here.

Um, not just on this podcast, but, you know, in our day to day lives at jumpstart, there are so many people who. Anytime I get like worried or. You know, scared or anything like that around the competition. I just like, remember I get to do this, right? You know, there are so many people right now who would trade anything with me for my anxiety about.

Competing to be able to do it. You know what I mean? Yeah. Um, compete at that caliber on that stage to have, to have, to have the, to have the physical wherewithal to compete at all, to, you know, maybe even have the mental health, right. You know, um, to be able to, to train and, and to consistently, um, you know, dedicate time and energy to something like [00:04:00] this.

So I I’m, I’m largely going into the competition with a pretty deep sense of gratitude, um, for my health. Well,

Vic: I’m, I’m super impressed with the work you’ve put in and I think it’s going to pay off.

Marcus: Let’s, uh, let’s get to our favorite topic.

Vic: Yeah. So, uh, the economy, we, it seems like there’s always news about the economy. Um, and we talked about this in July with, this is retail sales. So a group called red book, they track retail sales in the U S every week. We brought up that in July it had gone negative.

Meaning that it was lower was we were not having growth. We were going backwards for the first time in, in many, several years. Right. Um, and so I think it’s worthwhile to now circle back and say, it has recovered from [00:05:00] there. And so, um, if you’re watching, you can see sort of, it went negative for three weeks in July, and then it’s recovered, you know, at first pretty low.

Modest returns. But last week was 4. 2 percent growth. You know, it was just really. Impressive. Maybe that’s back to school. There’s, there’s lots of discussion on various. I’m trying to follow about how it may be higher than the steady state, but it’s not negative. So it’s real positive. That’s come back.

Marcus: Yeah. So the St. Louis fed and their prediction around GDP. Um, yeah, they maybe, maybe they know something that we don’t know. Um, and then also job openings, um, which are, I think this is the lowest ratio. They’ve been in what time period?

Vic: It’s in like two or three years, I think. Um, so they, they measure the ratio of open jobs compared to unemployed people.

Marcus: Right.

Vic: And I think it came down to one and a half jobs [00:06:00] for every person that is looking for work. It peaked at two or two something. And so there are fewer jobs. than there used to be, which I guess is moderately negative, but, but there’s still a lot of jobs out there and, and unemployment is fairly low.

So it, well, it’s down. It seems like it’s a pretty, pretty good set of reports this week.

Marcus: Yeah. There was a story in the business insider. The headline was, um, uh, the great resignation is over. And it was, you know, just sort of saying, especially for white collar workers, you know, We’ve had a sufficient number of layoffs as well as companies tightening up as they feel uncertain about the economy that now the combination of those two things have sort of flooded, you know, open jobs, uh, with lots of laid off people applying and, uh, That is making people who have jobs a lot less, you know, um, open to, to quit.

So there was this window, probably, you know, two year window [00:07:00] where if you were looking to hop from job to job, to grow your salary, um, it was a great strategy. It was a great time, but, um, At this point, the, the leverage has shifted back to the employers.

Vic: Yeah, but not in, it’s not so much, not so much that we’re looking at.

Uh, huge recession right now, at least so, so, I mean, all in all pretty good week for the economy.

Marcus: Yeah. I don’t think any of these, either of these trends along with the current state of inflation, especially based on, uh, Powell’s words last week indicate that he’s going to be stopping. I mean, so I, I’m predicting more hikes before the end of the year.

Yeah. And I

Vic: mean, the, the thing that he, I mean, you know, he spoke Friday, we both listened to it. There wasn’t anything really. Material to call out. I don’t think he just kind of was talking about they are almost like experimenting and trying to like, figure out what the right rate is to sort of guide the economy [00:08:00] lower, but not too far.

And I was struck with the US Fed employs more PhD economists than anyone in the world. If they don’t know what’s going on, I don’t know how you and I could know what’s going on. And they don’t know. So, I mean, it seems like they’re going to keep rates really high. They might even raise a little more until something breaks.

I’m not sure that’s the best strategy, but it seems to be what the Fed’s doing.

Marcus: All right, let’s start a, uh, Uh, a run of wall street journal stories. Uh, the wall street journal has been really active covering healthcare, which I appreciate, but also covering venture capital, which is nice. So, uh, they reported that quest to capital closes a healthcare venture fund at 397 million.

They had to point out that they didn’t hit their 400 million target, but I think that’s pretty irrelevant at three 97. Um, and this is a growth stage investor. Uh, and they are looking for companies that. Have between 5 million to 40 million in revenue. So, um, 5 million, not an easy number to hit in the venture space.

Uh, just to be clear for [00:09:00] anyone who’s not familiar with the venture space, especially if you’re talking about early stage venture 5 million, that’s real money. That’s real money. Yeah. It’s a growth and that’s the bottom. That’s the bottom edge of their, of their capital stack. Right.

Vic: Yeah. I mean, I think it’s, it was interesting.

That they got out. Yeah, maybe they didn’t hit the 400, but 397 is pretty close to their goal. That’s right. And they’re focusing on healthcare, connected medical devices, and then also kind of value based care. And that’s, that’s an interesting space. I think the growth market is pretty crowded with other funds as well.

Agree, but happy to have more money out there.

Marcus: Yeah, no, I think it’s good. I, we definitely want more growth, uh, funding out there. I mean, it definitely feels like healthcare has found its way to. Be a little more resilient in the venture space in terms of funds, being able to get raised. We talked about CDNR, which is not exclusively, um, healthcare, nor [00:10:00] is it even venture their, their P E, but they have a very, very strong healthcare portfolio.

Um, and it’s just great to see this news. I mean, you know, as often as we can, whenever we see new funds getting raised, especially if they’re substantial in the amount of capital, we’re going to shout it out because, um, as early stage investors, This is the part of the capital continuum that we need to continue to be in place.

Vic: That’s right. It’s, it’s great to see. And a fresh fund means they won’t have any of the old kind of marked up things that they’re trying to work through. That’s right. Great.

Marcus: That’s right. And it also means that they are going to be, I think, bargain hunting. When you say, yeah, and to that end, uh, wall street journal also put out an article about what you and I know, because we live at every single day, which is, um, startups hitting a funding wall after the seed stage.

Vic: Yeah. So there is a pretty big gap, I think, between where we live. In that seed, just getting going, figuring out how do you get your product to fit with what the customers want [00:11:00] and kind of get up and going to where you’re at 5 million or 8 million in revenue and Cuesta. Can fund you or someone similar to them.

Yeah, there’s a gap that series a maybe series B. There’s a big gap there Yeah, and that capital is not not around now right now.

Marcus: No, it’s it’s really really tough So they they I was actually impressed they they interviewed a block from from angel list. Yeah CEO And, uh, his quotes are the graduation rate to series a is way below historical norms.

Uh, there’s just not that many people writing those bigger checks. We’ve been telling, uh, the broad jumpstart health investors portfolio that for well over a year now, and, uh, we’re living it for sure. Um, now companies that are killing it have predictable revenue, have proof of, you know, um, Attractive growth, sort of two X year over year growth.

Um, we’re seeing those companies get to a series a, um, especially, you know, quite [00:12:00] frankly, if they have very clean business models, if it’s a SAS business, that’s, that’s very straightforward and easy to understand. But, um, you know, I would say some of these more exotic business models, um, tech enabled services, it’s just harder.

Vic: Yeah. And I think, I mean, I’ve locked, I think we’ve had it the right way. The graduation rate. declining. Maybe it was 40 percent would go on from C to A, and now it’s half that. And so it’s not that no companies will raise Series A, but it’s a lot harder. You have to be everything buttoned up, really growing quickly.

It’s still then a hard path to go. There are funds, but it’s much tighter today.

Marcus: Tell me how familiar this is. Uh, Ravi Sandipudi, who’s the chief founder and chief executive officer at effective, which is a FinTech company says he chose to raise a second seed round this year, rather than proceed to a series.

A to give a San Francisco FinTech startup more time to build its business. His quote, given the VC market getting tougher and even broader volatility in financial markets, [00:13:00] having an even longer runway was good for us. Yeah. Have you heard that before? Yeah.

Vic: I have heard that I’ve architected things like that before.

I mean, what you call around is, is BS, right? Like, so, um, I mean, I, the summer I, I led another, maybe the seventh round in one of our portfolio companies, and we called it an a, because it was more attractive to call it an a, even though you would normally go through the letters. And you, you wouldn’t, you don’t start at a, um, so you can call it anything you want.

If you have already raised a seed round and it’s not new investors, then that is pretty normal. Like they put in some more to get you going, but if you bring in all new investors and reprice it, whether you call it a or seed two, it’s still

Marcus: your second round. So I have a question for you about this because.

We don’t know when the series a is going to come back, right? We’re seeing PE [00:14:00] funds getting raised. We’re seeing growth, um, funds getting raised, but that’s not series. A we don’t know when the series a is going to come back. Um, we have, I, let me just speak directly. I have been telling, you know, various companies, they need to have very minimal cash burn.

Um, or maybe even, or maybe even be cashflow positive. Right. Um, and. And I, and I’m also preparing to do these sort of seed to checks. Right. So we’ve, we’ve in your portfolio and our portfolio, we’ve, we’ve gotten really, really stingy, uh, around reserves. And when I say stingy around reserves, I mean, less focused on new companies.

And we’re focused on making sure we can support the companies we’ve already backed, make it, you know, up to the, to the next level. We used to think about graduation as being a series a, you know, I, in some of my companies, right. It’s like, if they can figure out how to do it. [00:15:00] So, you know, I’ve got one company in the portfolio that it’s feasible that by next summer, they could be 5 million in revenue and cashflow positive.

Right without a series a and so like, I wonder for us, they can go to growth and they can go to growth. This is my, this is my question for you. Right? Like as C stage investors. Who have now had to go a full year and we’re heading into a year and a half of not having any series and investors, you know, do you feel like we may start just changing our entire model and thought process to be like, screw the, I mean, you know, we’ll do several seeds.

We’ll get these companies oriented and now not every company can do this. Right. But yeah, it depends on the business model, the business model. Right. But you know, where, where, where possible, we’ll do several rounds of seed. We’ll get these companies to, to that really healthy place. We’ll end up acquiring a pretty strong cash position because of that.

Right. Um, and [00:16:00] then. Ship them to growth, ship them directly to growth.

Vic: Yeah. I think that there are times in the marketplace where that is the strategy that is the best strategy for VC. So my new fund, that’s all I’m invested in seed companies that have a business model such that they can get to cashflow positive with this round of money.

Marcus: Right.

Vic: And they have to execute. That’s a very different Uh, investment thesis than would have been really smart in 2016, 2017, when it was much more about gathering revenue and market share, and then there were really welcoming exit markets. Yeah. I think about it as an exit market thing, and then it filters down the A, investors are really excited if they have a clear path to, okay, Three years from now, we’re going to be a sell this based on a revenue multiple.

I think [00:17:00] that’s gone now. Like there aren’t, there aren’t revenue multiples. There aren’t really a lot of exits going on at all, but, but when they’re, they are being traded, it’s a strategic buy and it’s based on, you know, cash flow, right. Or it’s a combination of even a multiple cashflow, multiple and revenue, multiple in combination.

And so I think for, for us. We should, I think we should modulate back and forth. Right. So right now I don’t see revenue multiples coming back. I don’t think the a market is back for two years, three years, four years. And so that’s a pretty long time. Yeah. So if I’m doing a C that’s a whole nother fund cycle.

Yeah. So this entire fund is, you know, I mean, I’ve said to my LP, so I think it’s okay to say it on here. I’m invested in 10 assets. They’re all going to be seed companies and they’re all designed to get to cashflow positive viability [00:18:00] and internal growth with their own cashflow with no more money coming in.

And I think that could change if the Fed changes. And, you know, in two years, hopefully the Fed will shift and that might change, but it’s going to take a long time to filter through, right? The. The VC market is at the tail end of everything. So, when the Fed changes, the public markets will react first.

Then private equity, then growth, then A. And then it goes the other way, too. Like, when it shifts negative, public markets correct first, and then we correct last. So, we’re at the tail end of this, this whip. And, that, that’s I think you have to plan for that.

Marcus: I feel like I want to go back and kind of look at where VC was from 2000 to 2010, because seed wasn’t around forever.

Series [00:19:00] that used to mean something very different, probably a lot more similar to seed. It just seems to me like, uh, if it’s not going to come back for the next four years, seed investors are going to have a completely different model to execute. Um, and I, you know, I think for a year, we’ve been talking about do entrepreneurs really understand sort of the difference in the market.

Now I’m starting to shift to like, dude, to seed stage VCs. Like, do they really understand that graduation to series a for some meaningful percentage of your portfolio should not even be the goal, right? You know what I mean? Like it’s. No, you, you really need to like build a business functional business and you should target trying to get to 5 million without a series a no question.

You know what I mean? That’s, that’s just a completely different mindset. I think most, you know, most seed VCs are talking one to 2 million,

Vic: you know,

Marcus: that’s like, that’s, that’s what [00:20:00] they’re,

Vic: there aren’t many VCs. as old as me and as poor as me. What I mean by that is, the last time we saw this market was 2001, and I was doing deals then, and I saw my first pay to play, like, really aggressive down round in 2002.

And you learn, like, I took a lot of pain in those rounds because I wasn’t reserved well, we didn’t, we didn’t have the right business model, and most VCs haven’t been investing since 0 1, 0 2, or if they, if they were, they have made so much money that they’re on their private jet, and they have other people doing things for them, you have to be You know, kind of a glutton for punishment, or really, I happen to really like working with the companies, and so I’ve been in it for a long time, but there aren’t that many VCs that have experience this kind of market before.

So I think you’re right. They don’t understand that the [00:21:00] business models that can be financed are different today.

Marcus: All right. Let’s shift to some healthcare stuff. Uh, really, really big developing story. Um, I think I mentioned this when I was doing my rundown on on Aspen Health and, uh, HHS Secretary Becerra was talking about, um, this was actually, I think the one big win he positioned in that talk, which was that, uh, HHS was going to be able to negotiate, um, drug prices.

And he said, I have, I have my top 10 list. He didn’t divulge what those, uh, 10, 10 drugs were going to be, but here we are. Um, the. The list has now been published. Wall Street Journal’s article headline is expensive drugs targeted for first us price negotiations. The lower prices would take effect in 2026 and Vic, uh, break this down.

Let’s let’s first talk about, you know, what the categories of the, of the drugs are. Let’s talk about sort of what the spend [00:22:00] associated with those categories are is for CMS and, you know, ultimately for our country. Um, and then the negotiating model.

Vic: Yeah, so they didn’t renounce how they, um, chose these particular 10, but I think it’s fair to assume that they, they chose drugs that have a, a very significant cost effect on Medicare or Medicare and Medicaid.

And then they tried to go across different disease states. And I think you could maybe quibble over one or two, but they basically picked 10 expensive, widely used and pretty effective drugs that are certainly expensive. We’re talking about heart disease, going down a little bit more diabetes, cancer.

Yeah. It’s, it’s, it’s basically the, the really bad, um, top killers. It’s the top killers. It’s the [00:23:00] disease states that a lot of people in Medicare have. And so that’s why they cost. That’s why the total spend is a lot. Right. And then sure, each one is expensive. In total, last year on all these 10, the government spent a little over 50 billion.

And so it’s a ton of money. Yeah. Big number. And it also, I think we have to say that the government spent 4 trillion. Well, the government spent 2 trillion. Right. The whole market was 4 trillion. And so while it is a big amount of money, it’s 50 billion. It is. A small aspect of the 2 trillion that the government spent.

So, it’s important work to do, but I would rather there be a more broad based try to get drug pricing across all the drugs as opposed to pick 10 [00:24:00] for one. Um, kind of unintended consequences reasons. I think, I think there’s going to be games that they’re going to play.

Marcus: Well, before you get there, like, let’s talk about the actual negotiating model.

Vic: Yeah. The negotiated model is, is ludicrous. I mean, I don’t understand why they set it up this way, but the model is CMS presents the drug manufacturers. So the top one is Bristol Myers Squibb. Well, I guess, and Pfizer, they present them with a price that CMS is willing to pay. And the company can accept it or negotiate and if they do not come to Uh, negotiated price that both sides agree with, then all revenue for that drug in the United States is taxed at a 95 percent level.

Not through, I mean, through CMS, but also through every other channel. And so, I don’t think that’s a negotiation.

Marcus: That’s, that’s the stick.

Vic: They have this, like, big stick, we’re gonna put a 95 [00:25:00] percent tax on the revenue of the drug. Or, you can Or accept this price.

Marcus: Or You can remove the drug from Medicare, Medicaid.

Yes, you cannot sell to the federal government. Which, I mean, can you imagine the PR fallout from that? Well, I mean, like,

Vic: dude. So the, uh, I mean, I’m a free market guy, but the negotiation is not a real negotiation. The government is not incented to put a fair price on the

Marcus: table. Well, when, when, when you say, when you say it’s, it’s not a real negotiation, I think what you mean is it’s not a negotiation purely on the basis of the buyer, because the government has more weapons than just their spend.

They have, they have the IRS, they have the ability to tax the company as well. That’s right. So they’re using their taxing authority in addition to their, in addition to their wallet. Yes.

Vic: [00:26:00] Which I think will tarnish the negotiation and it won’t be a fair negotiation.

Marcus: Okay. So the wall street journal also published an opinion piece from the CEO of Bristol Myers who was outgoing.

Um, of course, he was the only one that would do it. Yeah, of course they did. He’s he’s outgoing. So, um, and it should be said there’s lots of lobbying organizations. There’s a ton of suits going on. So this, you know, it’s, it’s still unclear. How this is all going to play out, but it was passed in the inflation reduction act.

And so, you know, HHS at the moment has the authority to do what it’s doing and they’re going to move forward with these. Yeah, they’re moving forward. Yeah. They’re moving forward with this negotiation. So, um, the, the, the article, uh, the, the opinion piece by, uh, Giovanni Coforio, pretty sure I pronounced that correctly.

Um, basically says that This approach is going to stifle innovation and TLDR, [00:27:00] you know, if you’ve ever looked at the way that the pharma industry works, especially the sort of us based pharma industry, effectively, you can make an argument that the margin, uh, the margin that is made on selling medicines to, uh, the United States makes up for a lot of the.

R and D cost that gets proliferated around the world, right? Because we are really the engine for innovation for, um, biopharma and small molecule development. That’s, that’s what we do here. And so if you take out that margin, that’s what’s subsidizing the development and the distribution of these drugs around the world.

And so it’s going to drive it’s, it’s an economic move. It’s going to drive economic actors to respond [00:28:00] with some form of behavior. Right. Yes. Um, and, uh, there will be consequences to this. We, we need to all sort of understand. I think before the show even started, Vic, you and I’ve said, I don’t, we don’t know how to think about this.

We’re not too, I don’t know what the answer is. We’re not going to take a position on this. Okay. But I think laying out the situation is. Is important because we are at a crossroads here. Um, that either this fails, either this negotiation fails to go through. Um, and we’re going to have pretty much a, I would imagine a status quo.

If this fails, we’ll end up having a pretty status quo situation with regard to pharma and the cost of pharma. We’ll just have to sort of accept that. Um, or. We will start this process where the way that pharma operates is going to really significantly change. So on one hand, you’ve got the government saying, we are your biggest customer.

We spent 50 billion, [00:29:00] um, on drugs. Here is a list of the top 10 drugs that are, you know, Dealing with the top three killers, uh, of Americans. And, you know, we have never been in a position. We’ve been price takers up until this point, we’ve had to take whatever price that you said, we’ve never had the authority to negotiate with you.

We now have the negotiate the, the authority to negotiate with you. It’s our fiduciary duty to the American people. To do so, uh, so far. I

Vic: agree with that. Let me

Marcus: keep going. Yeah. We have a fiduciary duty to negotiate with you and to lower the cost of these medicines, which we believe will cause less burden to families all across America and also will hopefully increase access to these things as the cost has been reduced.

You know, dropped so on its face on its face, not as a domino that knocks 10 other dominoes down that we haven’t even begun to think about yet on its face. That [00:30:00] seems noble and appropriate. That’s right, but that’s not what they’re doing. Well, no, it is what they’re doing. It’s not how there’s a what and there’s a how there’s a why, what and how here.

Vic: If, uh, every year large employers. Either directly, or through PBMs, or through payers, depending on how big they are, negotiate drug pricing. And they decide if they want to offer pharmaceuticals given the price they can negotiate, or they don’t want to offer that in their formulary. And they literally have, like, our employees can access drugs.

Through this means and not everything is offered that I’m fine with that. That, that is what the government should be doing. Well, but, but then going further, the government

Marcus: employers are two entirely different things. Why? That’s my question. Why? Okay. So employers [00:31:00] are economic actors only. That’s all they are.

And. In the case of, as you and I both know, because we are employers, um, your benefits are part of your competitive advantage to attract and retain talent. And so therefore, like if you have more cash available, you are fine paying for. More things to have a stronger benefits package to defeat your competitors.

Yeah. You attract by attracting and retaining better talent. Right? The government is not, does not have that same incentive so that I, I don’t, I don’t want to say whatever employers are doing is exactly what the government should do. ’cause they, they’re, they’re just fundamentally not the same thing. The government is not here to compete with what another government, I mean.

Maybe in some context, but not, not in this context,

Vic: if they were negotiating around, we will not purchase your drug through CMS, unless [00:32:00] we achieve a price point that we both are good with, that is a normal negotiation and CMS has a duty to bring the best treatments. It can find, but it has, we’ve talked about this on podcast that it can afford and the FDA has a different mandate.

Yep. So CMS has taken this mantle of trying to balance cost and benefit at some level. And whether they are great or not so great, they’re, they’re working on that. They’re trying their best to, to, to negotiate that for themselves that they should be negotiating prices. They should not just take whatever price anyone gives where I think it falls down is when they, they turn to the internal revenue service.

And have this extra thing, we’re talking about the how the house,

Marcus: but the how is important, the how is important. So let me ask you a question. Do you think that [00:33:00] their first thought on how they were going to negotiate? This included that? I just think it’s an interesting simulation to put in there because it makes me wonder whether or not they felt that they had it.

Adequate leverage on spend alone, um, to be able to move the needle in a, in a meaning, in a meaning, in a way that that was meaningful to them, you know, they put this really heavy stick out there and I, and again, I’m not taking a strong position. I’m more trying to like unpack what happened here. Like, how did we get, how did we get to where this is the model that we’re doing this negotiation?

Vic: Yeah, so I have opinions, but I don’t know how accurate they are. So neither of us know. Yeah. So neither of us know. I will tell you my opinion, but it may not be correct. Yeah. And so my opinion is that it’s fairly, I think it’s fairly understood that if you are working for the federal government, you’re doing [00:34:00] good work for the American people.

And you also have an opportunity to go to industry after that time in government. And you can make a lot more money. After that, so there’s a, there’s like this revolving door of people are in government for 10 years and they do their work for the people and then they go to a drug company or they become a lobbyist or they go and they make money and those things are pretty well understood that the.

The hiring out of government administrations, um, is pretty common because obviously those people know all the ways that everything happens in government. So it’s very valuable to the drug companies. And instead of trying to fix that, I believe that they, they felt like, well, given that dynamic [00:35:00] are, we’re not going to really be able to negotiate.

Effectively or aggressively because people on the CMS side, they don’t really have the right incentives. They’re not working for a private company where they get a bonus based on the What this drug spend is

Marcus: no they get they get their kudos based on What kind of impact they’re able to make

Vic: and and there’s a lot of pressure to offer Every drug.

Yeah, and so I I think they set it up this way because they didn’t think they could actually negotiate That’s what I think and and that’s that’s that’s what that’s what happened That’s what I think the way to to sort of fix the problem of the rolling door is not just to say well Forget it. We’re gonna do that.

We’re just gonna

Marcus: so how are they going to pick the price just randomly? You You can hire a lot of economists. You can figure out, you know, all sorts of health [00:36:00] economy ways to determine a price, right? I mean, there’s, there’s a lot of ways you can, you can go about this. Um, I think that it is a very, very hard problem.

This, this, this is, this is a super, super, super tough problem. And to me, it’s a great symbol of just. How challenging this industry is, I mean,

Vic: I mean, maybe I, I, I think I believe that CMS is the number one top revenue provider to pharma. Okay. Okay. There are nine more in the top 10 just by the fact that there’s, there’s a list of the top 10 buyers.

Yeah, of course. These drugs. Of course. You could just, can you just take the average price? The other nine pay, there are other ways to approach this. That would be market based and not dysfunctional.

Marcus: Yeah, but, but that doesn’t necessarily, if the [00:37:00] result of that is not politically satisfying, I mean, it is

Vic: what it is like,

Marcus: well,

Vic: no, that’s, that’s, that’s, that’s not

Marcus: a political reality.

What you just said, it is what it is. I mean, that’s, that’s just a pure free market perspective on an agency. That’s agency is not political, but it’s, you know, it’s, it’s a political weapon, you know,

Vic: I agree. We spend too much money. And I think if you look at the next nine biggest buyers, their price is, all nine of them pay a lower price.

And so it is ridiculous that the biggest buyer in the market pays such a high price. But there are, there are ways to do that in a process that would be

Marcus: fair. Well, you’re talking about what the price is. You’re not talking, I don’t think they, they said how they’re going to set the price. You’re, you’re, you’re just saying if they don’t accept the price, [00:38:00] you know, I’m saying it’s not a negotiation.

Vic: It’s. It’s a mandate.

Marcus: Well, I’ve been in negotiations that had this kind of mandate before. I, I didn’t like it, but the other side thought it was a negotiation.

Vic: I mean, it’s the movie, it’s the Godfather. Yeah, sure. You know, either your name or your brains are going to be on this contract, right? And right. I guess it’s a negotiation, but it’s not a, it’s not a functional one.

So perhaps, I

Marcus: mean, what I’m, what I’m probably, what, what I’m more concerned about are the unintended consequences of it. Yeah. If it does, they didn’t,

Vic: they didn’t ask either you or me how to design. How dare they, they would be much better off if we help them with all these policies, so it’s going to happen.

And so let’s talk for a minute about what the, repercussions are, what the dominoes are that fall. This opinion piece, of course, he’s has no biases. Well, he’s [00:39:00] also on his way out, so he gets to. But there’s, there’s a lot of truth to it. And I think part of what I like about this podcast is talking through these issues in a way that you can then interpret news later, you know, given all the different competing sides.

There’s no question that there are a lot of Research projects that end in nothing and you spend money because it’s an R& D project that looks promising But it doesn’t pan out because biochemistry is hard and when something does get through the process The company’s need to make an appropriate return to offset all of those R& D projects that didn’t work, and we want to incentivize them to do lots of R& D, because we want better drugs.

And so if you take away the highest paying customer, almost certainly there’s going to be less money for R& D. I mean, that’s just a [00:40:00] fact. Yeah. It’s gonna hurt medications available to, to the globe. Because you’re right, we, we sort of provide a lot of the margin. And whether Americans think they shouldn’t or not is a, is a question we should talk about.

But it’s gonna be less.

Marcus: Critics will say they make plenty of margin. They don’t need as much margin as they have. And that may be true. But they are independent companies. Many of them publicly traded who are beholden to shareholders who will behave in the best interest of not just the shareholders, but the stock price.

And so they will make a, they will respond to this in some way, shape, or form that protects their position. Yes, that’s, that’s the part for me that I’m like, the repercussions of this have not been fully thought through. It’s

Vic: their, they, they must protect the shareholders. That’s their job. Right. And every [00:41:00] American, starting with me, if I have something go wrong, I want the best drug I can find.

And if I’m in, if I’m old enough, I want CMS to pay for it. And so we’re setting up this system that’s going to, It’s going to make fewer R and D projects. I don’t know if it’s a whole bunch fewer or just moderately fewer, but there’ll be fewer R and D projects that can get done. And then there’ll be fewer things that come out the other side that actually are working.

Marcus: This rhymes very nicely with the feds impact on the venture capital world. Yes.

Vic: Yes. But before we go on to the, the other thing that I think is just. Idiotic is to pick 10. I mean, I don’t know how many drugs there are, but more than 10. And Bristol Myers Squibb sells a whole bunch. Pfizer sells a whole bunch.

J and J sells a whole bunch. They’re just going to [00:42:00] transfer price and move around and make everything else slightly more profitable.

Marcus: That’s an unintended consequence and, and, and, and a, and a rational response. And it would be solved with some

Vic: market based thing. And like, maybe. Maybe the other actors aren’t as good at negotiating as the federal government would be but but it would be Like repeatable, you, they do it every year.

Yeah. So just picking tennis is crazy, but that’s what they’re doing.

Marcus: Okay. Uh, that was a conversation that I feel like I’m no closer to understanding what the right thing to do is. Um, hard, hard, hard problem. I think it is, it’s a, as an American citizen, I think it’s, It’s noble for our government to try to be proactive to control the cost of drugs, especially for the most vulnerable, um, members of our population and for us as taxpayers who all pay into that system so [00:43:00] that, you know, as an American citizen, I think that is good, but I think, you know, similar to the Fed, um, who wants to, you know, You know, lower inflation.

That’s also noble. Uh, the, the selection of tools with which they can do that, um, seem really crude and seem to have a lot of unintended consequences. And, um, I think just illustrate what a difficult problem we have on our hands. Yeah. I

Vic: mean, it, it, it makes voters happy. Sure. It definitely makes voters happy.

That’s why it’s happening in my mind. Like, Both sides, no matter where you are, no matter where you’re sitting, what primary you’re voting in, you want the government to pay less for drugs. I think that’s right. And so that’s why it’s going to happen. I think that’s right.

Marcus: All right. Um, let’s take a break.

Let Doug share a little bit about Jumpstart Foundry and we will be back.

Doug Edwards: Thanks guys for the opportunity to talk about our [00:44:00] 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 trillion a year on healthcare with suboptimal outcomes. Jumpstart Foundry 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 health care.

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 [00:45:00] 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 Angel List.

To 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: Going into another conversation of which I don’t think we have an exact answer, but I’ve, I personally have, uh, Lived experience that, uh, makes me want to talk [00:46:00] about it. So these were two great finds. Finally, we’re done with the Wall Street Journal for a second. We have a New York Times article, um, an opinion guest essay, the headline, not everything we call cancer should be called cancer and actually written by two oncologists, um, Laura Esserman and Scott Eggner.

Uh, Esserman is from the University of California. She’s a breast cancer oncologist, and, uh, Egner is a urologic oncologist from the University of Chicago. So, um, I mean, I think it’s, it’s a pretty straightforward, you can kind of intuit what it’s about just from what the title of the essay is, um, which is that today.

We have this spectrum of experiences that are all under this bucket of cancer, meaning some cancers, you know, you can live for a very, very long time with sort of some treatment. That’s very, very manageable. Some are. A very short death sentence, but the word cancer still principally [00:47:00] has the terrifying death sentence association with it, right?

And, um, as a, as a population, especially as we are sort of. In the one out of every two people are going to get this thing. Um, you know, perhaps it is time to start thinking, uh, more thoughtfully and, and maybe consider renaming, um, you know, some of these, these, uh, these disease states such that we don’t associate ones that are very, very manageable with today’s, you know, medicines, um, with those that truly mean that mean a death sentence.

Vic: Yeah. I mean, there are cancers that we have. A really good understanding of the pathway that’s causing the cancer and we know how to interrupt it and treat it. And it needs to be treated, but it is similar to many other diseases that don’t bring that terrifying, fear based moniker. [00:48:00] Then there are some cancers that we wouldn’t want to treat at all.

That really the best course is to monitor them for sometimes a long period of time. Right. And then there are some that are really deadly. And calling it all the same thing is not helpful to any of those people.

Marcus: Yeah. And, you know, I love how they, um, how they lay out their case. You know, they basically say, look, um, we have advanced our understanding of cancer significantly, um, with amazing expertise.

Innovations and research work that has been done. I mean, we’ve poured countless dollars into trying to defeat this, this disease, and we’ve learned a lot and we’ve made a lot of progress. And with all of that learning and all that progress and all these dollars and all this research and all these advancements and all these saved lives and all the cancer that’s been put into remission or people who’ve been able to live for decades with, you know, [00:49:00] almost no altered quality of life.

Um, we have not in any way, Updated how we talk about it.

Vic: Yes.

Marcus: And that just seems crazy. That seems crazy. And then to even like give us a little bit of a history lesson and say the word cancer is attributed to hip, uh, Hippocrates 2500 years ago.

Vic: Right?

Marcus: I mean,

Vic: yeah. And and the um, like the cynical side of me thinks cancer raises a lot of money for nonprofit health systems.

And the fact that it is really scary is what, what causes donors to want to, to give a lot. And if you take away all the cancers that are very treatable and call them something else, it might become much harder to sort of Get that point across and so I know there’s all these like embedded things that just are in [00:50:00] like part of part and parcel with how the system works that need to be updated.

Marcus: Yeah, I mean that’s certainly one way to view it and I and I could see that that thought I mean my view would be I think it would be really helpful. If we like D listed things that we’ve beaten because it would show progress because like cancer is one of those things that feels to me, like we haven’t made much progress, even though we have made a lot of progress, right?

Because there are still those cancers that are incredibly dangerous. I mean, I think. I was talking to somebody about HIV, you know, um, last week and how ridiculously crazy it is that you can live.

Vic: Yeah.

Marcus: It’s,

Vic: it’s

Marcus: a life.

Vic: It’s fully treatable.

Marcus: Yeah. You can live a life and not be, you know, this super dangerous on TV.

It’s like,

Vic: it’s, Go have

Marcus: sex. We got a drug for you. Yeah. Yeah. I mean, like, but that’s, that’s a miracle of medicine. That is a miracle of medicine. Right. And so I [00:51:00] feel like the miracles of medicine in the cancer space,

Vic: we don’t, yeah, we don’t celebrate. We don’t see enough

Marcus: of those. Right. We don’t, we don’t see enough of those.

It just feels like we continue to have this big, scary looming thing. Um, and, you know, maybe changing the names could, could be, that could be a path to that, right. A psychological path. Demonstrating the progress we’ve made.

Vic: I don’t see a downside to it. You could change it to the type of cancer, and they give a couple examples in, in the article, but, it just gets, I mean, I don’t know what half the things are my doctor talks about.

And so, getting the technically correct name, and just removing the cancer moniker. I think there’s, I don’t see a downside to it other than it would

Marcus: be challenging for fundraising. I said that, you know, personally having experiences, you know, around this, um, you know, I’ve got several family members [00:52:00] and nothing is unique about what I’m about to say.

Uh, but I’ve got several family, family members, very close to me who are currently, um, in a journey with this broad word called cancer. Right. And, um, You know, they have different kinds of cancers in different stages. And I have to say, like, as someone who’s very close to these people. It’s hard for me to sort of parse out how I’m, how I should feel differently, maybe, about each one of them based on what their diagnosis is.

Well, that’s

Vic: the problem is that the patient is scared. Yeah. But like, it doesn’t matter if it’s a good cancer or a terrible cancer. That’s right. Like, as soon as you hear the word cancer, it’s over. You’re in full You go right

Marcus: to the You’re in full crisis.

Vic: That’s right. And so you, as a family member You have to be kind to them and sympathetic and empathize with what they’re, the fear they’re feeling.

I think this article is suggesting that maybe half of them, or a third [00:53:00] of them, didn’t need all that stress, fear, anxiety, and that actually may be worse than, than the, So the treatment,

Marcus: well, I, I, I appreciate the article. Um, and I love that it came from two oncologists. Um, you know, we love to see oncologists and, and just clinicians period.

Um, just contributing to the discourse and helping us think about things that like we’re not thinking about, but they experience every single day. Right. You know, um, it’s super helpful. Okay. So switching to another topic around patients and a lot of cancer patients. A

Vic: lot of cancer diagnosis.

Marcus: Yeah. Right.

Uh, so, so this has been a big story. You, you credited Kim Kardashian with her post on Instagram. She

Vic: just blew it up.

Marcus: Yeah. I mean, yeah, that’s right. She

Vic: can blow anything up. That’s right. Yeah. That’s

Marcus: right. Yeah. She’s got hundreds of millions of followers on social. Um, but, uh, This is, this is the story about people getting full body scans.

Right. And [00:54:00] these things are popping up everywhere that there’s several new ones here in Nashville. Um, I saw a friend of mine posting on Instagram that they went and they got them, but you and I, we’ve been hearing about this, you know, both from the Peter Ortiz of the world, but also in the

Vic: longevity space and in the wealthy person space, it’s talk about venture capital spaces, sort of the cross section of both those people it’s been talked about for a long time.

Yeah. And I, I sort of have two minds about this. Like I, I think individuals should be able to do whatever they want to do. And at the same time, if you get a full body scan, you will find a lot of stuff and you have to have an ability to like take that information in and be able to navigate the next step in a way that is different than if you have like a symptom that’s causing you pain or you can see there’s a real problem.

And it can be wonderful, but [00:55:00] I think it also can sort of put you down a road of you, you find something that. You know, you, you might have died of this cancer when you’re 190 years old, and you probably died of many things before that, but you’re now all worried about this very tiny, um, tiny cancer body of cells that, you know, may have just have gone away or might never have pulled up, so I feel like we should be able to do it, but it is dangerous.

It is dangerous. It’s causing a lot of people to sort of get spun up around things.

Marcus: Well, you know, the, the cancer diagnostic space is sort of one thing because, you know, in, in that space and too many people have stories about this to try to put this back in the bottle, um, late diagnosis is a big deal and unfortunately,

Vic: Largely.

Marcus: Yes, exactly. And so unfortunately, you know, we have not nailed the diagnostic model [00:56:00] in our health care system today. We have not, um, far too many people have died because of a late diagnosis. That’s just the reality. Um, and some of that is Physician judgment. Some of it is diagnostic availability. Um, there’s all sorts of issues there, right?

And so for people who have a lived experience with the healthcare system that has gone negative on this side of things, um, or just. Believe that they should be sovereign over their body and have a right to have diagnostics over their own body, um, which they should, um, these, these scans are going to increase.

We’re going to have more and more people with these scans. And we, we even talked about. How there’s a generational aspect to this, where the boomers, you know, I think we’re much more bought into physician sovereignty and I think millennials are much more built, bought into personal sovereignty and they have much stronger sort of trust and familiarity with technology.

So, um, they’ve been dealing with [00:57:00] wearables and all this other kind of stuff. And so their belief is they should be able to have these body scans. One of the thing I want to just bring up is, um, I have to talk about Peter Rottier because I think when you’re talking about these scans, he, you know, he’s, he’s kind of the, the physician leading the charge in, in, in pop culture, I would say, um, around, around getting more diagnostics, you know, when he talks about medicine 3.

0 in his new book, Outlive, one of the fundamental, um, principles there is sovereignty equals responsibility, right? So it means you as a patient, you have to become far more. educated and aware and you have to sort of have your own built in protocol for what to do when you get these diagnostics, right?

Which I think includes not freaking out, right? Like, you know, you have to be able to get these things, look at them and have a way that you engage with the healthcare system, the way that you engage with your primary care physician. You know, um, we have so many people who don’t have primary care [00:58:00] physicians partially because urgent care sort of replace them partially because We’re running out of primary care physicians, cause more, too many people are going to get specialties and we, you know, we could, we have five, you know, uh, folks that want to do knee work and nobody who wants to do family medicine.

Right. So, um, I just see this and I’ll just go ahead and say, I haven’t done the full body scan, but I’m going to, I mean, that’s, that’s in my future. Um, and, and a lot of it just has to do with, you know, watching members of my family, just, you know, Doing exactly what the healthcare system told them to do in terms of the number of checkups that they went to and the medicines that they had and, you know, being left towards the end of their life with just, you know, a low quality of life, um, you know, things, especially, you know, around heart disease or high blood pressure or any of those types of things that really could have been managed.

Um, you know, you hear about the number of people who feel like they’re fine. And then all of a sudden they need to have, [00:59:00] you know, massive heart surgery. Um, It just seems like there is a place for more diagnostics.

Vic: Yeah, so I read Peter’s book, it’s a great book, and I really got focused on the cardiac disease section.

That’s the section. Because Both of my grandfathers died of heart disease and it just made me worried that, and so I didn’t get a full body scan checking for cancer, but I did like dive into cardiac disease and what’s my calcium score and then I got the full, um, whatever it’s called, like a calcium, uh, scan of my heart and I have, I have heart disease and, and have a blockage in the whittle maker, um, And it’s called the damn Widowmaker.

And so it is not breaking news. My partner just told me he’s got a, well, my wife is on it. I’m on it. I mean, you know, so I, It [01:00:00] was good to read the book and dig into it. And there are treatments for it. Absolutely. Yeah. But it’s not symptomatic. So, so you can just be on a run and fall over with a heart attack.

Marcus: Yeah. And, and for people who don’t know Vic, like, All he does is work and work out and go to sleep and he eats healthy and he doesn’t drink and like, you know, I mean, you are a healthy guy. I think.

Vic: Well, that’s true. I think there’s a lot of genetic aspects and there’s also just the, the U S American diet.

I mean, I’ve been eating healthy for maybe five years, six years, but I’m 52. So there were, there were 45 years of not so healthy. And so I think I’ve caught it in time, but I’ve told my sons. You know, they’re, they’re in their teens now, but, but before you’re 30, you need to start monitoring this stuff because it, so I think there is something about [01:01:00] individuals taking control of their own health.

Marcus: I mean, but here’s what’s so crazy. No doctor would say this. No, like you went and got the diagnostic and then you found this and I had to pay for it. Yeah. I mean, it’s not

Vic: reimbursed. No. No. And then once you get the results, then they’ll reimburse the medication and other th Like, once you see what you have a problem with, Yes, I think it is If you have the money and you’re in the right generation and you want to take sovereignty over yourself, You should.

But that brings a responsibility. Of course, of course. You can’t just sort of Then give it up and be freaked out about all the things, right?

Marcus: Yeah, so I mean, look, I think that I think the physician is not going to put it back in the bottle. No, no, it’s not going back in the bottle. I definitely think there’s a generational aspect to this.

That’s kind of like a boomers versus millennials thing, you know?

Vic: Yeah. And just

Marcus: for the audience, we’re both Xers, so I think you’re an Xer. So we’re in the middle, so we’re not

Vic: in either of the camps.

Marcus: That’s right, that’s right. [01:02:00] Um, although, we’re not in either of the camps, but I side with the Millennials more.

I side with the Millennials. They’re just right more. Yeah, um, but look, I think that, you know, between the, Hey, maybe we should think about what we name cancer and, and, you know, these full body scans. There’s this growing, uh, narrative and discussion conversation around the relationship between patients and the healthcare system, right?

Um, and it’s not just about, uh, You know, life expectancy. And it’s certainly not just about bedside manner. It’s, it’s about these more fundamental things. And to me, it’s ultimately this physician sovereignty, patient sovereignty, paradigm shift that it feels like we’re in, which feels like a generational shift, feels like a technological shift.

Um, and,

Vic: and there’s just outdated. Uh, policies, right? So, so POT a thing around cancer. I mean, not cardiac disease. The risk profile is, you know, are you [01:03:00] likely to die of a heart attack in 10 years? And if yes, then we need to take that seriously and start treating it. And so I’m 52. So no, probably not right.

But I want to live past 60. That’s ridiculous. So like 10 years is not my window. And so that’s what really got my attention. And you know, You know, I don’t, I don’t need to wait until I’m 62 and have a lot more risk factors because I, I want to live 40 more years or whatever, 30 more years. And so the policy of here’s how we’re going to risk profile people, depending on your age, that, that may be fine if you’re 65, but it’s not great.

If you’re 30, we have enough technology and enough education to be able to sort of. Understand that, okay, I got a bad score. I need to take a stat and I need to eat more. I need to do zone two training. There’s a bunch of stuff you need to do. And it will be fine. It’s not a crisis, but you have to make some changes.

Yes. Yes. That’s [01:04:00] right.

Marcus: All right. Uh, shifting into some stories about EHRs, uh, three different stories about EHRs, but sort of with a little bit of a segue. So modern healthcare put out a story talking about common spirit and Penn medicine, uh, leading the way on confronting racial bias ingrained in EHRs.

Vic, we did a little Prep on this, because, you know, it’s something I have lived experience with it. Um, you, you, I’m

Vic: embarrassed. I didn’t know anything about this before, like yesterday.

Marcus: Yeah. So like the easy place to sort of start is, um, EGFR, which is a kidney, you know, rating. Yeah. How functioning your kidneys.

Yeah, exactly. And I’ve known for a very, very long time. If you get blood work, um, you have like a. If you’re black, you have like a EGFR, uh, and then you have like an African American EGFR, which is adjusted, um,

Vic: adjusted down. It’s [01:05:00] less down risky for the same score. It’s less risky if you’re African American.

Marcus: Yes. Because in some clinical trials, like forever ago, um, it looked like we have different readings, but of course, you know, race is not, and certainly African Americans, not even a race. It’s a. And the kidney, the kidney functions the

Vic: same.

Marcus: Well, here’s, here’s the big deal. The kick, the kidney doesn’t function the same in any two individuals.

Right? So the biological categorization of African American, uh, that’s a, that’s a fundamentally flawed one because race is a social construct, not a biological construct. And if you, if you based it on. Clinical trials, we’re just now trying to remedy how poor clinical trials have been from a diversity perspective, like in 2023.

So you’ve got, so you have, [01:06:00] you have bad sort of clinical policy based on bad clinical trials. And then what’s happened is that’s all been baked into the. EHRs, right? Which drive clinical behavior. And so what’s happening effect, effectively, common spirit has said, you know, we have these different readings that are popping up in our, in our EHR systems and clinicians are making decisions to delay care for

Vic: black people.

Let me, let me just say this. again to emphasize it because it was shocking. So this reading EGFR is a kidney function reading and systematically across the country for decades if you’re black and have a reading that is maybe uh showing kidney is not doing that well they do not treat you for a longer period of time than if you’re white because there was some [01:07:00] thesis that is not true that black people Always have a high reading.

And so. I think that means they’ve gotten that worse care for decades. Correct. And

Marcus: it’s, and, and, and systematically so, and, and even more systematically. So since the advent of EHRs, It’s been, so then the

Vic: EHR comes up and they put it in, in the system so that if the race is African American. It adjusts it, and there’s not a warning, even though if I, as a white person, had the same reading, there’d be a warning that happens.

Marcus: Yeah, and, and so, and so that then drives clinical decision making and workflow, which results in And, and

Vic: surprise,

Marcus: surprise, there’s a lot

Vic: of kidney disease in black people. Yes, so, so yeah. So, so, Common Spirit and PenMed

Marcus: Well, they are, I would say they’re leading the way and changing it. They, they, they are, [01:08:00] they’re pushing to have it sort of change in their own EHRs, but now they’re, they’re sort of raising the awareness about this.

And, um, you know, uh, I mean, I, I think obviously it’s, it’s great. Look, you know, common spirit, we’ve, we’ve covered them for a while, you know, a large percentage of their, um, you know, payer mix, almost 70 percent is, is Medicare and Medicaid. Um, you know, They, they, you know, look, quite frankly, they have black leadership.

So, and you know, I’ve, I’ve said many times, you know, when you have diverse leadership, you’re, these issues are going to get dealt with, right. Because people are going to bring these, these topics, you know, and look, it’s just a reality of, you didn’t know, you don’t have the lived experience, right. And I’ve, and I’ve known, cause I had to live the experience.

I’d show you my labs right now. And I’ve been looking at this, you know, adjusted EGFR my entire life, man, you like, you

Vic: know, so, I mean, it just. All three of these stories make me think that there’s a reason people don’t trust the medical system. We need to do a better job. We have [01:09:00] to do Well, it’s not perfect.

I think that’s the main thing. It doesn’t have to be perfect, but it has to be with good intentions. Yes. Yes. I mean, nothing in healthcare is perfect, but it needs to be first Don’t do any fucking harm. And we’re systematically doing harm by not screening people correctly. And then secondly, do the best we can to treat the patients.

That doesn’t mean everyone gets saved. I mean, you, you can’t promise that. This doesn’t seem like it’s the best we can do.

Marcus: Again, I think that the, the, the, the veneer of, you know, do as we say, and physician sovereignty, is. It’s buckling, uh, under the rapid development of technology, uh, quite frankly, you know, which, which is both.

More diagnostics in our hands, but also just more media covering this stuff, right? I mean, you know, more people being able to tell their stories about what’s going on. [01:10:00] Um, more, more, more physicians being able to have debates out in public. Um, you know, the fact that a Peter or Tia can build his own media company, that’s Matt, that that’s, you know, effectively massive and hugely influential.

Um, Huberman probably have the top two health. Podcast, not healthcare, health podcasts, uh, in America right now. And everything they’re saying is empowering the patient. Right. And so I just feel like the system is, is not designed to, to address this kind of onslaught, right. At its, at its authority and its fundamental authority to, to tell people, we know what we’re doing.

Just trust what we say.

Vic: It’s inherently designed for. patient having pain or some symptom, they break their ankle in the fields in the 50s and they come in with a problem. They present, I mean, the words are, they [01:11:00] present with symptoms and we treat them and send them home and That is important, but that we have chronic disease now and we have all things that are asymptomatic.

And so it’s, it’s no longer sufficient. We need to do better.

Marcus: All right. Final two stories, uh, shifting away from sort of the patient focus and just focusing on EHRs and technologies. Uh, we can drop this one really quickly. Another, uh, cybersecurity issue. The move, it breach hits Johns Hopkins and other health systems.

Um, you know, not much more to say it’s a file transfer software product and it has impacted health systems again. You know, we’ve, we’ve, uh, we’ve had a breach of records yet again.

Vic: And this is a constant thing. Every few months, I feel like there’s another breach. The healthcare systems in the United States are sitting ducks.

They’re, they’re. Good targets with [01:12:00] lots of lots. Yeah, it’s honeypot with lots of data. It’s very valuable data. And they’re just they’re not. They’re not designed to protect to keep people out. So they’re not going to.

Marcus: Yeah, and, and, and, and they can’t afford to bone up their I. T. Capabilities to meet this onslaught there was there was a line in this article here from from modern health care that said, uh, uh, nearly 25 percent of cyber attacks in 2022 targeted the health care industry.

I mean, that’s

Vic: insane. It’s a huge honeypot with a lot of lot of honey in there and no one, no one really guarding it. And like

Marcus: it’s it’s. It’s not like, like, if you think about the way that banks are oriented, banks can really control the vectors of access in a much more contained way. Healthcare systems in order to deliver care, we need, you got people everywhere.

They have to touch [01:13:00] stuff in banks. You can say no, slow everything down by three X, because like security is paramount and that’s a, you know, that works. And I think that’s why you don’t hear about banks constantly getting knocked over by cybersecurity attacks. Whereas in health systems, it’s just, they’re porous as people everywhere, touching technology, you know, moving in and out of rooms.

It’s just, well, we were talking about

Vic: diagnostics and labs and things already in the perforation of those. I want my doctor. at 10 at night from his or her home to be able to read what’s going on with my labs. And yet in order to deliver that, we have to have really secure and I don’t know, decentralized systems and there’s no money.

It’s like you could, you and I could envision that being created, but it would be expensive. And so it’s just not going to change. It would

Marcus: cost a [01:14:00] lot of money to adequately prepare the health systems of America, which they don’t have themselves and they can’t pay their people. Nevermind. That’s right. So it’s just going to keep happening.

And, and, and, and, and, oh, by the way, I, I’m, I’m not saying that this is their fault. But it certainly is going to impact trust.

Vic: Yes. I mean, yeah, it’s another thing that makes, makes you lose trust in the system.

Marcus: All right. Final note, uh, which is actually, I would say a, a bright spot. Um, yeah, if you survive

Vic: through all of this, uh, down, We have a great story,

Marcus: Dan.

Uh, so, so our friend, uh, Mike Schlosser, uh, at HCA, who is an SVP there and is really sort of leading a lot of the innovation, uh, from the, from the physician side of things, he, he, uh, he’s heading up an entire initiative that’s in their, um, Lake Nona, um, you know, hospital, which is basically like this just innovation platform that they’ve built out, which is super [01:15:00] cool.

Uh, they are advancing generative AI, uh, at HCA. In partnership with Google.

Vic: Yeah, which is great. And they are, I mean, we’ve talked about the listening and kind of doing the doc notes just by like sort of listening around the sides. They’re doing that, but they’re also trying lots of other things in partnership with Google.

And I’m really excited. I mean, we, we both know Mike. He’s a. He’s a physician, he’s a surgeon, and then he’s just a great, really smart, really good guy. He’s an innovator, and a business guy too. He’s a great person to lead it, and HCA and Google partnering together is going to bring incredible innovations to market.

So it’s really good to see.

Marcus: Yeah, and, you know, we have both talked about, um, generative AI. I have been very bearish about generative AI from showing up in the clinical setting. But You know, these names and [01:16:00] still confidence for me. HCA, Google cloud partnering to deliver it in the ed department with Mike at the helm, I’m going to, I think this is a development we really need to watch because, because this to me feels like either it will have legs and it will work or it won’t for whatever reasons.

And they will, they’ll stop and they’ll stop it. Right. I mean, so this will be something to really watch.

Vic: Yeah. The reason I’m excited about this is that, as you say, neither of these Companies, HCA or Google, are going to do something in a cavalier, half hearted way. Nope. They’re really buttoned up, and they’re really good.

And I’m excited to see sort of what comes out of it. Um, and it’s, it’s nice that we are right here in

Marcus: HCA land. Yeah, it’s fantastic. All right, man. Look, long show, uh, but good one. And, um, as always, thank you, Vic, for pulling it all together.

Vic: So next week you’re going to, um, host it without me.

Marcus: Yes. So next week, uh, I’m going to be in Chicago.

Over the [01:17:00] weekend for an Aspen Institute health innovators fellows reunion. It’s a mouthful. Um, but on Friday, we’re going to be recording, uh, uh, a tag teamed podcast with the folks at portal innovations in Chicago. And so we’re going to do a live show. It’s going to have a panel with some of my fellows, um, from my class, some fellows from other classes, which would be really, really cool.

So I’m giving Vic the week off. He has done. Incredible work for almost 20 episodes, pulling together these shows. I’m giving them a week off. Uh, and our show, our next show will be a couple of days late because they’re going to do the editing on it. So it’ll probably be like Monday instead of Friday, Saturday, when we’ll get that

Vic: some new voices from Aspen fellows.

Marcus: Yeah. It’ll be great. Um, so, so look forward to that and then we’ll come back the following week with Vic and I as usual. Yeah.

Vic: All right. Happy Labor Day. Thanks, man. Appreciate

Marcus: [01:18:00] it.