25 – Macro Forces Drive Insolvency & Defragmentation | GDP Growth | Seed-Stage Reset | Meta Lawsuit

Marcus: [00:00:00] All right,

Vic: we’re here. We made

Marcus: it 25. All right. Yes. And I think we’ve got audio. We’ve got video. All right. I’m super tired, but we’re going to get this done. Uh, I was at a panel this morning hosted by Nashville health that Senator Bill Frist, uh, and Mark Yancey, who’s the president of that organization pulled together.

It was really good. And I think probably the thing that’s most worth noting is the panel. I was on, I was talking about health disparities. It had a, so Mark Yancey is the president. He, um, he was the moderator. It had, um, the CEO from the healthcare council. It had, uh, April, it had, uh, Fahad, who’s the CEO of Ascension health, myself, and then.

Laurel Grafee, who is the regional executive for the federal reserve bank. For Nashville.

Vic: Oh, interesting. Yeah. It made me

Marcus: [00:01:00] feel so much better about us constantly talking about the fed to have a representative from the fed on a panel talking about health disparities. Yeah. That was very cool.

Vic: And we’ve been studying it and talking about it.

I,

Marcus: I felt pretty up to speed. I felt pretty up to speed and we’re going to do more talking about the fed because sorry, folks, that’s actually what is driving all this shit. Yes.

But we, we promised the audience, we were going to recap some themes now that we’re, you know, a quarter of the way to a hundred shows, what have we picked up as high level organizing themes, maybe both of our conversation, as well as the way that we have viewed all of the different articles and stories and press releases and 24 episodes.

Vic: Yeah. I mean, I think that the, the idea was that. We just [00:02:00] started this because we wanted to learn about it ourselves and kind of talk about it out loud and a decent number of people have been excited about listening, which is wonderful. But after 24 shows, it felt like a good time to take a step back.

What have we uncovered over the last several months? And what, what can we take from a high level, uh, insight? And then should we change what we’re focusing on in the future in any way? Yeah. And so, um, I don’t know, it, it, it feels like there’s, there’s, uh, three, maybe main things that we’ve been talking about.

You mentioned the fed. I think the kind of the macro economy environment, when we all sort of feel this. Post COVID, I think the world’s different after COVID than what it was before, and it’s, it’s a little bit harder to define sometimes, but, but that is, uh, kind of categorized under macroeconomy, [00:03:00] Fed, um, the employment, the rates, all, you know, how it all fits together, and then, we’ve been trying to cover that to understand it, Because it really affects our venture business, but it really affects the whole world.

Yeah. And so that, probably the first theme is that the macroeconomy forces in the marketplace are really applying pressure to healthcare. And, and it’s driving change. And it’s really catalyzing and, and kind of pushing. The existing healthcare industry to get better or, or get out of the way.

Marcus: Yeah, I think, I think that framing it up around COVID is important because even before the fed took action, uh, COVID.

Was the main player, I think, in, in, in an acceleration of changes that were already talked about coming and happening, but everyone always said 7 [00:04:00] to 10 to maybe even 15 years, right? Uh, nobody, nobody felt that they were going to happen as quickly as they did, but COVID absolutely accelerated them. On many fronts, and we can talk about the impact that COVID had on healthcare workers, especially nurses as, as a, as a huge one.

Uh, we can talk about what the shutdowns as a response to COVID spreading, what kind of havoc that created on the economy. And then we get to the feds response to that. We get to the stimulus. Right. Um, and then we get to the feds response Right.

Vic: Right. Yeah. I mean, I think that I mean, it was a global crisis and a healthcare global crisis.

And so it’s, I think it’s hard to Monday morning quarterback, what happened as far as stimulus from, from government and from the fed at that time. And that [00:05:00] is what it is. A lot of stimulus that happened. Maybe it was the exact right amount. Maybe it was too much. Maybe it was probably not too little, but there was, Something had to be done, and that drove everyone to start spending money, and our supply chains were not ready because of COVID, and so you had kind of a supply chain, uh, driven shock that drove prices.

Really high really quickly and whether it would have been transitory or not. I don’t think it really matters It wasn’t um, it wasn’t going to resolve quickly enough There was a lot of pain with inflation causes a lot of pain to people that are that are less well off that can’t afford it Because when your, when your gas bill is going up and your food bill is going up, people get really upset.

And so, the Fed reacted to that, and we’re [00:06:00] still in that situation now. The prices have come down significantly, but not back to the pre COVID levels. And I think that’s, um, going to continue.

Marcus: Yeah, and there was also a lot of really weird behavior that was started as a result of the stimulus. Uh, some of it.

Individuals from an individual spending perspective and some of the companies, right? Um, STEMI checks, weren’t just for individuals. We have PPP, we have EIDL, um, you know, these programs I think really allowed organizations to operate without profit as the prime motivating factor. I mean, in many cases, PPP and idle.

Made companies profitable. Yeah. Yeah. Many companies were made profitable via that. So,

Vic: and the fed started buying mortgage backed securities and company bonds. And so, I mean, you know, that when emergency [00:07:00] break this glass, I mean, we broke every glass and then did all the stimulus we could do, and maybe that would, we needed to do that, but it’s difficult to come back from that.

The population got used to getting steamy checks and getting unemployment forever at sort of extra rates. And then, yes, there’s a lot of corporate support and and then we had the, you know, interestingly entitled inflation reduction act. It didn’t didn’t reduce much inflation spent a lot of money. Um, and so it, it continues continues today and it’s hard to once you break that glass, it’s hard than to go back and not, um, you know, unwinding all of these functions.

Is, is much harder than, than pushing the money out.

Marcus: So let’s, let’s talk about specific to healthcare. What are the ways that you believe this combined event [00:08:00] of COVID and the feds response, uh, how, how do you believe that impacted healthcare? I think we can talk for one. We can say there were a lot of healthcare workers that may have been on the edge anyway with.

Their satisfaction with the career, with their satisfaction, with work life balance, with their satisfaction, with their earning. And for many of them, you know, I mean, we, we have to say, uh, the relationship between many people in the general public and healthcare workers, uh, became an antagonistic relationship, especially once vaccines came into the picture.

Um, there was distrust. There was all sorts of confusion around the way that, you know, the You know, the vaccine stuff was messaged. There was just the sad reality that, uh, in order to try to contain the spread, many people weren’t able to say goodbye to their loved ones. Um, so it was just a fraught time.

It was a very, very bad [00:09:00] time for a lot of reasons. And I think. To expect that that would not have created broad trauma across the base of health care workers, so it’s certainly, you know, doctors, but I mean, nurses are frontline and all of the hospitals and hospitals were really where this stuff was all going down.

It makes sense that that nurses would have a fallout as an overall. Sort of industry as an overall workforce component of healthcare based on just their lived experience through the COVID 19 pandemic.

Vic: Yeah, there’s no question. I mean, listen, I was in my house on zoom, still pretty functional in my job.

Safe, totally safe. And nurses and other healthcare workers and doctors, um, had to, um, Get in a car and risk their life and go out and take care of people and that’s their calling and, um, [00:10:00] they deserve a lot of credit for that.

Marcus: And then, and then just, we just need to say, remember, they would go to work, risk their life and then go home and potentially be risking their family’s lives.

Yes.

Vic: And then, for reasons that made sense at the time, we weren’t allowing visitors into the Health hospital rooms and the nurses and the staff who are not paid to do this job had to be like bouncers and security guards, preventing people from entry to see their loved ones in a very scary, emotional time.

And so all of that was going on

Marcus: and in many cases, they had to be a surrogate or a substitute for the loved one at the time of someone’s passing, right? Which is also which is massively traumatic. Yes,

Vic: terrible. And so that was a thing that was really put [00:11:00] a lot of pressure on already a challenging job.

Yep. And then we had inflation, which was not the fault of nurses and health systems had nothing to do with them. But for the reasons we just said, stimmy checks and the government and the Fed trying to keep the wheels of the economy going. Um, a lot of money was sent out and people spent the money and that drove the cost of living up dramatically and health systems have fixed, mostly fixed revenue line items.

So, so their reimbursement is set largely by the federal government and then, yes, there are commercial payers, but they’re all tied to what CMS does. So effectively, they’re locked in, they can’t raise prices. And so there became this tension where [00:12:00] restaurants and other, other retail establishments, once the vaccines came out and you could, you could move around the world again, they started paying people more because they can change the prices and um, And reset their what they pay workers for the environment and health systems and other health care organizations really don’t have that flexibility.

And so this combination of a really hard work environment getting. Sort of exponentially worse, more work, harder hours, more, more effort, and then much, much more fraud emotion. It’s always a hard job, but it got much worse. Combined with, now I can’t afford, I mean, I wasn’t getting rich to start with, and now I can’t afford to fill my car with gas, or I can’t afford to, Buy enough food for my family.

It created this massive tension between the workers and [00:13:00] management and management didn’t really have the levers to effectively solve it. And so that that’s sort of the macro environment that I think COVID caused. And we’re still, we’re still trying to unwind that today.

Marcus: And then I think there were also, uh, There was a battery of different emergency measures that were put in place.

Um, there was also emergency funding that was put in place to sort of help get the healthcare industry across this, uh, you know, across this, this valley of despair and unknown, and then those things ran out. And when they ran out, it didn’t, it didn’t mean that the healthcare industry was on solid footing when they ran out, you know, when, when they no longer reimbursed for tele telemedicine or when they stopped delivering health systems, you know, stimulus checks didn’t mean that they had fixed their business at that point, or they were [00:14:00] ready to sort of go the other way.

Um, so I think that was another, um, Point of impact that it kind of took an extra 12 to 18 months for many health systems to actually get back, uh, to where they were from an operational perspective after those emergency measures were taken away.

Vic: Yeah, I mean, I think we are seeing today a couple of years after.

All these events. I mean, CMS changes their reimbursement rate essentially once a year. There’s a couple updates and things, but, and so, the, the rates for this year are much better, cause they’re, cause inflation was high last year, maybe inflation is coming down slightly, and perhaps the healthcare industry can catch up a little bit, hopefully.

Um, but there’s a lot of pent up need there. And we, we, we talked about it last week with Kaiser. There’s still this tension [00:15:00] between management and workers and Kaiser happens to be sort of a integrated system with the payer and provider all connected together. They’re, they’re well run and pretty healthy financially, but a lot of health systems are not in that position and so this, there continues to be tension where it’s Healthcare workers could get paid more to go do an easier job, and yet they love what they do, and it’s important work what they do, and we need to figure out how to get these people paid in a way that is sustainable.

So anyway, all that is sort of a macro, it’s a result of the macro actions that happened in the pandemic.

Marcus: Yeah, and maybe one more thing to talk about, um, as the volume decreased in a fee for service environment. As the volume decreased, providers lost, [00:16:00] payers won. So payers balance sheets really grew. Yes.

They got in really strong positions to be able to make, uh, capital investments into what was going to be their future. And they already had a pretty good indication of what their future was going to be because you HG started their March to, to building, you know, Optum way before. COVID started, um, so there was already sort of a clear path to what the future of, of what managed care organizations would actually look like, which was, would not be strictly insurance companies with actuary capabilities, focusing on claims processing, right?

Vic: Yeah, I mean, the Affordable Care Act, the trade in the Affordable Care Act was we will get everyone covered. And in return, we’re going to lock you in at essentially a 15 percent gross margin. And that, that makes sense. And then unite health group, but now a lot of people have then created a secondary business line So they have the regulated business and it is it is limited to [00:17:00] 50.

Yeah But then they also have other lines of business that are outside of that regulated business And many of those business lines are either Um doing back office things or they’re providing care at some level. It started with case management really i’d say You Uh, but then certainly Optum has expanded into lots of things that are, I think they have, they employ the most stocks of anyone.

They do.

Marcus: Yes. And so that, there was winners and losers, uh, coming out of, of, uh, of the pandemic and coming out of those macroeconomic shifts. And I think that kind of sets up our second big trend. Which is that the payer provider dynamic, uh, which was semi functional prior to COVID, uh, is, is just crumbling like that.

That dynamic isn’t is dysfunctional right now.

Vic: Yeah, I think that that whole way [00:18:00] of thinking about the healthcare industry. Is no longer very helpful For a long time there were providers of care and then the people that would Review the claims and pay the ones that were appropriate and then question the ones that weren’t and there are so many Integrated systems that are that either started as a payer, but now deliver a lot of care Or there’s a few health systems that have gone the other way that now there isn’t there isn’t that clear sort of a check and balance there are many groups that have built up operations on both sides and as you said for for no I don’t think there was any intention in it.

Just the way that the the situation evolved the payers were able to gather financial and and operating strength You During this time and the health systems were not [00:19:00] they were running around trying to save lives And keep the lights on and they didn’t they didn’t put a lot of money away for the future And that then has allowed the the payers to really invest in this new thing We we kind of made up the term payviders um, not we but we Using the yeah, the industry has made we’ve started referring to it as a way to Have something to talk about.

Um, I think that has been a place that has gotten a lot of steam, a lot of investment, a lot of a lot of traction. And there were some examples before Covid, but the significant investment and and where it’s gone sort of nationwide and has a lot of power is post Covid really.

Marcus: Yeah. And, and, and it makes sense insofar as the payer provider dynamic that existed before, which was.

You know, largely [00:20:00] a pretty antagonistic negotiating model, um, around who had more leverage, who had more access, more data around the, the, the community, um, and therefore could sort of determine the prices, but everything really being fee for service. And, you know, really this, the, the health system largely just sort of aggregating a body of, of, um.

A body of codes, but then having a bunch of subcontractors, whether it be physician groups or, um, you know, just all sorts of data providers that they’re sort of working with and they all pay them, pay them all out that entire fee for service model, uh, I think became insolvent in the post COVID post fed, you know, action world.

It literally, you just can’t make the numbers work. In that model for most for most. I mean, there, there are a couple where you can sort of make it work that, you know, we always talk about HCA. I think you have to because they are best of [00:21:00] breed of their best of breed of that model, right? Yeah, there’s the exception

Vic: that proves the rule.

And maybe there’s one or two others that we know, but in general, I mean, listen, I think the, I think it’s similar to our legal system, right? Like we, we believe in this idea that. The truth is best found through two sides sort of fighting at each other And that gets to a fair outcome, and I believe in that if both sides are equally armed and sort of have the right incentives, and you can get to sort of a reasonable negotiated truth or or reasonable outcome, and the payer slash provider sort of check and balance worked for a long time after cove it.

I don’t think the providers have enough. Power and so and then simultaneously a lot of the pay viders now are on both [00:22:00] sides of the ledger And so it’s just it’s just not functional anymore. And I don’t mean that in a derogatory way just it doesn’t work and so the um, we have to figure out a new a new way unfortunately, um humans especially when their job is at stake will try to contort themselves to believe or to tell other people or to try to pretend like the community The way that that they are functioning is still going to be okay, and so that has led to, um, a bunch of stories that we have covered where some health care entity is not really delivering care to the patients in in a way that engenders trust, and I think it’s because they’re they’re trying to protect this [00:23:00] old way of Existing in the world in an environment where that’s not going to work anymore.

Marcus: Well, they don’t have a bridge to to the new Yeah, right.

Vic: There’s no there’s no way to go. Yeah,

Marcus: there’s no bridge for most providers to the new Um,

Vic: so the lack of trust I think it stems from that like they’re they’re sort of just trying to figure out Some way to get through the day the month the quarter And that doesn’t work that well.

Marcus: Yeah. And what I’m about to say is not a perfect analogy, but you kind of think about the difference between the public markets and the private markets, right? The public markets have a single value that capital is there to express, which is, uh, Growth right growth and safe growth, right? If I put a dollar into a stock on the public market, I want to know that year over year, it’s contributing to my overall index fund in a very predictable way, such that when I retire or when the pension [00:24:00] fund that’s that’s investing, everything is, you know, Where it should be, right?

I’m getting the kind of growth that I’m supposed to get. The public markets are not a place to innovate. You know, the public markets are not a great place for most companies to fundamentally change the way that their business works to navigate some massive macroeconomic, you know, uh, headwind the public markets will simply say, Oh, business, you’ve got a massive economic headwind.

We’re going to lower the price of your stock. Cause I’m going to shift my money out of your company and into another company that’s winning, whereas on the private markets, you know, It’s much more patient capital. It can be much more strategic capital. It can be much more aligned with saying, Hey, we’re going to take two or three years and we’re going to figure this out.

We don’t know where we’re going, but for the next two to three years, we’re going to figure it out. And I kind of look at the pay Vita model as much more of kind of like a private. Capital model, whereas the payer, they are, they’re collaborating with the provider and saying, Hey, how do we align incentives in a way that, and we know we’re not going to get.

Exactly the result we want in [00:25:00] month one or month two, but by month 24, you know, how can we get to the place where we’ve replaced this old model entirely and the savings and the, you know, patient outcomes are significantly better. You just can’t do that in this payer provider fee for service separate negotiated model.

It’s, it’s very difficult. It’s very, very difficult to do it.

Vic: Yeah. I think that makes sense. In the public private, uh, analogy, I’ll also say that, uh, you know, there are a lot of values that are useful at a nonprofit. Okay, like, you can, you can build a culture, you have a mission, you’re really trying to make a difference.

One of the things you really can’t do is retain earnings. Right. Like, you’re not allowed to have, to have sort of retained earnings and sort of, Build up capital. So whether you’re private or public, you, you have to pay out all the money every year and you can play some games like by real estate, real estate, [00:26:00] but it’s limited where If you are in a for profit, you’re allowed to do that.

Now you pay taxes. So the downside is you, you get that sort of tax on, on your earnings every year. But you have the ability to take a longer view and retain earnings because, well, I’m going to, I have these projects going on and. If if I have success in this first pilot and I want to expand into six states That’s actually going to cost me more money to sort of invest and build that up it’s really hard in a non profit to to do that because you have to do it like in the current year with revenue or donations or some something else and so that is um, It just is a disadvantage in this kind of innovation That’s I agree with your point Public private, but then also if you go to the nonprofit side that they, they don’t have that kind of balance sheet strength because they’re, they don’t, they’re not really allowed to [00:27:00] keep it.

Marcus: Yeah. And then let’s, let’s also say the, the, the final thing around the difference between the, the for profit and the nonprofit, the for profit is there to serve the shareholders. Right now, now the leaders of those organizations will say they’re there for their communities and they’re there for the patients and they’re there for their, their workforce.

And I’m not saying that that’s not. True. I’m not saying that’s not true, but on a quarterly basis, when they get on that earnings call, they are not speaking about that or they’re not talking to that audience, right? They are talking to their shareholders and they’re talking about the guidance and whether or not they met the guidance or they exceeded the guidance or they missed the guidance, right?

That’s, that’s ultimately what they’re doing. Whereas when the nonprofit world, I think the priority and the first principle is to be a. A servant to the community. I think it really is ultimately that. And if you do that in a way that, that loses money, sorry for you. And that’s why generally speaking, you’re going to see nonprofits that have worse payer mixes, right?

And that’s just a fundamental difference [00:28:00] of, of the business model. Again, when we talk about the payer and the provider mix up is imagine having a suboptimal payer mix and also having no embedded payer. I mean, it’s just a real path to insolvency.

Vic: Yeah. And then the other thing is, I think if you are operating a very large payer, right, you’re in a regular, largely you’re in a regulated business model and you are locked in at a set amount.

Now you can grow your overall book and then the 15 percent becomes more. There’s a lot of incentive and I think shareholders fully understand we’re going to invest in these other areas. That have much more upside. And now we’re diversifying that and and it’s an easier story to tell then from the other side a health system doesn’t have that sort of um, Steady but [00:29:00] not very not very profitable not that you can’t make money at 15, but not very profitable Core and so they don’t have that same shareholder incentive to sort of aggressively find new places to

Marcus: Yeah, and it changes the way that you strategically look at the payer part of your business.

The payer part of your business becomes a strategic tool to design, uh, you know, superior provider models that you then only deliver within your own, you know, Brother or sister business unit, right? I mean, you know, like it’s, it’s a, it’s a tool in, in that, in that case. And, and look, partially it’s a competitive tool, but partially it just makes sense because you’re going to, you’re going to be aligned.

You’re going to have the, you know, uh, shared culture, same vision, you know, um, shared resources, you know, much lower barrier from a cybersecurity perspective, there’s both sort of a competitive aspect to it, but there’s a practical aspect to sort of being all sort of on the same [00:30:00] team and having that pair and that provider on the same house.

Vic: Yeah, you could align interests in just a much better way if you’re all kind of under the same flag and and I’ll say that there are certainly people that that use the sort of understanding of the providing care space. Uh to negotiate in in let’s say aggressive ways But I also would say that the payer’s job right is to Figure out like adjudicate claims.

What is an appropriate way to treat these patients? And if you are delivering care In a more effective less expensive patients happier the providers the people giving care happier And it’s better for shareholders all of a sudden now like I don’t want to pay these claims that are much more expensive and the pay the the workers aren’t happy.

The patients aren’t happy And so you start denying claims, I think Somewhat correctly because it well it’s better for the patients. It’s better for [00:31:00] the workers There’s better all around and that’s not a evil intent. That’s sort of their job to do right? and so as you start to gain experience and And sort of an understanding of the providing care side I think there are times when when groups used sort of their market power You Maybe in a, in a way that was challenging, but, but there are other times where they just learned, gosh, we can do this a lot less expensive.

We shouldn’t now approve these claims. Right?

Marcus: So, so this, this second trend of the payer provider dynamic, just basically dissolving it’s, it’s no longer functional, uh, is really leading to the third trend, third and final. And then we’ll, we’ll get into some stories, but this third trend around. This newfound insolvency, uh, that has been driven by the macroeconomic forces is, is creating the, the, the tailwind for defragmentation.

Right. And I think defragmentation is, is the, the best high [00:32:00] level term we could come up with to describe multiple. Phenomenon that are happening one. We just talked about very clearly, which is the verticalization of the of the payer and the provider into one organization, but also it’s the it’s the rush to consolidation of health systems.

Right? And there’s so many I think. Moral debates about whether or not it’s okay for health systems to merge, you know, for profits, shouldn’t be able to buy nonprofits, you know, merging health systems kills competition and leads to higher costs and worse outcomes for patients. Right. I would consider all those to sort of be, you know, community oriented or moral debates.

And quite frankly, they don’t fully appreciate. The insolvent situation that the old state healthcare industry is in today. It’s just not working. It’s not, you know, it’s like, if they don’t do these things, they’re going to go out of business. You know, they can’t, they can’t keep going. So I think consolidation is another one.

And then [00:33:00] in some cases where consolidation is not an option, things are literally just going to go out of business. And that’s going to be another form of market phenomenon that we can package under this defragmentation bucket.

Vic: Yeah. I mean, I think. The two of us and most people in health care, like you’re in health care to try to make a difference.

I mean, you want to make money, but you’re also trying to help people. It’s it’s a it’s a care industry and the this, um, me, me and I think a lot of people becoming aware that the the old models of a siloed care delivery system and then relying on payers to fund it. Is is not sustainable. And then the fear that that I had and a lot of people have had of consolidation and what would that mean to People that [00:34:00] need care and maybe can’t can’t quite afford it or need a certain type of care I become less fearful when I start seeing all of the mistrust and challenging things that the established systems are doing so like though it’s not sustainable and In their sort of reaction to try to protect the existing systems They’re not always making the best choices.

And so that leads for an opportunity I think for You Someone to say, well, let’s let’s defragment this. Let’s align interests. Let’s all come around and try to bring care to these people In a way that is aligned and delivers better outcomes and then pay people in a non profit or pay people and have earnings in a for profit Either way a lot of business and knock out a business and it can be sustainable for several years, right?

and that um pressure from the macro forces, which I don’t think is anyone’s fault, but just is has led to the [00:35:00] situation where All the established systems are, they need to figure out a way to join up or, or figure out to get involved in a defragmented solution where everyone can be taken care of in a sustainable way.

And that, I think, um, that loss of trust, right? Well, I don’t trust that the, The health systems that are not connected to some kind of, some kind of payer system or have a plan for that, or they’re working towards that, I don’t think that they’re going to, they’re going to exist. And so then you have this, uh, I don’t know, like melting iceberg where everyone gets more and more nervous and they take bigger and bigger actions to try to protect their thing that doesn’t result in good patient care.

So that’s an opportunity. Um, you know, I want to try to be optimistic that has an opportunity for others to say, well, let’s try to defragment this and start from 1st principles [00:36:00] and bring solutions that can that can solve the problem at hand. Let’s deliver care to these people. We need to fund it. Of course.

Um, and so that, that’s the opportunity that it is insolvency, it’s loss of trust, it’s a changing of this whole system that is a little bit scary, but it’s so unfunctional now, I’m trying not to say the word dysfunctional, it’s not functioning well. Right. And that means that we have to, we have to create a new thing.

Marcus: Yeah. And we were, I don’t maybe debate is a little strong of a word, but we were, we were having a discussion where I don’t think we fully landed about sort of what that defragmentation process will look like in terms of replacing the old system with the new system. And I just am of the opinion that in some cases, and this, I think will certainly be, uh, social economics will be one way to look at this.

Um, in some cases we will have replacements. Right. We like, we will have something that comes and competes and beats the old thing. And so when the old thing goes away, because it loses, [00:37:00] it’s no loss to the, to the community, to the patient, because that’s great. And I think there’s going to be some cases, uh, in particular, you know, um, poor neighborhoods, poor towns, where the defragmentation is going to result in something just going away.

And maybe in the future, there will be something to replace it, but I don’t There’s a guarantee that things get replaced. You know, when, when all these right aids go out of business, there’s no guarantee that something comes in and replaces that right aid. Right. And whether or not we think that right aid is necessary, that’s a objective thing that.

It’s a judgment call that maybe we can, we can opine on, but it’s not fact, whatever we say is, whatever we say about that is not fact. What is fact is there was a right aid there. There is now no longer a right aid. And if there is not another point of care that. Replaces it the people in that community who may already be challenged from a transportation perspective or or many other [00:38:00] perspectives We’ll have to find another site of care and that side of care could be further away that could lead to worse outcomes that could be considered a lack of access of care, so um Yeah, the defragmentation.

I think with all these trends, we’re not trying to say what we want it to be. I think we’re just trying to say, this is what we see. This is what we see happening. And I remember Vic, when I first got into this industry and you were teaching me a lot about it. And then I was learning from lots of other people in Nashville.

Many of the things we’re talking about in these trends were the things that are happening. Yeah. That people said were kind of laws of physics of the healthcare industry, such as healthcare is so fragmented. It’s such a, and And that was true. Yeah. It’s such a fragmented industry. That was a, that was true.

B, I think a lot of people in Nashville made a lot of money off of that fragmentation. Yeah. Right off of how many different split parts it was broke, broken into. I mean, the

Vic: whole DRG family tree

Marcus: thing was fragmenting. That’s right. That’s right. A ton of money was made in the fragmentation and it’s just.

Not going to [00:39:00] work any longer. Like that’s not going to be a long term sustainable thing. Now, is it gone today? It’s not gone today, but we are clearly in an era where health systems are working very, very hard to combine, to merge. They’re even finding creative ways to do it that aren’t necessarily an entire merger, you know, like what happened in Michigan with him forward and the Ascension Michigan hospital.

Right. Like it’s more of like a joint venture, you know. You know, is, is that a model that will be more acceptable to, uh, you know, the, the FTC and to the regulators and things like that. Right. Yeah, exactly. So, so, but they’re trying to find ways to defragment, right. To combine, to partner, because unfortunately staying separate and staying on your own and staying small, it’s not viable.

Yeah, I

Vic: mean, I think I agree with that completely. The defragmentation process and economic progress in general is, um, not fast and it’s not, uh, it’s not spread out evenly, right? So, [00:40:00] um, Nashville, we have more hospital rooms and probably any city our size in the country. Nashville, I think we’ll always have good care, but that’s not true for every city and this process is going to be lumpy.

There’s going to be places where there’s a great new solution. And then right across the state line, there’s not a solution, right? And I think it’s, I don’t want people to suffer. Okay. So like in general, I healthcare is so personal and emotionally fraught. I don’t want people to suffer. And yet I think you’re right.

The only thing we can do is talk about what we see. Try to be honest about it

Marcus: and you and I specifically can invest in solutions. We, we can actually try to innovate and create solutions

Vic: we can. We can try to bring solutions that help one small thing or maybe a few things that fit [00:41:00] together, or maybe it’s a bigger thing, but that doesn’t mean there’s not gonna be people that suffer in this transition.

There. There will be people, but I think there are people that are suffering in the existing system today. For sure. We cover these stories. I mean, I don’t live these stories. There’s stories every week We can’t cover them all with people that are suffering and the existing system isn’t delivering care for them Or they work in a system And they’re getting verbally abused physically abused And so I don’t think we’re saying that defragmentation is going to be without suffering What I think we’re saying is This is the future, and the future is coming much faster than I thought five years ago.

That doesn’t mean it’s going to be here in three weeks, but it’s coming a lot faster. But it’s happening right now. It’s coming faster. Like, so, I think in three months, in three years, there’s going to be Serious swaths of the healthcare industry that are defragmented and have whole new [00:42:00] systems. Yep. And will that be better for every person?

I hope so, but probably not. There’ll be some people that would have been better off in the old system. Hopefully, In the mass more people are taking care of more effectively in the new systems, but it’s it’s never going to be perfect. I mean, it’s health care. People suffer. Unfortunately, people die. And that’s that’s the only system that we can build.

And so I don’t know. I think there will be in right. It’s a good example. There’ll be right. It stores that close. And those people will have to go further. They won’t be able to talk to a pharmacist as easily They’ll have to do some kind of ride share thing or be on a tele telehealth thing or something And it it won’t be as good as walking in to their neighborhood ride aid and maybe there’ll be a solution that comes up that [00:43:00] Eventually is is better for most of the people but that’s the big question Best we can hope for, and it’s the only thing we can do.

That’s right.

Marcus: Yeah. So, I mean, look, uh, if you, if you take issue with any of our trends, like reach out to us, let us know. I mean, this, this is just sort of the way that we saw this all breaking down. Um, and it’s. I mean, even, even looking at like the general Atlantic thing, right? I mean, if you look at the strategy there, sorry, general catalyst.

Yeah, exactly. If you look at the general catalyst thing, look at that strategy versus what a healthcare VC strategy would have been five years ago. Right. I mean, to me, that is an indicator that they think the defragmentation is actually going to create less opportunity for. You know, um, non platform companies to sell into and to be acquired by, right?

I mean, they’re literally building a health system because they’re not sure that health systems are going to buy their tools.

Vic: Yeah. I mean, it’s both. I think they’re, they’re trying to build a full, I’d call it a full [00:44:00] stack healthcare delivery system. Yeah. They have. They have everything right. They have primary care.

They have diagnostics. They have all the back office. They have the health system They have the clinic They have the ed. They have the surgery suites. They have icu. They have the payers Their vision I think is to have the whole full stack Delivered and whether they can pull that off or not. I don’t know but but it’s almost time It either is like right now the right time Or they’re a year Or 18 months early But as a VC, I mean that, that’s the risk you, you want to take.

That’s right. Because like, heads, heads I, I control this, this multi billion dollar platform. And tails, I lose the capital I put in. So like, I’ll take that, I’ll do that ten times. Right, right. So, then the thing I want to just mention, uh, is that I think I’m seeing that there’s gonna, [00:45:00] we can’t defragment the entire population all at once.

I think there’ll be segments. That’s right. So, so maybe there’s like a, Certainly, there’s a medic Medicaid segment for the population that that, you know, it really is government supported. Um, there’s a different reimbursement structure for that. Then there’s the commercial sort of a working age people segment.

Then there’s, I think Medicare Advantage seems like, uh, the dominant, uh, retiree. Platform there may be other segments. That’s where audience listeners may may help us, you know fine tune that but it seems like we might Have entire segments that you could take over But I don’t know if one group’s going to be able to do all the segments Or you might do one and then start to expand into other ones

Marcus: Yeah, I mean certainly when it comes to medicaid Everything that I’ve heard from state Medicaid directors is you really have to design for Medicaid [00:46:00] first.

And so I think you’re right. I do think those, those market segments, it’s very different, right? So I think you’re, you’re really going to have to have, um, different teams, different strategies, uh, you know, different sort of capital allocation models, quite frankly, going after those different market opportunities.

And that is good for us as capital allocators and, and, and innovators, um, that there will at least be. That level of complexity when it comes to the market segments.

Vic: Yeah. So I’m kind of excited about what I think we’ve uncovered in the last 24 and a half episodes. It’s pretty interesting to see, like, we’re going to see to keep trying to understand the macro forces because they’re driving everything.

And then how is the existing system fraying? Where is it really in need of desperate Replacement and where is it holding on? And maybe that’s not the first place that we change. And then what we want to find as VCs is what are what are the innovative new [00:47:00] solutions? How can we begin cobbling together things that make a difference.

Um, and so that, that’s part of the optimistic side of this.

Marcus: Yep, absolutely. Okay. It’s a good time to take a break. Uh, let Doug share a little bit about Jumpstart Foundry. And then we do have a couple of stories we’ll break into before we, uh, sign off.

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 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 [00:48:00] 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 Dumpstart 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 preceded stage companies in the country through those most innovative solutions that Jumpstart Foundry invest in. We also provide great returns and a great experience for our limited partners. We partner with AngelList 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 [00:49:00] 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, my buddy, Nick, our buddy, Nick was talking about traveling to, uh, the universal theme park, and he was like, dude, everyone keeps talking about the economy is no good, but these people are This place is packed and people are spending a ton of money.

And, uh, you know, we, we all were just like, yeah, it does seem like people have spent a lot of money. And so the GDP numbers came out for the third quarter and lo and behold, the GDP grew almost 5%, 4.

Vic: 9%. Yeah. It’s incredible way above the estimates. I was not expecting this. I knew it would be positive, but this is like a blowout GDP number.

And I agree travel has been, I mean, every time I’m traveling around, every plane is full and, and yet it [00:50:00] doesn’t feel like our, our, My friend group and people around people I talked to There’s not a lot of like people saying like i’m killing it and like socking money away Like people are still struggling and complaining about the cost of stuff.

And so the economy is growing at 4. 9 percent in the third quarter, but It still feels like we’re, we’re not, um, don’t have tons of momentum going to the fourth quarter.

Marcus: Yeah. I mean, the consumer has not been broken yet. Okay. I think we can say that the Fed has not broken the consumer yet, and therefore inflation will still grow.

So in the personal income, uh, category, there’s sort of three things that, that, um, the Bureau of, um, Economic analysis, uh, that they, that they focus on one is a current dollar personal income that did increase, but it was, the increase was down from the second quarter. So 199 billion in the third quarter compared to an increase of 239 billion in second quarter.

If that [00:51:00] trend is down, disposable personal income increased 95. 8 billion or 1. 9%, but the real disposable personal income decreased 1 percent in contrast to an increase of 3. 5%. And then personal savings, this is a big one, um, was 3. 8 percent in the third quarter compared with 5. 2 percent in the second quarter.

So what we have is a tale of two stories here, right? Which is one, Consumer spending, which was the largest category of GDP growth in the third quarter, uh, was off the charts and yet actually the, the household is doing worse, did worse in that quarter. Um, and so that’s where you, you know, you start to sort of see.

The, the credit card debt going up and generally speaking, people not being able to change their habits, even though financially they’re not doing as well, they’re not able to save enough, you know, their income is getting a little bit better, but that’s even softening. Right. Yeah. Um, but they’re spending like they’re killing it.

Vic: Yeah. We [00:52:00] have all my, this is not a. Data, you know solid position. My my gut feeling is that we all have gotten used to a certain lifestyle certain spending um rate and we’re still spending at that rate and Hoping that something will happen And whether that’s another government stimulus or the the fed starts Stimulating again or something.

I don’t know something will happen You And I, you only live once. I’m just going to keep going. And yes, credit card is credit card debt is getting to a level that that is pretty scary. And it, it just feels like we’re doing everything that my grandmother told me not to do. That’s not a scientific analysis.

It just feels like we’re, we’re spending a lot. Um, and that comes through in the [00:53:00] GDP number. But it doesn’t really seem like it’s that healthy of an economy.

Marcus: So sort of two things I would say one that, um, that lack of congruence between how people are actually doing versus what they’re spending does feel recession ish.

It feels like over the Hill, maybe in Q one, we, we actually are finally going to get to that recession that everyone’s been talking about. I

Vic: don’t even know if it’s that long. I think Q4 could be

Marcus: Q4. Okay. And then the second thing, um, is that we’re probably going to get another rate hike. Yeah, yeah, that’s right.

Probably get another rate hike. Right. Um, all right. So next door I want to go to is Charles Hudson. Who’s the general partner at pre cert precursor ventures, which is a seed fund, uh, uh, based on the West coast has been writing a sub stack called venture reflections. I’ve been kind of keeping up with what he’s been writing, but he absolutely crushed it with, uh, his last entry that he published on October 25th.

The title of the entry is [00:54:00] The big reset in seed to series a graduation rates is real and permanent. Now I know not everybody who listens is a VC, so you may not know what graduation rate is. So let’s just sort of explain it really quickly. Um, graduation rate is, you know, we, Vic and I invest a lot at the seed stage.

Right. So we’re, we’re writing, you know, one to 3 million checks and the companies are valued somewhere between 10 to 20 million. Okay. We want those companies to do really, really well. But we also would like for them to raise another round of capital from a different VC who is not the two of us at a higher valuation and get a bigger check.

That whole process is, is what’s called a series a round. Okay. And if the, and if a company that we invest in, in the seed stage, Gets that done. That’s considered graduating. They’ve graduated from the round that we invested in to that series. A okay. So that’s a, that’s a pretty good explanation, right? Okay.

So, so the reset that Charles is talking about here is graduation rates from seed to series a were pretty [00:55:00] high for most of the last 10 years. Yeah. Um, and that had to really screw up. Yeah. Yeah. But there was, there was plenty of series a capital out there. It was kind of all over the place. Okay. And, and he, he is.

Sort of saying anecdotally, I don’t think this is backed by any Carta or angel list data, but he’s saying anecdotally that to him, it feels like deal volume from the C to series. A graduation perspective is off about 75%. And I will say as a seed stage VC, I certainly feel like that’s about right. That number feels like that’s the kind of collapse we’ve seen in the series, a space, um, series a investors are not on the front lines.

They. They’ve been off the front lines for more than a year now. It started last summer. So it’s gone more than a year and they just don’t feel like they’re in any rush. And I think one of the things that he points to is that so many of these series a funds were so big that they raised, they raised these, you know, 300 million, 400 million, some of them a billion dollars series, a funds that in order [00:56:00] for.

An exit to make sense for them. It’s got to be a billion dollar exit. And a lot of these C deals, especially in this new economy with, with the way valuations have gone down, they’re just simply not going to get there. They’re not going to get to a billion dollar exit. Okay. Um, and that means, well, you know, I’ll just hold onto my capital until I find something that does get there.

And that is really changing the landscape of early stage companies in a way that we’ve been talking about for more than a year. We’ve been telling founders about this for more than a year. I do believe. Most of the founders I talked to now get it. Certainly the founders in my portfolio get it. I mean, they’ve, they’ve lived through it, so they get it.

But the point that Charles is saying is that this is not just a blip. This is, this is a reset that is going to be durable. Likely permanent, at least permanent in the context of the funds that we are managing, right? Which have 10 year windows, right? So for the next 10 years, you can kind of expect this is the way it’s going to be.

And seed stage [00:57:00] companies are going to have to be really capital efficient and may never get another round of capital. The seed round may be the growth round.

Vic: That’s the same,

Marcus: but I agree with that.

Vic: Yeah, that I agree with that too. I think that’s right. And so the, uh, yeah. I mean, this, I agree. This was a really well done article.

I think he’s exactly right. My belief is that a lot of series a investors have their own shit to deal with. They have a portfolio that is challenged. They’re trying to figure out their own stuff and the Need to invest in a new company is like the last thing that they’re worried about right now, right?

And so yes, they have dry powder. They’ll probably do a deal eventually, but there’s a thousand deals out there And I gotta take care of my portfolio. I have in hand right now [00:58:00] the later stage bc growth Is really gone because they are so tied to the public markets And the park markets are in trouble now.

And so it kind of all flows down. I think from the park markets. The other thing that I think he wrote about that is really interesting because it’s exactly right is and we were we were sort of just playing around with jumpstart the accelerator and trying to learn about this. Stuff, but in, you know, the cloud came out, uh, app, um, the iPhone came out, like there are all these tools and lean thing called lean startup where, like, you could, you could do a startup and really work with your customer to not waste a lot of money in products that weren’t going to, Be useful, right?

And that kind of iterative process, the development tools were such that you could be in the cloud and design and develop pretty quickly. All that kind of came to life 2000 to 2008 [00:59:00] or so, and we were playing around with that stuff then, and the seat, the entire existence, there were no, when I started in 2001, there were no seed funds that it wasn’t a thing.

Yeah, right. There was angel investing. And a,

Marcus: well, for good reason, there was no cloud. There was no need to buy servers, put them in a

Vic: data

Marcus: center.

Vic: Yes. That was expensive. You need, you need to raise 30 million. That’s right. And. Go. Yeah. And the entire seed concept was we can get a lot of progress done. We can get customers.

We can get revenue. We can really get product market fit. We can start having earnings and build out our business model. And grow grow in the point he makes that I think is really great is I mean and I’m doing this right now I have a new fund I’m trying to invest in 10 seed companies that never need money again, right and I just closed one today We [01:00:00] we put money in they Will never need money again in knocking wood.

Um, now they they might raise money But that doesn’t mean that we’re building a tiny little sort of, uh, business that’s not going to grow. It needs to be able to grow at serious rates, 50, 70, 100 percent a year on internally generated cash. And you have to have a really capital efficient business model and be really good entrepreneurs to pull that off.

That’s what seed funds were supposed to do and be able to sort of build all this value and then go to the a with like a, a very strong, or maybe even skip the a and go to a later stage on that was the basic concept. And then the great, great financial recession, whatever, uh, thing happened, you have GFC great financial crisis crisis happened.

And so. That distracted everyone and sort of free money [01:01:00] came in and zero rates. And all of a sudden there was money everywhere. And so seed funds were not that they just were sort of like a beginning, you know, early a flow. Yeah. serve deal flow to the A rounds. And I think we are back to where we started.

We, you and I need to build companies that are self sustaining. It can be 500, 800, a billion dollars without ever raising an A round. And that’s really

Marcus: hard. Well, the thing I like about all this. Is that was our premise when we started all this? Yeah, right. Right. I mean, I feel at home. Yes This this is a lot

Vic: easier for you and I than than the money money money Let’s just throw money and it’s a momentum thing.

I’ll talk to my fraternity brother and we’ll get it funded. Totally No one ever gave us any money We don’t have that that sort of golf club membership, uh, ivy league business school thing. We don’t have that

Marcus: Yeah, so I mean this is [01:02:00] this is fantastic. I just want to read this This, uh, this paragraph, cause it kind of encapsulates everything you just said, right?

Uh, with the era of capital abundance coming to an end, the stage might finally be set for the era of the capital efficient seed stage company. Seed stage startups are likely to confront a world in which raising series a rounds of investment remains difficult for quite some time. There will be a premium on execution and doing more with less capital.

The necessary pieces might finally be in place to push companies back towards the hoped for levels of capital efficiency. It’s awesome. Yeah, it’s awesome. Let’s do it. I’m ready. I’m ready to do this

Vic: and, you know, important, great things are fucking hard. So like, I’m not saying it’s going to be easy, but building a company with very little capital means you control a lot of it.

Marcus: Well, I’m just tired of arguing with founders. Saying they need 20 million when all that really means is you’re not willing to make hard decisions and focus on priorities and not spend capital that you don’t have to spend. I’m just, I’m glad [01:03:00] we can stop having to have that argument, uh, and really dig into you have less now.

What, like when you say, when you say you need, are you literally, are you going to give up now? Like, is that what, is that what it is? Um, And

Vic: those who will should. And then the, right. And then the other thing he says is that on the front end, VCs, he’s talking to us, basically, VCs need to be clear with the companies on what the plan is.

Totally. And at least for Companies I’m funding, the plan is not let’s sort of pretty this up and then raise 20 million in six months. It’s let’s execute and let’s build a business that we can be owners of for a long time.

Marcus: I did four less deals in Nova fund one than I thought I would in the beginning.

Yeah, because I was like, ain’t nobody come ain’t no graduation rates, right? So like I got it, you know, Catherine and I need to. Be the backer.

Vic: Yeah,

Marcus: the foreseeable backer. Yeah, that’s that’s that you

Vic: will own more [01:04:00] of a smaller number of companies Yes, you’ll own a higher percentage of fewer companies and the entrepreneurs and management teams will own more correct and it has to work That’s right.

And if it does work That’ll be great. Yeah,

Marcus: that’s great. And, and generally, I think we need a higher hit rate because without the capital unicorn season is over too. Well, positive cash flow helps hit rate. Yeah, exactly. Exactly. Yeah. I mean, all these things sort of move in the direction of what we always wanted to do.

So, yeah, I think this is,

Vic: and I think honestly, I think it fits well with healthcare. I think if it’s very well healthcare is, is not as amenable to that sort of like Get to a unicorn status in six months kind of thing.

Marcus: Now, the thing that we will have to figure out is What does all this mean for?

Scientific discovery in healthcare, right? What does this mean for the biotech space? What does this mean for the serious diagnostic space? Because those are spaces because of the regulatory pathways Those are going to get even harder based on developments in the FDA [01:05:00] Um, i’m, sorry, you need the capital.

Yeah, right. Oh, yeah, and and maybe that’s what we do We just sort of you know, draw a line draw a bright line and say They’re the companies that need the capital because they’re really at the end of the science developments. And then there’s companies that don’t need the capital and we’re just going to allocate the capital to the companies that need the capital Yeah, and not to the ones that don’t

Vic: yeah, and I was talking with emily evans Who’s a you know friend of the pot?

She’s been on here before I saw her yesterday The scary thing in funding’s drying up. I

Marcus: know

Vic: And so like, without basic science being funded, that that’s a, that’s the more worrisome thing on the biotech side. Um, we have, we have never invested in biotech cause I’m not smart enough to know biochemistry, but I had a whole

Marcus: conversation about, about biotech and how I just don’t feel good about doing that.

We did, we did it once. I’m not going to be doing that name anymore in the near future. Just like, I

Vic: mean, I’m all about risk mitigation, right? Putting a new molecule into the human [01:06:00] body. It’s just hard to, to understand what’s going to happen.

Marcus: Yeah. I mean, that part, I can, I can actually stomach that risk based on a lot of good data.

It’s it’s the capital market part is too hard. That’s, that’s the part where I’m like, oof, it’s you’re so dependent on the capital market and not on, and not on great execution.

Vic: Yeah. And that part,

Marcus: that

Vic: part’s really tough for me. Without the government. Subsidizing the basic research. I don’t know that the model really works that well.

Marcus: Yeah,

Vic: that’s the hard part

Marcus: All right, two more quick stories. Um One meta was sued by 42 attorneys general alleging facebook instagram features are addictive and target kids So a couple things about this one This seems to be very in line with what our surgeon general has been kind of calling for which is a moment of accountability For social networking platforms and really there’s only one You That’s noteworthy to talk about, which is meta at this point.

Um, [01:07:00] and the fact that they’ve been experimenting on our youth. Um, so I, I think it’s so interesting that a, we were, we were able to get a bipartisan group, 42 attorneys generals. That’s clearly very bipartisan, um, to collectively sue meta, uh, on behalf of, you know, America’s children.

Vic: There’s no question that they do this.

It’s true. I mean, it reminds me of the cigarette. Litigation like meta and I think tick tock is also in the crosshairs Those are the two big ones in my mind, maybe snapchat that they attract Kids because then they have a customer for life and they can sell ads to them forever and it’s It’s highly addictive.

I mean, it just is highly addictive, and I think I think Facebook’s doing a lot of good thing that is doing a lot of good things, but they they have internal documents. I mean, they know this. That’s why it’s like [01:08:00] cigarettes. Like there’s internal documents. I, I, we’re both seeing the, the documentary, I mean, there’s whistleblowers, there’s lots of, yeah, lots of whistleblowers.

It’s, it just, it’s, it’s gonna be a hard case for, for meta to work through. Um, but we have all these kids addicted to social media. And so there’s going to have to be some, I don’t think you can turn it off. I don’t, I don’t know how they’ve turned it off. So I don’t know where this goes exactly, but it seems true.

Yeah. And it’s good that, I mean, of the things for a state’s attorneys generals to be working on bipartisan, I mean, 42 states is, is almost all, obviously it’s meaningful States

Marcus: meaningful

Vic: and it’s in line with the surgeon general and we all. No, it’s true. So whatever controls, like if you’re not 18, you shouldn’t be subject to the same thing that an 18 year old substitute.

Marcus: Yeah. I don’t see any way that this does not result in some change to the way that meta [01:09:00] operates. I just 40, 42 attorneys general. That’s. That’s a lot. That’s a lot. All right. Final story, which, uh, is, is a hard one. Um, the story from the New York times, the, the, the name of the story, uh, stabbed, kicked, spit on violence in American hospitals is out of control.

So anyone who’s been inside of a healthcare facility, uh, since the pandemic has seen signs, you’ve seen signs that are posted up that basically request that you are patient and that you remember that healthcare workers are people too, and that they’re under a lot of pressure and that they’re And then they, you know, if you read the fine print, they kind of say violence of any form will not be tolerated.

Right. And I’ve seen these and yeah, in all sorts of different health system facilities. Right. So I won’t name names, but everyone, everyone that I’ve been in recently has these kinds of signs up. Right. Um, it is, it is an absolute disgrace that our, our healthcare workers are having to deal with. You know, this kind of abuse, uh, mental, emotional, but [01:10:00] worst, I’m sorry, physical abuse.

Um, it’s just, it’s a disgrace. It’s disgusting. And it’s a, it’s just a disintegration of, of the fabric of our country that, that this is something that we are, we’re doing. That we’re doing, you know, to, to our, to our friends and our family members and our communities to, to allow this to happen to the caretakers.

It’s just,

Vic: yeah, the video is really hard to watch. And I would encourage listeners to watch it anyway, because it’s, it’s really important. What I would say is that our emergency departments should not be the place where mental health first goes. They’re not designed for that. They’re designed for trauma and, you know, emergent issues that are medical health related.

Now that maybe it’s hard to determine always. But they have become [01:11:00] sort of the just the catch all area for anyone that is Struggling or in distress or in behavioral health crisis go there And that’s not fair to the workers there and they’re not suited to deal with that I don’t know. We need this is one of the ways that our existing system is Is not functional.

It’s not working.

Marcus: And, you know, I mean, I think the article does a reasonably good job of talking about some of the inefficiencies and some of the challenges in the experience, you know, just sort of the mismatch of it’s an emergency department. People are going in there because they’re panicked, you know, often when people go into the emergency and they’re panicked, You know, it may or it may not be an emergency.

A lot of people are going in there to figure out whether or not it is an emergency, right? But there’s certainly panic. They’re not in the best emotional state that they’re often not in a very good physical state to sort of be there. And as you already [01:12:00] said, some people are dealing with, you know, chronic mental health issues who are entering these environments.

And so, Yeah. The stress can be relatively high for all of those reasons. People, people who work in the emergency department, they’re well trained on on how to deal with all those things, but they’re not perfect. You know that they will make mistakes, but it can be a bit of a pressure cooker, right? You know, there is a.

Just a reality to the environment that can result in tensions being raised, being elevated. Sometimes there are wait times, you know, you get in, you get triage, you get to a room and then maybe you see an initial nurse who sort of gets you set up and maybe you don’t, you know, maybe the doc doesn’t walk in for an hour.

I mean, that, that happens, that happens in, in EDs around the country on a regular basis. So I think they do a good job of sort of talking about some of the. The operational functional challenges, uh, both in terms of the nature of the work that’s being done there. And then some of the, you know, delays and things in the experience that can, um, create environments where people may be more prone to outbursts.

[01:13:00] Having said all of that violence against healthcare workers is just, it’s just fundamentally unacceptable. I mean, like I said, all of that, just to say, like, you can see how in this environment, there may be, you know, a higher likelihood of this happening and still it cannot happen. Right? And still it cannot happen.

Yeah, exactly.

Vic: These people are doing a really hard job for not that much pay in some of the hardest environments in the country, and they don’t deserve that. And now, yes, every situation someone might be under a lot of stress and have their own mental issues going on and there’s family dynamics, there’s all kinds of complexities and there’s no reason to punch a medical worker.

There’s no reason to be verbally abusive of a medical worker. Right. It just can’t. It’s unacceptable. I agree.

Marcus: Yeah.

Vic: How do we solve it? I don’t know. That’s, that’s the issue. It’s like, this is going on. And we need some solution because it’s, [01:14:00] it’s not okay.

Marcus: Yeah. So this is definitely one of those, those stories where it’s hard, but we would definitely encourage people to read it and just be aware of what is happening in your community.

You’ve got an ed, you’ve, you’ve been to the ed. You know, um, I, I have, I have friends who are emergency doctors. Um, you know, some of my husband fellowship, uh, you know, a guy who, who I did jujitsu with is an ER doc. And, um, you know, it’s the place that cares for you at the lowest point in your life, typically.

Every time I’ve ever been to the ED, I’ve been really scared. Otherwise I just sleep it off and go into urgent care in the morning. Exactly. You know, otherwise you wouldn’t go there. That’s right. Yeah, that’s right. So, um, so shout out to the ED docs and nurses and staff, and, um, hopefully we find ways to, To protect y’all.

Yes. All right. That’s it. Great episode 25 Vic. Thanks for the work on the, uh, on the trends. I think it was a great idea. And hopefully this will sort of serve as a [01:15:00] framework and over the next 25 episodes, maybe we can develop the next set of trends. Yeah.

Vic: Yeah. Hopefully we’ll see some. Some exciting new optimistic, uh, solutions that we can bring.

Marcus: Yeah. And listener, uh, like subscribe, share, please share, share the show. You know, honestly, it’s actually

Vic: a

Marcus: good one to share. Cause it

Vic: summarizes a bunch of things.

Marcus: Totally. I’m, I’m very convinced. I know people who listen to the show on a regular basis and reach out to me about it. Um, I think the way the show is going to get.

Uh, grow is going to be through word of mouth. You know what I mean? Because it’s, you know, the topic and the subject matter that we’re talking about. It’s, you know, it’s not going to be like a super mainstream show. We didn’t build it to be a mainstream show, but we do want to continue to grow it to people who are interested in healthcare innovation, right?

Especially people who, you know, we, we love our listeners who are in the actual healthcare industry and are curious because they want to learn more about. Venture and investors and sort of the mindset and the way that we think about things and for sure healthcare founders and, and, you know, maybe healthcare VCs, but healthcare founders, I mean, should be listening to the show.

I’m sorry. I think we do a pretty good [01:16:00] job of laying out the landscape for, for founders. Well,

Vic: it gives you a little more insight into how to maybe design your business model or how to, how to tweak something. And every little advantage is critical in doing a startup.

Marcus: Yep. Yep. Yes. Awesome. Pass it around.

All right. Thanks, man.