Jan 12, 2024

36 – Jefferson Strengthens Payor Unit | Carta Oversteps Authority | Mayo Clinic’s AI Initiative | Pushback Against Federal Agencies

Featuring: Vic Gatto & Marcus Whitney

Episode Notes

In this episode, we discuss Jefferson’s efforts to bolster its payor unit, exploring the potential impacts on healthcare services and patient costs. We also examine the controversy surrounding Carta’s alleged overstepping of its authority, shedding light on the implications for the company and its stakeholders. We take a closer look at Mayo Clinic’s ambitious AI initiative, discussing its potential to revolutionize healthcare practices. We also analyze the growing pushback against federal agencies, providing insights into the underlying reasons and potential outcomes.

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Episode Transcript

Vic: [00:00:00] What’s up, man? Hey, I am rested. Feel good. You’ve been at JP Morgan traveling around doing everything. Yeah, I’d have you back.

Marcus: Thanks, man. I actually got pretty good sleep while I was there. So, uh, I’m, I’m reasonably rested given how many meetings Catherine, right? We were out there. Uh, the weather was better than it’s been in the past.

Um, and also I got to say, man, I, you know, those rumors about Newsome cleaning up the city. Yeah, you said San Francisco is nice or nicer. Feels to me like they power washed the streets and rounded up a bunch of people. I, I hate, I know that that’s not the kindest thing to say, man, but I haven’t experienced San Francisco in that.

Maybe ever because I didn’t start going until all of that had already, you know, in the 14th, 15th, I mean, it was already kind of moving in that direction on the tenderloin perspective. So you didn’t

Vic: see homeless people on the street all over the place. No,

Marcus: no, no. It wasn’t until. I was at, uh, Catherine and [00:01:00] I were at an event at the press club.

And then we sort of spilled out, uh, onto, onto mission. And there, you know, was sort of the first time that I actually like ran into a few people. Um, but for the entire rest of the time, and I did a lot of walking around town. Like I wasn’t all Uber to Uber. I did, I did enough walking that I was like, this is, Somebody did something.

Yeah. Okay. Somebody did something and I’m not sure it was done. Uh, , you know, hope was done.

Vic: It’s great to, to have the city be on the road to recovery. Maybe.

Marcus: I Well, you know, it, I think the question is whether or not it’s temporary or it’s, or it’s, yeah. You know what I mean? Like, are we gonna go back in two months and then it’s sort of all just back and it was really just for show, did

Vic: they do it just for this one week period for jpm?

Right,

Marcus: right. Yeah. Right. My wife Rachel would always tell me about like, uh, when she. Was an exchange student in China, um, for a little bit, how like in certain cities, there would be times when China would have, you know, international dignitaries in, and they would shut down all the [00:02:00] smokestacks so you could see the sky, but

Vic: you

Marcus: know, there was, it was like, it was a

Vic: show for that three day period.

Right. Yeah.

Marcus: Right. It was a show. So anyway, Cleanest I’ve seen the city in a long time. Weather was pretty good. We were shout out to Holland and Knight, our, our law firm. They were incredible hosts to Catherine and I, we got to have back to back meetings in their fantastic office. I’m really happy with this law firm right now.

Um, and we met all sorts of great people, you know, uh, uh, Nancy and DeParle at Constance’s Capitol. She, she hosted a breakfast and invited me and, you know, made a bunch of wonderful connections. Um, the, that’s been. Institutes Health Innovators Fellowship had had a couple of different events that were that were awesome.

It was it was it was a good time. It was a good time.

Vic: It always kind of sets the tone for the year. Like you meet face to face with a ton of people. Maybe it’s the end, you know, but even people that you know fairly well, like catching up and like getting ready for the year, you know, it creates Ton of work, but it gets everything lined up for the first quarter.

Marcus: Yeah, exactly. And look, were there a [00:03:00] bunch of announcements? Yes. But, uh, as we’re about to roll out on our show, I mean, the transactions were just not like who cared. It was more, it was less about transactions and more about transformation, right? Like if somebody had a transformative story, Um, that was a big deal.

Uh, a lot of people were talking about the Lily direct announcement from the week before. So I actually think that was really smart that they announced that before JPM. So then it was the top, like the cocktail party chat. Exactly. It gives about, it gave everybody something to talk about. Cause you’re too busy to read the news.

Yeah. Right. Um, so that was a big story. And then there was a fair amount of conversation around things that are happening in, in AI and obviously on the capital markets. And we’re going to, we’re definitely going to dig into both of those things. Are you ready? Yeah, I’m ready. All right, let’s do it. All right.

Let’s start with

Vic: CPI. Yeah. So today the December CPI came out slightly higher than expected. I think [00:04:00] people were largely looking for a 3. 7, ended up at 3. 9. We’re just going to have this kind of bumpy process where inflation is in general coming down, but, but not every month coming down. Right. And, you know, if I’m glass half full, this is what a soft landing looks like.

It’s not, it’s not without, uh, some work left to do. Um, but it, I mean, the reason we, we, so for people that are, um, listening, we, we go back all the way until 1960, just to get perspective. But, but I think the, uh, the reason I pulled that is that the last 20, 25 years we’ve been. Really blessed with very low inflation for a long, so long that a lot of people working have never been in an environment with high inflation.

Yeah, I mean,

Marcus: I was born in the high inflation

Vic: window, so I know

Marcus: nothing about it, right? Yeah,

Vic: yeah, exactly. I mean, I got out of school in 93, and that’s [00:05:00] right when the, the, what’s called the Great Moderation just started. Like, it hasn’t been high inflation since then, really. Right. But the, the fear of central bankers is from the seventies, where people, they’re listening, maybe can’t see this, but, um, we had a huge spike in inflation and the Fed fought against it, but then they sort of got comfortable that it was on the decline and getting better.

And then there was another huge, big spike. And so I think, um, chairman Powell and every, every fed chairman since then have been very nervous about. Letting off the pressure too soon.

Marcus: Yeah. It’s over the course of the seventies and this is like the iconic time that everyone talks about the Volcker and all that kind of stuff, it got to 11.

7 percent and then they got it down to around 6 percent and then it shot back up to 13. 6%. So, um, I think that’s what you’re talking about. So this rebound that it was even worse than sort of the previous [00:06:00] high is the concern and exactly why there’s so much. Caution, uh, from the, from the FOMC.

Vic: Yeah. And in the threes is, is, you know, much better than we had two years ago.

Right. But it’s not at the fed target. Right. And so the question is, you know, how long are they keep rates high? Uh, the stock market sold off today on this news. I think people were hoping for it to be in line or maybe even a little bit better than planned. And it just means they’re going to probably have to keep.

Rates higher for longer than we would like.

Marcus: Yep. Yep. It does seem that way. So, um, with that December print, uh, not really expecting any, uh, any rate cut, uh, over the next sort of 30 days at least. And, uh, hopefully we’ll see some better news in, in, uh, February of the January print.

Vic: Yes.

Marcus: Um, okay. So the next time we want to talk about, we don’t talk about this, this Carter story, because, uh, when, when I first saw it, [00:07:00] I saw the original post on LinkedIn and Twitter, um, from, from, uh, Carrie Serena, and I could be, uh, mispronouncing his name.

It’s the CEO of a VC backed company called linear. I found the, the, the post and I shared it with you on Slack. And I just said, Hey, we just need to track this, um, full disclosure. We are Carta. And so, you know, I said, listen, I’m not, I, I don’t want to talk about this on the show yet, but let’s, let’s just track this whole thing.

And the story is that, um, uh, Carrie was. Was disclosing via a screenshot of an email that one of, um, his, uh, that, that one of his, his investors received, uh, solicitating, soliciting that investor to potentially sell their ownership in linear on Carter’s secondary market. Now, Um, there’s a lot wrong with this, but I know that some of our listeners don’t necessarily understand [00:08:00] what’s exactly wrong with it.

So I think we should take a second to just kind of break this down a little bit. So,

Vic: yeah. Yeah. So let’s frame it up just in the general market environment first. Linear is a venture backed, uh, private company. Privately held company. Yeah. Very important. And it is a very strong team. Great. They’re doing well.

They’re not in health care, so I don’t cover it that close, but it’s a good team and a well, well known growth company. There is a very active secondary market for private shares. A lot of investors are trying to buy positions in companies like linear that are already doing well, and a lot of the risk has come out, and they’re willing to pay.

Pay up for these as opposed to waiting until they go public or whatever, because it’s taking longer and longer to go public, right? And Carta along with several other groups are trying to Make that process more efficient.

Marcus: Yeah, but Bacarda different from many other companies [00:09:00] is the software system of record For something like half of the venture markets today, right?

So they actually have the critical mass to create a true liquidity market Leveraging secondary shares. Yes, but just because of the volume the critical mass of companies that manage their You Manage the cap tables, manage their securities, um, and manage their investor relationships on Carter.

Vic: And so two things, creating a marketplace where sellers of secondary positions and buyers can find each other more easily and transact more often, or there’s more, there’s more transactions that are potentially there.

That’s a good thing. And I think Carter is in a good position to build this. Um, but it is. It needs to be an op, I think it needs to be an opt in [00:10:00] intentionally decide that Either the company or the shareholders or people opt into it. And that was the thing that really was shocking and is, I think,

Marcus: not acceptable.

It’s definitely not acceptable. And everyone in the, who’s an active player in the private markets knows that this is not acceptable. And, and, and what I loved about the, the, the post, uh, that, that the carry put together, Was he explained exactly why it’s not acceptable in a privately held company who has your shares is really important, you know, generally speaking, they’re not just a financial player.

They are often a strategic player. They’re there for very important reasons, and people who have shares in your privately held company. Can either be really helpful or they can create a lot of problems for you. And so you want to be careful about who is on your cap table, who has ownership in your company.

And you want to be very thoughtful about who you offer secondaries to. That’s the other thing, right? It’s, it’s not just, do I want to [00:11:00] offer, uh, Do I want to offer shares of my company on the secondary market? It’s also who do I want to offer them to many times you need a board action to do this, you know, many times, you know, the, the, the management team can’t just decide we’re going to do this.

They actually have to get board approval to offer secondary shares. Anyway, I just wanted to kind of like really emphasize that. I think the facts are

Vic: that Carta. Reached out a cold email to one of the shareholders could be more than one of linear trying to See if they would sell their position for x price and Linear has not opted into this Um, obviously it’s concerning that carda controls I mean, we host we custody our stuff there.

That’s right. A lot of people custody there and it’s not ethical or legal I don’t think to do that without permission Carta has since [00:12:00] come out and said it was in error and whether it was a one time mistake or Something that was a rogue salesperson or a actual program. We don’t think we know, but it’s very clear that there’s not enough separation.

It shouldn’t be possible to have a mistake like that made. And so it’s a it’s a mean, as the article says, it’s a big credibility issue.

Marcus: So I think what has been really interesting for me is to watch from the genesis of a couple of social media posts that I happen to see and share with you how fast this, this thing blew up, um, Carter’s CEO, I think his name is Henry Ward.

Um, he’s been a little bit embattled, uh, and a lot of it on social media, uh, for a variety of different things. It’s often been around. Sort of, uh, employee dissatisfaction. I think the majority of the [00:13:00] stories have been really around employee dissatisfaction. Um, so, so he actually engaged with the CEO of linear on this, on this matter, and that just sort of spun it up into a legitimate news story.

And you started having all sorts of, I mean, you know, they probably got referenced on all in, I definitely saw Chamath, you know, tweeting about it. Yeah. Um, and. It’s it’s at this point now where this company that had this aspirational business model right to to be a critical mass platform for the private markets so that it could eventually create a liquidity market, which is something we’ve never had.

We’ve never had a liquidity market, an efficient liquidity market in the private markets, right? We’ve never had that. I think there are. Principle valuation was based on them eventually getting there. You know, they have a seven. They have an almost 8 billion valuation. Yes. The custody alone is not, no, it’s not enough.

It’s not enough. And apparently they are shutting down their efforts to do a secondary market as a [00:14:00] result of this. And so there’s a lot of potential downstream ramifications for this. We don’t know. Carta itself is pretty good. Privately held, right? They’re not publicly traded. Okay, so we actually don’t know if they’re making money or burning money We actually don’t know if they are You know gonna need to raise more and more money to keep operations going but they have half the private markets on their platform

Vic: We want them to be successful.

Marcus: Yeah, like at this point But this is actually like a potential, you know, it’s not quite the same thing as an SVB, but it has some really ugly potential outcomes here if this does not get resolved correctly.

Vic: Yeah. And, and I think they, they’re shutting it down, but, but they are, they’re aspirationally they want to do this eventually, and I’m not opposed to Carta doing it, but it has to be.

Has to have a wall between it. It can’t be sort of easily sort of falling into the day to day [00:15:00] custody work.

Marcus: Yeah. And you just cannot cold outreach to somebody’s investors on their cap table, asking them if they want to sell their shares.

Vic: You, or you can’t, unless they opt in and say, what happens is, uh, employee options.

typically are where a company decides, well, we’ve been private for 10 years. We have all these people, some of which have left now and they’re looking for liquidity and we need to sort of facilitate that. And we don’t need cash to grow. So we’re not raising money, um, internally. So they could then allow that to be like an opt in.

And I’m not opposed to, A group doing both functions, but you have to separate the two can’t be commingled.

Marcus: And even in those cases, many, not all, but many of those options have a buyback right of the company where they get to buy it first before [00:16:00] you get to sell it outside of the company. So that’s what I mean.

Like there’s no, there’s just no world where this behavior was even remotely. Allowable. It wasn’t allowable and it wasn’t going to work. No, it’s so crazy that they let this happen. Right? I mean, so yeah, so we’ll, we’ll, we’ll see. We’ll see how it evolves. Yeah. I mean, we’ll see how this evolves, but, but you’re right.

The

Vic: story and it’s just the way, where do we live in stories can get spot on social media first and then they quickly escalate. And then it’s, it’s in the, it’s in the media.

Marcus: Yeah. And, and this one social media post, which was justified quite frankly, you know, I mean, I feel like the CEO of linear effectively did a PSA because he knows how many people are on this platform and said, Hey, listen, you might want to know.

That this happened to me, right? So there was kind of fair play PSA. And now like this platform, literally this week may have a lower valuation. I mean, you know, like, like right off the bat, like off of one social [00:17:00] media post from one really stupid thing that happened inside of the company. So I think it’s, it’s a, it’s a cautionary tale, but also something we’re going to have to watch as, you know, um, You know, a venture platform that’s on Carta.

Yes, that’s right. All right. Um, so moving into JPM stories, uh, as we said, we don’t really want to talk about. I mean, there were several hundred stories. Yeah.

Vic: Yeah. Uh, but we’re not in

Marcus: transactions. This acquisition, that acquisition, we’re

Vic: trying to. Talk about strategic things that kind of fit into where we see kind of the health care and the health care innovation market going.

Yeah,

Marcus: actually, can I just give a little commentary that’s not here? Um, one thing that was discussed around a lot of the people who I met with was just how heavy, and it had always been this way in the past, but just how sort of dominant, uh, biotech and pharma was at this year’s JPM. Yeah. Relative to.

Health care services and and especially digital health, um, startup health took a break this year. So they didn’t have their startup health festival, which is really [00:18:00] sort of the convening around all the digital health activations. Um, and in the absence of that, nobody came in and filled that, that, that gap.

Um, and so it was really a, a light year to talk about all things digital health, which is kind of weird, given. Where we’re going with AI, right? I mean, I think it was a pretty big missed opportunity. You only had like big companies talking about it. There was no sort of showcase of, and it was in San Francisco.

I mean, you can imagine what a critical mass of AI companies have been funded in San Francisco to take on healthcare. And we really didn’t get to hear about them or see about them in any, in any meaningful way. So that felt like a big miss, uh, for the conference this year.

Vic: JP Morgan, um, I mean, they’re a bank.

And so they are trying to kind of convene the, the industry in order to get banking business. Yeah.

Marcus: Their middle market starts at 20 [00:19:00] Yeah.

Vic: And where, where the most deals are now is biotech pharma. Yeah. I mean, there’s a lot of announcements that happened. I couldn’t keep track of it, but there are, there are several acquisitions.

And so as far as a fee, Perspective that’s where it is. That’s right. I was talking to someone that uh, because I didn’t go this year and this other woman I was chatting with didn’t decided not to go either. Okay, and it’s less of a like a really big new strategically valuable news than it used to be and much more of like a Go to find a deal or go to go to go to meet some deals and I had two portfolio companies, you know, inactive, uh, you know, sort of exit processes that were out there and it was great for them.

You have lots of people looking to find opportunities, but as far as like the breaking news or like. A real interview that you would have like at the conferences we used to do or, or, uh, another conference that’s not sort of focused on banking. They don’t have any [00:20:00] like actual deep interviews. It’s much more like PR let’s announce what we have going on.

Marcus: Right. Right. Okay. So let’s get to the stories we actually found. And this is the subset. There were others, but like here are four stories we actually found interesting. So the first one was Jefferson health, um, partnering with Lehigh Valley health system. Uh, and. Really sort of focusing on, uh, their insurance business, really focusing on doubling down on being a payvider, uh, acknowledging that the fee for service model is not only waning, but also, um, highly, you know, fragile.

Model, you know, you go, you go into a time like a pandemic and fee for service just kills you. Right? And so you need something to sort of balance that and make you more anti fragile. So I think the reason why we want to talk about this is because it’s in line with our broader theme around the defragmentation and around the future of this industry really being in that vertical payvider stack.

Vic: Yeah, and we’ve seen. A lot. I mean, I can’t tell you the number. [00:21:00] Several health insurers moving into providing care. Of course, uh, Lilly started going direct to consumers last week, as we talked about. This is the first decent sized health system that is doing an acquisition. And it, and it’s, the intent is to grow their payer base.

Grow the lives under, under coverage. Yep. And that’s great to see. I mean, we need to have health systems, you know, understand this is the sort of game plan. This is the strategy that’s going to work, having delivery care and the insurance business integrated together. And it’s, and Jefferson’s a great platform to sort of lead the way

Marcus: there.

Yeah. And, and, and they’re, they’re in a very competitive market too, right? You know, that, that Philly market is super competitive. So, um, seeing them, you know, sort of make this move, I would imagine we’re going to see others in that market, um, making, making similar moves. So that’s really cool. Yeah. Uh, next story.

We wanted to talk about you. You found this one really interesting. I agree. My background’s in digital marketing, uh, WPP, uh, which is one of the, the, I think three big mega [00:22:00] agencies. I mean, it’s a global agencies,

Vic: big advertising marketing agency. Yeah. And they announced today, healthcare marketing, you know, in 2024, like the new way to do it.

And they’re really focused on oncology and cancer marketing. And kind of changing the narrative around what it means to get cancer and be under oncology care and WPP is bad ass me like they are really good and they have not ignored health care, but they haven’t really been focused on health care. Yeah,

Marcus: they have, they have it in their family of of agencies.

I think Ogilvy health is probably the big name in the in the health care space. Um, They’ve got VML health. Ogilvy is the one that I always sort of think about.

Vic: Yeah. So for them to come out today with this idea that, um, sort of the new approach to marketing using AI and narratives and really [00:23:00] consumer focused, which WP is, you know, really good at that.

Um, I think that’s something to watch because our industry is, hasn’t been brand consumer marketing focused. And I think if, if a few platforms started doing that and hired WP to do it, you could maybe pull in a lot of, a lot of patients from around the country into your region.

Marcus: And look, here, here’s another thing, right?

Um, I, I’m, I’m, I met, I met up at, at JP Morgan with, uh, uh, a new fund manager. Uh, guy named, uh, Ben, who’s, who’s launching, uh, Oncology Ventures. He’s a cancer survivor himself, and really everything he’s focused on is, is not so much drug discovery, um, but more patient experience. Um, you know, and as someone who lived with that, I mean, and it’s a hard, it’s a terrible, it’s a terrible experience.

And, um, you know, quite frankly, If you understand like how anxiety sort of can impact your immune system, how you communicate about this stuff, like actually can have an [00:24:00] impact in the outcome. Yes. Right. I think it definitely does. Yeah. There’s real opportunities for upside here. They’re like in, in, in care delivery, in, in, in the patient experience.

I was, uh, having coffee with my buddy Clint this morning and talking to him about a family member’s experience with, with cancer. And that, you know, it was, it was caught at a, at what, We’ve been told as a very early stage. Um, but the way that it’s described, okay. Is smoldering. And I, and I understand that’s probably a technically accurate term, but like, how does smoldering sound to you?

Does that sound early or does that sound like, like. It sounds like it’s going to hurt

Vic: me and be really bad. I don’t want anything

Marcus: smoldering. Right. So, so, so like while they’re sharing this with us and this is, this is no shade to the doctor. They’re just doing what, what is the protocol? Yeah. Yeah. You know, they’re communicating that this is.

You know, this is a good scenario because it was caught so early and it’s, it’s before it really starts being aggressive and it’s in the smoldering phase. And it’s just like, [00:25:00] that’s just not how we communicate as, as humans, civilians, right? Like, how can we start to translate some of this technical stuff

Vic: if it’s in your body and it’s smoldering, you are immediately scared and not able to listen to everything else that’s being said.

That’s right.

Marcus: And I, I, I actually think this is just smart business because we are at a point where. Cancer diagnoses are, you know, it’s hitting like one in three. That makes it a mass market issue. Just like, if you just think about a WPP and they’re looking at, you know, marketing one in three people, that’s a mass market million people

Vic: in the U S right.

That’s a

Marcus: mass market issue. And, um, You know, it’s a high margin part of the health care business. It’s one of the few truly still profitable spaces to deliver care. So that means there’s margin to do things like message, better package, better communicate, better, you know, engage better. So this is

Vic: and the spectrum

Marcus: of, uh, [00:26:00]

Vic: Treatment availability varies dramatically based on where you go get care.

So the opportunity to create a marketing story, and they talk about narrative, which is brilliant, narrative around come to our facility and we have better options, we have clinical trials, we have all these choices for you, you still might be able to Have everything taken care of with the vanilla option, but don’t you want to be in a place that has all these choices and you could pull in a lot of patients that are willing to travel to get better care.

Marcus: Yeah. So this is exciting. Um, they’re also talking about how they’re going to engage AI, um, in their marketing, uh, uh, actions. And that’s a good segue into the next two stories, which are both AI stories. Uh, so Mayo Clinic talks about partnering with a startup, uh, cerebrus, On building out their own foundational model, um, Vic, when I did the summer retreat for HFMA with the board of directors in [00:27:00] 2023, um, the current board chair is Dennis Dolan.

He’s a CFO over all of Mayo Clinic, and he gave us all just a wonderful tour of the entire, you know, campus and

Vic: Minnesota.

Marcus: Yeah, yeah, and. Listen, if there’s any health system that I think has the ability to leverage AI to actually improve care, it’s Mayo. I mean, these folks are unbelievable in what they do, and what I just loved about it is that they’re partnering with a startup.

Like, that’s obviously just great news for us, for the innovation industry.

Vic: Yeah, and I think, I agree with you. I trust Mayo. To kind of leverage AI, but also understand sort of the safety and the efficacy and do it in the right way. I think it’s great to see them come out and kind of lean into this.

Marcus: Yeah, they have the platform, they have the campus, they have the, you know, quite frankly, A very high quality, um, faculty there, um, you know, they, they have a, they have [00:28:00] a med school there on campus.

Um, they have a partnership with a, with a nursing school. That’s, uh, that’s in the area. And, um, And a lot of resources and a lot of resources, a ton of resources, so this is great. I mean, you know, this is not just buying a model. This is building a model just so we’re really clear. They’re talking about training a model.

That’s not the same as tuning a model, which is what we are all doing, you know, with chat GPT, where we’re just kind of talking to it. They’re literally training it with their own first party data that they have generated, you know, and remember, Mayo isn’t just Uh, a caregiving facility and a teaching facility.

It’s also a research facility, so they have tremendous amounts of data that they can use to feed into a, you know, a new model.

Vic: Yeah. And I think, uh, the way I think the trajectory is going is the, the big LLMs are kind of commoditizing. There’s a lot of great capabilities, but the open source models are catching up to the proprietary models.

Totally. The only way to differentiate is to put [00:29:00] different data into it. And Mayo has a lot, lot of really valuable data and I trust them to sort of use it in a way that’s going to be great for healthcare.

Marcus: Yeah. And, and look, as, as we’ve said. Ownership of the data is going to be key. I don’t know if you saw this week, but you know, there’s rumors that open AI is in licensing agreements with different news organizations.

Because lo and behold, you’re going to have to have a license for this data. I’m telling you, like, you’re not going to be able to. Just take all the data and scrub it that you want. So, yeah, they fought back pretty

Vic: hard against the New York Times. Yeah, but they also are licensing with a bunch of other media companies.

So it’s like both end. Right,

Marcus: right. So, um, I mean, well, they’re fighting with the New York Times because the New York Times put him in the face. Right, right. But they are simultaneously trying to avoid potential follow on suits by engaging in licensing, you know, agreements, right? Um, which I think to a degree just kind of proves the New York Times point, right?

I mean. Yeah, I mean, [00:30:00] there’s different

Vic: points. I think that uh, every media company is gonna gonna protect their their data So it can’t be used in the future They’re going to put it behind paywalls, even if it’s a very cheap paywall so that you can’t just sort of be sucked into training data.

Marcus: Good for them.

It’s their outputs. They literally are paying for this. Like, you know what I mean? It’s, it’s not community data. All right. Um, next story on the AI front is OptionCare Health. Uh, this is the, uh, the, the large, um, I think they’re still privately held. Um, yeah, I think so. Right. I think they’re still privately held, but they are a national leader.

And, uh, infusion, uh, care. Yes. Um, quick, uh, shout out to, uh, my, my buddy, Norman Wright, who was just, uh, announced, uh, a board member of, of, uh, of option care health. Yep. Uh, and they’re, they’re kind of on the other side of the spectrum. Mayo is partnering with a startup option. Care health is partnering with Palantir, uh,

Vic: and the largest big data company.

And the old, one of the

Marcus: oldest, one of the oldest, exactly. Um, [00:31:00] and they’re doing that for nurse scheduling and supply chain, which, you know, is, is very, very smart. But, uh, you know, as we dug into this article, we found out that Palantir is not starting with option care health. They’ve had deals with HCA and LifePoint.

So they’ve already been in, in the healthcare space, partnering with some of the, you know, larger companies in the, in the caregiving side of the business.

Vic: Yeah. Yeah. And they’re, they’re been doing this for a long time. And a lot of big brains are repellent here. Yeah. Um, but I think it’s interesting that option care, uh, we covered it here.

They tried to, um, acquire a medicines, emerge with the medicines that deal fell apart and United ended up getting, getting that deal. Yep. And so now instead of that, like go big and sort of go across the whole country, it seems like now they’re maybe trying to get smarter and have a much more differentiated solution.

Which seems like a interesting strategy.

Marcus: Yep, yep, for sure. Um, alright, well look, [00:32:00] that’s our JPM wrap up. Uh, like I said, if you wanted to see sort of all the other, um, deal stories, you can just check Modern Healthcare or Pierce Healthcare. Yeah, there’s a lot of, uh, Sources for that.

Vic: I think we’re trying to bring a different perspective around the innovation and how the landscape’s changing.

Marcus: Exactly. Uh, and we’re going to take a break, let Doug share a little bit about Jumpstart Foundry. And when we get back, we’re going to, uh, come back to covering a story that we covered, I don’t know, maybe in episode 12 or 13, uh, talking about the Chevron deference.

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 [00:33:00] 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 single digit percentage of companies that apply for funding from Jumpstart.

And we invest in the most incredible, robust. We are the most innovative solutions and founders in the United States. Over the last nine years, Jumpstart Foundry has invested in nearly 200 early stage, pre stage companies in the country. Through those most innovative solutions that Jumpstart Foundry invests in, we also provide great returns and a great experience for our limited partners.

We partner with AngelList to administer the [00:34:00] 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. Jumpstart Foundry. Everyone deserves better. Come alongside us with Jumpstart Foundry. Invest in making the future of healthcare better and make something better in healthcare.

Thank you guys now back to the show.

Marcus: All right. So vick you you found this entire thread of things and uh, I think there’s a there’s a series of stories that span beyond health care But obviously this is a big story for health care because of the huge role that the regulatory agencies play in health care um, but eugene scalia who was the uh, the secretary of labor Under President Trump, um, and also happens to be, uh, the son of, uh, chief, uh, not chief justice, but Justice Antonin Scalia, uh, wrote an opinion in the Wall Street Journal that feels like, uh, a spoiler on, on where the, the Supreme Court is headed with [00:35:00] it.

With, uh, regards to the Chevron deference, we’ll probably talk to Emily about this next week. But, uh, why don’t you just like frame up a little bit about the Chevron deference for those who didn’t listen to our previous?

Vic: So Chevron is a case from the 60s or 70s a long time ago with where Uh, the supreme court previously Decided that they would give deference to administrators like the C.

M. S. For instance, that in general, the if it’s unclear what the law is that the executive department or the bureaucracy that is in charge of managing this part of the government should have deference and get to use their best judgment to make decisions on behalf of their constituents. The constituents.

Yep. And so if it’s very clear that they’re going against the law, then of course, the courts would step in. But in general, if it’s not clear, there’s like this, I don’t know, default position that we’re going to let [00:36:00] the The bureaucracy make decisions because that’s the best place to do that, right? And there’s a court case up in the Supreme Court right now, which is why we’re all talking about this challenging that.

And a lot of a lot of people, including me, think it’s going to get overturned where it’s no longer going to be that default position. In health care, there’s so much that is managed by HHS, CMS, all the regulatory bodies. There’s going to be a lot of things that are now subject to, to be called into question.

That’s right.

Marcus: Yeah.

Vic: And,

Marcus: and, and, and I think what’s, what’s been interesting Is to see that there has been, um, I think less willingness from, uh, the, the, the players in the, in the private and even public markets, um, to just stand back and take whatever the agencies sort of say and, and, and dictate, I mean, [00:37:00] It is in fact true.

And by the way, this was episode two of health further. So that we literally started this podcast talking about this. Um, it is true that look, these agencies are all effectively staffed by whichever party, uh, is, is in power in, in the white house. Okay. And the way that they run them is, you know, they have a series of commissioners and there’s always a chair of the commission.

Um, and it’s, it’s always a majority. Uh, allocated to the party that is currently in the White House with a majority there for the purpose of dissenting, um, and at least representing a dissenting view. But really, they can, you know, they can argue and try to persuade their their their commissioner colleagues.

Um, but generally speaking, we’ve seen just a ton of voting across party lines, um, and the agencies have become these tools to effectively push through policies, uh, from the executive office. And this has happened on both sides of the aisle. It’s, it’s, it’s not a Democrat or Republican thing. It’s, it’s, this is how the executive [00:38:00] offices have decided they’re going to get things done, um, in line with their promises to the, to their constituents.

Especially when Congress is kind of, you know, broken, uh, where, where there’s constantly, uh, yeah, that’s

Vic: the thing is that we’re not in a position where Congress can actually pass laws, meaningful laws, right? Right. They can’t even pass a budget. And so we end up with this executive order. Dynamic where the executives the president just says like we’re going to go this direction We’ve covered I don’t know 10 or 15 from the biden administration in the last few months.

Yep And that I think is going to change If this if this gets overturned.

Marcus: Yeah. So we just want to talk about three different stories here with three different agencies that are all currently kind of going on just to kind of frame up how in a world where Chevron deference is no longer. Uh, the law of the land, you know, the outcomes could be very, very different, right?

Yeah. So, the first one [00:39:00] is related to, uh, Medicare Advantage. So, we had a whole episode, again, with Emily, breaking down the huge changes that are, uh, afoot with Medicare Advantage. Yeah, the star rating got totally redone. It immediately, sort of, put a whole bunch of, um, health plans. into inviolable status, right?

They, they, they move from four and a half stars to, you know, sub three and a half stars. And basically you’re losing money at that point. So, um, it was announced on, on January 5th, that Elevance Health is suing, uh, you know, CMS for changes, uh, that were made to the star ratings methodology.

Vic: Yeah. And whether you think the new star rating is good or evil.

I happen to think it is pretty, on general, good. The ability to question this and sort of have a lawsuit that then we’re going to be in a position where no one knows what the outcome is, especially if the Chevron doctrine is, is sort of overturned. Right. Where now we’re going to be in the [00:40:00] courts and really no decisions can be made very quickly.

And, but I think it’s right that the elephants is questioning this because it’s It’s not legislative. It wasn’t sort of enacted by Congress.

Marcus: Yeah. And I think, I mean, look, people have their sort of pejorative views of different health care companies. Some people don’t like pharma. Some people think the payers make too much money.

Um, like regardless of what you think, just, just listen to this, you know, Elevance Health said on their last earnings call that they are preparing for 500 million hit to bonus payments. So imagine you start the year sort of projecting A certain thing, and then by the end of the year, you’re, you’re, you’re all of a sudden expected to take, to take a half a billion dollar haircut.

I mean, there’s clearly something in, in that process, um, of, of changing the ratings from a rollout perspective that can be something that organizations can actually absorb. Most [00:41:00] organizations cannot absorb a surprise half a billion dollar haircut.

Vic: Well, and I actually. I like the way the star rate, we talked with them, I like the way they’re trying to shift it to, you know, better alignment with, with outcomes and with patient care.

For

Marcus: sure.

Vic: But, um, but it, it was dramatic and much faster than anyone expected. Yeah.

Marcus: Yeah, so it feels like here. We’re really talking about a rate of change issue. Not so much like the direction of the evolution of the methodology. Um, and it’s

Vic: really dysfunction on at all levels. Like if Congress was more functional and there was more clarity of sort of what’s going to happen and it was actually enacted in law, then you wouldn’t have all these issues.

That’s right. If it gets overturned, I think I fear we’re going to have just more uncertainty. More unknowns, more people correctly being able to sue and try to stop things.

Marcus: Well, here’s the deal. If in fact, the Chevron deference [00:42:00] does get overturned, that does not fix Congress. Right, that’s the problem. And if it does get overturned, And what that then, I think, is largely going to do is it’s going to create more needs for things like ARPA H, for example, which are things that are totally outside of the agencies, and it’s just like the executive office grabbing a bunch of budget and just doing things kind of off the book, right?

So I think that’s kind of, you know, um, One, one model that you can see, and it’s also going to force the industry to drive better results through innovation. I mean, because there’s not, you’re not going to have as many levers that are going to be changed and pulled, uh, kind of year to year. So interestingly, I think the, the big changes that were made in this last, um, you know, physician fee schedule that were rolled out in November.

And there’s these big Medicare Advantage, you know, uh, updates and also the, the, the price transparency rules and also the drug negotiations. I mean, it, it could be [00:43:00] that the white house knew that the Chevron deference thing was on the horizon and they just were like, we’re just pushing all this stuff through now because we may be hamstrung, uh, you know, by the end of 2024 to do anything about it.

I mean, it’s.

Vic: Yeah. I don’t know. I’m I will talk to Emily about it. I think she’s on next week. Maybe we’ll talk to her because I’m worried that there’s going to be just a huge rash of new court cases. If now, and you’re not going to have any clarity, even, even worse than today, like what to do. Right?

Marcus: All right.

Uh, and then the FDA issued mass approval of, um, of drug imports to the States from Canada.

Vic: Yeah, this is. Ridiculous and a sign of complete incompetency. I mean, the idea that we are going as a country are going to allow and encourage the import of drugs. That are under price controls in [00:44:00] Canada for the benefit of Canadians because we can’t get our act together to decide how we should price our own drugs does not make sense in any world, but they have they have allowed it.

So now you can, at least I think Florida was the first place, you can, you can buy, thanks to the state of Florida for their Medicare, Medicaid, uh, book, is buying drugs from Canada. That’s right.

Marcus: That does not make sense to me. I mean, I mean, listen, it’s, it makes sense insofar as, uh, I don’t want to hear that people cannot get access to basic drugs that they should have access to, right?

So, like, I start with an orientation towards the patient, the patient’s needs, and, you know, we can talk about the, The logical path of the solutions that we’ve chosen and whether or not they make any sense at [00:45:00] all, or whether or not they demonstrate that like our own supply chain is totally dysfunctional.

Ultimately, we got to be able to get the right drugs to the right patients. Okay, so that’s that’s where I start, but I don’t disagree with you. Like the fact that this is where we are is

Vic: ridiculous in the U. S. I don’t have I should have looked it up. I think we probably by 50 X as many drugs as Canada.

And we’re going to take their pricing just because we can’t get our act together to to do it ourselves. I think the answer is yes, that’s what we’re doing. That’s the answer. The interesting thing is that those, so Biden and Trump and DeSantis are all in favor of this. Yeah. And so like, I don’t think there’s any other topic that I can think of that they’re all in favor of.

So it’s crazy. Yeah. All right. That’s an example where, where people are. You know, questioning how it should work. Yeah. And the [00:46:00] FDA just made a decision.

Marcus: That’s right. Uh, and then the final story is not a healthcare story. Uh, it’s Bitcoin. Um, so after 10 years of just totally stalling on any form of reasonable progress, and, and really, I would say, uh, an all out assault and what’s been called operation choke point 2.

0. Um, led by Gary Gensler, um, and, and the SEC as of last year, uh, over the last two years, the Bitcoin ETF is finally live and in the first day of trading almost 5 billion of volume. Yeah,

Vic: that was today.

Marcus: That was today. Yeah, day one. Um, And this is another space where, you know, it’s hard to look at. It’s really, really hard to look at the way that the SEC has managed [00:47:00] cryptocurrencies and effectively.

Not given any clear guidance to the market as to whether or not it is a security or it’s not a security has levied really aggressive, um, penalties, um, on companies in, in America and effect and effectively has offshored. The industry, especially when it comes to exchanges, you know, there are no on ramps.

It’s not safe for banks to, to be partners in, in the, in the crypto industry. Um, it’s, it’s been sort of characterized, I would say largely by the Democrats in Congress as sort of a tool for terrorism. Um, nevermind, nevermind that like most of the money does not go through crypto. It’s in dollars. That’s right.

It’s in dollars. Um, and, and now because Of lawsuits challenging the SEC’s reason and rationale. Finally, a Bitcoin ETF has been approved. Now the general public has, [00:48:00] um, you know, I think the right way to say it is, is a safe way. Yeah, safe and convenient. In

Vic: my Fidelity account, I can just buy it. That’s right.

Marcus: To get access to the asset class. Um, and this is another one of those cases where you look over the course of the last 10 years and all of the, all of the wrangling and the holdups and it’s hard to figure out why. It’s, it’s, it’s hard to figure out what was the good reason. And, and oh, by the way, hold on, hold on, hold on.

And, and, and by the way, when this whole thing started, you know, Bitcoin was sub 5, 000, you know, when, when the general public could have gotten access to it, it was, Worth 10 percent of what it’s worth now, right? And so now we’re in a situation where finally they can get access to it We’ve already had several happenings.

It’s like it’s 50 000 a coin now It’s just I mean, it’s still better late than never better late than never [00:49:00] but pretty doggone late Yeah, pretty late and and how do you how do you justify this?

Vic: Well this I want to try to say this simple point first, which is this was so egregious That the SEC couldn’t stand behind the Chevron doctrine.

It wasn’t unclear. They weren’t given sort of the benefit of the doubt because there was no doubt that it should, especially Bitcoin, which is the one they’ve allowed. Right. It’s been defined by the SEC as a commodity. Gary Gensler himself has said it’s a commodity. It’s a, it’s a commodity. It should be allowed.

There’s no question about Bitcoin. I think that’s true about probably, I don’t know, 50 of the, of the crypto coins. At this point. There are examples where it is a gimmicky, Plenty of them. Plenty of them. But those are not the top 50 market cap ones. They’re certainly not the top 5. Top 5. Certainly not Bitcoin.

Yeah. It’s, 10 [00:50:00] years and as you say, uh, a 10 X lost return for people that have 401ks at Fidelity that they want to buy this.

Marcus: And probably asset to asset, probably the best performing asset of the last 10 years. No question. No question. So like that, that’s the part, right? It’s, it’s like you didn’t let the general public have access to the best performing asset of the last 10 years.

Yeah, but they never do that. I mean, you also, they also don’t allow the general public to do venture. Yeah, I mean, I mean, I get that, but this, this is all just in the, by the way, and that’s also SEC. So, you know, all of this just kind of goes back to the Chevron doctrine, right? Which is, which is agencies and their authority.

I think on the venture side, there was more. Sort of, sort of, uh, I don’t know. There’s more history and more sort of established understanding about the difference between the public and the private markets, and at least you had access to some form of equity. Right? You know, it was just all, it had to be on the public [00:51:00] markets, but you had access to some form of equity.

But in this case, the general public had no access to. Cryptocurrency, right? No, no real access. That was, you know, above board where you didn’t have to worry about the exchange that you bought it on being audited, kicked out, you know, FTXing, uh, you know, doing all sorts of crazy stuff. You know, we have legitimate organizations.

Like you said, you know, Blackrock. I mean, these are all legitimate organizations that are doing these, these ETFs.

Vic: There’s no question. It’s the right thing. I mean, you and I are Bitcoin holders now, so it’s, it’s good for us, but it’s good for our parents. It’s good for our kids. Like, I was talking to my son about it yesterday.

He, he didn’t want to do the, the KYC thing. He didn’t want to get something. I mean, it’s a hassle to do and now he can buy it in his existing account. Yeah, whatever. Exactly. And I don’t know. I mean, I think that there was an intentional delay to sort of [00:52:00] let Wall Street. Get their kind of act together so that you could have Fidelity and blackrock and all all the kind of traditional Big wall street players get involved if you had done it even five years ago.

It would have been all new players Which would have been healthy for the ecosystem. You know that we still live in America with lots of lobbying and lots of lots of ways to at least delay stuff. And so a lot of the lot of the Bitcoin trading profits will not go to Coinbase. Crackin or the people that really kind of did the hardware to get this asset class to exist It still will be better for the general public.

That’s right, and they don’t

Marcus: have to allocate but it’s an option for them now Yeah, and also like Bitcoin kind of anchors everything else in the same way that you know, Google anchors All the private market tech companies, [00:53:00] right? You know what I mean? We, we, we, we look at private market tech companies that we say there’s a chance they could become Google, right?

So we, so we look at Solana and we say there’s a chance it could become Bitcoin, right? And, and, and so from that perspective, I think Coinbase still has a really good business opportunity there being the place where you can, you know, pretty easily get access to all the other coins that the ETFs are not going to have access to,

Vic: but if, if the SEC had allowed An ETF five years ago, right?

Coinbase would be running it and totally agree. They sort of delayed and not for all the other people had time to catch up, get their act together. And you know, I’m not a shareholder of Coinbase, but, but I think, uh, I think that was not ideal. It was ideal for the, for wall street, but at the end of the day, it is now possible to buy it.

You’re, you know, The foundations can buy it. The institutional investors can buy it. Little grandmother on main street can buy it and they don’t have to, but they have that option now, which is a good thing.

Marcus: Yeah. So all three of these stories, we’ve got a story about the, about CMS. We’ve got a story [00:54:00] about the FDA and a story about the sec, right?

You know, they’re

Vic: all being challenged and the SC lost. That’s before

Marcus: Chevron’s overture. Yeah. So, so we, we are headed into a world, you know, we, we just sort of, I, I, I think that this, the reason why we’re talking about it now is, you know, we’re now living in a world where we see the impact of, you know, the SCOTUS decision on affirmative action, right?

You know, these, these decisions that are, that are all sort of, uh, on deck for this particular, uh, configuration of the Supreme Court. You know, they’re changing the world that we have sort of all just assumed was the world forever for decades, right? They’re overturning these fundamental, uh, you know, rules of, of the way that the country operates, of the way that the government operates, and they’re going to have massive, massive changes to them.

You know, we just sort of assume that the [00:55:00] FDA has this broad remit of power. But if the Chevron doctrine thing gets overturned, I mean, there could be some real. Changes in the way that the FDA operates.

Vic: Well, I mean, you said it. If they overturn Chevron, that won’t fix Congress. No. And so they’re basically like ripping up the playbook.

But there’s no new playbook. Right, right. And so we’re just going to have chaos. And in healthcare, because 50 percent of the market is somehow paid for or regulated, or it’s all regulated by the government, so government influenced, I think it’s going to have a huge effect on our industry. All

Marcus: right. Good show, man.

Vic: Happy to be back. Um, I love the holidays, but I’m also happy to be back and working and getting going.

Marcus: Likewise. Next week we have Emily coming on. We’re gonna have Emily coming on once a quarter to just kind of give us a rundown on all things policy that are going on. Uh, and then shortly after that, we’ll start looping in guests on a, on a week to week basis, which we’re super excited about.

Um, we got Nzinga Harrison who just released her book. [00:56:00] Congratulations on addiction. Um, Uh, and, uh, I, I got to actually read it, but it’s at my house. Um, we got, uh, Dr. J bought from, uh, from Deloitte coming up. Um, uh, Ambar Bhattacharya from, uh, from Maverick Ventures. So great, great list of guests that are going to be coming up, uh, in the coming weeks, um, and that means we’ll be releasing not just one episode, but two episodes a week in these weeks, because we’re still going to do our weekly rollup.

So. Um, exciting things ahead for the podcast and, and we’ve also got some other tricks up our sleeve. Uh, so, you know, definitely let your friends know, subscribe, share, give us a great review on, on Apple podcast or on Spotify. Yeah. Thanks. All right. Bye.

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