39 – Wall Street Record Highs | Humana to Reprice MA Plans | AI at Davos and Deep Fake Biden Calls | Steward Health in Trouble (again)

Vic: [00:00:00] How’s it going? It’s going well. I’m, uh, fighting through some things in the portfolio. I think we made some progress this week. So feeling good. You know, you do all this work with these companies and it’s hours, as you know, but the listeners don’t always know. It’s hours of like working through change and reducing costs and raising new money.

And it doesn’t always end in anything. And so I’m hopeful this week. I feel like we made some progress in the portfolio.

Marcus: You know, just reflecting on the last 18 months. I do not expect anyone to feel sorry for venture capitalists. I don’t, I get it. It’s a, it’s an incredible privilege to write checks. It’s an incredible privilege to manage money.

Um, it’s an incredible privilege to make decisions on who gets funded and who doesn’t get funded. So I don’t like, yeah, we have a great job. Yeah. I don’t expect anyone to feel bad for us. Uh, I will say [00:01:00] there is a spectrum of VC. There are those VCs that follow pop party rounds, drop a check in and don’t actually do any work for those VCs that actually are leading deals, sitting on boards and working shoulder to shoulder with founders.

This is not a glamorous job.

Vic: This is,

Marcus: this shit is hard. And I think about everything from like the SVB, you know, meltdown to the meltdown of the series a market last year, um, to the down rounds. And, you know, there’s a big, uh, not a big story, but, uh, Peter Walker from Carta was taught, did a whole sort of data minute thing this week about down rounds and how prevalent they were, I think it was like 30 percent of the investments last year on Carter with down rounds or something like that.

Um, folks, this is not glamorous, fun stuff. This is super hard, especially when you’re going through a market cycle shift.

Vic: Yeah.

Marcus: Like we’re in the middle of right now, [00:02:00] uh, funds going out of business. Um, It’s look, it’s real work. And, and also like, you know, heavy is the crown. I mean, when you’re managing this kind of money, the swings and the, the potential wins and losses, it’s, it’s a lot, it can create a lot of anxiety.

So, you know, people have to take care of themselves. And I think, you know, the pressure is not for everybody. I think. 2024, we’re going to see more funds, just hanging it up for a variety of reasons. Just saying, listen, this is, this is no longer fun. This is, this is, it’s too hard. It’s no longer fun. Uh, and there’s other ways to make money.

Vic: That that that’s right. And so when I have a week, like this week, when I get some rays of light, uh, it’s a little hard to talk about the pod because I don’t want to out particular companies, but you know, they’re, they’ve been working a ton of hours trying to do more with less and negotiating. I’m trying to help them negotiate through, you know, changes in the cap table, restructuring things, trying to get it all right sized, which can be [00:03:00] challenging and sometimes just falls apart.

It’s good to see something maybe going to come together.

Marcus: All right. Uh, got a good week of stories to talk about. So let’s dig in. The S and P

500 is ripping.

Vic: Yeah. I mean, it is a record close five days in a row. Last Friday, and then every day this week, the SP 500 has closed at a new all time record. And the DAO is also, I don’t think it has that same streak, I think one day it didn’t hit a record, but both of them are just like, to the moon. And yet, it f Feels to me like the overall economy is not taking off like that.

Marcus: Well, it’s the haves and the have nots are getting more well defined. Uh, there’s more concentration for the [00:04:00] haves. So we’re hearing stories every day about the have nots. We are seeing consistent. Layoffs that are driving stock prices up. Yeah, right. Every time there’s a announcement of layoffs The stocks get a bump from that right?

That’s that’s that’s part of what’s going on here this week.

Vic: Yeah part I mean both of those things I completely agree. I just want to take them, pull them apart a little bit. So the, the Magnificent Seven or whatever it is, it’s very, we’ve, we’ve done a show on it. There’s very few companies in the S& P 500, seven, maybe a couple others, but less than 10, that are driving most of the gain.

Right. The earnings across the 500 stocks are down and it’s all multiple driven. Right. It feels like, even though it’s called the S& P 500, it really is seven stocks. And they are the have nots. They’re all the big tech companies that are able to leverage [00:05:00] technology to grow their power and eventually their earnings.

It’s a record. And we should note that, but it, but it, it doesn’t feel like it’s flowing through to the overall economy. And then the, uh, yes, the, the delay, there’s continued layoffs every day. This new layoff

Marcus: multiple times a day. Right. Yeah. Yeah. It’s, it’s, um, I mean, it’s all part of the reformation of. Of the economy, and we were going to talk about Davos, uh, we’re going to end up mostly talking about AI, I think, but just to quickly talk about pretty uneventful.

It was, you know, they, it’s just not where the economy is being worked out anymore. You know, um, it’s, it’s being worked out geopolitically, uh, in technology. That’s, that’s where it’s all sort of [00:06:00] coalescing. Um, you know, capital, capital markets and technology companies. That’s, that’s where the economy is happening.

Vic: I think that the Davos thing and the Davos man and that whole. ethos, at least they have realized that they, they need to be a little lower key. I think that’s why I was kind of quiet. Cause they’re not flying their private jet in and then talking about climate change and telling me that I should, you know, whatever conserve.

Um, It was a lot lower key, but that meant that really there wasn’t that much newsworthy now came out of it now. So I think it’s um, It’s just a declining power in the the old geopolitical world order like us led nato europe united states that is Declining not that we don’t have power, but we’re declining In the power and that that sort of elite group that met In davos every year to decide the fate of the world [00:07:00] has less power today That’s probably a good thing, but it means that there’s not that much to cover.

Marcus: So non healthcare related but uh, You know, i’m i’m i’m into sports and media just through the the soccer club. Yeah So it was announced this week that the flagship show of wwe world wrestling entertainment is going to netflix, right? You And they, they signed a deal similar to the deal that Major League Soccer signed with Apple.

So 10 year deal. Mm-Hmm. , the major league soccer deal was $2 billion. The WWE e deal was $5 billion. Um, it’s been viewed as like a, somewhere like a 25% increase on the rights. For the show from the last contract that they had previous deals were five year deals So this 10 year deal kind of locks them in over the course of course of 10 years to that 25 increase So, you know that kind of if you just amortize it out [00:08:00] cuts it down to a 12 and a half percent increase really over two five year terms, right uh, but the big thing about it in addition to all the financial terms is It’s the first time that a major WWE show has moved off of cable onto streaming and it’s going to be on streaming for 10 years.

So 2025 to 2034, it’s going to be on, on Netflix. And by that point, everything’s going to be streaming and can hardly be no cable anymore. Right? Um, I think that is a sign of the shift. Of the magnificent seven, right? Um, because so many of the layoffs we’re hearing about our old, we’re old world media companies, um, Forbes, uh, uh, Buzzfeed, um, business insider, uh, was announced today.

Um, 8 percent for business insider, I think 3 percent for Forbes and [00:09:00] the streaming platforms able. Being able to lock in these really long term deals at fixed economics, like to me, that just demonstrates they’re accruing more and more power because that’s a fantastic leverage deal for them. And if they’re able to start hollowing out cable, I mean, what, what part of media are they not going to be able to hollow out?

They’ve already hollowed out the newspapers, right? Yeah.

Vic: I mean, live TV was the last place. That was it. That now is over. I mean this week, um, I hadn’t really thought we’re gonna cover it, but it’s great I mean netflix really kind of stood up and proved they are I think by far the leader in streaming for sure Their churn rate is really really low.

They’re like at two percent a month Other platforms have a huge churn rate. They’re sort of burning through 60, 70, 80 percent of [00:10:00] their customers every year. So they have to refill just to keep up. Netflix is much better run, honestly. And it looks like to me, Amazon prime is really the competitor that has the number two

Marcus: and

Vic: that’s because they have a whole different Amazon, they have a whole different set of resources.

It’s prime. It’s prime. Yeah, it’s not,

Marcus: it’s not a streaming platform.

Vic: It’s an, it’s a feature of prime membership. I was a prime member before. Before they even had TV. Exactly. And when they got TV, like, sure, we’ll take it. We’ll take it. It’s pretty good. So, um, yes, Netflix, they killed earnings, they had this big announcement, a huge live sports event, and it just seems like cable, cable, with the rest of old incumbent media is dead.

Marcus: Yeah, and I mean, that’s a whole nother thing. Industry big tech is just swallowing. Yeah. So, so, I mean, I, I think the thing to really sort of note [00:11:00] here is one, um, healthcare continues to be, uh, resilient against big tech domination and swallowing, right? I mean, big tech really. Is largely, um, gosh, we probably should have, should have pulled it in.

Maybe we will in real time. Um, there, there was an announcement, uh, from Amazon, uh, around sort of the growth of one medical, um, this, this week. So, you know, I, I do think there’s going to be more, um, more approaches to the commercialization of, of, of healthcare through these bundles and through prime memberships and things of that nature.

But at the end of the day, fundamental healthcare is still, I mean, I think it’s back to the Apple watch story, right? It’s, it’s still just got barriers on barriers that, that, that, that keep it protected. Whereas all these other industries, retail, media, I mean, if it’s, if it’s consumer facing, man, it’s in trouble.

[00:12:00] It’s in trouble. I think CPG is in trouble. I mean, you know, I mean,

Vic: If it can be digitized, it already has been or it’s being done right now. And healthcare, eventually, you have to interface with the human body. You can’t put it over a Wi Fi network and shoot it across the world. Now, there’s lots of aspects of healthcare that can be digitized.

That core treat, laying hands on a patient, and giving them some kind of treatment is really not that digitizable. No. And so healthcare is protected somewhat. It is, uh, people are coming from all different directions like Amazon, um, and they’ll keep, they’re going to keep coming. And so we, I think our listeners and our, our portfolio companies and our, uh, incumbent customers, [00:13:00] they have the opportunity to.

Get their act together and sort of upgrade and bring the right digital services to complement the face to face laying hands on a patient But I don’t think we can get sort of lazy and just expect to be protected forever

Marcus: No we’re not gonna be protected forever and I think one thing to think about are the the undesirable markets right and and my how the tide turns so You know a market that I would imagine most of big tech doesn’t Really care to do anything with today is, uh, senior care.

Um, first of all, most seniors are not that tech literate. I mean, you know, they might use Facebook, they might have an iPhone, but sort of beyond those things. I mean, I just tell you from my view of my 80. Five year old parents, right? Like hard to

Vic: get them to

Marcus: Facebook and using their phone is that’s kind of where it maxes out.

You know what I mean? I’m doing a lot of stuff on their behalf when, when you get beyond that. And, um, I think as, as technology [00:14:00] continues to get, uh, new interfaces, right? So we have AI, we have voice, we have the metaverse. All these things are. Becoming a lot more real. They’re getting a lot less jokey and I’m getting a lot more real.

I think it’s just going to leave generations of people in the dust. Like, I mean, I, I know a bunch of, you know, people who are in their sixties who I don’t think will make that leap. And there’s probably people in their fifties who won’t make the leap to the next big interface we’re going to have in technology, right?

So you overlay that with, with just the shifts that are happening in. You know, Medicare Advantage, it’s becoming less desirable. And it’s almost like they’re just going to carve that out and say, okay, old school healthcare industry, you can have that while we focus on, you know, the millennials and, and the, the employer based, you know, market and how we can make convenience really great.

And just get them all used to the way that we work so that when they get into their, you know, their later years, um, they’re, they’re a captured audience and we can better manage and we’ll, we’ll take that, that part of the market Our focused market [00:15:00] target ages, but not like we’re not going to try to steal me from you today.

Vic: Yeah, I think there’s no question about that. I mean, we talked with Emily probably right before the turn of the year about where the senior population is demographically and it is. about to peak. I can’t totally recall, but like next year or two years from now, it’s going to peak and then be a slow decline.

And yeah, I think at some level the incumbent industry will take care of the boomers and then there’ll be new sets of services for the growth area. And so getting to this next story, Humana, um, they missed earnings. They had a lot of utilization, a lot of spend. Their MLR was 92. I think we covered that last week.

But, um, then they came out this week, and you found this story, but they are going to reprice their plans. Uh, because they don’t expect the government to [00:16:00] make any significant changes to the reimbursement side. So, I think what they’re saying is they’re going to charge the seniors

Marcus: more. Yeah, that’s exactly what they’re going to do.

So let’s, let’s just, uh, read a couple of quotes here. So, uh, from CEO Bruce Broussard, uh, he says, I think the whole industry will possibly reprice. I don’t know how the industry will take this kind of increase in utilization along with regulatory changes that will persist in 2025 and 2026. So he’s, he is predicting probably on good inside information.

And I don’t mean insider trading. I mean, just, you know, he

Vic: has

Marcus: people. Yeah. Yeah. He has people who are, who are tracking the trends of where the agencies want to go with this stuff. Um, they’re expecting more of what they saw for the 20, 24. Um, uh, rate notice coming over the next two years, they’re seeing utilization increased because as we get to the top of the curve, um, over the next two years, that’s going to mean a lot more usage.

Vic: Yeah. A [00:17:00] lot more as a percentage of seniors, more of them are older, more of them have acute healthcare needs and

Marcus: are expensive. Right. So, so more usage, right? Um, and that, you know, managing usage is, that’s key for MLR. You got, you got to manage that if you want to make money, especially in something like, like Medicaid Advantage, where the spread is the, you know, the key to making money.

So they said they wanted to raise prices. So you and I had a little, like, discussion around, like, how, how, what are the prices like now? I mean, we’re

Vic: in the market, and I, we had to go look it up. Like, I, I, Was not aware that pricing was a significant part of it.

Marcus: Yeah. So we, we went to, so just to set the, set the table for anyone who doesn’t know, um, if you’re just doing like regular Medicare, like that’s coming directly from the government, there’s no charge because the government is, is delivering it, but if you do a Medicare advantage, that’s generally speaking, it’s going to be a private, you know, insurance company that’s doing the administration of it, um, and they can layer on a cost there as [00:18:00] they sort of package the different plans and Depending on what state you’re in, you know, what plan you’re, you’re, you’re working with, what company, all those things factor into what the different plan options you have, as well as what the different prices can be.

So we went to Humana’s website, which is actually very, very nice website, um, and went to their Medicare page and just pick two different PPO plans that were kind of in the top of the list. So the first one is a recommended, uh, Humana choice PPO. Uh, and then the second one is the Humana Value Plus PPO.

Vic: Yeah, and it changes by geography. So we had, this is for Nashville. Yeah, that’s right.

Marcus: This is for our zip code. And so we were like, okay, what’s the difference between these two, um, plants? The reason why we picked these two is the Humana Choice PPO, which is their recommended one, has a 0 monthly premium.

So no monthly premium at all. Uh, whereas the Humana Value Plus PPO is 41. 40, um, monthly premium. Again, that’s for our zip code, um, here in Nashville. So as we kind of went down, you know, the, what are the big differences [00:19:00] between the no premium plan and the free, and the, um, 41 premium plan? Uh, the no premium plan has a max out of pocket of 6, 700.

Whereas the monthly premium, the 41 one has a max out of pocket of 3, 000. So that’s a, that’s a fairly big difference if you’re going to be using it. Uh, we’re talking the 3, 700 difference. So I think right there, um, you know, you kind of do the math and you say, if I’m, if I think I’m going to use this, I’m going to pay, right?

I’m going to pay the value plus thing.

Vic: Yeah. If you, if you’re going to have healthcare needs, which if you’re A senior, you might expect, depending on your health state. Right. You’re, you’re pretty likely to spend 6, 000, 6, Because it costs a lot to

Marcus: get treatment. That’s right. That’s right. Um, there also is a prescription drug deductible, uh, for the Yeah, the

Vic: deductible is lower in the free print.

Marcus: Yeah. Which is kind of counterintuitive to me. Yep. Uh, there’s, there’s small differences in terms of like the allowance for glasses. It’s, [00:20:00] you know, you have a larger glasses allowance in the value plus plan than you do in the humanit Choice plan, and then there’s something here around healthy options allowance where you get like 65 a month.

You know, I don’t know exactly what that is, but it seems like a like a kind of a trade. You pay 41 a month in a premium and you get 65 a month in this healthy options allowance. So I think most people will. If they have the

Vic: ability to pay, yeah, it’s designed to encourage you to pay the 40 bucks 41 a month.

Marcus: Yeah I mean if my parents came to me and they said, you know, hey mark, what should I what should I do? I’m gonna look at these and pretty quickly go up. You should do the one that’s 41 a month Like, you know, it’s kind of a no brainer. You’re gonna have all these downstream savings. So I think what uh, bruce broussard is is Is projecting is that not just Humana, but the rest of the market in order to, uh, deal with, you know, a heavy regulatory burden that’s going to be continuing to come down over the next two years.

Plus increased utilization is going to have to increase prices. So that’s going to, [00:21:00] you know, impact the household cost for these seniors or for the, you know, the loved ones who are trying to help them out. Um, That’s increased costs for the general public from a health care perspective and increased costs for seniors, which, you know, every time any bill goes up from my dad, he like freaks out because they’re on fixed income, you know, he’s on his pension plus whatever social security is.

So increased costs are bad.

Vic: Yeah, and I believe. It’s I think they can price this based on the zip code, right? So that’s one. I’m pretty sure that they can change the prices in different areas differently. Yeah,

Marcus: I think they totally can.

Vic: And furthermore, uh, recalling back to our discussion with Emily, in some of the rural areas, there aren’t that many choices, right?

And so, I mean, like everything in life, it probably is going to negatively affect the people that can least afford Going from 40 a month to 70 a month [00:22:00] and that where there is not many other options. I mean, it’s the only game in town, you know, they’re, they’re for profit publicly traded company. They sort of have to try to maximize their earnings.

They’re going to increase the price where they can and where it’s super competitive in. I don’t know, downtown Miami, maybe it won’t be so high. So it’s just going to be more pressure on seniors. And then I think it’s going to eventually flow through. Unfortunately, the health systems that are treating lower income patients are going to then not have lower margins.

Yeah, right. Yeah.

Marcus: So, so difficult times all the way around. On the Medicare Advantage front, um, higher, you know, uh, the higher utilization and the, and, and the lower, um, uh, rates, uh, that are going to be paid out by CMS based on performance and, and the more stringent, uh, [00:23:00] terms from a star rating perspective, all that is harder for the payer.

The payer is going to pass along that difficulty to both. the provider and the member. Um, so all the way around just hard, but I don’t know how this is necessarily avoidable.

Vic: Biggest one, biggest area advantage and pretty well run. I mean, we know several people up there. It’s pretty well run operation.

Nobody argues with that. I mean, you can’t, where I was going to go is this

Marcus: utilization. I mean, yeah, well, there’s a

Vic: lot of other ma plans that. Or might be in worse shape than this. So it’s going to be a hard industry wide thing, I think.

Marcus: Uh, okay. So just moving to the AI topic and going back to the, to the Davos thing, I think that the most meaningful thing, uh, that happened was Argentine, uh, president Javier Mille gave a speech.

Um, the speech was kind of lambasting Davos and, and a [00:24:00] general wave of, um, I guess left leaning policy, what he called collectivism, yeah, collectivism, um, you know, it’s interesting. We’re really getting into like some, some, some very fundamental political discussions now, because people are realizing like just running around and calling everybody a communist is not that effective.

So, you know, you need to kind of figure out some words, be more specific, but, you know, basically that that’s a, that’s a master word for it’s a soft word for communism effectively, um, but he was painting America. in

Vic: there, too.

Marcus: I mean, like,

Vic: right. And so 100%. I mean, I think that’s why he didn’t use the word communist because he wanted to include The US and Europe in there.

Marcus: Yeah, I mean, listen, I think maybe if I thought the world economic forum was more meaningful than it is, I would care more about what he said. And also, if you didn’t have this same kind of, you know, rhetoric being projected by our own. Uh, you know, Republican candidates as well [00:25:00] as well as from so many other European and South American leaders.

It’s it’s I would say it’s not that unique. I think there are two things that were unique about this. One is he’s the Argentinian president. And so he did have, you know, the historical backdrop. They have a lot of experience with this. Yeah, he did have the historical backdrop to kind of, you know, reflect on how Argentina was this thriving economy, and then, you know, had, uh, one of the most incredible run ups from a, uh, you know, currency inflation perspective, uh, that the world’s ever seen, ever, you know, from a history perspective, so.

And, I mean, people

Vic: should listen to the, to the speech. It’s a good speech, and he points out that it is, uh, at least for me, I thought it was good. It is fairly well intentioned when individuals try to bring. Fairness, and let’s share across more evenly. But then that’s a slippery slope and it ends up in collectivism.

Marcus: Yeah, well, look, I mean, [00:26:00] if you’re intellectually honest, you have to, um, steelman the other side. And, uh, I often appreciate when people who are on the right will at least acknowledge the importance of the left. Like, you need a counterbalance. Oh, yeah. You need a counterbalance on both sides, right? You know, because runaway, uh, That’s right.

All in moderation. Yeah, that’s right. So anyway, that’s not the story. That wasn’t what we were going to talk about. Yeah, yeah, yeah. The story is that within hours of him delivering the speech, In, not in English. Yeah. Uh, this program called HeyGen that anyone can go buy right now and use to, you know, create different AI videos.

I used it for free. Yeah. And I tested it for free. Yeah, you can go, go log on right now. Uh, generated an AI version of his speech with his voice. And his speech in English and his mouth saying the words in English. [00:27:00] And it happened within hours of him delivering the speech. And it was all over the internet.

So everyone could listen to what he said without subtitles and hear it in his actual voice with the tone and, and all that kind of stuff. And it was incredible. I mean, like, if you didn’t know, that’s what had happened. You wouldn’t know, you wouldn’t know, you wouldn’t know. Right.

Vic: Um, so, and what’s interesting is.

That’s right. And in translation there always is a choice. Okay, he said this in Spanish or Argentinian version of Spanish. I don’t exactly know the right way to say that. I apologize to my Argentinian friends. But he said it in a different language. Spanish.

Marcus: It was Spanish. Yeah.

Vic: They Translated it and I’m I assume because they’re trying to show off the strength of their technology that they had the best intentions You make judgment calls in any translation.

That’s [00:28:00] why there’s lots of versions of I don’t know the bible or other things And so we now are trusting. Hey, jen, of course to do this translation Yeah, and I believe they did the best they could but but that is fraught with potential issues

Marcus: Well, it’s a translation Yeah, so it’s not exactly what he said.

No, it can’t I can’t make it exactly what he says, right? So just I mean forget about AI hallucinations It’s just remembering a translation cannot be an exact translation It’s just right it can’t happen

Vic: and you could obviously use it to shift the tone Slightly in one way or the other. Yes And even unintentionally, you’re going to have to make choices about how to phrase something in English that was in Spanish.

Marcus: And, because his message suited certain people, especially people who are very powerful and get a lot of distribution on X, Like [00:29:00] David Sachs and Elon Musk, did they put a disclaimer of that at all before they decided to share it out to their, to the entirety of X? I can’t imagine they would. They just posted it out.

Just posted it out, like, here’s the video of this talk.

Vic: This is it. Like, this is the, this is what he said. Right. Right. And let’s assume it is the best attempt at what he said, but it’s not actually what he said. That’s right. That’s right. So, this is, I mean. And it’s fast. I mean, it, so, it’s great that we can understand each other.

Across different languages, different, different parts of the world,

Marcus: you can imagine traveling, having your phone, having a real time AI translator, where you just talk into it, and it just, it takes your voice, turns it into the native language that you’re trying to, yeah, I have that already, like, like, that’s, that’s amazing, right?

That’s great. That’s great.

Vic: And when you translate it to media, yeah. It is, yeah, it’s great, and it [00:30:00] also is, makes me a little nervous.

Marcus: Well, if you are honest, and you know that, I mean, look, let’s, let’s just take The perspective of people, uh, that I would say, like on the right, which is the world has bad people in it.

And that’s why you need, you know, um, military and you need law enforcement because the world has bad people who will do bad things, right? Let’s just, let’s just take that, that, that point of view. So people are going to do malicious stuff with this technology to, to manipulate people.

Vic: Yeah, all humans. I mean, humans, not all humans, humans will always use technology for good and for bad.

Yes.

Marcus: So, what’s an example of that? Yeah, what’s an example of that? So, the Biden robocall, um, that was happening in New Hampshire with the primary, that was not actually Joe Biden, uh, telling Democrats not to vote.

Vic: And I don’t know if you, if you heard it, I heard [00:31:00] it. It, it’s pretty good. Of course it is. We’ve seen enough of this technology at this point.

This stuff is It sounds like he’s on a cell phone, but, but it sounds like Biden and he’s saying something that doesn’t make sense, which is you shouldn’t vote in the primary. But if you just listen to your voicemail, it, I mean, you, you think, gosh, the president called me and told me not to vote.

Marcus: And I think Vic, the thing that most worries me is.

In almost every setting that I’m in, I am the expert on AI in terms of understanding how far it has come. Right. So when I talk to people and I say, did you know about X, Y, Z? Yeah. Unless you’re in San Francisco, you’re the lead. You’re the expert that most people do not know. Unless I’m in San Francisco or a certain group texts that I’m on, right.

Uh, I’m the person who knows the most and the people that [00:32:00] I’m around, No, a lot, right? Yeah. So like I’m around people who are knowledge workers. Yeah, right all the time all the time So that’s a pretty Steep drop off from like the average American who’s not working in technology. I just think

Vic: about the voting Population in the United States.

Yeah, the chance that that group of people the average voter Is not a knowledge worker, and they don’t have a chance to separate real Joe Biden from fake. They don’t need,

Marcus: because they don’t yet understand that these capabilities even exist. That’s the point I’m trying to make. People, this stuff is being deployed.

And people don’t even know that there are super inexpensive AI programs that enable it. Yes. That are generally available.

Vic: They’re [00:33:00] available for less than 100, you can do the same thing. Right. That’s the part people don’t get. It is not, you don’t have to be well funded or super technology. You just have to decide that you want to sway the election one way or the other.

And this one was so obvious. That it got caught. Yeah. Okay. But, but there, there are going to be hundreds of not so blatantly ridiculous as saying don’t vote in the primary, but something slightly different, like a slight change in policy that whatever some pollster knows is going to be really negative to Democratic voters.

Or it’s going to be a health issue or something that is more plausible, and it’s going to be on both sides and everywhere. And whether you’re Democrat or Republican, you should [00:34:00] be worried about our ability to have fair elections.

Marcus: Yeah, so just just to kind of wrap this up, um, I mean, look, when we were talking before the show, I continue to just be concerned about cybersecurity because as as we know, The vector of attack is not breaching a firewall.

It’s not, you know, cracking a password. It’s getting social engineering, it’s, it’s, it’s social engineering, getting someone on the phone and tricking them into doing something they should not be doing because they believe they’re doing the right thing because they believe they’re following instructions or following orders or, or, or getting, you know, guidance from someone who is not who they’re actually getting guidance from.

And when you start factoring in, uh, AI into these, Social engineering attacks with with this gap in awareness of these tools, you know, people can hardly. Pass phishing tests right now.

Vic: So think about in in health systems and payers. It’s not one side or the other How many times does the help guests [00:35:00] get a call from a senior doctor or a senior?

Actuarial person someone with a big title. I lost my password. Can you get it’s reset and it Sounds, you know, they are confident and they know the right names and they know who you are, they know who your boss, the help desk often is changing that. Yeah, and it’s and it didn’t use to matter because it was, it sounded like the person or they could somehow try to check on it.

But the deep fakes are getting really good now.

Marcus: Yeah, it’s, it’s, it’s super scary. So. There’s a group called Kodiak Solutions that’s an arm of Crowe Horath. Yeah. Um, and they, they do a lot of like revenue cycle management stuff and, and things of that nature. And, uh, they came out with a report talking about AI and they, they identified it as a top risk for healthcare.

And one of the areas was certainly cyber security. But another area that they talked about, um, I think [00:36:00] relates to just sort of this, this gap in, in awareness. And, and I think even like, Knowing how to feel about AI, which is okay. Let’s say you want to roll out, you know, automation in a certain part of your, your organization.

I mean, some people just don’t like the idea of this stuff and they’re not going to take the time to learn it and you’re going to have to fully replace them. Like, I think there’s a lot of, I mean, I’m, I’m seeing it in our portfolio and our portfolio is full of innovative people, you know, but like the work that they do is part of their identity.

And the idea of turning over this part of your identity to a machine, like people have not gotten comfortable with that yet. And so a lot of, in a lot of cases to incorporate AI is going to mean trading out teams. It’s not, you know, it’s not going to be as easy as upscaling.

Vic: Yeah.

Marcus: In a lot of cases you’re going to have to trade out.

Vic: It’s going to be very difficult to introduce a technology, uh, [00:37:00] that makes the work job much easier. Even if you don’t cut any staff, because all of the people will see that, gosh, so what am I going to do now? Those are all the duties that I do, and they will invent ways that they do it slightly better, different, in a unique, special, snowflake way.

But all that’s going to do is delay the implementation, and as you say, it’s going to make Some leadership teams just like get rid of the whole department and put a new team in I think it’s it’s sitting we’ve talked before I think it’s similar to when the internet came out because that because that’s the biggest change that I’ve lived through We’re like there was a time when we didn’t have browsers in the internet.

Yep, and then four years later Every business had it and there was a lot of resistance during that time of people that were used to doing a [00:38:00] thing a certain way and they didn’t like the fact that I could email them and they had the note right then they kind of, they enjoyed that two or three day in the mail process.

Um, and it changes eventually, but there’s a lot of challenges during that process. And unfortunately, a lot of people lose their jobs, not because. There’s an intent to get rid of people because they refuse to use the technology because they really don’t want to learn about it. Yeah,

Marcus: and I think AI poses a bigger risk of that than the software did.

Much, much more.

Vic: Right, because It’s much more core to your identity.

Marcus: Yeah, and also it’s just much more existential. The software couldn’t operate itself. Mm hmm. This thing has the potential in the very near future to operate itself. You know, we’re already starting to see some examples of that. So, um, yeah, I, I, I think we’re just going to have to continue to watch this space when it comes to AI, because [00:39:00] it’s, it’s the, it’s still the story.

Yeah. It’s still the story of our, of our time, you know, maybe the story of our generation. I mean, it feels like the world is never going to be the same, um, in, in so many ways. Yeah.

Vic: We keep talking about it. I think if you’re listening, you have to play with this stuff and it’s going to be messy and hard and you’ll make mistakes and you might, like, I, I’ve bought things that cost me 20 bucks a month that I didn’t use and they weren’t that good.

You have to invest a little bit of money. It’s not a lot of money, a little money to really, you know, Test it out so that you can understand the impact.

Marcus: Yeah,

Vic: because otherwise it’s just coming.

Marcus: Yeah. And also like, don’t go use it and be like, Oh, this isn’t as good as I thought it was. And then just like, forget about it because all this stuff is getting.

So much better on a week to week, month to month basis that like, it’s just something you have to keep tracking, you know, it, it is early, but man, it’s moving fast. It’s moving really, really fast. Okay. Enough about that. We’ll take a break. [00:40:00] We will let Doug talk about jumpstart foundry. We’ll be right back, uh, to review what happened with, uh, with one of the health systems that we talked about in, uh, in, in a few episodes back.

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 deploys that across 30, 40, 50 assets every year, allowing ease of access for our limited partners.

to invest, to [00:41:00] 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. Innovative solutions and founders in the United States. Over the last nine years, Jumpstart Foundry has invested in nearly 200 early stage, pre seed stage companies in the country. Through those most innovative solutions that Jumpstart Foundry invests in, we also provide great returns and a great experience for our limited partners.

We partner with AngelList to administer the fund, making that ease of access, not only with low minimums, but the ease of investing in venture much better. We all know that healthcare is broken. Everyone deserves better. Come alongside us with Jumpstart Foundry, invest in making the future of healthcare better and make something better in healthcare.

Thank you guys. [00:42:00] Now back to the show.

Marcus: All right, Vic, you found this story, uh, Steward Health, which, um, we, we talked about, I don’t know, maybe 15 episodes ago. Um, this is, this is the health system where they have been, uh, they have a, a minority owner, which is a REIT. Um, they’ve been doing lease buybacks and they’re economically upside down.

This story in stat, which is, which stats is based in Boston, I believe, um, is covering what’s going on in Eastern Massachusetts. Steward health has a number of different hospitals in Eastern Massachusetts. And, uh, it sounds like chaos is happening there as they are likely going to have to shut down pretty soon.

Yeah. It’s a.

Vic: It’s a pretty sad story, honestly, that the management team of Stuart, it’s a for, for profit health system

Marcus: previously owned by, uh, by private equity,

Vic: private equity, uh, management bought it out of private equity. Yeah. 2020 2020 that’s right. [00:43:00] And, uh, since then they have been selling their buildings and the real estate.

And then leasing it back from this REIT, Medical Properties Trust, that also owns 10 percent of the business. But then they, they use that capital to finance the losses. Right. And it’s not a run, well run business. It’s, there’s no future. It’s sort of the end of monopoly when you start like selling everything, it’s, it doesn’t end well, and yet there’s a lot of patients that are, and, and unfortunately, sort of a repeating theme, it’s lower income patients, typically that they’re serving, and so they are, they’re in trouble in Massachusetts, they have several facilities that I think it looks like you’re going to shut down, says grave financial distress, um, and there’s, you know, There’s no system that I can see that would want to step in.

Or, [00:44:00] or that has talked about stepping in, so I don’t know what’s going to happen, but it doesn’t, it doesn’t look like a very good,

Marcus: so things that stuck out to me about this story. One, it’s a, it’s a, you know, an update on a story we had previously covered. I think the last, uh, The hospital that they had under management was in California that in that in that small town, uh, that that went out of business.

And so, you know, this now is on the East Coast. Yeah. Um, very similar situation. So it’s not one hospital. It’s several hospitals, uh, the payer mix 70 percent Medicare and Medicaid. Now, I’ve always heard really great things about Massachusetts and their Medicaid program, um, and it being sort of like groundbreaking nationally in terms of like the kind of coverage that it provides.

Yeah, they’re very innovative. A lot of access to care. Yep. So I, I’m not, I’m not quite sure how that pertains to rates and how that impacts, uh, you know, what’s happening here to Steward Health, but, uh, it, it certainly, you know, [00:45:00] Felt weird that this would be happening in massachusetts a state that is so well celebrated for the way that they take care of their aging population and their socioeconomically challenged population So I I just thought that was that was interesting as well Um, and look it’s just yet another story about these health systems that don’t have the scale And they don’t have a payer attached to them and they have a bad payer mix.

Vic: Yeah,

Marcus: and What is the what is the logical end here if they don’t get acquired by somebody? They’re going out of business and. In these communities, that is devastating. You know, it’s really bad from an employment perspective, but also like you need a hospital. Okay. Like even start this episode talking about this, but like, you know, I had a family emergency on Saturday night and like, you know, thank God for the hospital that was, uh, you know, within, you know, 15, 20 minutes of, of where my loved one lived.

And

Vic: we’re lucky in Nashville is great [00:46:00] facilities because they’ll, they’ll A lot of them are headquartered here, and if they’re not headquartered here, there’s a ton of talent here. And so, your family member got what I think probably was very good care. Incredible care. You know, they’re still going through it, but the prognosis is much, much better because of that first hour, first two hours care.

That’s

Marcus: right. And look, I mean, at the end of the day, it’s like you think about all the things you’re lucky for. And one of them is just like the existence of the hospital, you know, I mean, that’s something we can easily, we have an embarrassment of, of options here in Nashville. I mean, you know, it was more, it was a decision about where to go, what facility to go to, but in, in the, in these poor smaller towns, uh, you know, where there is no choice, there is a hospital and then the hospital is going to go out of business.

I mean, you know, this is like. It’s just devastating. You, you can, you can just see story after story of family after family, especially, you know, when they have a 70%, you know, Medicare, Medicaid [00:47:00] payer mix that tells you a lot about the makeup of these communities and that doesn’t work. I mean,

Vic: like, that’s all you need to know.

The hospital is not in good financial. You don’t need to know anything more than that. That’s exactly right. And so as a society, I think. This is not the first hospital to fail, it won’t be the last hospital to fail. We’re going to need to figure out what do we do with these parts of the country where Hospital is not sustainable anymore.

And I don’t, I don’t know the answer.

Marcus: I don’t think there’s a good, good answer. No, I agree. There, there’s, we, we don’t have an answer there. There’s no answer. They, they just caught a business. There’s no one to save them. Right. I think this is, this is like, this is one of those like, uh, let’s get outta childhood and let’s grow up and let’s deal with reality things.

You know, Vic, when I was a kid, you couldn’t have explained to me that a hospital would go out of business. You know, because I didn’t even see a hospital as a business, [00:48:00] you know, I, I really saw a hospital as something that was part of a community and something you needed because what happens if someone goes sick, gets sick, you go to the hospital, it’s just like what happens if there’s a fire in your house, you have the fire department that they come, you know, and then you grow up and you realize these things are not utilities.

You know, they’re not utilities, they’re, they’re entities, they’re businesses. And this is, you know, I mean, we talk about like single pair. I mean, hell, forget that man, safety net hospitals, you know what I mean? Like, like, I just, I just can’t, I can’t get my head around the idea, uh, that we are going to have hundreds, if not thousands of hospitals just vanish.

In America, but like, that’s what is happening. Yes, that’s what’s happening.

Vic: And we not, I’m a, I’m a right leaning free markets guy, right? And I look at this trajectory over the last 15 years, [00:49:00] right? And a private equity company bought up a bunch of assets and cashed out. And then sold it to a group of doctors who, let’s say they’re doing the best they can, but they’re selling the physical assets one at a time to a REIT and that cannot end well.

And so like, in private, we have friends that are in private equity, private equity does a lot of good, but I think there needs to be some, some guidelines or some control in this. Because it’s, uh, this is not a, not a happy ending story. You know, I’m worried about where the story ends.

Marcus: Yeah, so anyway, look, uh, I think we need to continue to share these stories just to make people realize, like, especially, I think a lot of our listeners probably live in major metropolitan areas.

Okay, [00:50:00] um, just to, for people to realize, there are communities that are losing their hospitals. And, you know, this is, It would be one thing if someone was swooping in and creating freestanding EDs and great clinics and doing a much more efficient job of creating care. I don’t think this was happening. I think they’re going away and that’s it.

People don’t have any Yes. They have to drive to the next town now. Yeah. To try to get care.

Vic: But this is not in nowhere rural America. This is Georgia. This is, this is

Marcus: Yeah, anyway, um, terribly sad. All right. So last story we’re going to cover, uh, I think was, was pretty cool because it’s a, it’s a Nashville based VC that we know very well that in fact, you know, they have a lot to do with the origin of jumpstart, um, uh, FCA, uh, Invested in a company called crowd health.

Uh, so join crowd health. com is where you can go to the website. And, uh, it’s pretty cool. They they’ve created, I’m not just reading from the website. [00:51:00] Crowd health is not an insurance company, but a platform and community that empowers you with a crowdfunding tool and a wealth of resources to efficiently manage your healthcare costs.

So basically like this is it, they call it peer to peer healthcare funding. And this is like just individuals banding together. Saying we got to take care of ourselves because the system’s not taking care of us anymore. And so we got to get educated and we got to create, you know, a community and we got to support each other and everyone kind of pay in and help bail each other out and also teach each other how to, I think, I think the most value added part of this is be part of this community so we can each teach each other how to navigate this, this, uh, the system from a cost perspective.

Vic: Yeah, I mean. I, I’m lucky to have some money to be able to pay for things. So if I get treatment, I, you know, I, I got value. I should pay for that value. And when I go to any other [00:52:00] industry in the world, typically there’s a price list before you buy and in healthcare, there’s not. And so one of the things they’re solving, I think, is that like the.

Kind of, what is the network pricing for cash pay? I mean, it, it, docs don’t know. If you ask your doctor, he, he or she doesn’t have any idea what it would cost. They say, call the billing department. You call it. I’m too, I’m not going to sit a hold and deal with it. Yeah. It is great that once someone does that, then now we know what that price is.

And so the community can build it up over time. And then it’s not insurance, but there is this peer to peer support system where like, I, I’m willing to chip in almost like a, um, what’s the, it’s like a GoFundMe thing. Yeah. Often when you, when you have, it’s usually for like travel or something that’s not healthcare related.

If you have. Cancer is some bad treatment. You got to travel somewhere. They’ll do a GoFundMe page. And it’s like a charitable way to help your friends. It’s like that, [00:53:00] except for all of healthcare and you don’t have to be best friends or know them. It’s just kind of like, well, they’re in, they’re in the, our crowd health network and I’ll, I’ll chip in a couple of dollars and then if I need help, they’ll chip into me later.

Marcus: Right, right, exactly. So I think, I think it’s brilliant. And the reason why we found it is because you found this post on X.

Vic: I’m crazy enough just to sort of follow stuff on X. And, uh, it is, I mean, this is the CEO, um, Andy Schoonover, yeah, and he shared a story about a recent, uh, experience he had with a hospital bill, sort of illustrating the value of a system like his, um, but the way it’s phrased, it just caught my attention.

And then he’s got a wrestler, you know, sort of pounding the ropes. The ultimate warrior. Yes, exactly. And so, you know, it’s a. It’s a new media company bringing a new model to healthcare, which is pretty cool.

Marcus: Yeah, so the story is basically he goes to the ER, uh, [00:54:00] you know, he’s fine, but you know, you get, you’re going to get your bills from your ER visit, right?

And they’re not going to come for months. We’ve all sort of had this. So, so one of the bills he gets is from a, um, a radiology group, local group. Um, and he knows what the CPT codes are. And. He gets the final bill and it’s almost 4, 000. Right. And so he’s like, now this is a guy who created this company.

Right. So he’s very knowledgeable about this stuff. So he literally knows the codes, blah, blah, blah. And he’s just like, this feels crazy. This, this bill I’m getting feels, feels nuts. So he calls. That same radiology groups, brick and mortar use, right? So, you know, remember they were embedded in the ER for this, for this.

So he calls their brick and mortar and asked them like, what’s the cash pay for these coats? And their answer is 1500. So that’s already, you know, more than half off what his bill was. Um, and then, then he asked, you know, more questions and basically got it [00:55:00] to the point where he, he tracked it down. It was like, You guys are gouging me.

I’m gonna file a suit against you in small claims court, and Then we’ll just go to court over this and basically they said if you if you’re willing to pay by credit card right now We will bill you four hundred and sixty dollars instead of the four thousand dollars That we sent you to bill for in the mail And I think the best part of this is that he says the entire set of conversations took all of 12 minutes.

Um, so 12 minutes to bring a bill down from 4, 000 to 460. So obviously 12 minutes, very well spent for anybody. I don’t care what your hourly rate is. That’s a fantastic ROI on 12 minutes. But it requires the knowledge to know how to navigate all of that. Right. So. Or the confidence. So

Vic: the part of the all crowd thing that I really like is.

You can see, gosh, my peer did this, and so I’m going to, I’m going to call and [00:56:00] save money, too.

Marcus: That’s exactly right, because a lot of, a lot of people feel like you don’t have any leverage against the healthcare industry. And so I think you’re right. A community that’s like sharing stories and building confidence in a communal way, in an environmental way.

Uh, yeah, I think there’s a lot of, you know, a lot of spillover effect in terms of getting someone who might not have done that before. To just take a chance. Yeah. And, and make the call. Right. Yeah. The price is not going to go up. It’s not going to go up. That’s exactly right. So anyway, I, I just thought this was a great post that you found and also a great, a great innovative approach to like, how do we deal with these mounting costs and, and, you know, hospitals are closing and MA going up and we’re going to get higher rates.

And to some degree, I think the idea of just banding together as patients and, and better educating ourselves and better supporting ourselves. I think it’s just a really. Brilliant idea. You know, it’s, you’re not opting out of the system, but you’re saying, gosh, we, you know, we are better together. If [00:57:00] we can share information and share resources, we can, we can help each other collectively go through this.

Vic: No question about that. And I, I’m kind of excited about the idea that I don’t know how many people have to be in groups like this, right. But, but it’s a pretty small percentage, right? If 5%, 10 percent are actively pushing and. Demanding a cash price and then publishing what the results are, pretty quickly, someone who’s listening in our audience is going to say, well, I run a radiology practice, we should be forward looking, let’s tell people on our website, we will, we will set up these claims for this way and try to be more transparent.

More consumer facing, more consumer friendly. And then the whole system will go like once you start to get, I don’t know what the critical mass is, but I don’t think it’s 70%. I think there’s some critical mass of [00:58:00] kind of like buyers, um, begin to negotiate and publish things. And then the industry starts to turn towards being more transparent, more friendly, and then it starts to really change.

Marcus: Well, you, you, you just said something that, uh, I hadn’t put. Together in my head, but the main reason why I have been bearish on consumerism actually impacting healthcare is because I’ve just generally felt that the patient is not educated enough, um, to be an effective consumer that that’s, that’s been my, my primary issue with that whole thesis, but you’re right.

I mean, through. Community, like, like if something like this takes off and then there’s like, you know, multiple different companies trying to do it or whatever, right? Uh, but, but if we can get communities of patients together To to [00:59:00] educate each other and support each other on how to be better consumers of health care Then consumerism actually has a has a shot Uh at at at changing health care and I think right now it’s the only thing We can do That ultimately can, because what we’re seeing is even as the, the government tries to lower the cost.

It’s going to get passed back to us as, as more pressure gets put on health insurance companies. They put pressure on providers as providers get more pressure. They put those, they pass those costs along to the consumer. And oh, by the way, Humana is raising prices. Correct. Oh, by the way, the, the, the payers are going to raise the rates on their plans too.

And it’s

Vic: all, we pay taxes, right? I mean, it ends up in the same, someone’s going to pay for it.

Marcus: That’s right. That’s right. So, so even when the government is quote unquote, saving money, The individual household is not saving money. Right. So, uh, you know, if, if patients as consumers are going to be able to, uh, [01:00:00] improve this healthcare economic situation, I think we’re gonna need these kind of purpose built communities.

This, this is, you know, I think it’s really cool.

Vic: Yes. And, I mean, we both have a lot of physician friends, a lot of friends in, in healthcare and payer leadership. Yeah. And the individual people, I think, really got into healthcare to make a difference, and to help people, and the system has sort of forced them to behave through these different, you know, incentive structures that are misaligned.

Right. But if we start to sort of re rethink it, reinvent it, There’s a ton of docs that would love to, to be more direct and they need to be paid for their time. But we need to get to the, what is the fair price? Yep.

Marcus: Yep. Agree. All right, man. Another great show. Yeah. I’m headed to, uh, Arizona next week. I got a HFMA winter.

Oh nice. Board winter retreat. [01:01:00]

Vic: Well, you’ll learn a lot about health care finance there.

Marcus: That’s what I always do. Two to four times a year, go to these board meetings and, you know, learn more than I ever thought I wanted to know from the best CFOs in the business. So, um, I’m excited about that. Hopefully I bring back some good, good stuff.

What, what do you got next week?

Vic: Um, I am gonna try to finish this, this deal in the portfolio I was talking about. Hopefully we’ll get that done. And then I’m going to try to escape for a long weekend. My wife has a birthday coming up, so we’re going to get away on Friday. And I’ll take three days.

Marcus: So that’s why we’re recording on Wednesday.

Yes. Okay. Yes. Got it. I didn’t understand that. Okay. Awesome. Well, look, uh, we will see y’all next week and, uh, of course, share, subscribe, let someone know, um, and

Vic: tell us

Marcus: about stories

Vic: that we should cover. Like if you know, uh, optimistic story or a concerning story, you know, let us know where we want to know about it.

Marcus: Yep. All right. Till next [01:02:00] time.