51 – New Diagnostics, Aegis Ventures, HHS’ Resiliency Plan, Molina and Cityblock, Ozempic’s Growth, Diet as Psychiatric Treatment

Marcus: [00:00:00] 2024 continues to be better than 2020.

Vic: Yeah. And I’m, uh, I’m, I’m a bandwagon fan. Now I’m an Iowa women’s basketball fan. So I’m excited for this weekend. My new, uh, my new favorite women’s basketball player, Caitlin Clark. Only one I know.

Marcus: Oh, come on, man. You got it. You got to know more than just Caitlin Clark.

Marcus: She’s pretty good.

Vic: She’s she’s yeah, yeah, yeah, there’s other there’s other talent. I mean, it’s oh, yeah for sure. It’s gonna be a good good week in a basketball. Yeah,

Marcus: I’m I’m so happy to see everyone getting so excited about College women’s basketball. Yeah, I mean, I honestly like if you so in all the days that I was like hanging out with my dad You know, what do you do?

Marcus: You sit in the house? Yeah, you gotta find something to do. You watch TV, right? And, um, we watched a lot of college basketball and actually we weren’t watching a lot of Iowa because most of the games that they were playing were South Carolina. Like, Kaelin Clark is incredible as an individual, but the South Carolina team, I mean, their story is getting very [00:01:00] overshadowed right now.

Marcus: They were undefeated. They still have not lost all season. And by the way, this is a brand new team. Like, the whole last team left, an entirely new team came together. And, um, we weren’t And like, they’re 43 and 0 now or something like that. It’s like, it’s like insane. It’s insane. So it’s, it’s, uh, and in a state like South Carolina where there’s no real pro teams.

Marcus: Yeah, right. It’s like University of South Carolina girls basketball is like, is like the ticket is the best. You know, you can’t get a better ticket in South Carolina right now. So we

Vic: have men and women’s final four this weekend. It’s going to be a good, I think they have them staggered Friday. Women, Saturday men, Sunday women.

Vic: I wonder how much the

Marcus: women are going to beat the men, ratings wise. I mean, it was double in the, in the elite eight. Yeah. I think, I think it’s going to be pretty nasty in the championship race. It’s cool though, man. It’s great. I think it’s good. It’s super cool. All right, man. I don’t know if you just felt, felt like [00:02:00] going hunting, but we have so much,

Vic: I was trying to stop.

Vic: There’s a lot of news going on. Yeah. We have to, we have to do rapid fire. I think there’ll be fast.

Marcus: It’s kind of feast of famine around here, but this week it is a feast. And so with that, let’s dig in.

Marcus: Starting with the S& P 500, it dropped a couple of days and everyone lost their minds.

Vic: Yeah. So, um, the, the surveys that the fed does about, you know, how buyers feel, I mean, your factors feel. Uh, it comes out every month. It, it was slightly, I mean, it’s 50, 50 is like the recession or expansion level. And it clipped over 50.

Vic: So everyone was super excited. But in, in the stock market craziness, too much growth means the Fed might not cut. [00:03:00] And so the stock market was all worried and Monday, Tuesday were pretty down days. Um, and so that’s what we’re showing here. You know, it was the start of the quarter and the S& P dropped pretty dramatically over a couple of days.

Marcus: Well, I feel like we’re starting to hear people say, what inning of the bull market do you think we’re in? Right? So, so I think, I think now people are waiting for the shoe to drop and they’re looking for the shoe to drop. And they’re like, this is too good to be true. It’s too early. And so this is probably the first sign of, you know, we’re at the end of a quarter.

Marcus: We didn’t get our rate cut. Um, uh, this, this is probably too good to be true. Someone’s going to hold the bag. I don’t want to be the one holding the bag. Let me sell off some stuff. Yeah, I guess so. I mean, we didn’t even have urban earnings yet. It’s only April 4th. There’s, there’s nothing material for this.

Marcus: No, first of all, it was a

Vic: good economic report, but that means maybe we won’t get like a [00:04:00] cut or as many cuts. And in the complicated Wall Street, uh, algorithm, that, that means sell somehow. Right, I need my cuts. Right. But then I think the next story is Powell. Powell, so Powell came out Wednesday and basically just said, no, no, no, no.

Vic: Yes, there’s some progress, but we’re not changing our plan until we see more data. Right. And the stock market then was happy again. So it’s just a pal the dove. Yeah, that’s Yeah, I don’t know. Don’t don’t

Marcus: sell don’t sell guys. I’m still coming. I’m still coming with the cuts.

Vic: Yeah, I got your cuts coming So, I don’t know and then uh, so then the sp was back up.

Vic: That’s this is story, you know on wednesday um, but all of this, um, I think is kind of noise, but we need to cover it because the fed affects It affects health care.

Marcus: Yeah, well, and also, we’re talking [00:05:00] about it every week. So, you know.

Vic: Yeah. But I put in these other couple slides. So if, if you are not watching, this is, uh, the last four days, basically, you know, the first this week, and you can see it was down just as I described, it was down for a couple of days and then came up basically back up to where it started.

Vic: But I also put in the next slide, which is, um, over the last five years, we’re at all time highs. So yes, we are, had a little, not even a correction to pause or a couple of days of a deep breath. But we’re we’re at levels that we’ve never hit before

Marcus: not only all time highs over the past five years. We’re up 81 percent yes, which is incredible.

Marcus: That’s all that’s really good year over year returns Yeah,

Vic: yes, you know and we only had a global pandemic in there and then a supply shock and all kinds of [00:06:00]

Marcus: Well, I mean, when you think about that, right, you think about year over year, five years, 81%. I mean, that just raises the bar for what venture needs to produce, right?

Marcus: I mean, because that’s pretty good. That’s pretty good return and a fairly safe, you know, uh, certainly a liquid. Yeah. Well, I mean, not just liquid, but also like everyone’s in it. The pensions are in it. The endowments are in it. Like, you know, like if the, the government won’t let the stock market totally bottom out.

Marcus: Right. And we’ve seen that over history. That’s not us. Just. I mean, Palk did a press conference in two days.

Vic: That’s right. So, yes, VCs, you have to, you have to perform, you have to perform, you have to perform. I think you have to do, you know, two to three times the S& P 500. And so, but this is good. I mean, you should be motivated

Marcus: by that because you as a GP.

Marcus: Yeah, you’re gonna cut out [00:07:00] all the pretenders. Well, not just that, I mean, one fund at a decent size, if you are outperforming the S& P that significantly, your carry, like, gets you very quickly to FU money. I mean, you know what I mean? Like, that’s, that’s like, that’s pretty That’s pretty serious. So like, I don’t know.

Marcus: I mean, I feel like while the space was very saturated and people were accepting lower returns, it was kind of like, why are we doing this? Why, like, why are we even in this? Is this even a business where you can, you know, generate the kind of wealth creation that people sort of. generally associate with VCs, right?

Marcus: Um, and I think as the stock market performs better, pushes VCs to have to perform better, which is good. Yeah. That’s a, that’s a better alignment. That’s

Vic: right. I mean, I think the floor should be a three X return at the fund level. Right. So, but, but I mean, but it hasn’t been, but it’s not, it’s actually

Marcus: not that.

Marcus: Right. I mean, I think it’s probably more like two is, is, is sort of like you’re. [00:08:00] Yes. You’re mean. Right. I mean, yeah.

Vic: But if you can. I mean, in 10 years, you’re going to have, you’re going to double your money in the S& P 500. That’s, that’s. So. Well, no, less than 10 years.

Marcus: Yeah. Five years. In this

Vic: course, five, six years.

Marcus: Yeah, yeah. Six and a half years. Yeah. You’ll double your money. Yeah. So if you’re

Vic: doing a 2x fund, that’s doubling everyone’s money, X the, any carry, which you may or may not hit with the hurdle. Right. But leave it to the side without liquidity. So. You got to beat that.

Marcus: You got to beat that. You got, you got, you got to be doing a three, right?

Marcus: Right. You got to be doing a three backer. Yeah. All right. So, um, I thought this was a good story to kind of follow up on all that. This is the Wall Street Journal. The, the, uh, the headline is, uh, what’s wrong with the economy. It’s you, not the data. And the general sentiment of the article is that, Regardless of the actual data and the reality of how things are going in the United States economy, which by the way, it’s going very well.

Marcus: Uh, you know, if you’ve been listening to our show, we’ve talked about the GDP, we talked about the, the, [00:09:00] um, the stock market, all time highs, you know, America’s kind of ripping right now. Yeah. Two thirds of the

Vic: stories are really positive.

Marcus: Yeah. Yeah. The, the, the, the drop in, um, in, in the inflation numbers. I mean, look, we’re not at two, but we’re basically at three and coming down from highs of nine.

Marcus: It’s been a great. 12 trailing 12 months for the United States economy great and yet There’s sentiment out there that people feel like the country overall is not doing that Well, you know and then and then what’s really funny is that they think in their state where they have sort of more data You know closer proximity in my state.

Marcus: It’s going okay, but broadly in the country. I think it’s not going very well

Vic: Yeah, that that’s what was yeah this chart right here They uh, because it’s the wall street journal they covered the seven or eight Kind of battleground states for the politics.

Marcus: Yeah. Arizona, Georgia, Michigan, North Carolina, Nevada, Pennsylvania, Wisconsin.

Vic: And in every one, the citizens that they polled. I don’t know exactly how they did it, but local people, [00:10:00] they each said that their state, Arizona, we’re doing really well here. But they also thought the country overall was not doing well.

Marcus: Yeah.

Vic: And every state was consistently like that. It’s like, it’s the opposite of, uh, what you normally see, which is like, everyone thinks, well, I’m doing well, but other people are really suffering, and the country’s Going poorly.

Vic: Yeah, we were talking earlier. It’s sort of some combination of social media and the campaigns and I don’t know There’s a general the way that our data are Our perception works.

Marcus: Well, it’s, it’s certainly a combination of the very fractured, uh, 24, seven, you know, news channels that are now unapologetically partisan.

Marcus: And so you just pick your flavor and then you watch that all day. And on that channel. They will talk about the other side all day. That’s all they talk about the other side all day. And then on top of that, you reinforce that with social media that algorithmically is doing the [00:11:00] exact same thing. Um, it’s just how else are you supposed to, you know, you really have got to go on a media scale.

Marcus: Slash social media diet in order to, you know, get on balance around your perception around how things are going in the world, because all of the media is designed to get you really aggravated with those who don’t think the same way as you. All right. So enough of that. Um, let’s turn to healthcare proper.

Marcus: Um, uh, Providence spins off a patient portal company. Probably, uh, I think two really ironic things about this headline from modern healthcare. First of all, Providence, um, you know, Providence was a leader in healthcare innovation, a leader in healthcare VC. Uh, we know people who were there. Aaron Martin is a friend of ours.

Marcus: He’s not over at, at, uh, at Amazon. Um, but then they kind of imploded, you know, kind of, kind of over invested. They had some of

Vic: the best talent in, oh yeah. Health care corporate VC and those, I think all those people are gone now.

Marcus: Yeah. Yeah. I mean, [00:12:00] basically that whole thing they, they did kind of mercy bond

Vic: secure.

Vic: Yeah. They’re, they’re around different places. Right.

Marcus: Uh, so, so there’s, so that’s one thing. It’s like a Providence headline around spinning off a company is interesting. The second thing is they’re spinning off a patient portal. And I mean, I think I was just like in 2024, we’re, we’re still doing patient portals.

Marcus: Yeah. Right. Like,

Vic: yeah, is that really, how can that be a thing? Like, uh, but, but look, but they raised 20 million.

Marcus: Yep. Round led by first Cressy right here in town. Um, I, I mean, I’m sure there is a, uh, I’m sure there was a market, the first Cressy, you know, team, very smart. So I don’t think they, uh, did this deal without serious underwriting and, and, uh, being well informed about the market opportunity.

Marcus: So investment opportunity aside, let’s put that to the side. I just think. Patient portals in 2024. Like I just can’t get inspired about that. I’m sorry, but I will say this, you [00:13:00] know, I don’t have consistent patient portal experiences. I’ve got the one I’ve got for Vanderbilt, which is an Epic based system.

Marcus: So I’ve got my chart, which, you know, is it the best thing in the world? No, but is it pretty robust and does it work real time and on my phone and on all my devices? Yes, it does. Right. But then, you know, your step down from there, any of your specialists or my PCP, which is actually not in the Vanderbilt system and the patient portals are still awful.

Marcus: Yeah, they’re still terrible. So I guess there is still upside to doing this. Now, this particular patient portal, uh, I think the, the unique angle is that it’s single sign on and it links to a bunch of other consumer apps. And so it tries to kind of create a more holistic interface between the health system and the patient for other things the patient might actually use.

Vic: Yeah, I would love there to be an actually useful patient portal. I don’t have one. I’m a HCA patient and their, their stuff is, I mean, I can find data, but it’s not good. No, no, no. They don’t have it. They don’t, they don’t have a great patient portal. Um, [00:14:00] but I haven’t seen a business model and I don’t know, Priya, I guess it’s Priya Health.

Vic: I don’t know how the, what their business model is, but I haven’t seen a business model that kind of aligns interests. And so it’ll be interesting to see, but yeah, it’s. They’re spending, they raised 20 million. So there’ll be something there. I

Marcus: mean, but you have to think that they can’t, they’re not really going to be able to sell into the Epic market, right?

Vic: Well, that’s what I meant. Like the, I’m not sure where they’re going to get other large health system customers, and then they’re referring to Amada and other. Wellness, uh, platforms and is that, uh, is that, is the patient paying for that? Is it billed to payers? It’s like a, the business model needs to be thought through carefully.

Vic: I’m sure they have, cause they’re all really good investors, but I just don’t know how, I don’t know how it works.

Marcus: Well, well, I’m sure we’ll [00:15:00] find out. Yeah, I’m sure we’ll be hearing more about about prior health. Another deal, uh, Binx Health, the diagnostics company raised 65 million to drive the growth of point of care testing.

Marcus: I actually think this is a pretty cool one, um, focusing on sexually transmitted diseases and, uh, kind of continuing to extend, uh, the distributed lab capabilities and put those directly in doctor’s offices, um, which I think is. One of the coolest things, uh, I took my mom to the doctor, like at some point in Q4 and she got some, you know, blood work done in the, in the lab is a VMC situation.

Marcus: And so, you know, I’ve got her, um, her app loaded up on, on my phone or I’ve got access to her, to her, her health record. And, you know, she, she got the blood done. They walked out of the room and like a minute later, I’m getting notification. You had the results, your lab result. And so I think. The more that we’re distributing labs into, um, you know, uh, PCP and specialist offices.

Marcus: That’s just so cool. You know, it’s, [00:16:00] it’s just empowering. It’s a much better healthcare experience when you know you can get the result at the time of your visit, you know. Yeah, it’s top line for the patient.

Vic: You’re moving capabilities out to the kind of the edge of the network, which is much more effective.

Vic: Yep. In this case, they, they really specialize on sexually transmitted diseases. The lab tests related to that, and I think that can be impactful, like learning that I, you know, I have some STD in the office when the doc can educate me and prescribe something right then, as opposed to sending me home and I’ll tell you in a week or two, and then I may not come back to it, or I may not get the prescription filled, and meanwhile, I’m potentially spreading the disease around.

Marcus: Yeah, and also, I mean, if you’re going in to get a test for an STD, you probably have a lot of anxiety. Yeah, about that. I mean, you know, I would imagine more than half the people who, yeah, I was thinking

Vic: about prevention, like not preventing the spread, but yes, for the individual or the person who’s going

Marcus: in, I [00:17:00] mean, you know, they’re probably so nervous.

Marcus: And then, you know, if they don’t have an STD, what a relief to find out right then and there, if you do, you know,

Vic: you have questions you can ask right then

Marcus: and there, you can start to kind of get, you know, some, some clarity as opposed to you get a result in an email.

Vic: Yeah. It’s also much. Gosh, less likely to have, uh, privacy issues, right?

Vic: Like, yeah, that’s right in the office. You tell them verbally, there’s not an email being sent. That’s right. Hopefully no one sees. I think it’s good.

Marcus: So a couple of things here. One 65 million round more and more rounds. I mean, every single week we’re getting a bigger list of companies that are raising these significant, you know, size rounds.

Marcus: And, um, and then I think the other thing is, this is a really cool company. Like, yeah, like let’s, and it works.

Vic: It’s, it’s, uh,

Marcus: I am just so pro diagnostics right now. I mean, I just want us to, from an innovation perspective and a VC world, all the diagnostics, all the diagnostics, there’s so much upside in improving the, you know, the [00:18:00] availability and the speed of diagnostics, um, in, in healthcare.

Marcus: So this is, this is just really, really cool. All right. Uh, next story. Um, another diagnostic story. Uh, 58 million put into BioLink. Dexcom has been sort of the 800 pound gorilla in the continuous glucose monitor space for a long time. We’ve seen, uh, innovative companies like Levels Health and others sort of partner with Dexcom to kind of get those into people’s hands from a consumer perspective.

Marcus: They

Vic: just allowed it to be sold over the counter. So you don’t have to

Marcus: have a prescription. Yep. Uh, and, and obviously, you know, it hasn’t hurt that guys like Peter or Tia and others have said, yeah, you know, you should do this kind of testing thing, blah, blah, blah. But if you’ve ever tested it and I have, you know, I don’t have a type two diabetes, but I actually, I actually ordered levels partially because I feel like as a healthcare investor, I want to know, I want to know how all this stuff works.

Marcus: Uh, but also I was just curious. I’m a little bit of a biohacker. I wouldn’t say extreme biohacker, but a little bit. And. Let me tell you, that thing is not comfortable. [00:19:00] I mean, I tried it one time and then on top of that, like I do jujitsu, right? So like, you can’t, you can’t be in a match. No, no, I can’t train with it.

Marcus: So like I put it on and I was like, yeah, no way. This is not going to work. So I just like, you know, I kept it on for like half a day and then I never. Again, so what’s really interesting about this one is, um, it is significantly more shallow in terms of how it penetrates the skin to be able to pull the reading.

Marcus: Um, and that’s a big deal because that was what was so, uh, discomforting to me was that penetration and kind of just feeling that needle, you know, in there moving around as well as I’m moving my body. Cause, uh, I think I put it on my like belly, you know?

Vic: Yeah. I think it’s something like 10 percent as deep.

Vic: It’s barely. The Biolink. The Biolink. Versus like the Dexcom. Yeah, the Biolink is, yes, right. It’s much smaller, um. But it’s not smaller on the surface. But the overall device is not smaller.

Marcus: Yeah, it’s, it’s still pretty kinda, I don’t know, it’s raised on, on the body and so, you [00:20:00] know. You have to have something baggy in order for someone to not know that you’re, that you’re wearing it.

Marcus: But it says up to 20 times more shallow. So that is a big deal. And I think for all the people who are regularly, you know, if you are an actual type two diabetic and you’re walking around with one of these things right now, that’s probably a big deal to you. You know, the idea that you could have something that would not be so deep inside of your skin.

Marcus: So,

Vic: yeah. And I’m hopeful that the, the external form factor and optionality will change over time.

Marcus: All right. Next deal. Um, well, not so much a deal, but maybe the launch of a new fund, uh, Glenn Tolman from Livongo fame from, uh, seven wire, uh, fame, and now the CEO of transparent, uh, and I’m saying fame very intentionally, uh, has now launched a new venture fund.

Marcus: So let’s, let’s just keep track. Now. So the Vongo started transparent was still, um, a GP at seven wire. And now has [00:21:00] started a new venture fund called 62 ventures. And so Glenn Tolman is, uh, is definitely emerging as, um, you know, sort of an Elon Musk in, in our healthcare innovation space. And so far as he’s doing multiple, pretty big things in parallel, um, you know, I mean, have you ever raised a hundred million dollar fund by yourself?

Vic: No.

Marcus: Okay. I haven’t either. So, so he,

Vic: and managing two GP responsibilities simultaneously to running a company and then also CEO of a company, right? There’s a lot, I mean, that’s a lot of hours. Yeah, I don’t know how that’s a lot of hours to do it. Yeah.

Marcus: So, so, of course, how you scale that is you have money to hire teams, right?

Marcus: You know, but I, but I think the thing here is there’s so few, you know, we, we were kind of talking before the episode around how does someone ascend? To the point where [00:22:00] they are able to, as a, as an individual start to kind of buck trends and buck, uh, norms. So I would say less trends, but more norms, right.

Marcus: And just kind of break out and kind of do whatever they want to do. Now, some of it, I’m sure has to do with the success that he had at Livongo. You know, that, that was a very good win. And, you know, I’m sure he’s got the means to sort of do that. And, and just on his own, if he wanted to do all these things, he probably could, you know, Kind of just do all this stuff yourself, but my guess is he’s not doing this with all of his own money You know, there are other people that yeah, he’s raising money from he’s collaborating with he’s partnering with and You know, how do people ascend, you know, is it just that one big publicly traded?

Marcus: IPO win that sort of sends them out into the stratosphere where now, you know, the general rules of gravity don’t apply to them and they can start to play in all different ways that the average person can’t plan. I mean, what are your thoughts about that? [00:23:00] Cause he now is positioning himself as someone who you really have to kind of pay attention to, um, cause you never know what he’s going to do next.

Vic: Yeah, I, I agree. I think it is a, a bug, not a feature, maybe I think it’s not positive, but it’s just a thing that exists that health care. I mean, as we talked about in the show that there’s a lot of areas in health care that are multi billion dollar opportunities. And no one is addressing just because they haven’t found the way to address it.

Vic: They haven’t assembled the money or the team haven’t assembled. The money is a lot of it, right? The money or the team. I think those two, you need both those things. Harder to

Marcus: get

Vic: the

Marcus: team without

Vic: the money. It’s hard. Yeah. And so, um, for large institutional investors, Glenn Tolman is a proven brand. Yeah.

Vic: And you can go to your [00:24:00] committee and say I’m putting 20 million dollars in this new Clint Lentailman fund. And everyone says it’s healthcare, big opportunity, we know that brand, his personal name. Yep. And sure, I think that’s a problem because we need new, I mean Glenn is great, but he’s only one human.

Vic: And there just aren’t that many ways to sort of spread his expertise around.

Marcus: But the capital aggregates around those. The capital aggregates around that. Yeah.

Vic: Right. Yeah. And so that, that combination of really understanding the healthcare infrastructure that you would get from listening to this podcast or being in the industry like Glenn for 20 years, like you and I for a long time, but then you have to have the capital, Immediately trust you without a lot of due diligence because a hundred million dollar fund is as you and I know is Great, but institutional investors don’t want to spend months working on that, [00:25:00] right?

Vic: Because it’s they’re trying to deploy billions of dollars. That’s right. Um, it needs to be like, oh, I know him He’s done well before sure or they want to do a billion dollar. I mean, we’ll talk about a billion dollar fund in a minute um, so I think it’s a it’s a it’s a bug in a sort of a result of You The too much opportunity and not enough places to invest where glenn can can take advantage of it and you know I I don’t have any Negative thoughts to him.

Vic: I mean if I could have multiple funds and bc of a company I don’t know that I would, but it’s, I mean, I can’t blame them

Marcus: for it. Well, I, that, that was kind of what I, what I was going to ask you was, you know, it’s, it’s, it’s hard to put yourself in that position because it’s an entirely different thing to have those kinds of resources, like everything about your life is different.

Marcus: And so you have different energy because you’ve got more help for things. I mean, you know, at the end of the day, like emotional, you know, [00:26:00] uh, Tolls from family things are pretty evenly distributed, but, but money does change a lot of other things, right? And so it’s hard for me to say, I mean, what I, what I, I think I can say with probably pretty strong confidence.

Marcus: I, I would rather run multiple funds than be a CEO of a full time company alongside running funds. Um, that’s probably more. More my own personal, you know, speed. Um,

Vic: I mean, I think, I mean, my framing of it is that you and I started a venture firm named Jumpstart Health Investors. Intentionally trying to build a brand that was not our two brands.

Vic: Certainly we are supporting it. And a lot of the value in the Jumpstart brand is related to us personally, but we very intentionally set out to try to create value creation aspects in our venture fund that are not [00:27:00] tied to, it’s like, if I get hit by a truck. Jumpstart can still keep going. Glenn is the old fashioned VC.

Vic: Like, it’s him that has the pattern recognition, has the deal flow, has whatever. It doesn’t matter what the fund is called. He personally has whatever magic pixie dust he has. I don’t think that we would do that if we could because we, our track record is we started a venture fund to try to escape that.

Vic: Now that may have been foolish because it’s a harder, it’s a harder story to tell.

Marcus: Yeah, it’s, it’s, uh, it’s, it’s interesting. It’s interesting. Uh, I, I’m, I’m gonna, I’m gonna keep an eye on, on, on this story really just to reflect on my own, honestly, to reflect on my own and kind of think like, is that something I would want to do?

Marcus: Um, is that something that, that may present itself as an opportunity in the future? And if it does, like, is that really what I, what I want [00:28:00] to do? I mean, at the moment, I don’t think so. But, um, But yeah, it’s interesting. All right. Continuing on, uh, More in the VC and partnership world. So we, we talked probably two or three months ago around, around, uh, ages ventures.

Marcus: I think the main thing there was that, um, David Feinberg of Geisinger fame and then of Google fame, and then of Cerner fame. Uh, has gone over to be a partner, uh, uh, at, at Aegis and they were talking about creating this consortium. So they’ve now announced that they have nine, nine health systems, uh, headlined by Northwell and Memorial Herman, who are part of this, uh, consortium to basically partner with Aegis around, uh, Deploying healthcare innovation, mostly, I think, healthcare IT solutions.

Marcus: So, we continue to see this model, General Catalyst did it, now Aegis is sort of doing the same thing. Leveraging a previous health system CEO, um, and their brand, and their connectivity, and the respect [00:29:00] that they have amongst their peers, other health system CEOs, to create a consortium to then, Look at how they can, you know, basically create business development, uh, distribution channels, uh, for their portfolio.

Vic: And, and I, I am hopeful that it has a lot of impact. My watching of general catalyst is they ended up buying a health system because this is really hard. It’s really hard. I don’t think launching entrepreneurial things is really best done in a team sport with a consortium of health systems in all different geographies with different stuff, but, but that could be wrong.

Marcus: Can’t you understand exactly why it’s such an attractive idea? Yes, and

Vic: I’ve tried it four times. I mean, I’ve tried it before. And so, yes, and I’m hopeful it should work. It just is hard to get. Isn’t it interesting how it doesn’t work though? Yeah. Well, I [00:30:00] mean, the thing about bringing in an innovative, new way to treat patients is at first it’s different workflows.

Vic: You got to retrain your staff. The whole thing is new. And so you have to sort of force people to use it for something like 90 days before then they love it. And I think that’s really important. really difficult if you don’t have like some ownership and commitment from the top and a lot of reason to do it.

Vic: So I have much more confidence in one health system kind of going all in on an innovation and because they have aligned interests and they want it to work like the Providence story we did earlier. Then this grouping of nine hospitals or whatever this is with where they just. All kind of, um, being willing to [00:31:00] tolerate that inefficiency and change management for really not much upside.

Vic: Like, yeah, they’ll be able to run their hospital better, but maybe I’ll let someone else try this out. Yeah. When it works, call me. Yeah, yeah. So I think you have that, like, I don’t know if it’s like, there’s like a incentive just to, Take a step back and let other people work on it, but everyone then takes a step back.

Vic: So we’ll see. I mean, I, I, it could work. I’m hopeful it does work.

Marcus: I, I, I think you just articulated a core issue that a lot of innovators have when they’re Talking about bringing in of bringing innovation to health systems, and I feel very fortunate to have spent the last two years on the board of HFMA because I think I’ve really gotten to have a much better understanding for the mindset of You [00:32:00] know, look, certainly CFOs, um, in, in health systems, and I think you nailed it.

Marcus: I think you’re exactly right. You know, they, they are constantly, uh, looking at, at things. And here’s the deal. I think these CFOs are very open to a win win. But I think they look at this stuff and they go, why would I do that? You know, like, why would I do that? It feels like that’s the thing I can see them all saying.

Vic: Right, like, I bring it in, I help you create this product and make it actually work. Ready and in return I get an incre. I’m a customer. I get an incremental, slight benefit. After my staff has spent 90 days beating their head against the wall and figuring out the workflow for you, I get incremental benefit and you get a new billion dollar check.

Vic: And

Marcus: why is that win-win. Meanwhile, you don’t have any technology that’s solving [00:33:00] my real problem, which is labor, right? Or which is, you know, reimbursement or, which is right. You know what I mean? Like. Like, those are my real problems. My real problems, like, like put another technology thing in front of me and I’m going to scream.

Marcus: So yeah, I mean, I, I think you, I think you nailed it that there is, there’s asymmetry in terms of understanding the, the wantingness of the value proposition of the mutual value proposition and innovators and VCs don’t have, I think that’s actually part. Part of the reason why these consortiums work better when you have a Mark Harrison or a David Feinberg at the table, because, you know, I think there’s just a, you know, And understanding that, okay, this person has to understand what, what, what actually matters and what I actually care about.

Marcus: And so I don’t feel like I’m going to have to, you know, educate them about [00:34:00] it. I’m not, I’m not saying that that improves the sell through, but I’m saying even getting the consortiums done, even getting them built and announced, right? Like, as you know, that is a, that’s a milestone. It’s not easy to do.

Vic: Yeah.

Vic: I mean, just in full disclosure, I’m working on a different, not health systems, a different niche, but it’s similar to this and I’m not building a consortium. I’m hoping to bring in multiple, but they’re going to be one off deals and I’m going to bring them innovations that they invest alongside me and we work on and they might learn from each other, but they’re one off deals because they want to get an advantage for their.

Vic: Their thing, practice. They have their own problems and they have their own problems, and, and the entrepreneur doesn’t want to have equity owners in 15 different practices, but they’re willing to, to give up a significant amount for one. Because they’re going to learn a lot. Yeah. So anyway, that’s my current iteration, but it’s a tricky, it’s a hard [00:35:00] thing.

Marcus: Uh, moving to tiger global, they closed a fund that was 63 percent below their target. Uh, and they landed at 2. 2 billion. Am I reading that correctly? Okay. That’s right. Okay. So they landed at 2. 2 billion. They targeted 6 billion, uh, 63 percent short. And, um, this, this I think is pretty consistent with everything we have heard from.

Marcus: The institutional capital allocator world, which is growth venture is overblown. Um, the, the markdowns are brutal and no one really believes they’re going to come back. And they had too much money. They aggregated too much capital and they don’t, and they’re not going to get as much capital, you know, even if they come back, they’re getting smaller allocations.

Marcus: And so, you know, it’s hard for me to cry for, for Tiger Global because even 63 percent short, At 2. 2 billion. Yeah, it’s a 2 billion fund. Dude, like, like, let’s just say that’s the correction. Okay, [00:36:00] fine. You have to sort of re, you know, organize yourself around 40 million a

Vic: year in fees and fees. 40 million a year.

Vic: That’s nevermind carry. That’s nevermind carry. They may not have carry.

Marcus: So, so I look, I’ve never run a growth fund, but you know, you’ve been in the industry longer than I have. What is the Proposed return profile. We just talked about how the SMP has been, you know, generating 80 plus percent over the course of five years, right?

Marcus: So you’re going to get to double your money in about six and a half years on on that trend, if they’re everything sort of stays the same. Forget if it’s actually increasing and doing better year over year, right? I mean, maybe it’s just six years to double.

Vic: Yeah.

Marcus: Um, what is the Tiger Global presenting in terms of like, here’s how much you’re going to make?

Vic: Well, I mean, To be clear, I haven’t seen the pitch, but my, my, my belief is that growth capital like [00:37:00] Tiger Global is, it’s another type of asset allocation. It’s not the same as what we do. You and I do differ, something different. No, no, no, no, I know that. They’re doing, um, an, an uncorrelated to public markets.

Vic: Ten to twelve percent in turn a rate of return net of fees.

Marcus: Okay, so so a hedge against the public markets

Vic: Yeah, it’s well, it’s not correlated. So like well, yeah, it’s a hedge against

Marcus: In all practical, you know terms Uncorrelated. Well, like well, the

Vic: issue is that it is correlated. That’s it. Well, that’s what they’re selling is uncorrelated ten percent

Marcus: Yeah, but it’s, but it is correlated.

Marcus: But it

Vic: is correlated and they, I don’t know if they are going to be able to deliver 10%.

Marcus: Yeah, it is correlated and it’s negatively correlated because the, the exit targets they require were much more feasible in a less concentrated, [00:38:00] uh, index market, the index market today with the magnificent seven. So concentrated that your surface area of buyers is very, very small.

Marcus: And when they’re behaving like Microsoft is where they’re saying, Hey, billion dollar company, we’ll just steal your CEO. I mean, I think the prospects of MNA just getting so much harder. So you have, you have this combination of. Smaller surface area, because there’s too much concentration in the public markets for people to buy your overly expensive, overly capitalized companies.

Marcus: Uh, and then on top of that, like, you need to return really, really big numbers. Like, it just feels like the business model is fundamentally broken for, for, for growth VC.

Vic: That, that’s right. And. I think their sales pitch works because it’s easy. Sure. Right. Like from a capital allocation, capital allocation.

Vic: Listen, I need, I need to deploy [00:39:00] 400 million into private equity this year. And Tiger global is a name that I know. Go to the next, uh, slide. They’ve raised ten funds. Well, they’ve raised five funds in the past ten years. They’re only raising two billion. And I can get an allocation. And I think there’s a lot of institutional investors that, that, that works.

Vic: So for people that are listening, we’re showing the last five or six funds. They, they started at two and a half billion. In fun 10 and then they grew to almost 13 billion in fun 15, which was the last

Marcus: fund. And now this fund is 16 is back at 2. 2, which is below any of the last five funds. And probably a bunch of people just looked and said, you just raised 13 billion like and you, and you destroyed value with it, but I, you know, I would love.

Marcus: No, I know I, I shouldn’t say that because I really would not love to do that because I don’t want to destroy value, but gosh, must be nice. You, it must be nice. I don’t want to say I would love to do that [00:40:00] because

Vic: I would love to take 40 million in fees from something, but I would not love to do the business they’re doing.

Vic: No,

Marcus: no, it’s a hard business. It’s a, I think, I think their business model is really hard. All right, look, let’s take a break. Let Doug share a little bit about Jumpstart Foundry. We’ll come back. We’re going to get into all things government.

Doug Edwards: Thanks guys for the opportunity to talk about our pre seed fund, Jumpstart Foundry.

Doug Edwards: My name is Doug Edwards, CEO of Jumpstart Health Investors, the parent company of Jumpstart Foundry. We’re so excited to be able to talk about, uh, early stage venture investing, certainly the need for us to change the crazy world of healthcare in the United States. We are spending 20 percent of our GDP north of 4 healthcare with suboptimal outcomes.

Doug Edwards: 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 [00:41:00] 30, 40, 50 assets every year, allowing ease of access for our limited partners.

Doug Edwards: To invest to help us make something better in healthcare. Some of the benefits of Jumpstart Foundry is there’s no management fees. We deploy all the capital that’s raised every year in the fund. We find the best and brightest typically around single digit percentage of companies that apply for funding from Jumpstart and we invest in the most incredible, robust.

Doug Edwards: 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.

Doug Edwards: 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 [00:42:00] foundry, invest in making the future of healthcare better and make something better in healthcare.

Doug Edwards: Thank you guys. Now back to the show.

Marcus: All right, we’re back. And, uh, let’s start with, with Medicare. So, uh, the, the rates were announced lower than I guess everyone expected. Although I feel like, you know, Broussard did a great job from Humana trying to project to everybody. It was going to be brutal. Um, well,

Vic: I mean, just to be.

Vic: They put a proposal out for the rate, and then in historical times, they have increased that, but they didn’t increase it. They just kept the original one flat. So they didn’t really reduce the rates, but they didn’t bend the lobbying and go up at all. Yeah,

Marcus: they bucked historical trends by keeping it flat.

Marcus: So, uh, I think on that day, Humana went down 13%. It’s back up now. But, you know, all the, all the sort of managed care stocks kind of all down. Yeah, we’re all kind of down. And, um, [00:43:00] you know, I think we, we looked at this. We said, Oh, man, it’s gonna be hard for managed care. And I do. Look, I certainly feel like it is going to be more difficult for managed care.

Marcus: V. C. Based companies that are selling into Medicare Advantage because it’s going to force the managed care companies who will make their money one way or the other, um, to evolve things and put more pressure on the on those providers. So I think ultimately the the payers will figure it out. Um, I think it’s the providers.

Marcus: Underneath all this stuff that are really probably most likely going to get hammered Uh really hard But uh, we were talking with emily evans who will be coming on the show in a couple of weeks To do a recap because so much has happened in medicare advantage since we talked about it back in december um And she you you uh, you found a slide from one of her hedge.

Marcus: I present. Yeah, she did

Vic: she did a Presentation yesterday the day before I I think before we start talking about this. I think that um, i’m in favor of hhs [00:44:00] Really putting, uh, more controls and more guidance on the Medicare Advantage platform. They’re increasing the star rating influence. Yeah. They’re really being careful about the rate increases and forcing Medicare Advantage plans to sharpen their pencil and be really good at managing the patient pool and managing their provider networks.

Vic: That’s all great, and I think you’re right. It will, it will result in challenges with the providers, with health systems. I

Marcus: was about to ask you how, how does that impact your investment thesis around Medicare Advantage, right? So, so for example, I think it makes me Think that things from an AI perspective or an analytics perspective in the Medicare Advantage space are probably pretty important right now because you’re going to have to get way more tight on your execution.

Marcus: You got to [00:45:00] save

Vic: money. You got to lose less people, but also importantly, you got to start bringing, uh, SDOH in, you got to start patient engagement. That’s all the star rating is all that. Data, data, data, right. Which is, which is actually, I think, Where the government should push them. Yeah,

Marcus: I like that. Yeah, so, so I think there’s great opportunity on data, AI and analytics around Medicare Advantage.

Marcus: And I think

Vic: And engagement or anything that’s sort of bringing more and better, uh, whole health to the patient. Yep,

Marcus: and I think it’s scary to do an innovative services model to this population. Um, that that’s where I would be worse. And I think that’s a shame because there’s still a lot of need for innovation, um, in senior value based care.

Marcus: And I, I, I, I would have a hard time underwriting that just given how, how choppy the waters are looking out there, right? Yeah,

Vic: depends what the cost is. You gotta, you gotta, [00:46:00] you gotta cut costs and deliver better.

Marcus: Yeah, but

Vic: there’s a labor component

Marcus: to it. And so, you know, you’re, you’re kind of screwed on, on costs at the end of the day, right?

Marcus: Um, I, I think it’s, it’s less cost and more outcomes. When it comes to services, you really got to like really hit those star numbers.

Vic: Yeah.

Marcus: And that’s a, that’s a process of like getting there, right? You don’t just come out of the gate and nail the startup star ratings. So you got to have the capital sort of fight through, I don’t know, a year, two years, three years of like figuring it all out.

Marcus: That’s hard.

Vic: Yeah, at least three years. So, so this slide is, uh, sort of comparing their rate, which is the gray line that, uh, for people that are listening. It was sort of 20, 21, 2, then it grew to four, then eight, and now it’s back at three ish. Um, compared to the actual change payments change in the full payment, which of course is year over year, combination of rate, volume, and acuity, [00:47:00] and the payments have grown much bigger and faster.

Vic: Well, they’ve grown differently than the, than the rate has. And so, I think Emily’s point is it’s more nuanced than this, and there’s lots of political theater going on, but the Medicare Advantage plans will. We’ll bring in a lot of money. They’ve grown every year. Yeah. Yeah. What they’re actually collecting.

Vic: Yeah.

Marcus: Do, do not correlate the rates to the, the, the payments that, that the payers will be able to generate, right? That’s, that’s kind of the main thing. Do, do not equate the two things because there’s a lot more to it than just that. Um, they can raise premiums. They can. You know, string together different, different protocols that can, you know, increase the yield, right?

Marcus: I mean, there’s all sorts of different things that can be done there. So just understand it’s, it’s not as simple as rate go down, you know, money go down.

Vic: Yeah. And Emily back in a couple of [00:48:00] weeks, she’ll have a lot more. detail, but I think that’s the takeaway. Yeah.

Marcus: And, and in fact, I mean, uh, I’m, I’m looking forward to hearing from her specifically on this, you know, I, it’s not entirely clear to me that the wall street analysts, uh, are wonky enough to sort of know that to even look at the kind of data that, that the hedge is pulling here.

Marcus: But when you look at this and you see those dips, you know, 13%, you know, you’re kind of like, Hmm, is Humana a buy? I think Humana is a buy. Not investment advice. Yes, not investment advice, but you know, when you look at that, you kind of say, Oh, there’s a little bit of arbitrage there, right? Because, uh, the market is just saying rates bad, you know, revenue bad.

Marcus: And is that really 100 percent true? Not clear. Not clear. All right, more on the government side. So HHS, uh, Medicare incentives, penalties for hospitals could help stem drug shortages. So Vic, what’s the deal here?

Vic: So this is to the, uh, healthcare supply chain resiliency thing. Everyone, including me [00:49:00] is worried about, um, international suppliers like China producing drugs, and then we get into some conflict with them and, and all of a sudden we can’t produce our own medicine anymore.

Vic: Yep. And so this, they, HHS released a white paper yesterday. Basically calling for the creation of a some kind of private for profit entity to set up medical supply chain onshore. And then they’re going to start providing incentives and penalties of hospitals, single source from international. That’s the summary.

Vic: Yeah. And they are planning to have the spend be somewhere between two and a half and four and a half billion dollars over a decade. So it’s a significant amount of money, but compared to the four trillion, You know, what’s a billion here there

Marcus: seems like the kind of thing that the government should be doing right?

Marcus: It does seem like there’s a national security issue here. [00:50:00] There’s a national resiliency issue here. And, uh, you know, look, coming off the back of the change healthcare situation where. It’s like, look, I really don’t want to hear Congress talk about, you know, what the, what, what these private market companies or publicly traded companies, you know, should be doing when it’s, it should be national infrastructure.

Marcus: I mean, you know, you guys should, should be in the game in some way, shape or form creating at least an option for redundancy, at least, at least you should have a fallback option, right? It’s some

Vic: kind of. Public health utility like service like the electric utility here in Nashville, like you should have a return on that, but the utility is regulated by generic drugs and other things like that.

Vic: There’s not a lot of by definition. There’s not a lot of proprietary benefit, but if you don’t incentivize investors with a 10 percent return or some amount of return like utility. Then they’re not going to do it and then you don’t have it. So there’s some I think the government does need to be [00:51:00] Helping foster this

Marcus: let’s be clear a lot I mean, I I think the things that that are at risk are things people wouldn’t think would be at risk, you know Uh blood thinners and yeah, I mean kind of really basic stuff But but things that address chronic diseases that too many americans have right?

Marcus: So, I mean you could really see a a huge problem if we got into Even like a 5 percent shortage, right? I mean, anything like that could, could, uh, could create a lot of mayhem.

Vic: Yeah, it’s really anything that has been around for more than 20 years. Because the newer things are very profitable and, and over an artist or Pfizer or whoever is, is making money on them.

Vic: Uh, so, you know, so that’s a good lead into this.

Marcus: Yeah, yeah, exactly. So KFF, uh, Kaiser foundation found that part D spending on Ozempic skyrocketed between 2018 and 2022. So I think the first thing is I know I’ve got the, you know, the Ozempic song in my head, but I don’t think I fully [00:52:00] understood that. It had been approved in December of 2017 and so started generating revenue on Medicare books, uh, at 2018.

Marcus: Um, but the growth in it, uh, has been, is it, is it on this article or the next slide? It’s the next slide. Okay. But the, the growth is just kind of, uh, Out of control. So 2018, 56. 8 million, 2019, 552. 8 million. So 10 X, right? Yeah. 2020 goes to 1. 5 billion. 2021 goes to 3. 1 billion. So then it just starts doubling every year.

Marcus: Right. And 2022. 5. 7 billion. The first years, 10x’d, then after that doubled every year.

Vic: Yeah, and as you said, which I completely agree with, this growth occurred before it came into the jingles on college basketball games, where they’re telling everyone to go sign up. We don’t have the 2023 [00:53:00] numbers. But it’s gonna be huge.

Vic: Oh my gosh. It’s gonna be huge. It’s

Marcus: gonna be ridiculous.

Vic: And they just, and Part D just opened up other use, other uses for, I think for cardiac stroke. Well,

Marcus: I, I think, I think the Lilly, um,

Vic: GLP one, maybe it’s, maybe it’s the Lilly version. So it wouldn’t be Ozempic.

Marcus: Yeah. The zip bound.

Vic: Yeah. We, the government’s spending a lot of money on this, and I don’t think it’s slowing down.

Vic: It’s gonna be.

Marcus: Yeah. So, so I mean, I think probably the big headline here is you may not have known because we haven’t been talking about GLP ones before the pandemic, but these things have been in market from before the pandemic for diabetes approved by Medicare part D and, you know, Cracked 1. 5 billion during the, during the first year of COVID like, you know, something you just not, not even thinking about, you know, people are in their, in their homes and, and, uh, you know, we’re locked down, but they’re, they’re getting those epic in the mail apparently, you know?

Marcus: So anyway, just, yeah.

Vic: And, [00:54:00] and I mean, the question is, does it help people manage their diabetes? Or other, other disease, chronic disease, and save the government money. I think that’s what Novartis, Novartis, or Lilly, or someone would say. I’m not sure that that, those numbers play out in Medicare. Because, you know, a lot of the spend is end of life, and people are still gonna die of something.

Vic: 50 pounds. But I, I haven’t seen the underwriting, uh, I was going to say

Marcus: that would be, it would be really cool to read it, read a paper about the actuary, uh, you know, math and logic there on, on that one. I, I, I, I think, I think I would really like to know that.

Vic: Well, I mean, I don’t, I’d like to know that too.

Vic: I don’t think their congressional budget office has. They either haven’t produced [00:55:00] it, or it hasn’t been, um, like, clear. Or maybe they, maybe they produced something that was not clear.

Marcus: Yeah, man, that’s, that’s a, that’s an interesting one, though.

Vic: I don’t think it pans out. Well, the But that, that could be wrong.

Vic: Yeah. Obviously, they would argue I’m wrong.

Marcus: Yeah, I mean, I mean, you know, the, so, so, Diabetes and, uh, and, and, uh, CKD are pretty closely tied, right?

Marcus: You know that the actuary math is probably pretty interesting on this, you know, in terms of total cost of care of someone with type two diabetes across all other prescriptions, because it’s not like they’re not on any prescriptions right there. They’re on other prescriptions already. Um, and then as the disease progresses.

Marcus: Right, then they start getting into more expensive things, um, which might include, uh, amputations, um, which might include, uh, [00:56:00] home health, which might include having to go into, um, assisted living, which might include dialysis. So there could be, and those charges mount up very quickly, and they, And they can take a long time, you know, they really can take a long time.

Marcus: So, so,

Vic: so I guess the question is, what are we measuring for measuring total cost of a person to the federal government? That’s

Marcus: well,

Vic: that would be where

Marcus: I would start. I don’t know. Okay,

Vic: well, if you live longer. Do you cost less?

Marcus: It’s not a matter of, of living longer. It’s how long do you live with a chronic disease that requires a large number of interventions that are already approved to be paid for by Medicare?

Marcus: I think, I think people would be shocked at how much Medicare actually covers. Um, For people in really intense, expensive situations, whether it’s [00:57:00] hospitals, whether it’s, you know, dialysis, I think people would be really surprised. And if so, if you live a long time with that chronic condition, the government’s paying a lot of money, you know, so it’s very tough to sort of just look at it in terms of length of life.

Marcus: It’s length of life. At a certain level of acuity, right? You know, that, that Medicare is already on the hook to pay for. And if they basically looked at this and said, you know, we believe putting someone on this, which will cost this, we’ll cut down on, you know, not necessarily make them live longer, but maybe it strips out.

Marcus: I mean, it could even be like months. It could even be months because that’s how expensive some of these interventions get, um, especially if they, if they, you know, are, we’re talking about a hospital.

Vic: Well, so I guess we need to try to find the data. My guess, which is all it is, is that the last 12 months of life [00:58:00] still will cost a ton of money.

Vic: You might have a different set of things. I, I, I hear what you’re saying there. And then you’re going to live. For four years longer, a while longer, but that last year is still going to be very expensive. So I don’t know that I think we’re treading water. I don’t know. Now, maybe quality of life is better.

Marcus: Maybe quality of life is better. Maybe, uh, productivity of that person. Well, they were tired, mom. I mean, but there’s, there’s still contributions to the community. There’s still, you know, Um, you know, do they require other labor to be, you know, working with them, taking care of them? You know, are they a drag on on society in terms of requiring labor output for them?

Marcus: I just think there’s a lot of actuary inputs there, and that it just is interesting. It’s just interesting, right? Um, anyway, somebody decided it was worth paying for because we paid for 5. 7 billion of it in 2022. All right, just quickly circling back to Rite Aid. Um, they [00:59:00] They’ve found a way to stay in business, which I think is a good thing because, uh, I am worried about what’s happening in communities, uh, where, you know, if you just think about the right aid brand, it’s generally speaking, not in, in, you know, sort of more fluent communities.

Marcus: And so the idea that they would just shudder. Um, is awful, but they’ve swapped claims for 90 percent of the stock and they’re reorging.

Vic: Yeah, so basically the bondholders will own most of the company and it will keep operating. Which is, I think, a good thing. That’s a good

Marcus: outcome. Yeah. That’s a good outcome.

Marcus: Yeah. Yeah. I mean, and look, in a lot of cases, this is what should happen, right? Which is, the people who were owners of the company, when it was being run into the ground, they get wiped out.

Vic: Right.

Marcus: And then you kind of find a way to reboot the thing, people can recap it, you know, there’s still an asset there, there’s still value there.

Marcus: Um, you know, probably a lot of free real estate leases are sort of, you know, uh, uh, acquired in this, in this, uh, recapping,

Vic: uh,

Marcus: lawsuits get wiped out. Yeah. [01:00:00] Yeah. Um, anyway, look, I, I, I’m just happy that this is put to bed, the fact

Vic: that there’ll be pharmacies in. What are a lot of places that wouldn’t have a pharmacy for a long lot of miles if they totally shuttered.

Marcus: That’s right. All right. Uh, also recapping on the steward situation. So, uh, it’s it’s gone into, um, General Assembly in Massachusetts. And, you know, we’re talking about. Senator Warren’s stomping grounds. So this is not going to be a friendly environment for private equity and for, uh, you know, large publicly traded companies that are doing very well.

Vic: Anarchy is tough too. Yeah. Massachusetts Senators are tough.

Marcus: Yeah. Yeah. So, so, uh, look, um, hard, hard hearings that are happening up there in Massachusetts around all this do it care stuff. I think this article here from Fierce Healthcare, Uh, outline some of the, the prior, you know, uh, realities of the deal, such as the fact that, um, service, which is the, uh, the private equity firm, you know, when they sold [01:01:00] the hospitals, the actual buildings, uh, to the REIT, uh, what was the name of the REIT?

Vic: Medical props,

Marcus: MPT. Yeah. So when they sold those buildings, um, they, they generated over a billion dollars, uh, in, in top line revenue with that, they, they captured half a billion, 500 million, and then the remainder was what was used to reinvest in the, the remaining asset, which was the operating business, right.

Marcus: Um, since you no longer had the real estate and, you know, there’s a question of, okay, well, how, how long term thinking was that. Um, was that action, can you blame a private equity firm that is ultimately obligated to generate returns for their LPs and not necessarily to be a custodian of healthcare for community?

Marcus: I mean, I don’t think you can, they, they have very clear, um, you know, directives in terms of what their LPA says they must do when they generate returns or LP say, Hey, pay me out. Right. Um, but this is what happens when you blend private [01:02:00] equity that has a mandate to their LPs with. with care for communities, right?

Marcus: I mean, it can get, it can get dicey. I

Vic: mean, I think, I agree with that completely. Cerberus sold their interest four or five years ago. Yeah. And, uh, they have come out after all of this craziness, they came out this week, I didn’t include it, but they came out and said that Stewart was kind of a mediocre return and they were not happy.

Vic: It wasn’t up to their standards. So even though they took money out, I think they invested a lot and then they got a slight. Return, but it wasn’t

Marcus: which further justifies from their perspective. Yes. Why why why we took the half billion

Vic: and then the Sort of continued to sell things to Mpt more buildings and pay for salaries and you know, just pay the operations and not invest in the ongoing business But I think that there is no There’s no plan of how these hospitals can [01:03:00] operate in the black.

Vic: No, no, if

Marcus: your plan is to sell the buildings to pay for ops or to return. Yeah, that’s a road to hell. I mean, there’s no, there’s, there’s no. And then here’s how we’re going to turn it around at the end. Right. I mean, it’s like, okay. Right. So, you know, so anyway, uh,

Vic: It’s going to, it’s going to spin up a lot of concern around private equity and that’s fine, but that’s.

Vic: That’s not the real issue, which is that steward health is in a difficult. Geographies and doesn’t have any plan.

Marcus: All right. It turns into some good stories. Molina healthcare and their, their, their senior care product, senior whole health is partnering with city block, um, to give dual eligibles, increased SDOH assistance.

Marcus: So, um, city block, uh, you know, sort of, uh, really high VC based company, uh, that is focused in, in urban settings on, um, on delivering care to, uh, to dual [01:04:00] eligibles. Um, and this is, you know, more growth for the, for this company. Um, Cam Matthews, who, who, who was a friend of ours and, uh, CityBlock’s chief health officer is quoted in this article here in Fierce Healthcare.

Marcus: Um, and I think, I think it’s good news. I, I, first of all, I love it because it’s a VC based company and, and I love to see a VC based company continuing to grow at really significant scale in value based care arrangements. Um, across the country. So that gives me hope that there’s more opportunity for us to continue to do this.

Marcus: Um, and also, you know, love to celebrate friends.

Vic: Yeah. Yeah. This is an example where the pressure HHS is putting on the Medicare Advantage. And in this case, there’s some met duels. Um, Is having a good effect that they are then incented to go find partnerships and city blocks. Great.

Marcus: Yeah And and also city blocks been around for a while So, you know when we talked about that sort of, you know, one year two year three year It’s like

Vic: they’ve gone through that process Well,

Marcus: they went through it and their [01:05:00] timing was good, right because they did it when the government was much more uh Sort of accepting of that figuring out process, right?

Marcus: I mean now I think the timing is not that great for new companies. That’s actually probably a really nice plus for city block because they have, you know, better to be, you know, lucky than good. And I think from a timing perspective coming out when they did aggregating the capital that they did and being able to put, you know, years of learning underneath them and build out a great management team.

Marcus: Like now they’re really in a good position to scale. Um, with a business that’s been hyper focused on specifically these geographies, these populations, um, seems like they are in a position to really kind of run the table. So,

Vic: yeah, I agree.

Marcus: All right. So congrats to city block and to Melina on that. Um, also another, another good story.

Marcus: Uh, Kaiser closed the Geisinger acquisition. And so rise in health is a reality now. Uh, apparently both Kaiser and Geisinger will maintain their names. Yeah. Um, Which I think makes sense because there’s one P. O. Box somewhere. That’s rising

Vic: health. That’s

Marcus: it. [01:06:00] Yeah. Well, rise in health. I mean, we were kind of talking about what’s the analogy.

Marcus: I mean, maybe rise in health is kind of like ascension, you know, but you know, and and they did eventually. You know, roll out the Ascension brand, but for a very, very long time here in Nashville, St. Thomas was just St. Thomas. It’s now Ascension St. Thomas. But, uh, you know, as they kind of grow and aggregate different health systems around the country, maybe you don’t start by just bulldozing the brand that everyone is, is, uh, you know, familiar with and, and probably has strong affinity to.

Marcus: It’s a solely Kaiser and

Vic: Geisinger are, are, I mean, they’re the positive brands, top 20, top 50 brands in healthcare. I mean, a really good brand. So yeah. But eventually they need to bring it all together into one identity.

Marcus: Yeah. And this article in Modern Healthcare says that they are looking at other acquisitions, probably three to four other health systems still be acquiring.

Marcus: So Kaiser kind of on one coast, Geisinger on the other one. I think it stands to reason either they’ll look in the Southeast United States or middle America to kind of continue to round it out.

Vic: assets in Massachusetts called Stuart.[01:07:00]

Marcus: There’s some assets there. Yeah, assets there. I dunno about. Great. Um, alright. Uh, HCA rolls out in, uh, uh, in EHR referrals to psychiatrists, tele, uh, psychiatrists. So, um, I, I, I think this is in response to the growing need and recognition that, um, we need to be getting people the behavioral health support that they need.

Marcus: Also, um, that there is a labor shortage. It’s very hard to sort of build brick and mortar behavioral health, um, practices. And so. You know, partnering with a platform and being able to integrate that directly in the EHR to make those referrals very seamless. That’s that’s a win. Yeah, great to see HCA continuing to innovate on this front and making things sort of seamless for their for their patients.

Vic: Yeah, this was a great. Great thing. T Tree I guess is venture back two. They raised maybe 20, 20, $30 million. So good.

Marcus: Uh, okay, last two stories. So the first one, uh, wall Street [01:08:00] Journal Opinion from Larry Ellison and Seema Verna, you heard of them? ?

Vic: Yeah. They, uh, Larry is the founder, I think, and CEO Yep.

Vic: Chairman of Oracle. Yep. And Sema. Used to work in government and now she’s going to make money at Oracle.

Marcus: Yeah. She, I mean, she, she ran a CMS for Trump, uh, before that was, was in the Indiana government under Mike Pence. Um, and now she’s, uh, at Oracle health. Yeah.

Vic: So the reason this caught my attention is because of those two authors, like I respect both of them, and I want, I wanted to see what they were saying.

Vic: Unfortunately, I don’t know what the hell they’re saying. But, but they put a, they put a op ed in the Wall Street Journal. So,

Marcus: so, so it’s, it’s an article. The headline is, it’s time to hand cybersecurity over to the computers. And, um, so obviously it’s an opinion. We’ve got the heads of Oracle that are, uh, you know, Oracle and Oracle Health.

Marcus: Um, look, very powerful, very [01:09:00] connected, people. Um, and, and rightly, they are saying that, you know, the, the healthcare industry needs to start investing in, in security. Like, you know, like this, this is

Vic: The number of places where there’s a, there’s a workstation and taped to the keyboard are three passwords. I mean, that’s in almost every health system in the country.

Vic: And that’s the core thing that they’re saying passwords are not secure. Yeah, they get passed around. They’re not changed enough. They’re pretty easy to figure out. I agree with all of that. And so that that’s where they start. And that makes sense. But then the answer is the answer is I’m not going to get past codes.

Vic: Which I didn’t even know exactly what that was. You knew what they were, but, um,

Marcus: Well, well, you said pass codes and I was like, do you mean pass keys? Yeah,

Vic: I thought they were talking about pass keys, which is actually interesting. Yeah. Like they’re [01:10:00] not talking

Marcus: like a huge standard that everyone is adopting and they’re great.

Marcus: And they’re integrated with all the password managers and they’re integrated with your fingerprint recognition or face ID. Yeah. And they’re fantastic and really secure and, and, and healthcare should use them and a better user experience than passwords. Like it’s, it’s better, but no, they’re actually talking about pass codes, which is where you get like a automatically generated six code thing texted to you.

Marcus: And then you have to put that in because it’s automatically generated. And I just, um, I don’t know. I mean, I feel like if we’re going to, if we’re going to bring people into the, you know, the, the year we’re living in, do we need to bring it into 2005?

Vic: Yes, exactly. Like, welcome, you know, 2005. Let’s just, let’s just go ahead and leapfrog that and go to the actual past keys.

Marcus: That would be, that would be great. So anyway, uh, look, it’s, it’s, uh, It’s [01:11:00] valuable to have, you know, leaders of industry like Larry and Seema, um, offering opinion, and we know that they’re definitely, you know, saying things that Oracle will be able to provide as a service, as a, as a vendor, there’s no question about that, and, and they are right, we do need to invest more, but I, I think for industry, um, leaders, we, we need to be Educating people about what the latest and greatest, um, technologies to defend against cyber security are, and I don’t I won’t say that I’m a cyber security expert, but my understanding as someone who’s been a technologist for, you know, all my professional career is that past keys are kind of where we’re, where we’re moving, you know, physical security keys or past keys, not necessarily these past codes.

Marcus: Um, so I would like much less past codes. Much more past keys. Okay. That was kind of wonky and techie [01:12:00] and nerdy, but whatever. Uh, final story is actually not a story, but it’s a paper on science direct. com. And, uh, the paper’s title is ketogenic diet intervention on metabolic and psychiatric health and bipolar and schizophrenia, a pilot trial.

Marcus: So our friend Emily pointed this story to us. Yeah,

Vic: it’s about to be published right now. This is the pre publishing. Um, but they have. They’ve shown that, that a ketogenic diet, which is really, um, low, low carbs, high protein, high, high fat, a lot of times, is very impactful on behavioral health, specifically schizophrenia and bipolar, without anything else, no other interventions, and the behavioral symptoms were improved, 32 percent for Thank you.

Vic: Schizophrenia, and 69 percent for bipolar disease, and it’s a small [01:13:00] number of people in the trial, but that’s really, that was really impressive to me, like, you obviously would pair this with other things, certainly counseling, you might, you know, You might want to keep on the drugs and maybe you could taper over time, but it just goes to, it’s a continuing thing that I’m interested in, which is food as medicine or your diet is it’s just comorbid with everything good and bad in your health journey.

Vic: And if you put really unhealthy food in, you have. lots of downstream negative effects. And alternatively, if you fix that, then you don’t.

Marcus: Yeah, for me, a couple things. One, nutrition is such a rat’s nest, but, um, applying science to nutrition is a good thing. Uh, we have to understand what the baseline of the study was.

Marcus: We need to understand who was in it. Um, this, this to me speaks to [01:14:00] a huge opportunity in diagnostics, because I do think we are starting to learn. Um, that there are different genes that are predisposed to, um, be able to process different types of foods, uh, you know, better or worse. And so I don’t think there’s, there’s totally quality across the entire human race as it comes to, you know, how we’re able to, to properly.

Marcus: Yeah. I’ve got biomes

Vic: different. That’s right. Everything’s different. That’s right.

Marcus: So, so to me, just being able to start having, um, science applied to looking at the connection between really severe diseases that are not, you know, You know, um, diabetes, right, you know, and in heart disease, but actual things that kind of fall more into the, you know, mental health, behavioral health, brain disease issues, um, and the connection between that and nutrition, uh, you know, you hear people who are into.

Marcus: wellness and nutrition, talk a lot about how, you know, the stomach is the brain and, and, and, you know, your, your gut biome is, is as important, if not more important than your brain. [01:15:00] And to me, this just sort of, it’s, it feeds that argument, right? It feeds that argument that we need to do more studies. Um, we need to do more studies.

Marcus: We need more diagnostics. We need to make sure that these studies are equitable and they’re covering all, you know, a very diverse group of people. Um, By gender, by ethnicity, you know, by age, um, but, uh, but yeah, I, I think, I think it’s pretty exciting. Personally, I’ve been on the ketogenic diet before. I have lost a lot of weight.

Marcus: My cholesterol shot through the roof, so it wasn’t a sustainable diet for me long term, but it clearly did have real impact in the period of time that I was doing it. It did have a physiological impact for me.

Vic: Yeah, it’s a hopeful. I think it’s hopeful. We need more study, but it’s a good, good sign.

Marcus: All right.

Marcus: An hour and 14 minutes, but we got through it.

Vic: Yeah. Yeah. And as I said in the beginning, they’re not all positive stories, but it’s probably two thirds, maybe three quarters are good stories. Like, Things are going well. The economy is good. Don’t [01:16:00] believe what you hear on whatever channel you listen to tonight.

Marcus: Yeah. I mean, I don’t, I don’t want to turn anybody off, but at least curate your social media friends at least curate it. Right. Um, anyway, uh, good week and, uh, we will be back next week with more.