Podcast Summary
RRE Ventures' entry into healthcare sector: RRE Ventures, a 25-year-old NY-based VC firm, identified healthcare as an attractive sector 6 years ago, recognizing its potential value through industry analysis and expert consultations. Healthcare offers numerous opportunities for founders and investors amidst ongoing disruptions and advancements.
RRE Ventures, a New York-based VC firm with a 25-year history, has identified healthcare as an attractive sector for investment. The team, specifically partners Raju Rishi, Nikita Singha Reddy, and Jason Black, conduct thorough research and exploration before committing to a sector. They decided on healthcare around 6 years ago after recognizing its potential value, following extensive industry analysis and expert consultations. Healthcare, as a sector, offers numerous opportunities for founders and investors, especially given the ongoing disruptions and advancements brought about by the COVID-19 pandemic. The conversation between Patrick O'Shaughnessy and the RRE team on Invest Like The Best provides valuable insights into the current healthcare investing landscape and the role of various stakeholders within it.
Identified as an attractive investment sector due to market size, tech discontinuities, fragmentation, waste, and regulatory environment: The $3.6 trillion health care industry, with 18 million employees and 54,000 companies, is ripe for innovation due to its lack of major tech impact, fragmentation, excessive waste, and complex regulations, resulting in over $1 trillion in unnecessary costs annually.
Health care, a $3.6 trillion industry, was identified as an attractive investment sector around six years ago based on a framework that considered the size of the market, technology discontinuities, fragmentation, waste, and regulatory environment. The sector, which employs 18 million workers and has 54,000 companies, was found to be ripe for innovation due to its lack of significant impact from major technology trends, fragmentation, excessive waste, and complex regulatory landscape. Additionally, the industry wastes over $1 trillion annually on unnecessary services, administrative costs, ineffectively delivered services, overpriced services, fraud, and missed prevention opportunities. These factors make health care a massive and ineffective market, presenting significant opportunities for entrepreneurs and investors.
Healthcare Pricing: Consumers Demand Transparency: Consumers are demanding price transparency in healthcare due to high deductible plans and rising costs. The government is mandating disclosure, but resistance from the industry presents challenges. Businesses can provide value by helping consumers make informed decisions.
The healthcare industry's pricing structure is complex and opaque, leading to consumer frustration and a growing demand for transparency. With the rise of high deductible plans and increasing healthcare costs, consumers are now shopping around for healthcare services and pushing for price disclosure. The government has also stepped in, mandating price transparency through regulations like the ChargeMaster disclosure. This shift towards consumer-driven healthcare and price transparency presents opportunities for businesses to build solutions that help consumers make informed healthcare decisions. However, the industry's resistance to price disclosure, as evidenced by lawsuits against the government, highlights the challenges that lie ahead. Overall, the healthcare sector's pricing dynamics are undergoing significant changes, and businesses that can navigate this complex landscape and provide value to consumers will thrive.
Empowering Consumers with HDHPs and HSAs: Consumers are taking control of their healthcare expenses with HDHPs and HSAs, while insurance companies amass profits during the pandemic. Regulators may intervene, pushing for price transparency and potentially leading to more affordable, consumer-driven solutions.
The US healthcare system is experiencing a potential shift due to consumers becoming more cost-conscious and regulatory bodies scrutinizing insurance companies' revenue. High Deductible Health Plans (HDHPs) linked to Health Savings Accounts (HSAs) are empowering consumers to shop around for healthcare services and save for future needs. Simultaneously, insurance companies are accumulating significant revenue during the COVID-19 pandemic as people avoid non-emergency healthcare visits. Regulators may intervene, questioning the justification for high healthcare costs and pushing for price transparency. Ultimately, this situation could lead to a crack in the dam of the current healthcare system, potentially leading to more affordable and consumer-driven healthcare solutions.
Understanding the Complexity of Employer-Based Health Care in the US: Consumers use tech for health care control, but face EHR integration issues; Payers aim for value-based care and data access; Medical companies focus on EHR interoperability for innovation
The health care industry in the United States, despite being known for prioritizing capitalism, operates in a corrupt and complex way when it comes to employer-based insurance. A recommended read to understand this further is "Catastrophic Care" by David Goldhill. The major stakeholders in health care include consumers, doctors, insurance companies (payers), IT personnel, and medical application or device companies. Consumers are increasingly taking control of their health care through apps and technology, but face frustration when trying to integrate these tools with their electronic health records (EHRs). Payers seek access to this data to improve value-based care and reduce over/underpayments. Medical application and device companies focus on tying into EHRs, creating a need for interoperability as the first step towards unlocking the potential for innovation in health care.
Unlocking patient data for improved healthcare: COVID-19 accelerated data democratization and interoperability in healthcare, leading to unlocked patient data for better care, research, and efficiency. Stakeholders like consumers, clinicians, IT personnel, payers, and medical application/device companies have unique needs and opportunities for innovation.
The healthcare industry is undergoing significant changes, particularly in the areas of data democratization and interoperability. COVID-19 has served as a catalyst for these shifts, breaking down the barriers that have hindered innovation in the past. One of the most significant changes is the unlocking of patient data, which can lead to improved patient care, better research, and more efficient processes. There are several stakeholders involved, including consumers, clinicians, IT personnel, payers, and medical application and device companies. Each of these groups has unique needs and challenges, and there are opportunities for innovation in each area. For example, there are tools being developed to help clinicians manage their time more effectively, and there's a need for greater transparency and efficiency in the reimbursement process. Medical application and device companies can benefit from interoperability, as they won't have to spend as much time and energy integrating with various healthcare systems. Overall, the changing landscape presents significant opportunities for innovation, and the first step is unlocking the data.
Telemedicine and remote patient monitoring during COVID-19: The pandemic led to eased regulations for telehealth services, increasing virtual consultations and remote patient monitoring. Consumers are now able to manage their health with advanced tools and technologies, including remote vital checks and home-based procedures.
The COVID-19 pandemic accelerated the adoption of telemedicine and remote patient monitoring in healthcare. Prior to COVID, regulatory hurdles made it difficult for doctors and hospitals to offer telehealth services. But when the pandemic hit, there was a surge in demand for virtual consultations as many doctors' offices and hospitals were overwhelmed. In response, the government eased regulations, allowing for easier credentialing and reimbursement of telehealth services. This shift was met with enthusiasm from both doctors and patients, leading to a significant increase in virtual consultations. The future of telemedicine and remote patient monitoring is uncertain, but it's clear that they are here to stay in some capacity. Another key takeaway is the growing trend of remote patient monitoring. With the availability of advanced tools and technologies, consumers are now able to take a more active role in managing their own health. This includes using mobile devices for consultations and even bringing diagnostics into the home. Companies like Atyalcare are merging video calls with vital checks to offer a more comprehensive remote healthcare experience. The pandemic has also highlighted the potential for home-based procedures and care, with estimates suggesting that a third of all procedures and care can be done in a home setting. Overall, the healthcare industry is undergoing a significant transformation, and the consumer experience is at the forefront of these changes.
Expanding healthcare revenue and preventative care through remote patient monitoring: Remote patient monitoring using clinical-grade IoT devices helps individuals take ownership of their health, receive early notifications for potential health issues, and benefits those with chronic conditions, driving growth in value-based care and preventative measures
Remote patient monitoring plays a crucial role in expanding healthcare revenue and providing preventative care for patients, especially those with chronic conditions. Hospitals are increasingly adopting remote patient monitoring to keep track of patients' vital signs post-discharge and improve overall efficiency. The market for remote patient monitoring has grown significantly with the advent of clinical-grade IoT devices like the Apple Watch and home tests. These devices allow individuals to take ownership of their health and receive early notifications for potential health issues, reducing the need for expensive hospital visits. While wellness devices and patient-driven monitoring will continue to proliferate, remote patient monitoring will be most beneficial for individuals with chronic conditions where early intervention and actionable data are essential. The shift towards value-based care and preventative measures in healthcare regulations is driving the growth of remote patient monitoring and improving overall health outcomes.
The future of healthcare: seamless data sharing and remote monitoring: In the future, healthcare will focus on remote monitoring for chronic patients, driven by financial incentives from insurers. Data will be shared, anonymized, and used for advanced diagnosis and personalized treatment plans, including genetics and machine learning.
The future of healthcare is headed towards easier connectivity and remote monitoring. For chronic patients, remote patient monitoring will become essential, with insurers driving this trend due to financial incentives. The focus will be on actionable data that can prevent readmissions and improve patient care. However, for voluntary consumer-level monitoring, the data needs to be relevant and meaningful to healthcare providers. The ultimate goal is to create a system where data is seamlessly shared, anonymized, and used for advanced diagnosis and personalized treatment plans, potentially including genetics and machine learning. This vision of a connected healthcare system with ongoing passive monitoring and diagnosis is intriguing, but it's not likely to be fully realized within the next decade. Instead, we can expect incremental progress as technology continues to advance and healthcare systems adapt.
Inefficient and outdated clinical trial process ripe for innovation: Machine learning, data analysis, digital solutions, and blockchain technology offer opportunities to improve patient selection, streamline workflows, and create new revenue streams in clinical trials.
The clinical trial process in the pharmaceutical industry is ripe for innovation and disruption due to inefficiencies and outdated methods. The current system relies on a volunteer-based model for patient recruitment, leading to inconsistent data and selection. This process is not only inefficient but also lacks transparency and scalability. Additionally, the workflow is antiquated and not online or cloud-based, making it difficult to manage and analyze data effectively. However, there are opportunities to improve patient selection through machine learning and data analysis, as well as streamline workflows with digital solutions. Moreover, the use of blockchain technology could potentially enable patients to own and monetize their genetic data, creating a new revenue stream for pharmaceutical companies and startups alike. Overall, the clinical trial landscape presents significant opportunities for innovation and the creation of new businesses that can address these challenges and improve the efficiency and accuracy of drug development.
Technological advancements in healthcare: Alleviating the burden of administrative tasks for doctors: Technologies like speech recognition, Google Glass, and robotic process automation can help doctors manage administrative tasks, making their job more efficient and attractive, but implementation comes with challenges such as regulatory requirements and thin healthcare organization margins.
The healthcare industry is undergoing significant changes, driven by technological advancements and the need to streamline administrative tasks. Doctors are spending a large portion of their time on administrative tasks, which is a major concern, especially during the COVID-19 pandemic. Companies and startups have an opportunity to improve the experience of doctors by implementing technologies such as speech recognition, Google Glass-type tech, and robotic process automation. These technologies can help alleviate the burden of administrative tasks and make the job of being a doctor more manageable and attractive. However, the implementation of these technologies also comes with challenges, such as the need to navigate regulatory requirements and thin margins for healthcare organizations. Overall, the healthcare industry is undergoing a significant experiment, and it's crucial to find ways to make it more efficient and effective for doctors while ensuring that patient care remains a top priority.
Healthcare lagging behind in tech adoption: Regulations and IT heads focus hinder healthcare tech advancements, but interoperability may unlock personalized prescriptions and reduce costs for new healthcare companies
There's a significant disconnect between the adoption of user-friendly technology in various industries and healthcare. While consumerization and simplification have led to major improvements in other sectors, healthcare has been lagging behind due to regulations and a focus on large-scale EHR sales to IT heads rather than individual doctors. However, there are exciting developments on the horizon. Interoperability, which allows for the seamless sharing of data between different systems, is expected to unlock new possibilities, such as personalized drug prescriptions based on genetic information and ethnic origin. Furthermore, as interoperability advances, it has the potential to significantly reduce the overhead costs for new healthcare companies, leading to a Cambrian explosion of innovation in the industry.
The future of healthcare: personalized, predictive, and preventative: The future of healthcare will prioritize preventative measures through affordable, rapid, and accurate testing, enabled by digitized health records and universal medical devices.
The future of healthcare lies in digitizing and connecting all health records to enable hyper-specific, preventative care. The speaker is excited about the potential of universal medical devices that can predict future health outcomes and affordable, rapid, and accurate testing. The speaker believes that the healthcare system should shift from managing conditions to preventing them, and testing is a crucial step towards achieving this goal. The speaker also shared a personal story about the kindness of a merchant who helped him when he was a young child. In the realm of healthcare innovation, the speaker sees a future where affordable, preventative testing is the norm, and the digitization of health records enables personalized, predictive care. This vision aligns with the current trend of bringing more healthcare into the home and the acceleration of these developments due to COVID-19.
Acts of kindness can have a profound impact: Kindness from strangers and loved ones can provide practical help, emotional support, and touch us deeply. Be open to recognizing and appreciating these moments.
Acts of kindness, no matter how small, can have a profound impact on someone's life. The speaker shared two personal experiences where strangers and family members went above and beyond to help him during difficult times. The first was when he was injured and his brother-in-law drove 16 hours to help him, and the second was when the DMV instructor passed him despite making mistakes during his driver's test. These acts of kindness not only made a practical difference but also provided emotional support and touched the speaker deeply. The speaker emphasized that kindness can come from unexpected places and that it's essential to appreciate and recognize these moments. Additionally, the speaker encouraged listeners to sign up for his email newsletter, Inside the Episode, to receive weekly summaries of his podcast episodes and book recommendations.
Jonathan Thierman, MD, PhD, is physician executive in the LifeBridge Health system and president of the medical staff at Northwest Hospital. He started his career as an engineer and inventor, earning his PhD at MIT and then training in emergency medicine at Harvard Medical School and Johns Hopkins Hospital. In the past, he has worked to bring real-world clinical experience to the engineering and design of medical devices.
Daniel O’Neill, MA, MS, currently serves as chief commercial officer for Pine Park Health, a value-based primary care group that delivers on-site care in senior living communities. Prior to that, Dan was a health policy fellow at the National Academy of Medicine, working primarily in the US Senate on legislation focused on surprise billing, anti-competitive contracting practices in the commercial market, and price transparency. Dan has also worked as a senior vice president with Change Healthcare and as an advisor to venture-stage healthcare services and technology firms. At Pine Park, Dan is responsible for risk-based contracting with IPAs and insurers and for the group’s participation in CMS value-based care models, including direct contracting. Dan’s research is available in