TMRW/TDY
The Future’s Playbook
Hey Reader,
Walk around any clinic or hospital and you might be amazed, as I continuously am, at how many specialities and care programs there are. From primary care to the gi lab to robotic surgeries in urology, it is astounding that so much different type of care exists.
In fact, healthcare has the most diverse and complex supply chain of any industry on the planet. By most estimates, there are tens of thousands of unique pharmaceuticals and medical and surgical procedures. And the list keeps growing.
Apple, often the world’s most valuable company, essentially makes only 6 products.
Increasingly, investors and start-ups are asking if it makes sense that all this care exists under one roof. It’s a trend that I call the Spotify-ication of healthcare: the fragmentation of care delivery across multiple platforms that can both unlock new value and innovation in a sclerotic industry but also put patients at risk.
The rise of streaming music services like Spotify have eliminated the concept of the music album as unified piece of art to be consumed in its entirety. In its wake are not only just single songs, long a staple of radio airplay, but hooks, samples and ringtones from individual songs that can be mixed and remixed by regular people, attached to Instagram posts and TikTok reels. They can can spur even the original artists to make songs in the hopes of capitalizing on this viral meme and remix culture. Old songs from decades ago can become modern day chart toppers because they are on a streaming show on Netflix (aka video Spotify).
Now let’s see what has happened to the first wave of digital and new health startups in the last 10 years but especially since the immediate pre-pandemic era. There is a plethora of disease and patient population point solutions both online and in person. The spectrum ranges from diabetes care (Omada health), to mental health startups (BetterHelp), to virtual weight loss clinics (Calibrate, Noom) to female health clinics (Tia and Maven).
Economically, these focal solutions make sense: directed business operations and marketing. Clayton Christensen, the late Harvard Business School professor, would refer to them as focused factories: you disrupt healthcare by offering in depth services for a niche audience. And in healthcare, everyone is part of a niche audience.
This trend is buttressed by larger forces both consolidating and disagregating care at the macro-economic level. Healthcare costs, especially for inpatients, are at an all time high so insurers are making a big push for healthcare at home. It has vaguely nostalgic vibe to it but its P&L statements that driving this phenomenon, not any desire for continuity of care or a healthy doctor-patient rapport.
Jorge Conde of venture capital firm Andreseen Horowitz calls it the great Healthcare Unlock and cites a few key factors:
- shift away from the hospital monolith to retail and community startups
- virtual first paradigm
- consumer at the center of the healthcare value chain
Mark Cuban’s new healthcare disruptor CostPlusDrugs is a fantastic example of all three of these innovative forces combined into one company. 100’s of drugs available and dramatic discounts because middlemen like Pharmacy Benefits Managers (PBM) are cut out and direct to consumer sales via an intuitive web page provides for both profits and costs savings. Hear him wax poetic on all the green flags for healthcare disruption.
But for every CostPlusDrugs there is a Forward Health, the recently collapsed primary care clinic started by ex Google engineers with an axe to grind and abandoned all their patients.
We’re in the Wild West here, people, and it’s an industry where mistakes cannot be tolerated. Buckle up.
Even health information is becoming disaggregated. No longer content with Dr Google and WebMD, people are searching for supplements on Amazon, checking out patient experience stories on TikTok, watching health documentaries on Netflix. Even the WSJ recently ran an article entitled “Googling is for Old People.”
People are creating their own playlists if you will regarding health information and healthcare services they consume.
And if you believe your patients are not uploading their recent labs into Chatgpt for analysis, you would be wrong.
It’s telling that some of the most popular health & wellness podcasts – Huberman Lab, Found My Fitness, On Puporse, The Ultimate Human, MindPump, The Model Show, etc -are not hosted by MDs or DO’s or any allied health professional.
But we do live in a dualistic environment. This unbundling of consumer health is prompting greater industry moves to consolidate – especially on the payor and provider side. Private equity is rolling up numerous outpatient clinics. Kaiser and Geisinger recently merged. Payors themselves are buying providers themselves. United Healthcare (whose late CEO was recently gunned down in a political hit) is the largest employer of physicians in the country through its acquisition of Optum. Though far from smooth, CVS and Walgreens (pharmacies and PBMs) have entered the provider space with Oak Street Primary care among others.
The data strongly suggests that consolidation while excellent for shareholder value and a trigger for more capital investment into healthcare, can prompt higher prices and worse patient outcomes.
Exhibit 1 Percent of physicians, primary care physicians, hospitals, and hospital beds affiliated with vertically integrated health systems in the US, 2016 and 2018
source: https://www.healthaffairs.org/doi/10.1377/hlthaff.2020.00017
UFC Founder Dana White is one of the most influential people in the country. He’s founder of a multi-billion dollar sport and close pals with President Elect Trump. When he recently got in shape in conjunction with alternative health gurus and biohackers he said this:
“I will never go to a doctor ever again about my general health.”
He was speaking to a large discontent in the American populace. They don’t want to simply listen to (receive) songs (care) but rather choose what music (care) they want and how they use it (consume it).
And they don’t believe their doctor or insurance company to provide them this experience.
60 years you could expect to go to your local family doctor and get all your questions answered. The world was simpler then. We had fewer medicines, minimal TV ads for the latest drugs, and hurried managed care appointments were yet to appear.
Today, your average healthcare consumer is likely to do the following:
- Learned of a food recall off the New York Times
- Read about the benefits of cold plunges on the Huberman Lab Podcast
- Check their Oura Ring sleep data first thing in the morning
- Buy supplements recommended to them by Dr Hyman
- Use Calm meditation app to de-stress
- Read Emily Oster on the latest data to guide their parenting decisions
- Have a virtual urgent care appointment via TelaDoc
- Watch the Game Changers vegan documentary on Netflix
- Search through a patient Facebook group on how to manage their lupus flares
- Buy cheaper prescription drugs from Canada
- Call their health insurance member benefits number to complain about a co-pay
- Will talk about their relationship stressors with their therapist on BetterHelp
and more. This is the modern healthcare “playlist.”
This “remix of healthcare” highlights the greatest single opportunity in healthcare:
Creating the front door of healthcare
With more options comes more confusion and the paralysis of choice. People are lost in their ever present search for the right doctor, the right medicine, what diet to start and more. Not a week goes by without a friend or a family member asking me to help them with health or medical problem they have. Most of my doctor friends have similar stories.
We don’t mind helping, but it’s clear that the market needs a unified on-ramp to help consumers learn and purchase the right healthcare from a very granular level – what urologist specializing in advanced prostate cancer can I see in Kansas City ? – to high level discussions (is Whole30 really the best for my general health?). Purchasing healthcare is entirely different than buying a car, an iPhone, even a home.
This op/ed by two Cleveland Clinic oncologists underscores the dirty secret of medicine: informed consent is not so informed.
The most important purchases people ever make are in healthcare. And yet there is no systematic to guide people in the choices. People have, in turn, created a patchwork quilt of their own resources. There is enormous potential in this approach that is patient driven and consumer focused. But also enormous pitfalls.
Spotify doesn’t create a music but it has fundamentally re-shaped how music is both created and consumed. It is the ultimate marketplace for all music vendors and is the gatekeeper of what is cool, which is the sacrosanct vibe of all things music.
The companies that can guide patients in a similar manner in their care delivery choices will be the new healthcare Kingmakers.
The US music industry has a $212 billion economic impact. Healthcare? In 2022, the US spent $4.5 trillion on healthcare.
Let Battle of the Bands begin.
Forward,
