← The Peel with Turner Novak
The Peel with Turner Novak
How US Healthcare Actually Works, the WWII Tax Loophole that Broke it Forever, and How AI Can Fix it | Nikhil Krishnan, Out of Pocket
01:45:04
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- [00:03]
A
Nikhil, welcome to the show. What's up?
- [00:05]
B
Excited to be here.
- [00:07]
A
I'm excited to have you too. We're gonna talk, I think healthcare more broadly, but also tactically and then some content creation stuff. Cause I guess we're both kind of content creators and people always wanna know about that kind of stuff.
- [00:19]
B
So this feels like, you know, like when Twitch streamers collab on a thing, the people freak out. Like, this is how. This is how I view this. This is like the Avengers of people that are too online, me and you.
- [00:29]
A
Yeah, I think the comments for this, people are going to be just absolutely losing their minds about two. Just heavy hitters from the Internet.
- [00:36]
B
Just from coming together, specific niche of the Internet,
- [00:43]
A
but really quick for people who do not know. Let's just say, you know, I've never come across you on the Internet before. How do you just describe both of us? How do you. How do you like describe yourself and then out of pocket more generally?
- [00:56]
B
Yeah, I mean, so I try to make healthcare more entertaining and accessible. That's like the short version. We're trying to teach people how healthcare works. I write a newsletter, we do a bunch of courses, we have a bunch of events, blah, blah, blah. General idea is we want it to be easier for people to understand how healthcare works and we hope that people will build more interesting things if it makes more sense to them.
- [01:19]
A
That makes sense. So I mean, that's probably a good first topic. How would you describe the healthcare industry to someone? Like, just pretend I just have no idea how it works. Like, how would you describe this whole thing?
- [01:31]
B
I would just like, I would just step on your foot really hard and just be like, how does that feel? That's the entire healthcare system.
- [01:37]
A
That's it. But. And then you hand me a bill after you step on my phone, Right?
- [01:41]
B
Exactly, exactly. This is for your own good.
- [01:43]
A
But you send it like three months later and I can't access it online and it's like an envelope that gets
- [01:49]
B
lost in the mail. As it should be. Right. I mean, the US healthcare system is messed up. Right. It's very confusing. You know, I think the reality is like US healthcare was not a planned healthcare system like a lot of other countries where they sort of like actually planned out what the healthcare system would look like. It sort of just appeared and kind of congealed over many, many layers. And because of that, like we've created these like bespoke rules that exist for different slices of the healthcare system. And so as a result, what we now have is actually it's more like you know, 50, $100 billion microsystems in a trench coat underneath this like, you know, what we call like a $5 trillion or $6 trillion healthcare industry. It's really like a bunch of micro healthcare systems and each one of them have different regulations, they have different people who pay for it, they have different services they are allowed to offer and not. But they all have different rules. Right? And so you know, one of the reasons healthcare has so much administrative sort of blunt and what people complain about is because you actually have to now track all of these different rules and if someone jumps from like one system to another, you have to understand like what does that mean? And you have to go chase down a bunch of information, all that kind of stuff. So it's a very messed up system. But I really think of the US healthcare system is like a bunch of really small micro healthcare systems within like a larger umbrella basically.
- [03:18]
A
And you said 50. Is it because like it's just each state is different or is it just like different aspects of it or.
- [03:24]
B
Yeah, I shouldn't have used 50. That's like a little too perfect on the nose for states. No, it's like I would say the categorization is more around like who pays. Right. So like it could be a state, for example, if it's Medicaid, it could be the federal government if it's Medicare. But now the federal government also contracts with private insurance companies for Medicare Advantage. So each one of those is like a different set of rules. If you get your employer, if you get your health insurance through their job, that's a different set of rules. But also sometimes an employer will pay for the medical bills directly rather than go through an insurance company. And that's its own set of rules. So like all of these are like different. It's actually probably more than 50 if you really think about it. But it's not just state based, it's really, it's really just whoever's footing the bill at the end of the day versus like a lot of other countries. For example, if you ever hear like a single payer system, there's one pay, right? So it's like the government is footing the bill at the end of the day. In the US we have a multi payer system and each of those payers have different rules basically.
- [04:26]
A
And you mentioned this thing about planned versus unplanned. So in other countries was there just a point where they're like let's make this big change and the government just takes over everything and then that just didn't happen in the US or how did that evolve?
- [04:40]
B
It's an interesting question. So for a lot of other countries, the government basically said, here's the role that we're going to play in the healthcare system, right? Whether that is we are setting prices, we are running the hospitals ourselves, we are creating a marketplace where a bunch of health insurance companies can compete with each other, whatever your version is. But it is, it was the government deciding very clearly, like, hey, this is the role that we intend to play here. The US Is very different. So the weird quirk of the US basically is that our employers choose our health insurance on our behalf, right? This is like one of the, I think, original sins of US healthcare. And that is actually born out of a tweak in the tax code. Like it wasn't like a planned healthcare system thing. It was basically like, hey, so basically like everyone was off fighting World War II and we were worried about wage inflation at the time, or like, you know, everyone's overseas fighting. We have, you know, labor force here, it says way more leverage. So we're afraid that people are just going to cause wage inflation. So the government basically said, hey, you have to cap wage growth, but what we'll give you in return is you can use tax exempt dollars for other things basically. And one of those other things was health insurance and healthcare coverage. So because of that, essentially, this was kind of like, it's like a footnote, you know what I mean?
- [06:05]
A
Like, it wasn't really thought to be that big of a deal back in the 40s, right?
- [06:10]
B
Because healthcare was also very cheap at the time, you have to remember, right? Like it was like house calls and like people would give cooking for your migraine and like you move on with your day, right?
- [06:20]
A
Here's some hard drugs to put it. But, but, but it's like because, because we didn't really have like a pharmaceutical industry, right? And like people weren't really getting surgeries, they just kind of. You got sick and you died.
- [06:31]
B
Yeah, it was, it's a very different, like we didn't have for example, like the level of complex hospital care we have today. A lot of that is like a post World War II invention actually. So because of that, like healthcare was a, was like a, like a blip in terms of cost. So people didn't really think too much about it. But that weird tax quirk basically then created what we know as like the third party private insurance industry essentially at the time. Or really put gas on it. It existed before this, but put a lot of gas on it. And then as healthcare got more expensive and more complicated and all this kind of stuff, it became this sort of like, you know, it had all the sort of factors needed to become suddenly runaway costs, right? Because employers had this tax exempt done. So they were paying, people weren't paying out of their own pocket. Healthcare itself started getting more intensive and all this kind of stuff. So then the cost started ballooning and then now we have like a bunch of random, you know, and then, and then, and then, you know, when in 19, I think 65, we then created Medicare, right? So we created like a whole new set of rules and the government got much more involved in the payment of healthcare. And so then now you have a whole new system that gets created and that basically when you, when you start layering these things on top, it's like, like you start putting band aids on problems basically. But it wasn't like a fully planned healthcare system.
- [07:52]
A
Okay, and when you say tax exempt, just so everyone knows what you mean by that. It's basically when you give someone a salary, the company has to pay taxes or the person, the employee deployee pays taxes, but with health benefits they're kind of essentially not taxed. So it's like compensation that you get without paying taxes on and the company also doesn't pay tax.
- [08:13]
B
Yeah, so like maybe the most clear explanation of this is like if you're self employed, for example, you will probably buy health insurance off the like, you know, individual exchanges.
- [08:24]
A
The marketplace.
- [08:25]
B
Right, the marketplace. When you do that, you are paying out of your own income, right? So you are paying, it is post tax dollars you have probably received and you are paying it to, to, to your premiums, right. Versus when an employer does it, they are paying pre tax dollars to your premiums. So essentially that is like a huge boost in itself. And that doesn't even include all the things like benefits and all other stuff. But it is, it is the, it is the pre tax versus post tax dollars. And that is like a huge delta. And if anyone has ever left a job, for example, and had to pay cobra, right, like so you can pay into your old employer's health insurance, you'll probably notice that it spikes a lot, right? And that's, that's even though it's the same plan, right. You're suddenly paying a lot more and it's for two reasons. One, your employer price subsidized a large part of your premiums, just like as part of your employment contract. And you're paying it in the form of post tax dollars. Now yourself so you're getting hit with a double whammy basically. So that's not the case for other countries. And also now there's like some new tools that are getting a lot of traction. I mean in the VC world you've probably heard of like Icarus as like a very popular new startup idea basically. And the idea there is employers will create a wallet effectively to give you the tax exempt dollars they normally get and then you can go shop around for health insurance or whatever healthcare stuff you want. So same tax treatment dollars they normally get, but then more consumer sort of oriented essentially.
- [10:03]
A
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- [12:21]
B
Yeah, yeah. So there's a couple, there's a couple things. One, as a percent of GDP actually healthcare has not gone up as much as people think it has. So if we look at actually the last like 10 to 12 years, it's gone up a little bit, but actually like not as much as you would think. Um, and there's a lot of debates about why that's the case. Right. Some people are like, people are just rationing care. Other people are like, you know, we've had a lot of big drug breakthroughs like in heart disease and stuff like that to bring costs down. Other people are like, you know, we just, the government just pays less. Now there's a lot of debates maybe, but it's actually, it hasn't gone up as much as you would think as a percent of gdp. But the caveat here is that who pays? It's been shifting a lot. So within that like whatever, 18, 17% of GDP, a lot more costs are shifted to people basically. And that might be people in the form of like, hey you, you know, your deductibles going up or your premiums going up or else it could be in the form of your wages not going up because it is going to healthcare costs instead. So, so that's, that's one thing is like actually maybe it hasn't gone up as much as you think, but how the costs shift around have shaped, changed. The second piece of this is more macro oriented, which is this as our population is getting older, people are consuming more healthcare services as a whole. And also with a lot of new very popular things, like for example diabetes drug, I'm sorry, weight loss drugs, they're very popular categories, they're very expensive and people want to consume more of it. So in general we just have like much more, we have a lot of consumption of healthcare services generally. Right. Which then comes to an ideological question, which is what do you think should be the mechanism by which we reduce prices or reduce consumption of healthcare? Whichever access you choose, it's not super Clear. Right. So for example, you could just be like, yo, we're not paying for healthcare anymore, right? Well then suddenly people are. You have to ration something, right? So who are we going to ration care consumption from? Right? That suddenly gets very political, right? Healthcare is the number one employer in most states currently. So now if you say like, hey, we're actually not going to be paying for this kind of stuff, a lot of people are going to lose a lot of jobs. You've probably seen in like the jobs report for like the last year. The only place with positive growth consistently is healthcare, basically. Right. So in this implicit jobs program in the US and on top of that, people, people want to consume a lot of healthcare services. So you could try to reduce consumption. That's pretty tough. So maybe another mechanism is reducing price, right? And this is like, I think one of the cardinal sins of us is that we don't have a centralized price negotiation system the way other countries do. So other countries, typically the government will set prices or at least set how price growth should be or whatever. Or it's like a totally free market system where people are paying out of pocket. So that is like the price sort of setting mechanism. But in the US we don't really have that. And so as a result, what ends up happening is the government might say, hey, we're not going to pay as much for these things anymore. And then the hospitals will just increase prices on the preg insurance side of things. So it's like squeezing a balloon, right? Where it's like you could try reducing it in one place, it's just going to grow somewhere else. So there's no universal price setting mechanism is the problem so long ranked. But it's a harder question than just saying, no, it's not.
- [15:54]
A
Yeah, yeah, that's fair. And, and so the, because you know, you, you could argue like America's like a capitalist market or whatever. Like this whole, you can just choose where you go is there, or you can like, you know, there's like competition in prices and like that should in theory bring the costs down essentially.
- [16:15]
B
I think there's a question around are we a marketplace or are we not a marketplace for healthcare? Right. And I think that's actually one of the core problems with US healthcare. It's just like we don't know which one we want. Right? Do we want to be a healthcare system that is more government sort of intervened or do we want to be a healthcare system that is more free market? And the problem is like there's no agreement on that. Right. And so depending on the administration, they'll go one way or the other, but then if a new administration comes, they might want to go the other way. And so the problem is if you ask 50 different people which version you think looks better, you'll get 50 different answers. And because there's no again, unifying theory of what kind of healthcare system we want, we can't build towards that given direction. And so that makes it very tough. Right. So yeah, we're like just regulated enough to prevent competition and just free market enough to enable price gouging.
- [17:13]
A
Yeah, it's kind of like depending on who you are, that's either an incredible opportunity or also like terrible at the same time. Like I guess it depends how you think about it, where, where you're at in the, in the equation.
- [17:26]
B
Yeah, totally. I mean, you know, I think the, the marketplace is maybe are a good example for this. Right. Where you know, as part of the Affordable Care act they were like, hey, everyone's going to buy their health insurance on an exchange now. Right. And that should look like a marketplace. Right. That should be much more competition friendly and all this kind of stuff. The idea was that if you buy your health insurance on a marketplace, like you know, you'll pick things that you care about. Right. Like customer experience and.
- [17:54]
A
Yeah. Coverage deductible, etc.
- [17:57]
B
They wanted to make it more of a competitive, true free market thing. Right. But the problem is that like everyone has to be on the marketplace for that to work. Right. If you only have people who are relatively sick come onto the marketplace or if more people stay on their employer insurance because it's much more attractive because of a lot of those tax break things we talked about. It's not like a real marketplace. Right. And so that's just like a good example where it's like it kind of looks like a marketplace but it's not quite marketplace enough to work because there's like lot of the government sort of stuff that's not making it work properly. And so you know, again, like caught between two rock and hard place.
- [18:37]
A
Have we ever tried to move off this like employer tied healthcare model or has it just like never been attempted?
- [18:43]
B
That was the Affordable Care on goal is really to get people off. There was a lot of components to it. One place one was creating this, this way you could go shop around for health insurance, for example. The second piece of that was going to be make it less attractive to offer benefits as an employer. Right. So sort of a two pronged approach where you're like hey, let's make it more attractive to buy your own health insurance and less attractive for employers to offer it. So there used to be this thing called a Cadillac tax that they wanted to implement where it's like if you offer things that are, if you offer health insurance coverage that's like too good, basically you'll get extra taxed effectively. I'm not going to go to like the specific specifics here, but just in general. The idea was to push people out of this employer pool and into this individual exchange pool, but that's not how it ended up panning out. And that part of the deal ended up getting killed. And so you have to remember also that employers like this system currently, if you're a big employer, it's an excellent talent recruiting and retention tactic to offer health benefits. You probably know people who keep a job explicitly for the health insurance benefits. So they, you know, a lot of employers actually are quite pro this situation.
- [19:56]
A
So yeah, I know there's a lot of kind of like the most classic sort of like startup founder setup is like you got your startup, you don't make any money, taking a ton of risk and then you have a, a partner who works in a big company with a nice salary, really good benefits and you kind of like you have like the two pronged approach almost.
- [20:15]
B
I mean if anyone is listening, the startup idea is actually a dating app between founders and people with Fortune 500 benefits. That's true.
- [20:23]
A
That's a big opportunity when you can build anything. Amplitude lets you know how to build the right thing. Use human language to get complex answers about your products. No more manually selecting events or building charts or dashboards. Just ask. Use agents to sense changes in customer behavior, decide what's causing them and ask you if it's okay to fix it continuously in the background while you work. Get the answers you need while building directly in the tools you are already in. Like Claude Cursor, Lovable and more. And for the first time understand if your agents actually work, measure quality, debug failures, experiment and measure their ROI with agent analytics, amplitude with AI analytics. All you have to do is ask how does sort of money usually flow in US Healthcare? Like does is it the consumers that are like you usually making decisions like how does this kind of all work? Would you, how would you describe it?
- [21:16]
B
Do you have like this is a five hour podcast? Like there's not enough time in the world to go through that. I mean at a high level the way most people get health insurance is through their employer. And so the way it'll work is your employer will choose a handful of plans for you. You will pick a portion of premiums, your employer applies, subsidizes a portion, but then when you go see the doctor, the, the health insurance is usually paying the doctor the majority chunk of that in some capacity and also paying for majority of your prescription drugs and all this kind of stuff. But like, you know, if I were to explain the entire diagram flow, this, this would be like the Charlie. It would be like the Charlie meme.
- [21:57]
A
Yeah, the always funny meme.
- [21:59]
B
Yeah. But it's, it's very different also depending on if you are on a government plan versus if you're on a private health insurance plan. So you know, if you're on Medicare or Medicaid, which are the government programs, they have again like a different set of rules and payment methodology, etc. Versus if you're on a private health insurance plan. So very, very different.
- [22:20]
A
You mentioned this one concept called like a two way price negotiation or something like that. Am I remembering this? What is that for someone who's never heard of that before?
- [22:28]
B
Yeah. And by the way, this is not unique to health care. This actually exists in a lot of different places. But the general gist is, is a lot of healthcare. Now the value proposition of companies is that I am large enough to negotiate with a counter entity, right? Like I'm a hospital, I want to get bigger so I can negotiate with the health insurance company. I'm a health insurance company, I want to get bigger so I can negotiate with the hospital or the pharma company or whatever, right? Like in general you're trying to build leverage in some way, shape or form. And so what ends up happening is there are a lot of entities that are like, hey, we aggravate a lot of people together and we basically then can negotiate on behalf of everybody, right? And so if you're a newcomer or you're an individual or whatever, you probably want to join one of these aggregate pools to negotiate against the counter entity. So like an explicit example of this is like if you're an insurance company, you probably want to work with a pharmaceutical benefits manager who aggregates all of the patient lives that different insurers represent to then negotiate with the pharma companies on drug prices, basically, right. Because it's probably better to get everyone together to do that and negotiate than it is for any individual person. Right. However, the issue here is that a lot of those entities that represent the aggregate leverage point or whatever also now go to these companies, they're supposed to be negotiating against and say like, hey, if we choose you, we want to cut basically because they have all of the power in this situation and this happens in a bunch of different places. So for example, if you as an individual sign up for a health insurance plan, you might use a broker to do that, right? And be like, hey, the broker is going to guide you to a given plan, blah, blah, blah. They offer the service for free, but they're getting paid commissions, usually from the health insurance carrier. Right. But now you might be. It's like a little bit of a weird situation, right? Where you're like, well, aren't you supposed to be helping me out? But you are getting your payment from the entity that theoretically either you're supposed to be negotiating against or are getting commissions paid on them. So maybe you only pick the entities that give you the best commission structure. Right? So the. And again, this is not unique to healthcare. This is any unique service where it is free for you and the seller is paying for it. Right. Like any broker basically across the board in any industry will typically operate like this because people don't want to pay out of their own pocket for those kinds of services. But you are paying in other ways. You know what I mean? Like you're paying in the form of either like for negotiation or not being offered all the options, one of which that might be right for you.
- [25:14]
A
Yeah, the, the, I mean the broker thing is like a classic, even interest in finance more broadly. Like I, like, I think you've got like, or, or like selling health insurance, selling like a mutual fund. There's always like, I think my favorite in, in just like finance, like finance, your financial advisors, like advising you on this, like these different choices of funds. But then there's some where they pay out a percentage just right up front. Like you get paid 8% of the deal value just right when it closes. And it's like they're going to recommend you the investment that makes them the most money up front. Like no questions asked, of course.
- [25:48]
B
Or even like getting an apartment or buying a house or whatever, right? Like their brokers involved in that. And you think you're not paying but like is baked into the selling fee, right? Like, so you are paying. You just, just don't. It's like in a convoluted way.
- [26:02]
A
Yeah. My favorite hack for buying real estate, I've done this twice is like the per. Like in, in residential real estate, I bought two houses and, and the realtor always gets 30 or sorry, 3%, one from the buyer, one from the seller. I don't have a realtor. I just find a house I want and I say, I want to buy this. You can be my realtor. Just tell me what I need to pay and I will. I want to just win this. And like you'll get double the commission. And it's like, it's like a hack to the system because of the way it's designed. And you'll win, like, you'll, you'll have the highest bid because the realtor wants the money.
- [26:38]
B
And also, yeah, I mean, there's lots of ways you can game the broker stuff, right? But at the end of the day, I think it represents like a bad transaction mechanism for everything. Especially when I think of AI tools, for example, right? Like this is a great use case where it's like, usually if you're paying a broker to reduce the information asymmetry in the transaction between you and the seller, right? For whatever it is, right. You're buying a house, you're buying health insurance, whatever. You're like, this is complicated. I wish someone would guide me through it. But the reality is like now with AI tools, like, it's actually much easier to do that with like a co pilot actually that may not have those incentive issues that you deal with current brokers that make it like more straightforward to go to go to a copilot.
- [27:25]
A
Yeah, maybe that's an interesting segue into just generally AI and healthcare. A pretty broad, like, loaded topic. I mean like every. Everything can be AI. What are you kind of seeing right now in terms of what is actually getting adopted and actually is kind of working right now.
- [27:43]
B
So basically, like most of the stuff that's actually getting adopted touches the payment rails in some capacity, right? So in healthcare that's called revenue cycle management as a whole, which is the process by which a provider essentially takes the medical documentation, turns it into a bill that they send to the insurance company to get reimbursed, and the insurance company pays them or argues with them or whatever, right? So that is an incredibly convoluted process. It is a lot of transforming text from one place to transforming it into text in another place. So as you can imagine, like it's an excellent LLM use case in a lot of ways, but also simultaneously, like it doesn't solve the core problem, which is that payers and doctors like don't want to pay each other, right? Like that is just like, it's like a Tom and Giardy fight, right? You gotta, you can add all the tech you want to it, but they're still fighting, right? So it's like you have the docs using AI bots to like call the payers and other payers are creating AI bots to like stop the doc bots, right? Like we kind of ended up back in the same place a little bit. But you know, that's an area you can demonstrate ROI very quickly, right? It's like, hey, we'll come in and we, you know, your, your accounts receivable are way lower than you think and there's all this uncaptured revenue and, and, and codes you should be adding and we'll send it to the payer and you'll get more money and all this kind of stuff. And then you go to the payer and you're like, hey, you're overpaying for the stuff and blah, blah, blah. We'll use bots to prevent overbilling and all this. So that is like the area with the clearest adoption currently, right? And you know, there's a lot of steps in the process of revenue cycle management and so people are tackling different steps. So even things like AI scribing, which like you're recording a doctor's visit and they have the raw audio data and you can transform that then into the documentation or the bills you want, all this kind of stuff. But all of this is like the way you can get adoption quite quickly is by demonstrating ROI on this payment side of things. But again, my personal opinion is that process is just very broken, just payer and provider fighting. So it's an area I'm not as interested in personally, but I do think it's the area that it's getting the most inroads currently. But I do think there's a much bigger opportunity in actually totally rethinking how we do care delivery from the ground up. So just like, if you were to rethink a doctor's office from the ground up with AI at its core, what would it look like? It would actually look probably quite different. The form you fill out before you go into the doc is probably going to be more dynamic and risk assesses you and only pushes you to an in person visit if it's serious enough or you know, navigates you a telemedicine visit if it's not and all this kind of stuff. So that stuff I think is particularly interesting. There's a company called Doctronic that is like in Utah right now that's testing out fully autonomous prescription refills basically. So if you are in a relatively low risk medication class and you're getting A refill. And AI basically is just. Is just doing it. It's like rewriting the script for.
- [31:05]
A
For you.
- [31:06]
B
That is an example, I think, of where we are probably moving towards more clearly of, hey, can AI actually autonomously start doing some tasks? And if the answer is yes there, then you can really start rethinking the workflow from the ground up rather than every time you need a human in the loop. Basically you're just going back to the most inefficient part of whatever the workflow is. Right.
- [31:32]
A
Thinking about, like, that Doctronic and how that interface is like, you're talking about, like, giving some sort of care. Don't you need licenses? And there's probably regulations around that stuff. How does that intersect with all this?
- [31:45]
B
Yeah, so right now, like, this is kind of one of the open questions is like, where does liability lie? Right. If the AI system messes up, who's liable? And all this kind of stuff. Like, one way you can sort of work around this, which, like, I don't have confirmation, but I just assume this is how Doctronic is doing it, is that you can have basically a doc essentially put their license, give the AI essentially access to their license, essentially where they absorb the liability. But then they also get the upside of if things work out right. Where it's like, you know, if a doc wants to see 10x more patients and AI enables them to do that, they both absorb the liability of something going wrong as well as the upside financially if things go right. Right.
- [32:29]
A
And that's like, that's probably good. Yeah.
- [32:31]
B
Yeah. And then it's on the doc to basically evaluate a lot of these AI systems to make sure it's doing the things that they want it to. And that is a little bit of the gap. It's like, okay, can they do a good job doing that? Should it actually be the fda, who is checking to see if, like, these. Are they more like medical devices or are they more of like, you know, like nurse practitioners that like, work underneath the doc? Actually, that's like, not super close clear which one it should be. And that is sort of the, like, open question. It's like, should this be regulated as if it's a medical device or as if it's a person? And it's like, not. Not that clear.
- [33:04]
A
Interesting. What do you think is the right way to do it? Because when I think about this and I think about anytime I've gotten anything from the doctor, it's literally there's like care staff, whether it's like a nurse Whatever that does all this like prep work, they get it all ready for the doctor, the doctor talks to you for like a couple, couple minutes or whatever, just makes a decision based off the information that's been collected and presented and then the nurse comes back in and does the rest. So it's almost like you can speed that process up with more software technically, right?
- [33:32]
B
Yeah, I mean, not only speed it up, but also like you can have a more expansive visit. Right. Like, if I can talk to the AI for an hour, I can actually get more information down and also I can talk to it through the course of my life rather than only during the visit itself. Right. So you can get very different information doing that. Right. I don't think there's a right answer here. Like, I think one of the benefits of having like 50 states is that a lot of different states are experimenting with different ways of regulating this. Right. Is like some people are like, hey, this is a sandbox, go test it out and just like give it a shot. And then other states are like, nope, you, you can't do that. And we're going to not. We think that there's too much downside. And I do think it's like, it's good that there's more experimentation here. And I think where areas where you have more acute healthcare needs will be more willing to try this out. And so I think that's probably where it'll end up landing. I do think there will be some shifts in how we think about malpractice insurance or liability insurance for software and stuff like that. Like, that will probably change, but in terms of like how it's regulated, I honestly don't know. And there's a version in which like, maybe you have to present a certain baseline level of competence through an FDA route and then at the deployment level it just lives underneath the practice or the doc or whoever, essentially.
- [35:05]
A
Yeah. And one thing I know you've kind of mentioned before is you feel like doctors are kind of like the most screwed in the healthcare system. So I mean, you think doctors, like, there's like one of like the highest status roles in the world. Like, that'd be amazing, wouldn't it? Like, so what, what's going on where doctors are kind of screwed?
- [35:22]
B
I mean, to be clear, screwed is, you know, in the grand scheme of things, they still have, you know, a very secure job and like make pays quite well.
- [35:31]
A
Yeah, so I, I'm over glamorizing. I'm clip farming here. I'm trying to get some clips.
- [35:38]
B
Of course, yeah. You know, I think that the issue that the docs run into is that they basically are like on a productivity hamster wheel a little bit, where it's like you go work for a hospital, the hospital basically controls your time as well as what you're allowed and not allowed to do. And as a doc, you come in and you basically are put on this hamster wheel of like 15, 30 minute visits or whatever it is, and you just gotta bang this out and you have to hit these productivity metrics basically to get your pay and all this kind of stuff.
- [36:11]
A
So there's like quotas in the back end, like you gotta visit these many people or like quotas is not the right way to put it.
- [36:19]
B
It's like we have a system Basically that's called RVUs and they, these are essentially, they're essentially like scores put towards how you get reimbursed, essentially. So this is like, and, and it factors in like, hey, how hard is this is the procedure that you're going to do? What is the like liability risk of doing it? How much equipment do you need to do it? So there's like a scoring methodology essentially that says like, hey, for this given service, this is like how many, how much productivity it brings to the healthcare system and we'll reimburse you accordingly. And so that is a metric that is actually calculated by the government for Medicare payments essentially. Now it gets adapted for different use cases and all this kind of stuff. But as a doc, you can get bonused basically based on a lot of these productivity metrics. And you are expected to do a mix of services that will hit a certain sort of level of productivity essentially. So it's not like, hey, for every prescription you write, you get like, whatever. It's not, it's not, you know, it's not like as maligned as that you would think. But they are sort of incentivized to do like a mix of things that are sort of more productive for the hospital or whoever they're employed by, essentially, which puts them in a tough spot, right, because you don't in a lot, a lot of those cases your salary may be a bonus essentially. So you're not participating in like the upside. If you owned your own practice and you were sort of like grinding this out, putting more hours and it goes straight into your pocket, right? And someone else is deciding a lot of these things on your behalf. So, you know, I think, I think it's just tough in that way. And then that's combined with, I think generally, unfortunately, the social status of being a doctor in society has just gone down quite a bit. Like, people are just more skeptical generally of the healthcare apparatus as a whole. And so as a result, patients are more bitter when they're coming in. They're also much more complex when they end up in the hospital. So the cases are more complicated, less patients have a relationship with their doctor. And so as a result, it's not like you're building these like, long term relationships. It's like more episodic in nature. And like, people don't feel the same social, you know, sort of social connection. I think that they do with a lot of the medical industry that they used to, frankly. Yeah.
- [38:53]
A
It reminds me of like, there's definitely been times where you go to the doctor and they walk in the room, they're like, hey. And like, they look at the paper like Turner and they're like, oh, how's it going? Like, you just like, they don't know you.
- [39:03]
B
Yeah, that's like my parents, they're doctors. They come in, they're like, hey, Nick Hill, right?
- [39:08]
A
Are you our nephew? Son? I can't remember. What's your relationship?
- [39:13]
B
Which one are you? It's like, I'm an elderly child. I'm the only one. No, I mean, yeah. But yes, they're trying to figure it out on the fly too, a little bit. And it's a bit that the system doesn't encourage these long term relationships nearly as much anymore.
- [39:28]
A
Yeah. So the thing you mentioned was rvu. What does that stand for?
- [39:32]
B
Relative value Units.
- [39:34]
A
Okay. Are there. So what does it ultimately incentivize? Like there are, are there certain things that are more incentivized versus less incentivized based on. On that calculation?
- [39:44]
B
Yeah, like procedure. Procedures are, are definitely much more incentivized across the board.
- [39:49]
A
So this is like a, like a surgery type of thing, Like a medical intervention type of concept.
- [39:54]
B
Surgery is one example. Or like, you know, infusing a drug, like anything that is sort of a little bit more requires like some sort of like doing something to you rather than just like evaluating how you are. Basically. There's definitely like more bonus payment bonuses, productivity bonuses for doing that kind of stuff.
- [40:14]
A
And it's essentially because those things cost more money and like the hospital or the health system is more profitable the more you do that kind of stuff.
- [40:21]
B
Yeah, those are just like the higher margin sort of things to do essentially as a whole. So like, you know, if you're a hospital, like primary care doesn't make you any money. And it's like a Terrible. You know, it is bad economics, but a lot of time hospitals will buy primary care practices because they will feed into the higher margin things that a hospital wants to do, like procedures, for example. So you know, again, like that, that is, that is the reality of like living in our current healthcare system is there's definitely much more, there's definitely much more reimbursement incentives to, towards procedures.
- [40:56]
A
And is that ultimately where the profitability comes for most health systems is doing procedures of some kind or like, like administering drugs?
- [41:04]
B
Yeah, I mean, doing procedures. There's a lot of new ways that hospitals end up making money in strange convoluted schemes that like.
- [41:10]
A
Oh really?
- [41:12]
B
Yeah, I mean this is probably like too walky to get into for like this podcast. But like for example, there are government programs where hospitals that serve mostly lower resource patients can also get drugs for much cheaper in a program called 340B and then get it reimbursed at like the normal insurance rates. So if you acquire the drugs for much cheaper and get it reimbursed at normal rates, you can make a huge spread. Right. So there's a lot of like ways to do this. There's a lot of different ways hospitals make money now. It is not just like doing, doing like hey, you deliver a service, we get paid. But there's like a lot of, you know, basically I would say generally like subsidy schemes, especially for hospitals that are serving lower resourced areas that like you can make money in other ways too for sure. And by the way, I don't think it's like malicious. I think it's, it's, it's just one of those things where it's like we have not quite figured out what are, how we think that payment should be structured for people who want to get care in lower resourced areas. And we're trying to figure out who should foot the bill for that. And there's like a lot of different discussions and arguments about what the right answer is there.
- [42:29]
A
Well, it's probably also like if you're just taking two contrast examples like a very, a lot of net worth, a lot of disposable income where they're just spending a ton of money on these like elective procedures versus like the most lowest income area in the country. Like if you're picking between those two areas, you're going to build a hospital or the healthcare product for people who have disposable income and you won't build it for the people who can't pay for it. So I guess you do sort of need to incentivize there to be care built there and like infrastructure there too.
- [42:59]
B
So of course you need some program to be like, hey, don't cherry pick really healthy patients or really like easy patients, right? But, but it's, it's a, it's a little bit of a tightrope you have to walk where it's like if you set up systems that are too profitable or get too much subsidies for taking care of patients that are sicker or lower resource or all this kind of stuff, then people will game it in very different ways too. So you know, it's a little bit of a lose, lose situation where you're like, if you, if you, if you make it too easy, if you, if you make too many subsidies to do this, it'll just get gamed in a different way.
- [43:36]
A
Is there anything about the, the healthcare system that you think is like the most surprising for people who just like don't know how it works? Maybe it's one of the things we already talked about, but is there anything like it's like a dinner party trick when you like drop it and like blows people's mind and be like, wow, that's, that's just weird. Like, that's, I didn't, I wouldn't have expected that.
- [43:54]
B
I think for a lot of people, they don't, they don't understand how large the healthcare system is here and the sense of employment. Like it is an implicit jobs program in the US And I think that's the thing that people struggle with a little bit is like, hey, essentially manufacturing was replaced by healthcare as a jobs program and it is the number one employer in this country and it's number one employer in most states. And so if we want to see the productivity gains of tech, AI, whatever, we also have to figure out what it's like the next jobs program that people have to go to. Because right now it can't, you know, it has to be something that basically people who don't have advanced degrees can make an income from. And currently that is health care. But it is, it's not clear what it should be next. So I mean, there's lots of other things, right? Like, I mean most, most people don't understand this whole employer involvement in US healthcare and they don't understand it's like a very unique thing to our country and not other countries. Um, but, but that, and you know, I think another thing too is maybe this might surprise you, like what percent of US healthcare do you think is like pharma spend?
- [45:04]
A
I, I mean I feel like it's either really high or really low. I'm gonna say like 62%.
- [45:11]
B
It's between like 9 and 11% somewhere there. Like, it's really, it's like, for example, it's just like much smaller than I think a lot of people think. And, and so, you know, whenever I talk to people about this, like, I think that always surprises them because they're just like, it seems like it's much higher because you hear a lot more about like specific really expensive drugs and how high profile they are and a lot of people who can't afford them. And it's like, it obviously is like bad and it sucks, but actually relative to the rest of what we spend in healthcare, it's actually like much smaller.
- [45:44]
A
I think I saw a stat once. I'm going to butcher the exact statistic, but it was something like 40% of all cable news ad revenue is like drugs, basically, like pharma. It, it's a really big number like that, which is pretty crazy.
- [45:58]
B
I feel like I have the Skyrizi. The Skyrizi, like, you know.
- [46:01]
A
Yeah.
- [46:01]
B
Jingle branded in my brain, unfortunately.
- [46:05]
A
Yeah. Probably like the funniest thing, it's not even really related to healthcare thing, but like you're watching like a basketball game and like these guys like peak physical specimens and then there's an ad for like, it's like three Skyrizi or like Doritos or like some junk food or
- [46:20]
B
like peels or something like that. You know, it's kind of interesting. Like, I sort of was having this debate with somebody recently where I was just like, you know, of all, of all the things that we want people to consume more of generally. Right. Actually, like, drug products are probably not as bad on the scale of things, but versus some other stuff.
- [46:45]
A
Oh, really?
- [46:46]
B
It's just like my, I mean, it's a debate, right? Like, I would say that like, getting more people into like sports betting and like buying CBG products or whatever is probably more net negative to them relative to a lot of people who are, for example, under diagnosed with heart disease or whatever and probably might actually go see the doctor if it's rammed into their head enough that like, hey, you might have this condition. So I don't know, like, I'm sort, I, I, I, I think, I think, I think, you know, direct to consumer advertising for pharma is like, bad in a lot of ways. And like, you know, it, it is, is easy and to figure to, to make that case for why we shouldn't have that more. But I do think that there's like a lot of the things that people are upset about with pharma advertising are just upset about in consumption culture in general in the US and relative to other categories that get a lot of ad spend. Actually, like, maybe pharma products are not the worst thing in the world.
- [47:43]
A
Yeah. And then when you think about like the, the effect of like one of these drugs is like, it cures your diabetes or whatever, like makes you better. Just we'll pretend whether that's true or not. And then like you look at like an alcohol brand and it's like partying, having fun. And you could like, you could say, like, it's actually really bad for you to be drinking alcohol. But we get to, we let them run these ads where it's like, you know, makes you think you're cool if you do this stuff or you drink this stuff and it actually is really bad for you.
- [48:14]
B
It's kind of crazy to me that pharma companies have to put all their side effects things in an ad and then alcohol companies don't. Right?
- [48:21]
A
Yeah.
- [48:22]
B
Isn't that sort of a weird juxtaposition in a lot of ways? Yeah. Well, it's like, yeah, the alcohol party seems way more fun because the pharma party is telling me that I'm going to shit myself to death.
- [48:32]
A
At the end of the day, I literally might die. Like, I literally might die from taking this drug.
- [48:36]
B
Exactly.
- [48:36]
A
Which you won't. From the alcohol. Alcohol, you'll be cool and you'll get to hang out with all the cool people and, you know, it'll make.
- [48:42]
B
Make you feel awesome. Exactly.
- [48:44]
A
But so talking about AI stuff that is actually kind of working in AI right now, in healthcare, are there certain areas that you feel like they're almost like the amount of attention versus actual effectiveness is like a little bit out of whack. Like some things are maybe a little overhyped.
- [49:00]
B
Yeah. I mean, again, like, I think a lot of this stuff that's just like speeding up this revenue cycle process is very short term. Like, I just don't think that. Yeah, I just don't think like speeding up, you know, hey, we're going to make how you submit a bill to insurance faster is actually going to change that much. Like, I do think that eventually the payers on the other side of this equation will build their own systems to slow this down. Right. Like, the friction is sort of a point of the system in some ways. So I'm not like that excited about that kind of stuff. And I do Think it's like there's a lot of money that goes to that, but it's not as durable, I think. And also quite, quite interchangeable too. Like you can, you could swap out the vendor under the hood and not a lot of people sort of care. So I think that gets a lot more attention than what it's like actually probably that useful. So yeah, that, that area I think is like quite overhyped generally.
- [50:00]
A
Are there any areas where they sound like they'd be really good startup ideas or like healthcare business opportunities that you just never end up working are usually kind of a trap.
- [50:12]
B
There's so many, dude, like I want to hear.
- [50:15]
A
I need to know these because I want to make sure I'm not investing in them.
- [50:18]
B
Yeah, like medical tourism marketplaces, like I get that all the time where it's like, oh, it's all cash pay, like people go abroad and blah, blah. What if we just did? And it's like, you know, dude, like all the good hospitals abroad have their own programs already to like shepherd people there. They don't need to go to a marketplace. They're pretty much full. The rest of the places are quite bad. Health insurance here doesn't cover complications. If you get a medical tourism and come back. Right. So medical tourism marketplaces is one area that I'm just like, I just, I feel like I get it all the time. Another is like, hey, you know, we will analyze your bill and if we discover issues, we'll take a percent of savings and you don't have to do anything.
- [51:02]
A
That sounds awesome.
- [51:04]
B
It sounds great, right? And I actually think you can build a smaller business around this, especially today with like AI tools and stuff like that. But the problem in a lot of these cases is a lot of it is, is fighting the hospital and them basically just like not playing ball essentially. So it has nothing to do with like tech and all that kind of stuff. It's like a lot of times just being like, hey, like prove it. And also you have to catch a patient at a very specific time in their journey. Right. Like it's really hard to acquire a customer for something like this. And they'll usually only use you like once, basically. So just the making the economics. So that worked a really tough also because it's not recurring in a lot of cases. Very lumpy revenue. You spend a lot of money to acquire a patient and then they also don't stay with you in a lot of cases. So that's another one that I feel like I hear all the time.
- [51:59]
A
There's so many more, dude.
- [52:01]
B
I get a pitch a week around. Oh, we make it easier to recruit patients to clinical trials and all this kind of stuff. And I'm just like a lot of these are, a lot of these are also fine ideas but they're just not defensible at all. Or they're just like not venture businesses which is totally fine. Right. It's just like hey, this is like a services business and you should go do it. And actually I think you can make a pretty good life out of this. But they all want to like raise $10 million. And I'm just like, it is you're going to try doing this and try to build a big business and like this is just the wrong capitalization structure for this type of business.
- [52:38]
A
And it seems like coming back to a lot of this is like the profitable acquisition and retention of customers is like this longer term relationship. So it's kind of like the importance of the primary care practice for a health system where it literally doesn't make money aside from being the way you acquire people for these more profitable one off procedures essentially.
- [53:01]
B
Yeah. And I mean again like you could be profitable even in a one time transaction. It's just people have to keep coming back to you. So. So again like the other problem too is let's say you offer a service that's covered by insurance for one thing and then you leave your job and you switch to a different insurance and that doesn't cover the thing that you normally use. Suddenly you just lost them as a customer. Right. It's like built in churn essentially. So again it just depends on the service and what it is, but it is just really hard to deliver. Also, just remember that like also for most people in the healthcare system, they are not using the healthcare system on a recurring basis. They're using it relatively infrequently. So to try and build a business that gets recurring payments is really hard because they're not using the healthcare system on a recurring cadence. So how do you build a business basically that has more predictable cash flow or can build a predictable revenue business in that paradigm? Right. And that's really tough to do.
- [54:03]
A
Yeah, I mean it seems like the answer to that is like it's almost like this like stack ranking of like well you should sell to the employer because they will always just pay the individual. And then you know, maybe if you can't get the employer, you sell. It's like the insurance company or something like that. And then it's like, I don't know, I don't know how this ladder kind of goes, but, but if I'm thinking about this, maybe that's where I would go.
- [54:24]
B
Selling to the doctor, selling to the patient. Yeah, like every single one of those is different trade offs. Right. So if you're selling to the employer, for example, most of the employers use benefits consultants or brokers to help figure out the vendors that they're choosing. Yeah, you're going to go to the brokers, but the brokers want their pound of flesh and they also want a commission and they also have their own vendors that they work with normally that they are are comparing you against. Right. And so now it's like you're selling to the broker who's then selling you to the employer and then you actually have to get the employees to use your thing. So now you've got to sell to the employees. And so, so you can see like it sounds great in theory. And then it's like just a different set of trade offs you're making by going down that distribution angle.
- [55:05]
A
And then even like above the brokers you might say, well each, there's like hundreds or thousands of brokers that work with each insurance company. Like should I just go straight to the insurers? Like you jump, you jump over everything totally.
- [55:17]
B
You go to the insurers and then they'll be like okay, where's your data? And then you'll, they're going to send you to probably one of their, you know, employer clients that they work with to test you out and then you're back at square one. Right.
- [55:28]
A
So fair.
- [55:30]
B
And.
- [55:30]
A
But then there's kind of this whole movement is sort of like the consumerization of healthcare. That's a pretty open ended topic is that sort of like this evolution of people realizing that maybe there's like this other rung that's just like the individual person that's receiving the care. Like I just go right to them. Is that sort of what's been happening?
- [55:51]
B
Yeah, I think in general that is where there's been more, there's just been more activity. Right. Like I think we swung quite far to like more paternalistic healthcare system and now there's like a swing back to like a more consumer oriented healthcare system. Obviously I think AI tools play a big role in this. Right. You now have tools that give people much more expertise in their pocket to make decisions. It could do a lot of things that like, you know, typically clinical people could only do. So there's definitely much more there. And there's more push, for example, to make it easier for Patients to get their own data out of health records and put it into one place to give it context, data and all this stuff. So the pieces are moving there for sure. And I think that's good. I think people should have more agency in the decisions that they make in the healthcare system. I think in general also people should be allowed to take on more risk themselves in more risk in the risk reward, trade off of services they're able to get. I should be able to say, hey, I want this AI to prescribe me this drug and it might get it wrong some of the time, but in exchange I get a cheaper service. I think that's generally where things are trending towards. But I will say that there's also bad parts of this too, right? Like I think that you could look at maybe like dental services as like an analog world here where you're like, hey, dental is extremely consumer oriented, you know, like you are. It is very schedulable and shoppable. You can figure out the prices for things and they give you real time checks on your insurance and like how much it's going to cover and all this kind of stuff. But you see all the downsides that that system too, where it's like you're constantly being upsold on things. There's a lot of bad actors that are telling you you have cavities that maybe you don't have. It's all the pros and cons of a consumerized system. And so then the question is just how far do we want healthcare to move in that direction? And I think the answer is probably further along the consumer spectrum than we are today. But how far along is still an open question, right? I mean, you probably saw this, by the way, with all these GLP1s, for example, right? There's all these kind of Shady compounded GLP1 things where it's like, yeah, come get your drug here, we'll help you lose weight. And then there's a whole spectrum within that of just like, okay, very consumer oriented, maybe a little too consumer oriented.
- [58:33]
A
Yeah, just don't ask how we make them or where they come from, but don't trust us, bro.
- [58:38]
B
Yeah, like, hey, it's super cheap. Like, don't ask why it's super cheap, but like, come here and get it right. Like that's probably maybe too far on the other end of the spectrum. So it's like, where, where do we meet in the middle somewhere here.
- [58:50]
A
Basically, in the dentist thing, it kind of reminds me, like, I don't know, you've probably like seen like the joke of like each time you go to a new dentist, they just tell you you have a ton of cavities and like you got to get them all re refilled each. Every dentist will tell you like you have a million things wrong with your teeth.
- [59:06]
B
Of course. Exactly. And, but now it's like, hey, maybe I can actually just take that same image, put it in an AI tool and feel like a more informed consumer. Now when I go to the dentist and feel more empowered and like having that discussion, like that's actually probably a net good thing for everybody.
- [59:21]
A
So with people able to just access this stuff in Cloud or ChatGPT, like are they, are they winning just like consumer healthcare AI, like does everyone just say like, you know, you know, here's my thing, tell me what to do and like, and they, and they solve everything or what's going to happen?
- [59:40]
B
Well, I mean again, it's a few things, right? Like one is again, liability is sort of not an answer question here. So it, you need to be able to figure out like if it gives the wrong diagnosis and something messes up, who's on the hook for it. And I don't, I don't think that's an answer question. And I think it'll tilt at least for now towards doctors or the medical establishment absorbing that liability. And right now I don't think we have good frameworks for that for just a standalone LLM today. So I think they'll be limited in what they're able to do because of that. Right. So it'll be hard for them to like prescribe a drug. Right? Like the thing is like you will hit a point where you're like, I need to do a next action and I can't do it with just the LLM, right? That might be get labs, get a drug prescribed. That might be, I need like someone to put hands on my body to like answer certain questions or like run certain tests or whatever. And I think at least today the LLMs can only get you so far. But if you need, when you need the next action, you need sort of to interface with the healthcare system in some capacity. So I do think people that can offer their services have a better advantage there. Now that might change obviously. And I still think the LLMs are great at providing interpretability for results you are already getting back. Right? So a lot of people, for example, will put their labs in to get answers about anomalous lab results, but in order to generate net new data or net new actions, there's still no mechanism for the LLMs alone to do that.
- [61:18]
A
There's like a break in terms of what they can do anytime there's like a real world action necessary. Whether it's like someone touching you, someone sending you something, you, you receiving some physical thing in the, in the real physical world like that will always probably have to be a separate product, probably.
- [61:36]
B
Right. And it should actually be under the supervision of a doctor in some capacity. Right. Like whether or not the AI is doing the one ordering or whatever is fine. But like someone has to be the orchestrator of this in some capacity and also if it needs to be escalated that it goes to someone who is like the right touch point for that. Right. So general.
- [61:58]
A
Yeah, I feel like one interesting area that I've a lot of people are talking about. I still don't know what my opinion is on this, but the whole like peptides concept, like what, what, what is, what is the, what's happening there for people who are not familiar and like what do you think is going to happen over the next couple years?
- [62:18]
B
Oh God. So I mean the high level is like a peptide is effectively an amino acid chain. Right. But the way people talk about it today is effectively unregulated drugs, I'll call them. Right. Like unregulated pharmaceutical products. So you know, typically when a drug comes to market it goes through a relatively rigorous clinical trial process to prove if it's wor working or not. That takes a very long time, it is very expensive and so when it gets approved it is a very expensive product at the end of this. Right. And also takes a while to get access to it.
- [62:52]
A
But, but they're basically saying like this is safe to take, like it's been rigorously proven, that's what the test is.
- [62:58]
B
Okay, yes. So the other version of this which is sort of gaining some traction now is hey, we should be able to get access to these compounds faster and take on the risk ourselves. And like if it's not safe, we absorb that risk. If it's not, whatever, you know, doesn't work, we absorb that risk and all that kind of stuff. But we want to be able to test it ourselves rather than wait for it to get approved by this like long sort of clinical trial process that you know, we don't believe, we don't, we don't believe that we have to wait that long essentially. And so there's a lot of products that are out there that people swear by and all this kind of stuff that do everything from repair your muscles to, you know, better acting Ozempic to whatever like make you live 500 years. And you know, there's a, there's a
- [63:50]
A
one that, that lets you live longer, sleep upside down.
- [63:53]
B
But I'm just kidding. I mean, I don't know the longevity. People claim anything.
- [63:56]
A
Okay.
- [63:58]
B
But anyway, there's like, there's a whole range, right? Focus. Some claim to curate adhd, it's impossible to know because you can kind of say whatever you want, right? That's the problem I think with this space a little bit. So that's like the general, whatever the level setting of what peptides are, are
- [64:19]
A
they pretty much all injectables? Like you have to take a needle and inject it into your vein?
- [64:26]
B
No, there are some ingestibles, right? There are I think also introducing unproven products systemically through your body, which is the oral route also produces different risks too versus maybe a localized injection version of it. So you're making different trade offs there. Again not very well studied. So it's very hard to figure out what those risks are. But you know, again like I think this goes back a little bit to what I was talking about before, which is like people feel like they want to be able to take on that risk themselves and make those choices. People want agency in their healthcare decision making. This is one part of it, right? I think that some of these drugs are going to cause really bad side effects. I think that there's now like, you know, there's sort of like a trend to try and standardize a little bit of like how these drugs are at least procured and like manufactured and that kind of stuff. But even then sourcing has been really shady a little bit. But yeah, I don't know man, like I personally wouldn't, wouldn't do it, right? And that's just me. I'm not like casting judgment on people that choose to do it or not. Like if you're in a lot of pain, for example, and there hasn't been alternatives for you to do and then there's someone tells you like, hey, this peptide can cure you of that knee pain that has been relatively incurable for a long time. Like I understand why people would explore doing that. I do think that people should think a little bit more about the risk reward, trade off that they are making for some of these things, especially if they are younger and relatively healthy and all this kind of stuff. But I understand why this trend is happening at a high level.
- [66:13]
A
Yeah, that's a good, that's a good way to encapsulate it all I feel like I'm, I feel like I'm in a similar boat where it's, I think it's good that there's just new things, new options for people that do things like you and you can make a choice if you want to use this. And I'm kind of someone where I feel like with a lot of this new stuff there's, there's always side effects to these things that we don't know about. Like with cigarettes. Like took us like 30 years for the cigarette companies to basically admit that they literally kill you. So I'm not saying that this stuff is specifically like cigarettes and they will literally kill you, but there may be some analogies that are related to that. I feel like, oh totally.
- [66:56]
B
I mean, by the way, like it's funny to think about the FDA as like a mechanism because actually the way we review drugs in food are pretty much like this, which is like for food you can bring anything to market as long as it's considered generally regarded as safe. And for drugs there's a much higher burden to bring a drug to market even though it actually affects a much smaller swap of the population. And so peptides arguably are actually regulated more like food where it's like, hey, this thing is sort of safe. Ish. Let's just introduce it to the population and see what happens. And so I don't know, maybe, maybe that's just a different way of thinking about it. For what it's worth, there is a philosophical question around how much evidence do we need to generate about drugs before we can consider putting them into the market. We test safety, we test efficacy and then we test those things at larger population sizes as the three levels of doing this. But yeah, maybe there is an argument or we should just test safety and, but other people choose, you know, when they want to take the drug based on how much data they want to wait on to prove efficacy. Right? So maybe actually after safety we just bring it straight to market and higher risk taking people can take it if they really want to and then we'll see how it goes and then people who are less, more risk averse take it later or whatever. Right. Now again, like we have randomized control trials to prove these things for a reason so that you don't have a self selection thing like that. But some people argue like, hey, actually like bringing, taking so long to bring the drug to market is doing more harm than that, than good and we should just go to this other system, I don't know, like again everything is trade offs, you know.
- [68:44]
A
Yeah. Well, it's kind of like with McDonald's it's like it won't kill you necessarily. Like you can eat it as much as you want. It's probably not the best for you, but like you could eat it every day, three times a day and just see how it goes for you. It's like, it's like one of those options. It's like we know that it's, that's probably not a good idea, but you can choose to do that if you want.
- [69:03]
B
Yeah, exactly.
- [69:05]
A
It's up to you man.
- [69:05]
B
Like you want to, you want to eat that Doritos flavor, that is a mystery flavor and you know, consume all the things you wanted that like, you know, you want a Baja Blast, it's like salute dude, that's all you.
- [69:17]
A
That was like one of my favorite things in college. Like the Taco bell run at 2am Baja blast through the drive thru. Like so good.
- [69:24]
B
Yeah. It's like if you're putting that in your body, you don't need to worry about the peptides. No.
- [69:28]
A
So I. Another healthcare related question. I don't really know how related to any of this it is, but I wanted to ask you, do you know why all medical software is just so bad? Like why does it all kind of suck? Because I feel like that's like a general tech person thing is you like, you go to a hospital and you like look at the screen and it's like the ugliest thing you've ever seen in your life. Like why is all medical software so bad?
- [69:54]
B
You have like the MRI machine that's like advanced physics and it's like running on like Ms. Dos and you're just like, how can these two things be in like the same room, right? You know there's a few things, right? Like one is, remember all enterprise software sucks, right? So it's not just healthcare, right? Like have you ever used SAP?
- [70:13]
A
Concur, I've used SAP. It's, it's brutal. It's crazy how it works, right?
- [70:20]
B
Any, any enterprise software sucks and healthcare is just, it's very concentrated, right? So you have a lot more large enterprises. So I would say at a baseline layer it's just enterprise software and it all, it all looks quite bad, right? The second thing I would say is there's a, you know, healthcare is very rife with like this principal agent problem generally where it's like the users of tools and software and all this kind of stuff are very rarely the people paying for it, right? So therefore the people who are Users have a certain set of things that they would love from software, but the buyers who are hospital admin or whatever are choosing on very different metrics. Right. That they care about and usability is probably much lower on that priority list. And so as a result, you have generally like, I would say, you know, worse looking and less usable software because it's just not a priority. But again, I also think most of this is actually just like healthcare has a lot of really complicated workflows and all enterprise software kind of sucks, Tim. You have to like account for a billion different workflows. And you know, my hope is actually that like now with a lot of these new AI tools like GUIs and the user interface is going to change a lot for people who can basically use different tools that they can interface with. And then under the hood, you know, you have whatever database or enterprise software or whatever, and you know, your, your user interface will just look very different. Right. So that's my hope. But you know, dvd, we'll see.
- [71:58]
A
Yeah. What have you seen works the best in terms of when you're, when you're navigating that sales cycle with a healthcare system? Like, what's the correct way to approach that for maybe somebody listening to this? It's whether they do it already or they're thinking about doing it, or they're trying to learn more. Like how does it generally work?
- [72:16]
B
I mean, one is don't do it. But two is if you're going to do it, I mean, there's a couple of things. One is the, the ROI timelines you now have to prove have to be much shorter. Like basically within a year you have to prove roi. And there has to be very clear case on how you're going to do that. Right. One of the mistakes I think a lot of people make is they assume hospitals have budget for software, which is in general not the case. Right. Like the budget for software is very small and it is generally not ROI producing. And so you typically will have to target some service line and cell capacity where there's headcount, budget or where there's like financial transactions that are happening, et cetera. So to prove roi, it's much easier to do it through those vectors.
- [72:59]
A
So I could see the revenue management where there's headcount and there's also payment kind of flows where you can jump into that and intersect that in some way.
- [73:08]
B
Yeah, exactly. That's like a very easy place to go. Right. Like a lot of mistakes people will make is like, oh, we'll actually increase the productivity per worker, for example. But like that is very like, you know, roundabout. Like most hospitals want to see a more direct line of sight into what the ROI is going to look like and it's much easier to do that. You're like, hey, you don't have to increase your headcount by this much per year if we actually implement this correctly, right. And then you have to find a department that is your champion. Right. And so every health system is structured very differently in terms of like which, how department, how departments are structured, who owns budget, who makes decisions, how is implementation chosen, all this kind of stuff. And you have to find someone who's basically going to like run you through the many committees it's going to take to get approval to do this. And it should try to be like one person who's going to be your champion across all of those things. So those are like, I mean high level tips and I mean there's other ways you can go about it. Like one thing that I think is quite interesting today is that there are more companies trying to do this like bottoms up adoption motion that is been quite rare in healthcare where they're trying to get employees to just use the tool school themselves. So open evidence is a good example of this where it's like, hey, chatgpt for Dr. Sounds great, let's just get it in the hands of people and blah, blah, blah. And it's so used by people that you just have much more leverage when it comes to talking to your hospitals and all this kind of stuff after that. So that I think is a slightly new motion that I've been seeing a little bit more of. But yeah, that's, that's another, another access.
- [74:51]
A
Is open evidence going to hit a wall in terms of just like the system, you know, squashing them? I, I know, I don't really know a ton about them. I just know one, when I had a checkup a couple months ago, my doctor was using it and I was like, ah, I've seen the fundraising announcements about this company. Like it's cool he's using it, but like in terms of that bottom ups adoption, like aren't the powers that be gonna be like wal, like not allowed?
- [75:18]
B
It's a good question. I really am very curious how this whole thing plays out. There's this triangle that's sort of forming a little bit where it's like, there's like the scribe companies, right, that are recording the visit and turning in documentation.
- [75:33]
A
And this is interesting because this is like the, we're collecting data like, we're building this like proprietary data that maybe doesn't exist anywhere else. And you know, you can then use this to like do work with like, we can help you get stuff done.
- [75:46]
B
Yeah, like, like that is like the data generation side is like, hey, the visit is being recorded and we're going to generate data about this visit like that is happening. But then you need to figure out what next steps are. And so you might do a literature review, so you might like look up like articles to be like, what, what do you think is the best thing to do? Or you know, also sometimes colloquially called clinical decision support. Like what is silva? This would be like an open evidence, for example, like, hey, based on what this patient has, what do you think is the right course of action? Right. But then you got the system of record, which is the electronic medical record itself that has all the history and context data about the patient. And so all three of these are in a dance a little bit, right? Where it's like they all want to do what the other one does and also need each other to actually come to a optimal conclusion. And so the question then just becomes like, who has the most leverage in that scenario? And that's kind of the fight that's going to play out, I think in the next few years. It's just like the EMR companies are going to try and roll out their own scribes and literature review things and they're probably going to be bad consumer products because that's not the muscle that they have built, but they have much more leverage because they are the system of record. But then the scribe companies might build different tools and then the literature review companies might build into the scribes or like integrate into the EHRs or, you know, doctors love using them. They want to demand more from, you know, so there's like a lot of. I think it's going to be, you know, it's a little bit of like that office meme or like everyone's like guns pointed at each other a little bit, you know, that, that I think is like going to be the sort of interesting fight to play out.
- [77:25]
A
What do you think is going to be like the most important position? Like, does the system of record probably win because it's so widely ingrained already and they have like political leverage or.
- [77:39]
B
It's a good question. And again, like, I think other industries might actually have better. They might. This fight might happen faster there where, I mean you even see with like Salesforce and a lot of these other companies, right? Where it's like, are they gonna, are they going to launch their own tools? Are they just going to be like MCP servers that like charge attacks every time you hit them? Like, what is the role going to look like even outside healthcare? Right, it's not super clear. Right. And there's a lot of big lawsuits happening right now on the, in the healthcare land of like people using agents basically to like log in as humans and like extract the data and all this kind of stuff. And you know, they're like, hey, it's breaking terms of service. And the people are like, your users want this and you're blocking them from doing it. And technically we're using it as if the user. And it's not super clear where this is going to land up. I think again, the bigger issue in my head is more around the consolidation in healthcare where it's like, of course a large hospital is going to give a lot more, is going to not switch their system of record company overnight, right? It's just like not going to happen. So the system of record has a lot more leverage in that scenario. So the bigger question is like, why aren't there more like, quote unquote, startups in healthcare? And I say that more as like private practices or small pharmacies or smaller insurance and whatever it is, right? Like why isn't there more competition on the small, medium business side of the scale where maybe you might see new operating systems or you might see new, you know, systems of record or whatever. And that I think is like a more fundamental question. And I think maybe my hope is actually like building AI native operating systems might make it more attractive for people to start new things, basically because you're like, hey, I can go work at this, I'm making this up, right? But it's like, I'm a doctor, I don't like working at this hospital, but it's really hard to go independent. But here's this company that is offering like, hey, we'll help you build a private practice and you'll be able to see 10x more patients and get the financial upside and we build all the agents out for you and blah, blah, blah. Like that looks like a totally different system of record operating system, all this kind of stuff. And maybe we'll make it more attractive for people to leave and start their own thing. Now this doesn't solve a lot of the other problems of like, how do they get patients? Or like, how do you get new customers? Or like, if you're a new insurance company, you need risk capital. Like there's stuff like that that is not super solved but, but I think if you could make it more attractive for people to start small medium sized businesses, you will solve the like enterprise software system of record being bad kind of problem.
- [80:25]
A
It almost sounds like Shopify for doctors or something like the most simple way of describing it where you just like enable them to create their own business.
- [80:34]
B
Yeah, essentially. And there have been a million people who've tried to start that company of like business in a box, start your own practice thing. And the problem has always just been that it doesn't solve the much harder parts of this which is getting patients and all this kind of stuff. But again if patients demands change themselves where you're like hey, I'm making this up. It's like I really want a doctor who offers me an AI agent that can see me really quickly and prescribe me my medication refills much faster. Or I want a doctor who will actually interpret my wearable data and make it a part of the care or whatever. Then actually maybe you might solve some of the acquisition problem also. So again there's a lot of moving pieces to this. I think physician independence is like one of the most important topics we have to solve in US healthcare today. And there's a lot of different problems and blockers for how that happens but that you know, this might be one version of solving it.
- [81:38]
A
It seems like you'd, you'd need to build like a pretty full stack like not just like the system of record but also like the customer acquisition. The I guess like with the Shopify analogy the way that got solved for was like you can run Facebook ads and push to the Shopify store and then you maybe have these like a lot of these brands got, you know, do a lot of content online to like build narrative. So you almost need these like maybe not exactly the same but like a social media first doctor where like they're making content that helps them acquire local patients or something. I feel like you maybe see that in therapy. Actually I sick. I feel like in therapy that's kind of happened where you, they're like making videos about it. Then you like get em into the back office and like it's a lot of like telehealth. It's a virtual. So maybe that's like that just was possible sooner. Maybe Covid pushed it.
- [82:34]
B
It's very cash pay oriented. Right. That's the other component to this is like in Shopify e commerce stores you're paying out of your own pocket. Pocket. The other big issue that doctors wanting to start new practices face is that they get bad insurance reimbursement rates out the gate. Right. And so it's really hard to make this economics work because you have bad negotiated rates out of the gate. But in more cash pay oriented areas that's not necessarily the case. So therapy is a good example. All these longevity docs are a great example of this which is like they have very strong social media presences and have strong opinions on how they think care should be delivered in their side of things. But it's also a very cash paid business. Right. And so the question is like how do you solve this for the insurance piece? Because obviously not everyone's gonna pay cash or how do you bring the cash pay rates down so much that people are gonna pay out of pocket instead of using insurance or alongside their insurance. So you know, there's like a whole movement of stuff called direct primary care now for example, which is like cash pay primary care essentially. So you pay a monthly subscription to a primary care physician and you get set of services underneath that basically, whether it's like 247 texting or hey, we get your meds at wholesale prices and we basically just charge you at cost or whatever it is. Right. There's different sort of services you can offer underneath that. But the idea is also like you want to bring costs down for people, right. And make it more attractive for them and just be a part of that.
- [84:06]
A
Interesting. Yeah, I feel like it's a good, a good way to think we're like with physician independence, I think was the way you described it just like enabling more people to start their own healthcare related company providing care to people?
- [84:22]
B
Yeah, man. I mean it's, I, it's, I really feel for the doctors who are, who are, you know, going to practice now. They're very, they feel very like they don't have a lot of agency in their work. In a lot of cases they're not practicing the way that they would love to practice, for example, and they come out with a lot of debt. So it feels like they're sort of, they have to be in a system that they didn't really necessarily want to be a part of. It's actually very surprising to me. Again, this is a little bit anecdotal, but it is surprising to me how many people I meet now who are residents. So they've gone through the really gamut of stuff, right? They're residents and they don't want to like practice full time. You know, they want to do like two days a week or even less and they're asking me about like health tech product jobs and I'm like something, something has gone horribly wrong. If people who have gone through all this training and are very, you know, they're, they're, they're highly skilled in their, their own craft, are now coming to like help tech because they're so jaded about their, you know, where they're, what they're doing. And like, I think that's, that's like a sad state of things.
- [85:31]
A
Is it? That the process of becoming a doctor is so hard and long and people just, they're like I, I don't want to do this anymore. Or like what, what, what's causing that?
- [85:43]
B
I mean that might be one part of it for some people, but I really think it's just like they, they look at, you know, they look at working at hospitals and all this kind of stuff and it just doesn't bring them the like level of fulfillment. Maybe they thought they would have or they want to do more things, right? So they're like, you know, there's all this cool stuff happening in AI and tech and all this kind of stuff and they want to like be a part of that and that's cool and it's awesome. But maybe there should be like cool awesome things also happening in like traditional medical establishment or working, you know, your traditional medical career. That makes you excited about that too, right? So I don't know, like, I think it's hard to pinpoint exactly what it is. Obviously keep in mind that like if people are coming to me, it's a very self selecting group of docs that like are probably particularly jaded or particularly interested in health tech as a whole. But I think part of it is just like you know, they, they, they don't want medicine to be the only thing that they do in their life and it maybe doesn't bring them the level of fulfillment they expected it to.
- [86:43]
A
That's fair. I think it's an interesting transition. I know we wanted to talk about just like starting a business like content creation. So, so for out of pocket, what was like the 32nd kind of run up into how this thing got started because you've kind of, you spent a ton of time in like healthcare industry analysis kind of what was like the original story behind how it all got started.
- [87:05]
B
You know, it's fun. So I mean I, I was at a company called CB Insights and we were doing a bunch of content about you know, diff tech, different tech things and I was running the research team around healthcare there. So that's kind of where I started reading a lot of this stuff and so started writing and then I joined a clinical trial startup after that for a little bit.
- [87:22]
A
Oh, I forgot about that.
- [87:22]
B
And then I left. Yeah, I know I did for a hot second. I was an operator and I like, wasn't very good at that.
- [87:28]
A
Failed, failed operator, failed operator.
- [87:32]
B
But then I left in Feb 2020 and you know, interesting time. I know. Seriously, I was like, world's my oyster. And. And you know, I started writing again. Cause I just wanted to like build that muscle back up. The original idea was actually make the Daily show for Healthcare. So I was actually really interested in, you know, I think Jon Stewart was like an amazing influence in my life earlier on of just like making topics that I consider very boring, very interesting. And I was like, can I do this for healthcare? Turns out video is really, really hard. And like, you know, we filmed some sketches and I was just like, oh my God, I cannot do that.
- [88:13]
A
Didn't you like to post some of these at some point? I feel like I've seen stuff over the years.
- [88:18]
B
Yeah, yeah, yeah. And I, I ended up posting a few of them because I was just like, we already did. They had the footage and I was just like, all right, let me just do it. But like, to make a business out of that and to like do it consistently, like, I have such deep respect for like, you know, video people now because I'm just like, that is so hard, you know, And I was better at writing anyway, so I was like, let me just keep writing. And obviously the substack economy was sort of like getting formed around then.
- [88:45]
A
You probably got an insane boost of starting in the beginning of COVID when everyone was like, give me that, give me this, subscribe to that, subscribe to that.
- [88:54]
B
Yeah. I mean, people were also locked in their house with nothing to do but read. And healthcare was like topic du jour. So it sort of worked in my favor in a lot of ways. But it's been six years since then and so it's evolved quite a bit. We, I would say, are now really all in on in person stuff. Right. I've been doing the newsletter thing, I still do it. And we do a bunch of virtual courses and all this kind of stuff. But it's very clear that like we are content on the Internet, I think is changing very rapidly in a lot of ways that I don't like. And so standing out in that sea of terrible AI slop feels like an uphill battle in some ways. And so we're all in on in person stuff now. And so we're doing more events, we're doing hackathons, we're doing these micro conferences that are really focused on builders who are sharing across different companies. We run a bunch of healthcare coworking spaces now. So like, you know, this is, it's evolved quite a bit over the years. But yeah, you know, I view content as like the bat signal to put out into the universe of just like here's a topic area I think is interesting. Let's all coalesce around it and meet in a place.
- [90:18]
A
Yeah, and you almost think of it as like it's the top of funnel, basically.
- [90:22]
B
Yeah, it's the top of funnel. It's also like a good self selection mechanism. Like I want people who can read to come to our things.
- [90:29]
A
Yeah, that's a good like you know the. If you, only if you're like a short form new media type, you know, the brain short circuits when you try to read something.
- [90:38]
B
You know what's so funny dude, is like there are a lot of people that I think make content and they would never want to make, they would never want to meet the people that they make the content for. You know what I mean? Where it's like you make content for people that you're, you know, you can monetize well, but you would hate spending time with them. And I'm just like, I could never do that, you know, like for me the fun of this is like, let me put content out there to find my people, even if that group is much smaller, you know. And so I think of that as like a, hey, like let's hang out, like let's do fun stuff together. Content is not the like be all, end all for me.
- [91:14]
A
Yeah, that's a good, that's a good way to think about it because I've, I've like almost accidentally figured that out. Like, I really have not done that intentionally but like a lot of, I like most of my content is either like really dumb and just kind of making fun of like this whole thing that we all live in or it's, I mean it's really kind of dialed in on this like super serious. I mean I don't know how serious this conversation was, but these like pretty long just conversations where it's like I just try to learn stuff and it's like, you know, there's all these different angles of like how you package this stuff up. But I, most of the people that I meet that like listen to the podcast, like, oh, that person's like Cooler than I thought they were or like that. The people who follow you on Twitter, on the Internet, from like the dumb jokes you make, they're like actually pretty smart and actually kind of interesting to get to know them. So. Yeah, that's a good, that's a good point. I had never thought about it like that, but that's a good way to think about it.
- [92:05]
B
Yeah. I mean, again, like, I think if you plan on meeting people as the course of your actual job, you end up gravitating towards that anyway, so. But there's a lot of people who make content and they like, that is the end form for them. They're like, I make content and I monetize the content and I don't want to actually meet people who, who we do this for. Um, and that's a, that's a totally separate business and that's fine. I respect that and all that kind of stuff. But that's like not, that's not who I am.
- [92:34]
A
And so what is sort of the business model for out of pocket, like the different revenue streams? Like you, you make the newsletter. I think you do some sponsor stuff in the newsletter for the events. Like, do you make money off of the events? I think you do some investing too. Like, do you have a fund or is it all just kind of angel investing? What is sort of like the whole like system look like.
- [92:53]
B
Yeah, yeah. So, so we do have some so content. A lot, like, a lot of it is sponsored in some capacity. Like we have the stuff that I write and they have some banner ads and we do some full page sponsorship. We co develop courses with companies where they're experts in a thing to try and explain stuff to people. And that is like those are sponsored courses, events. We have sponsors for it and we also charge tickets depending on what the event is. So we do, we do make money off those. And you know, I do some investing, but it's typically angel investing. Now investing is like my least favorite of the jobs and hats that I, that I, that I, you know, to put on. I know, I know it's your whole, your whole shtick, but for me I'm just like, man, I don't have the like delayed gratification mechanisms that you must have. But you know, I see so many companies at this point that like, I like vouching for people in a lot of ways. And one way to like share your credibility or like give someone a boost is by putting a little bit of money behind it. And so I view that as more of like a, you know, thing to do to give people some credibility in the space where maybe they don't have it. But yeah, so there's a lot of different things. I mean we have these co working spaces and all this kind of stuff. So like little bit, little bit. It's like a whole, you know, hodgepodge of side quests underneath a bigger umbrella. But you know, I run a slack community too and you know there's some monetization there but it's like, you know, it's purposely diversified I would say so that like you know, we're not too concentrated on any one stream but we're, we're all in on event stuff specifically.
- [94:31]
A
So I think one interesting thing. Do you do the courses for free? Like are they mostly free to sign up for? I think I was looking at them. Or are some of them paid? How does that work?
- [94:41]
B
Yeah, so some of them are paid. So for example I teach a healthcare one on one course and that is people pay directly. Most of the times employers are signing up their employees to get up to speed on different things and then most of the rest of the courses are free for people to attend and the sponsor typically is paying us to basically co develop the course and co market it for them. And then we do a lot of on site workshops now with companies to teach them more specific things in different areas. So for example we do these courses on claims data analysis. So this is a very common data type that people have to work with if they're in healthcare, on a data team, et cetera. We will typically go on site and teach people the basics of it. So like 60%, 70% is like, you know, pretty similar where it's like this is what a claim is, here's what's in a data analysis, all that and then we'll customize the last amount for whoever we're working with. You know I just, we found that just like for a lot of these things it's just really hard to keep people's attention for long periods of time over zoom. And so it's easier just to go on site and like treat it as a training basically. And so we've been doing more of those, we've been doing a few AI ones too where showing people like the basics of Claude or ChatGPT or whatever their internal tool is, but then also interesting ways to use it that maybe they haven't tried. So for example connecting it to an MCP for XYZ vendor and just show them like hey, you can do more interesting things. A lot of people just need Some hand holding to do that. And so we've been going on site to do that. But it's like bit of a test that we've been doing.
- [96:17]
A
Yeah. Because I think a lot of people don't understand how big sort of the like L and D budget is like paying, you're paying a vendor to help get your employee smarter. Like that's a good investment in a lot of cases.
- [96:30]
B
So it's a little bit of a mix. We found that it's like a little bit of a mixed bag. So in the sense of there is L and D money, L and D money at larger companies tends to be earmarked for, for certain things. So whether it is they already have a platform that houses all the learning and development modules that they need for something and then you have to be a part of that platform which means you have to pay take rates and all that kind of stuff for that platform in exchange for distribution. Or you have to be with some name brand thing that basically they can point to as like good. Right. You have some certification or some whatever that proves like hey you're good. You know, it's always a little frustrating for me where it's like we offer courses or like training stuff for like a fraction of the cost of like a lot of these like quote unquote like highly certified places. And like I've seen their content and I think ours is like 10x better but we're not certified for whatever thing that this enterprise needs to consider us good. Right. So it's always, you know, it's a little bit of a frustrating process and I get it, they probably have used a lot of non certified people and their content sucks and like now we have to pay the price of doing it. But that's where we are.
- [97:42]
A
It's interesting because when you talk about swinging or in person like the just with how the Internet has changed, content on the Internet has been changing. I specifically with AI, like to, to what extent have you been enjoying it, using it? Like how do you think about how AI is kind of changing things lately?
- [98:06]
B
Oh yeah. I mean at a personal level I use it all the time. Like it's extremely useful for example of just running business. Right. Like even just plugging into all of our stuff so I can get a better sense of what's going on in the business is incredibly useful. Right. So when we do whatever XYZ events like we have a whole database of people in the out of pocket ecosystem and it's now really easy for me to be like hey, who's the best person person for this talk that we're doing and it can look through like, hey, this person worked at this company and it's very relevant to what you're talking about. And last time you emailed them it was very relevant. So you know, you can get all this context things super quickly, right? And also as a person who has to get up to speed very quickly on different topics within healthcare, I'm lucky that I have like built the like smell testability to know when it's kind of bullshitting me or not. But it's very useful for getting up to speed on certain things quickly. Like one example is, you know, I read like primary source docs a lot more nowadays. So for example, lawsuits are great ways to like learn about the mechanics of like a specific slice of healthcare, right? But also at the same time the lawsuits are extremely long and super like, you know, excessive. They have a lot of stuff that I don't really care that much about. So I have a Claude skill that basically will extract just the parts it knows that I like from a lawsuit, so removing all the like legal proceeding stuff, but just the mechanics of like what is interesting about the suit itself. And so that has made me get up to speed much more quickly on different topics by just having a tool that, that makes it easier for me to like learn essentially. So on a personal level I think it's awesome and like I use it all the time but you know, I'm more worried about people that use this to essentially like pollute the comments of the Internet or replace their own critical thinking with, you know, every time I see someone like at Grok, like tell me why that should care about this, I'm just like, oh my God, like, you know, like what are we doing here?
- [100:07]
A
Yeah. Do you feel like that's happening a lot? Like do you feel like people using AI to create content on the Internet is, is happening more than most people think or you feel like it's really obvious? Like most people realize that it's going on and they have an opinion whether it's good or bad.
- [100:22]
B
I think for the people that are on the Internet is happening more. But I think there are not that many people who are posting on the Internet. We have to remember that it's like a very small slice of people who actually post. So most people are not. But the other thing too is most people, I actually don't think care if something's written by AI or not. In fact, I think a lot of people prefer were it because it's like, much more digestible and in the cadence that they like, et cetera, and actually don't care that it's slump. Actually, they are totally fine with that. I think one of the things that is probably frustrating to people like you and me is like, if you care about the craft and blah, blah, blah, you're like, oh, that's AI slop. Everyone will be able to tell. And it's like, not only can they not tell a lot of people actually like that. And so your competition is basically, you know, the people's. People's preferences, which, by the way, it's not that different than like, when we used to probably sparknote Shakespeare back in the day, where it's like, listen, I just, like, I can't read this. I just, like, don't understand. The prose is not there for me. I'm not getting it. I just gotta read a simpler version of this. And I'm sure Shakespeare would be rolling around in his grave knowing that, you know, we were doing that, but it, like, worked for us. Right? So is it really that different? I don't know.
- [101:36]
A
I mean, like, imagine Shakespeare reading Gen Z slang. Like, you know, like, there. There's one you, like, like a kid with like a broccoli haircut talking about, like, you know, clavicular frame mogging some voids in like, you know, bus, whatever.
- [101:53]
B
Look, you know, Macbeth was, you know, whatever, like the court maxing.
- [101:58]
A
Yeah, kind of thing. So then how do you think someone should be thinking about just like, posting on the Internet? Like, making content on the Internet? Like, do you. Do you think, like, our followers super important? Like, should you be focused more on, like, creating like, a brand or reputation or something? Like, how would you advise somebody to say, like, if I'm like, hey, I've never. I have no following. I want to start like, what. How should I think about this?
- [102:21]
B
I just think, like, people so underrate reputation. Like, I, you know, I think that that is the most important thing that matters. Like, smart people really care about finding other smart people. And it's not about rage baiting. It's not about getting eyeballs and not like that. It's like, you know, for me, for example, like, people send me really thoughtful emails and no one else can see them, right? Only I can see them. And they just do it because they're genuinely intellectually interested in the stuff. And I reply back to every single one of them, you know, because it is just like, so much more. I care so much more about people that are, like, they are intellectually curious and blah blah blah. And I think that if you're posting, it doesn't even need to be posting publicly online. It's just like you should be thinking about this in how do I find the people I really want to meet that I respect a lot and what is the best avenue to do that? And maybe it's not posting online, maybe it's some other thing that you do, but your reputation, I think really matters. And I would just post as if your reputation matters and there's different ways you could do that. I think that matters a lot.
- [103:26]
A
Well, it's been a lot of fun. Thanks for taking the time to do this.
- [103:29]
B
Yeah man, I appreciate you having me.
- [103:31]
A
You're pretty active on Twitter, unfortunately. Out of Pocket Health.
- [103:35]
B
Yeah, out of Pocket Health. We're doing some fun stuff in healthcare. So if you're interested in healthcare, regardless of how much previous knowledge you have about healthcare, like we, you know, come through, we try to teach people how all this stuff works. And I think it's fun, I think it's entertaining. And yeah, we're doing some, doing some cool stuff.
- [103:53]
A
And thank you for listening. Make sure to check out Nikkel and everything he's doing in out of Pocket. Thanks again. This episode Sponsors Flex Upgrade to Flex Elite and get a thousand dollars in the description Numero Put your sales tax on autopilot@numerl.com and amplitude for AI analytics. Just ask Amplitude if you enjoy this conversation. Please like comment, subscribe and share this episode with a friend who wants to know more about how the US Healthcare system actually works. Make sure to check out the back catalog of over 100 episodes with founders of companies like Robinhood, Sweetgreen and Mercury. Tune in over the next few weeks for guests like Alex Israel and Metropolis, the parking company who's quietly pulled off one of the most successful versions of the AI enabled roll up growth buyout strategy that everyone was talking about last year. And Jim Balosic at Send Cut Send, who's one of the pioneers helping Reshore Manufacturing back to the U.S. if you you want to miss any of these, subscribe to my newsletter. The split linked in the description to get each episode plus a transcript emailed directly to your inbox every week. Thanks again for listening. See you next time.