82 - This Shocking TikTok Case Could Rewrite Internet Laws Forever!

Show Notes

2:45 - Fed’s Powell Declares ‘Time Has Come’ for Rate Cuts WSJ
4:24 - The Geography of Unequal Recovery NYT
6:35 - Canada pallet backs order, restoring freight rail operation 
8:04 - The IPO Market Gets Cold Feet WSJ
9:36 - Nvidia Reports Strong Quarter Amid...
13:21 -  ApiJect collects $35M for prefilled injection devices Axios
14:40 - PitchBook Q2 Healthcare Funds Report PitchBook
18:57 - Northwell, Nuvance merger wins state AGs' blessing Fierce Healthcare
21:28 - TikTok isn't protected by Section 230 in 10-year-old’s...
26:46 - Evolent Health's stock price leaps...
28:14 - Federal court: TennCare illegally terminated...
30:36 - McKesson to buy stake in Florida cancer...
33:40 - Optum sets sights on Surgery Partners...
35:34 - Advocate Health's operating...
36:51 - Here's how much Kaiser Permanente's Risant...
39:09 - Recent moves by Epic, Carequality mark a major...
41:19 - 5 takeaways from Epic’s user group meeting Modern Healthcare
43:39 - J&J Takes Aim at Hospital Drug-Discount Program WSJ
46:04 - HRSA says J&J's plan for 340B discounts...
50:30 - House weighs suggestions to fix 340B...
50:46 - Pfizer Launches PfizerForAll: Connecting...
52:17 - Battling Mpox in the Outbreak’s Epicenter in Congo NYT
55:25 - OpenAI in Talks for Funding Round Valuing It Above $100 Billion WSJ
58:59 - Qventus' AI operational assistant helps patients prepare for Northwestern Medicine's operating room Fierce Healthcare

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What is Health:Further?

Every week, healthcare VCs and Jumpstart Health Investors co-founders Vic Gatto and Marcus Whitney review and unpack the happenings in US Healthcare, finance, technology and policy. With a firm belief that our healthcare system is doomed without entrepreneurship, they work through the mud to find the jewels, highlight headwinds and tailwinds, and bring on the smartest guests to fill in the gaps.

if you enjoy this content please take a moment to rate and review it your feedback will greatly impact our ability to reach more people thank you okay excited to do this with you we have a guest host today Doug Edwards CEO of jumpstart thanks for doing this man appreciate it man good to finally be here I made it in the first 100 episode made into the studio Marcus is fighting he's going for his third World Jiu Jitsu Championship that's right he repeated last year he's trying to repeat again and so he's off getting his mind focused for fights like they start Saturday and Sunday yeah it's gonna be a big weekend for him he's been training like crazy yeah yeah so um I don't know I'm trying not to be overconfident we'll see how it goes but he seemed pretty pretty tight you know ready he's pumped he's ready to go and he's definitely ready yeah so good for him good luck this weekend man we miss you here but glad filling with big shoes yes yes we will carry on so um give the audience just a little bit of your background you know you've been our CEO for gosh three years about three years now three years almost I'm very happy that you've taken over the responsibilities I get to do um things that are more fun for me like c I o planning and stuff yeah um and great podcasts and a podcast exactly yeah uh what did you do before jumpstart and uh what's your background yeah man awesome being here and I can't believe it's already been almost 3 years no uh but probably a lot of listeners and subscribers don't really know kind of the difference between JGI our our fund brand yeah right so Jumpstart Health investors obviously you know being our parent kind of operating side of the company is really the back office the ways of which we actually manage the business and so coming in as the CEO to manage that I've also paired that with kind of running our preseat state fund just our foundry so that takes up a good bit of my time as well but now three years later you know lots of scale lots of growth lots of investments building out the team and capabilities has been a key focus and prior to that spent 20 years on the operator side almost 25 years on the operator side uh the last 8 before that was actually working as a in a startup for uh healthcare yeah uh working on kind of virtual chronic care management and parent uh patient navigation care care management navigation yeah so did that from kind of cradle to exit yeah you had an exit and stayed on with the choir for a little while and that's right we recruited you away from I went through a few fun grounds and lessons I Learned I'm like man I need to sit on the other side of the table that's right so the lesser side of the table is a fun spot to be so it's been great three years well welcome we will carry forward without Marcus this week lots to talk about so let's dig in we'll do the best we can okay so the Fed had its summit at Jackson Hole and Tyran Pal spoke at the summit and really pretty stark change in his is tone of his commentary where he kind of said you know the job losses have been significant and he doesn't welcome any more job losses and really kind of started to pivot towards needing to focus on cutting rates and inflationist courses not down at the 2% level but the focus seems to be going more towards focusing on job creation and inflation control maybe in the back burner yeah I think that's right I mean one of the things I picked up was just the the the loss yeah year over year almost a million jobs kind of less from a loss standpoint yeah but wildly up over what it's been three or four years we've got many many more jobs in the country yeah even pre pandemic um but certainly I I I took that he you know we talked about no more cooling uh and not seeking any are welcoming any uh additional cooling in the market is telling yeah it's not at the point I think at this time it's about let's see if there's gonna be a cut it's like what's it gonna be yeah I think that's right it seems like very very likely maybe 100% likely they'll be a cut question is is it 25 basis points or 50 yeah um I'm kind of hoping for 50 but we'll see we'll see what we get I think that I think the last draft report coming out kind of mid September will be the tell all of how aggressive or soft they're gonna be yeah it'll probably be the difference between point two five that's right that's right yeah and so kind of we have other economic news sort of related to this overall economy there's a story in New York Times about the geography of unequal recovery so like different counties different states different counties are growing their economies and their jobs at different rates and image on the screen of every county I think and the blue arrow up if it's up it means they're growing and if it's you know really big arrow growing more and then the reddish orange ones are declining uh in sort of job creation and so we were just talking about jobs in the last story but it's spread very unequally across the across the country what would you make of this story you know um maybe one I love the graphic two to some degree kind of not surprised right so the big markets where you see a lot of the down orange arrows is really reflective either large uh large markets like big cities or rural markets yeah uh and when you think about kind of post pandemic one slower to shutdown less lower to respond and those kind of suburbian markets you know gosh take Nashville is a great example you'll see a lot in that kind of Sun Belt certainly in the eastern half of the country that seen a much greater influx of growth uh of jobs but you can also correlate that over with kind of population uh declines and increases in those markets yeah yeah I was really surprised at the New England state so um I mean Upper New England Maine and New Hampshire just don't have that many people but when you get into New York Pennsylvania a lot of job losses there compared to the southeast and west yeah when you think about I think the convergence of where people have gone but also where it's going from remote remote workforce and and you know technology adoption you're seeing a lot more that concentrated on this side on the southeast kind of sector in Mid Atlantic markets so when you look at the gosh just a footprint within kind of a tri state area of of Tennessee it's pretty impactful yeah the growth and we've seen it firsthand right now we're living it trying to hide it firsthand yeah yeah so I think this this sort of makes the job of the Federal Reserve even harder that they're gonna set policy for the whole country and yet you have very different realities on the ground based on where people live that's right okay circling back to the story we had last week there was a strike slash lockout of the railroad operators in Canada over the weekend the government required that they go to arbitration and work well they're in arbitration and so they're back to work which I think is good but it makes me a little worried that the government would just stop the ability to negotiate like that so anyway what do you think of this well certainly the union parties would feel the same it's almost like it's an anti kind of conforming to what the reason that unions exist and the teamworkers exist I didn't realize the kind of magnitude of just those two rail systems and the economic impact it had in kind of across North America yeah I mean it's 100 hundreds of millions of dollars of lost economic value every day that they were shut down yeah right so I I get the need to kind of push but it does seem a little counterintuitive to how they did it yeah I mean I think um me famously was it Reagan ordered the air drive controllers back to work for safety reasons back in the day and it's somewhat similar where um I think they were saying that there's the Canadian economy can't function without these rail lines with those kind of numbers I can understand understand why so I think it's good that they're back up and moving freight hopefully the arbitration will be fair and they'll get to some reasonable contract so moving on the IPO market gets cold feet this is a story in the journal this week we had some encouraging signs of new ipos earlier this year but it's slowed down the fourth quarter usually when you get back from summer traditionally there are several ipos sort of queued up and not so much this year there's a the slower path which maybe we're all waiting for the Fed to cut maybe there's other reasons I don't know yeah I think the next couple of weeks historically been kind of the peak weeks of IPO yeah certainly getting ahead of quarter releases coming out the doldrums of of summer months and I don't know if we're gonna see that cause we look at like what the average values have been if you can kind of get an idea of about 25 billion on average that it raised versus the prior 10 years in an average of 55 billion right I might slow walk my IPO as well yeah yeah I know yeah then we have a few there were a few um the spring Reddit got out um couple other small ones but it's been it's been slow yeah I was interested also Learned that obviously the Russell 2000 out performing SMP yeah alright so kind of the small market or small players and companies in that are really killing it yeah that that's right they and I think that might be to me it's more of an impact of the Magnificent Seven which is a lot of the SP500 that's having some struggles this summer um I suppose to the Russell really killing it but but yes it's doing better okay then we had Nvidia we wouldn't normally cover but it's such a bell weather now for the entire stock market is so much AI excitement and now excitement slash fear worry that maybe AI has maybe it's a bubble maybe we've invested in front of what's actually being realized and so everyone was kind of looking at the videos earnings that came out last night

00 or so um and they beat earnings and continue to really do very well very profitable um they had one concern with their new chip the Blackwell chip they're having some supply chain issues and not getting it to market as much as they had planned but it seemed when I was listening last night seemed kind of minor and then this morning I have a image here um so if you're watching on YouTube you can see this is today's stock price

21 or so and it's lost value pretty much almost straight during the day little bit up and down but been it's been received poorly and so I was talking to some folks about why that might be and their comment was the well the revenue is still growing the rate of growth that like second derivative how fast the growing has slowed down dramatically um don't know what are your thoughts about the video well you know I think this is one just a blip in terms of timeline they have certainly grown mean look at that like kind of yeah we have the next month which is a six month chart right that one for me is kind of the tell I was powerful in terms of where they were back in kind of late Q1 going into and then the growth throughout the summer has been impressive if you look at any kind of close peers or competitors you'll almost see the inverse of this relationship or yeah in terms of their experience and and these guys are still killing it in terms of market share yeah I mean they own it right yeah that's right over a six month period if you're listening on audio first of all you should watch us on YouTube so you see all of our pretty faces right but um it was 80 $80 a share in March uh late spring

18 as of recording this

35 and so we're seeing you know kind of a lower high um and now going down again so it may be that they sort of consolidated and gonna go up again in the fourth quarter it may be that in fact the AI boom has slowed somewhat and they're such a dominant player that yeah almost like Cisco in the early internet that's kind of my analogy for this for a while Cisco was all the routers they could you know it couldn't make routers fast enough and then we got a little bit over our skis as far as we had so much capacity and not much content to put on the internet that Cisco then declined and didn't really recover for for years yeah the video I think could be similar to that we'll have to see how how it pans out yeah I think I think we're starting to see some normalization you know I don't know if it's gonna go up or down dramatically but yeah over the next six months anyways we'll we'll start to see it plateau yeah normal yeah you know what's interesting about these guys if I had only listened to my advisor to invested in 2000 and $5,000 today it's worth almost 800,000 did your did your advisor really tell you no but I have $1,000 to invest back in 2005 yeah I honestly didn't know who nobody was in 2005 yes life of the company yeah okay so moving into the venture markets we it was a slow week for VC deals we only had one new deal announced of course it's late August right before Labor Day so a quiet time but happy jet they make pre filled injection devices so refill syringes yes syringe already filled one time use um this is not new technology but they're doing it at a higher scale and um maybe more efficiently definitely more efficiently but also doing it for a little bit more the common ailments right so it's almost preventative of having to go to X to go get visit get prescription go to the pharmacy and all that they already have it prebuilt and ready to go so if I think about ease administration there's a lot of benefits to it yeah there's some downside as well but and like you said earlier it's been around for a long time like we're just seeing it more mainstream kind of medicines and purposes yeah yeah and I think we're moving towards we're not there yet we're moving towards much more prepackaged uh healthcare world where you get this in the mail and you just quickly grab it and you can give a patient uh uh charter injection without having to slow down much and do the measurement and get it all set that's right I mean some folks might be allergic to bees and you have those kits that you carry those around for years so similar think about other ailments so it's definitely tight right for disruption and time for more it's coming yeah not surprised to see them getting getting good funding yeah yeah and then Pitchfork came out with their Q2 report which was great that the summary I think is that the VC markets for fun formation have been very slow and private equity has been killing it so private equity funds have raised a lot of money a lot of funds um but we really focus on venture markets and so let's talk through the venture markets there are two slides that I pulled out and we'll link to the entire report feel they want to read it's probably 15 pages if you carve out life sciences which was we're mostly focused on healthcare services digital health consumer health um tech enabled services and healthcare all of those are bonded under the other healthcare VC category by Pitchbook and it's um we have a slide up on on the screen right now goes back to 2012 with both how much capital was raised which are the blue bars and then how many funds were formed in that year and in 2023 there were 34 new VC funds in a total of 4.6 billion and so far of course we're only this is a report as of Q2 so it's halfway through the year yeah but there's only been four funds and it's 200 million so not even not even half a billion very small yeah fractional to what it was just a year ago yeah and even in compared to 20 10 years ago yes it's a pretty pretty dramatic drop off yeah and so helpful for a strong second half yeah it's worry some for me as if for both of us as vcs um I I'm hopeful that um there weren't that many vcs in the market as opposed to you know the alternative lots of vcs just can't get it raised well and look at the last three or four years of the influx yeah of new uh venture for uh venture funds venture yeah record record level unbelievable right 20 20 22 21 22 yeah 41 new funds 57 and 21 42 then 34 last year so yeah yeah maybe it's a little revision to the mean yep uh but 4 and 200 million seems really small is drastic and so that thing that is uh gonna flow through to to you know startups raising money in the next couple years there won't be a lot of that's right new funds formed in 2024 unless there's a big back end yeah well the downstream impact for 2025 and 2026 when they're in their actual active investment yeah it's gonna be it'll be harder yeah and then the other side graph that I pulled out is the size of the funds being raised and there's several categories people there listening in this over a billion 500 to a billion 2 50 to 500 100 to 1 to 2 50 50 200 and sub 50 and in most years the pretty even spread across the different categories um typically it is um they do it by percent of the money and so just the way that the math works right there the smaller funds end up being a smaller percent of the money um but the this year there's only been four funds and all of them are under $100 million 1 hundred so there's only this two categories represented the sub 50 and then the 50 200 and so it's a it's a thin market up there for new funds and they're all fairly small that's right that's right and you know I think gone or the days are at least in the near future of mega funds uh adventure yeah billion dollar funds I mean it almost feels akin to 10 years ago yeah 2013 right um say I hope so be not I think um having 15 20 new funds all that are somewhere you know DC 0 to 500 that's right I think would be great I think that's far more competitive and far more available for early stage startups yeah that's healthier for the for the system yeah but four is too low so we need to yes we need to get some activity we need to raise some more funds right right okay so moving into our policy segment it was great to see we have a story from Fierce Healthcare that Northwell and Yvonne's the merger that they announced early this year got approval so they are going forward with that this is in kind of upstate New York yeah exactly yeah right I think they both cover the state of New York and Connecticut fairly well I mean these are two really large nonprofit systems yeah with big with big footprints lots and lots of hospitals locations I think combined north of several hundred yeah locations yeah I think they are both very large to me there's there's a pretty clear bifurcation in kind of well run strong operators yes in the lead yes at Northwell and and others um whether they're for profit or non profit health systems that are managed well and kind of optimized for the type of care you need today with a lot of physicians owned and in a pretty good um network of of referral centers you hit you have yeah urgent care and primary care diagnostic center surgery centers all feeding into kind of the mothership that's right um Northwell has that nuvants done didn't wasn't as optimized that way and they were really struggling financially like top line and bottom yes significantly and so you know gosh listeners have listened to what's his episode 82 numbers of episodes talking about the potential future convergence of systems because of the very example here yeah that's right New Vance is that and I think we'll see more and more of that the great thing is obviously it got approval this is this was announced six months ago yeah that they were having it took a wow but the reality is the economic impact and the access to care in those markets they have a pretty predominant foothold so behoove them to to wanna approve the yeah the partnership yeah and I think it's it's a I think there's a necessary approval review process just to make sure that no zip code is losing providers all together or that someone looks at it but the overall care system in those geography is much stronger under the Northwell platform with great leadership strong balance sheet good operations um pulling in the new Vance network of the providers yes it was I think it's a it's a win win so yeah they only got there okay and then the on the regulatory front not healthcare but I wanted to cover it uh because it's a it's a section called Section 2 30 that covers sort of protects aggregators and publishers from liability usually defame it or libel because they're publishing information and the concept is that social media or other platforms that are publishing lots of user generated content they can't be held responsible for any one user um saying something that is defamatory or that would generate liability right and so for a long time I mean it came out in the 90s 96 96 okay um those platforms have been protected from liability and TikTok lost the case yesterday it's a terrible story on TikTok there was this blackout challenge which is a you know fixate yourself like a physical challenge for how long you can be blacked out which seems like a ridiculous and dangerous thing to for anyone to do yeah um but it was on TikTok and a 10 year old she died trying to win the challenge um which is a terrible outcome yeah um but the policy discussion that in the 3rd Circuit Court yesterday the court ruled that the fact that TikTok uses an algorithm yeah to serve up content design design to that user yep that in fact is their contribution to the content and thus they can be held liable for for serving this content to them that is a huge change um the headlines TikTok isn't protected from Section 2 30 and the 10 year old blackout challenge death but the sub line I really liked which is wanna bought to pick engaging content and also immunity for liability you can't have both of those you have to pick one as the 3rd Circuit Court said sharply disagree right absolutely reliable yeah um TikTok is I mean one of the most valuable aspects of TikTok is their algorithm it's very strong yeah yeah and highly automated I think I thought it was 100% automated it may have some manual interests okay um but I think there's gonna be a lot of questions and where do we draw the line mean what is the platform suggesting things to me and what is me sort of like let's say on X I'm choosing people to follow and choose and then it serves me a selection of those there's a lot of questions of sort of how we will distinguish between publishers serving up content that someone else published right and now this whole algorithm is the content the concept well I mean this comes from the Communication Decency Act 1996 man yeah so remember what social platforms were were in 1996 and how algorithms played a role in that process yeah

00 30 beast you know kind of subsection of that is more recent but it really tries to protect those platforms it's it's time for a little bit of a refresh and reform yeah on that because of how much how much more sophisticated they and at the end of the day you got a 12 year old who's getting fed content good bad or ugly right we got to protect that yeah you know yeah I mean children using social media is is a whole another topic they should not be using it um but but children will cheat and yeah tell the system they are 18 when they're not it's difficult to police that but I think we need to try to do a better job with that um but it's not clear to me where we're gonna draw the line of what constitutes an algorithm that now brings the the whole platform into liability um and what is in fact protected by yeah sort of the free speech they're enabling free speech and I might say something stupid but it's not TikTok Facebook uh access as fault that's right um I want us to follow this one cause I'd love to kind of see how this where this one goes yeah I think it'll be weeks months before you know anything prevails in terms of how they're gonna be kind of required

30 b or I'll take that down to respond to it yeah I'd love for us to track this one oh yeah it's gonna be an ongoing story I agree that

30 needs to be clarified and updated I think that would require a Congress to be adults and act yes and so I don't know how much confidence I have in that but in my only other parting words for this is you know parents are listening take control of this too right yeah we all have responsibility here not just laws and policies and in section 2 30s to kind of manage this stuff but gosh darn it let's let's yeah and it doesn't matter how much money TikTok pays that girl's not coming back so you need to take care of your children yes for lotteries and adults and adults and adults yeah yeah Everlot Health is a publicly traded company that's considering going private and it's really a sort of in the middle of helping providers and insurers sort of navigate to value based care Yep currently have a market value of around 3.8 billion yeah it seems like they there's a rumor that they are in talks for an acquisition or take private discussion and she has jumped um 18% this this company has been you know sort of trying to find a secondary exit uh for a couple years they were talking to Walgreens previously um so just interesting to see I think there's a lot of value here I don't know where they would um they would sell its own its publicly traded but a lot of private equity firms are in yeah yes yeah exactly and they're looking so TBG right I mean big player in this face of their the potential suitor I assume and Clayton do we earn rice at least what the article kind of references right um so it's kind of interesting to help ensure elements also put in with these guys are they a part of yeah they're all I think they're all shareholders now current okay okay and they well the private equity guys are looking to get liquidity yeah of course um and so they think they're trying to figure out where to grab yeah how about interesting okay so then we have here in our home state of Tennessee such a good name our Medicaid platform is called Tencare yep and they lost a court case that's been going on for years it first came out before the covid pandemic people were kicked off the plot kicked off and and you know not eligible yeah um and didn't have due process weren't notified or the letters that they were sent went to the wrong address um and so they they were they lost the court case so they now have to um figure out ways to do a better job that yeah really surprising cause I I think of 10 care is fairly well run but this is a lot of damning facts in this that they'd have not been doing a good job keeping their members engaged I think that's fair and I think evidence of a little bit of archaic processes in terms of how you enroll somebody I'm still using paper still using snail mail still relying on things that are just difficult with too many potential cracks in the system and when you mention that some people kicked off we're talking hundreds of thousands of people that actually lost coverage and never a good indicator when the headline says illegally kicked off of right coverage from a state ran you know healthcare yeah offering right not not good and so when you read an article like this it's talking about those disadvantage the elderly children that now don't have coverage yeah I haven't for years now uh so there's definitely gonna be some remediation to kind of solve for how do you fix the system but then how do you make this right yeah uh and I think 10 care is gonna be uh yeah accountable yeah no question I mean I think that uh I think it's a pretty hard challenge to reach these people that are moving sometimes they're they're don't have stable addresses or phone numbers it's difficult to reach them and 49 other states are doing it and so yeah well it may be a hard challenge I think 10 care has to figure it out they gotta figure it out I don't know if you caught in the article to how they're recommending to mediated is through mediation yes like right do mediation first and then let's fix the problem right so they do have to do both yeah so hopefully they'll do that soon yeah okay so moving on to the provider side health systems and providers Mckesson is buying a group of a physician group Community Oncology in Florida as far as I know this is the first time Mckesson has moved into owning a physician group it's in it's in oncology which of course they have a lot of um medications for yeah yeah yeah but Mckesson is a drug wholesaler so I wanted to talk about it interesting to see the drug channel now kind of moving into owning provider groups specialty groups yeah right and they're taking a pretty big footprint of the business though this the core ventures is what they carved out to kind of be a focused area as a part of this Florida cancer specialist group and so Mckesson comes in takes 70% of the 70% of the business right which is a pretty big footprint in Florida especially for a drug distributor you know based in yeah not in Florida yeah and so what do you think about the the concept of a drug wholesaler you know whether it's Mckesson and Mr Sproger in a Cardinal is three big ones owning physician groups owning hospitals owning providers well interestingly enough like so the other two big players in the space were also vying for this deal yeah yeah they weren't the only suitor at the table right but Mckesson comes out on top uh look man we're we're gonna see more and more of this welcome to the consolidation world right yeah so we're gonna see much more of this I think there's value in it there's always gonna be downstream implications to it cause now you got a Mckesson that's majority controller of a services you know specially services group in a in a state and compound that by 50 other states do they know that business well are they gonna allow it to operate efficiently and effectively I think for me it's more concerning about operational than it is the strategic advantage of a Mccestin probably a good move for them yeah I mean the um that's obvious to me that's the concern is it are they going to let them treat patients totally hands off or there's gonna be some shaping of the yeah um the formula like what what they're prescribing you know a good question this idea of this Core Ventures group started because of access issues and cost issues I'm hopeful that a Mckesson kind of introduction can help fuel what Core Ventures was actually created to do to begin with yeah I think it I think it can yeah so I think we'll see much more of this yeah so they're looking this started with um you know payers acquiring providers and then the the providers starting to get into value based care and underright we've talked about the payvider space and we may need to sort of rethink that phrase to incorporate the drug channel right now we gotta think about a higher much more complicated thing yeah but it's interesting to track yeah and then on the same sort of note Surgery Partners which is here in Tennessee right down in Brentwood is for sale and Optim is one of the leading bitters on that hasn't fully been put through but the rumors that Optim's gonna purchase it they already own the the largest largest yeah they have the largest surgery center business already as is the sea yes yeah okay and so SCA has it says here in the article they have 32 hundred amateur surgery centers and 92 hundred physicians just in that often has other physicians too and so this is the third largest um and so if Opton buys that they'll add 160 centers to their 3 20 already massive growth um so we'll see it's sort of another in the in the string of acquisitions that uh UHC Optum has done that they typically in the past have left the operations fairly separated and sort of running on the room but but they pull all the data in behind the scenes and yeah um so we'll see it's interesting well I'm excited to see a kind of a local uh company that's done really well you know they've been around a while oh yeah 20 15 ish they they went public ipoed in 2015 I think yeah that's right I think they backed them as well so love just love to see a local uh surgery part man they've grown a ton in 10 years oh yeah a ton yeah in 10 years so yeah and they couldn't have you know if UHD Optim thing comes through I don't think they could have found a better choir great right yeah that's right okay so moving into a couple large health systems uh we talked about Northwell earlier in the show being sort of of that Elk of large well managed Advocate Health is is similar different footprint they're more in the Midwest yeah they publish their um for 6 months of financials and the net income operating come grew five times um up to 400 basically 450 million you know which was much greater than the 85 million that they had at the same point last year so I mean with this is sort of been an ongoing theme but the health systems they're seeing patient volumes grow very quickly and the patients are have higher purity they're more they need more services more expensive services so revenue is growing very quickly and if it's well run these health systems are generating profits or if you're non profit I guess it's operating profits that's right that's right and they've done well I mean profit wise now advocate is the combination of atrium in the old Advocate Aurora right yes that's right so they came together a couple years ago so great to see them you know really grinding hard and 2024 is looking like a pretty banner yeah you know kind of post that 18 month post that consolidation yeah that's right they're doing well hmm okay and then Kaiser Permanente you know they rebranded when they bought Geisinger they rebranded to uh rhysant I think that's how you say it yep um they recently bought their third asset Cone Health in North Carolina and they came out with a plan it's in fierce healthcare will link to it their plan to invest in the platform and they're gonna invest um a minimum of $1 billion yes in the operations in the facilities really growing the capacity upgrading things um what what do you think about this you know interesting you know the good and the bad for me the worry is they literally just consolided with this guy Singer Health 6 months ago right I don't know how that's going that seems a little early to go out and take on another upwards of a billion seven they're gonna invest yeah in cone because they got a few covenants around a billion dollars on the front end but then another 400 million for integration and transition another 300 million for growth and and that's fantastic um just hopefully they're not taking and biting off more that they can chew too too fast yeah but I love that the Kaisers you know getting further and further in the in the game yeah that's great well when they when they put the brand out there rising they announced that their their intention was to buy four or five systems in different geographies around the country and so I think they are planning to add to Geisinger and co now with other geography so that they have yes you know eventually the entire country covered a large swass of the country covered to get the economies of scale and the benefit of consolidating those together under a rise and kind of brand something really smart about kind of timing and how they integrate yeah well and one of the things that one of the reasons I follow them is um all three of these platforms but certainly Kaiser and Geisinger were really strong on the payer side as well as provider so they have that integrated um provider a kind of platform cone was not as big on the payer side but they did have a payer yes and I think everything that they buy is gonna have those two pieces and then they'll bring their expertise about how to grow it that's right that's right moving in to talk about epic is a couple stories on epic course they had their big user group conference last week but they had an interesting shift this week where they they are moving away from their traditional data exchange platform there's a lot of data exchanges out there sort of too many in my opinion if you want to share data across different health systems you can go on to one of those exchanges and do that for several years epic has been partnered with TEFCA Trusted Exchange Framework Common Agreement yep and they are moving away from that and moving to care quality which is uh the largest and I think gonna once epic move to it I think now it's gonna be the default um integrator so that every health system is gonna have I think gonna have to be on care quality and that will probably make it easier to make that system a good way to start move data back and forth but what are your thoughts about care quality and epic uh I think it's the shift in in what will be in a year or two or three the new standard right I think even for us selfishly as as the individual patient like we have to get there and we gotta adopt a standard and care quality seems like the new kind of the way yeah and it's certainly being adopted well I think we'll see an influx of kind of growth of that in your right trying to trying to connect a whole bunch of disparate systems together and different platforms together will have to have a standard in exchange to be able to do that care quality seems like it's it's it's the right the right move yeah I think that's right and epic had the ability to cause challenges to one system where everyone would be and I think it's positive that they're now joining in with kind of everyone else I think that's right I think that's right I mean it's time for this man we've been we've been talking about interoperability for how damn long forever yeah so adopt a damn system pick anything and let's go right right let's go okay and then modern healthcare had pretty good story about five takeaways from the user group we cover the user group last week but I thought it'd be good just to go through the five so number one is that Judy was sort of talking about how fast they're growing she in there talked about sort of the market share that they have I think it's even stronger than she claimed but she's saying that they have 39% of acute care hospitals 52% of beds over half the beds in the country half the beds that's unbelievable yeah I would have guessed even higher than that really okay I mean it's really only you think about like the top 3 4 I mean epic Sermonitech and then after that it falls off pretty quickly yeah yeah um so then they have their data platform cosmos and AI they really have gone very quickly into AI and data they collect data through this thing cosmos from every system and it's pretty powerful and I was surprised that the number of apps they have within the Cerner kind of platform that are AI generated epic yeah platform yeah that are that are AI over 100 yeah over 100 yeah and then they really are focusing on Ry for their customers which I think makes a lot of sense that they've been that way for a long time they are streamlining the prior off thing which is I think all the back office revenue cycle is is sort of so ripe for disruption yes and that's been the No. 1 place that AI is being used yeah yeah um and then sort of um you know having fun they they are um very profitable I have been frustrated with epic at times but but they take care of the developers and their customers and they had a big event and so they had fun with it we talked to her last week's Judy you know who's a billionaire was wearing her Mother Goose costume on stage and having fun thousands thousands of their customers there it was a pretty significant event and obviously to realize they're not just a US company right I mean they are in many countries certainly a global footprint so yeah anxious to see where where the HR gonna player goes here yeah yeah moving on to the drug channel J&J Johnson Johnson came out this week refusing to continue with the 3 40B discount program because they claim that the savings are not being passed on to patients and they no longer are going to provide drugs at the 3 40 b price instead you have to pay the regular price and then if you provide discounts to your patients you can then get a rebate discount go to rebate plan yes that's exactly right and I don't think they're claiming that they potentially don't pass along with they ma'am they don't pass along the savings to the patient right when you think about the savings in the discount program yeah hospital systems are are loving it yeah that's right they are keeping yeah the difference the patient does not realize the savings yeah and at first I mean this rule has been around for a long time yeah at first it was really designed for FHC federally qualified health uh systems which is a very small patient population small set of providers and treating the people that really need help very low income folks that's right and it was meant to tell that and then when we came to the um Formal Care Act we added any non profit health system to be eligible for 3 40B and you've seen just a huge explosion of the adoption the cost to the drug manufacturers and there it baby needs to be looked at not maybe it should be looked at yeah um but Johnson and Johnson is just not gonna keep playing which I was surprised about yeah I don't know if they'll I don't know how this is gonna turn out right uh because there's definitely uh arguments on both sides of the table health system certainly gonna pound the table like we gotta have this right yeah uh and I think the discounts are what in the neighborhood of like 35 50 I mean they're pretty substantial significant discounts discounts uh that for me that part of the solution is pass the damn savings along to the individual right right that's the intent I think of the program or a part of the intent of the program yeah yeah so this the agency that runs is the federal agency called Health Resources and Services Administration HRSA um so fierce health came out with the next day HRSA and hospital say the J&J plan is not supported in the law you know it doesn't you basically JJ can't do this and well I think that probably is true from just directly reading the law I spoke to Emily Evans who you know talks to us about policy things um before the show just to get caught up on this and she doesn't think HRSA has much enforcement teeth can't really do much to J&J other than yell about it yeah they are they are um a governing body but not an authoritative body of power right they've got no ability to kind of determine who does what right uh so that that makes sense and is it true that like almost a third of hospital systems actually are three 40B eligible like in the US I mean there's a significant number of systems in the country that are yeah eligible yeah there's uh really any nonprofit I think eligible okay um if you have you know any patients below a certain income level so yeah it's pretty it's a lot of hospitals yes but the big um most of the dollar flow most of the volume of three 40B money goes to a lot of academic medical centers it's basically the top 20 academic medical centers they have the infrastructure they is a lot of paperwork a lot of filing um you need to do a lot of infrastructure in order to be able to value yourself of this so very small system I think would have trouble that they couldn't do it but yeah they haven't largely and so you're gonna have um here in town Vanderbilt yep but Mayo in Cleveland Clinic in I mean all the all the basically the top 20 top 30 academic medical centers nationwide avail themselves of the 3 40B system and you know I have no problem with that it's it's legal it's part of the law yeah they maybe there certainly should do that those groups have a lot of lobbying power so you're gonna see I think the drug companies and the hell settings of lobbying are just all fighting each other yeah I think that's I think that's right it'll be interesting here because when you think about those academic medical centers this is a pretty significant part of their of the revenue yeah kind of what would happen NH funding is not declining but not growing anymore so it's not keeping up with inflation that's right and 3 40B is under scrutiny those are two significant uh sources of revenue for for that information they don't need any additional headlands oh right right exactly so yeah um really this going back to the Section 2 30 this is similar Congress really needs to weigh in and change the statute to be whatever the will of the people is through it their elected officials both the house and the Senate started before J&J came out have started picking this up and looking at how could we uh make improvements to the system but there's been no legislation you know this just like a couple other topics we we 30 some year old uh legislation like this has been around 34 b's been around three 40 b's been around for a long time uh it needs to be refined I mean think about just the change of the landscape and yeah you know who now what what was approved back then it's totally different today it needs to be reformed and looked at yeah and I think still necessary and Fhcs need a lot of help yes um but I'm not sure that the academic medical centers need the same kind of assistance mean they do great work but FCS are just a very different animals it's much so much smaller part of the market and they they do need a lot of support um so I don't know we'll see how it goes both the house and the senator looking into it the way I read J&J is there sort of a catalyzing this discussion because they're gonna stop paying on October 15th we'll see how that goes there is no chance this legislation before then no no way not an election year yeah right nothing is gonna happen yeah and so but whenever Congress comes back after the election I'm sure there's me a lot of attention on it agree agree so we'll we'll post this I'm gonna go through but we have a story about the um energy and Commerce Committee in the house uh that was working on how they might affect this change again I don't think it's gonna happen before the election it's not gonna happen until the election okay so this is interesting Pfizer came out with their direct consumer product Pfizer for all and it directly connects patients to a physician in a telehealth setting and they have some images here of how their phone app works so it looks really you know easy nice and then you get your script you know doesn't have to be a Pfizer medication but they are probably looking for that and then often they'll deliver it to you and so Lily came out with Lily Direct and this really is I think Pfizer's answer to that right and so it's another consolidation play like that they are now sort of grabbing uh merely just just intermediating the physician just going right to the direct camera yeah too right yeah I mean this is actually gonna be available for you and me and everybody else right we can go on right now and it's live and it's akin to like we see startup companies all the time trying to to do an app trying to do a solution to kind of make the system more efficient yeah bring together what Pfizer's kind of pushing down right they've got the power yeah be able to do that so I'm excited for what Lily's done what these guys are doing um I think it's game changer stuff um and it looks like a pretty slick and easy app that can do a whole lot for yeah for a lot of people um so that's cool stuff now we're gonna get to sort of a harder story but I think we should cover it so mpox uh the World Health Organization came out with a health emergency maybe a month ago New York Times had a story this morning really just showing how terrible it is and they they went to Congo which is the center of the disease lot of children affected and it's a poor country poor area already and they're not getting enough support they're not getting enough services and so it's spreading quickly and unfortunately this strain is more deadly than the previous strain was yeah and it passes more through just contact you don't have to be not sexually contact so yeah kids can pass to each other I think this this new variant uh clicked like one I think is what what it's called is potential skin to skin contact yeah that's why we see it more prevalent in kids that you know are probably already under nourished and yeah already have you know I mean the video so the starting of the video of the like infirmary where they're treating for these patients is just heartbreaking yes I mean they have a tarp separating one room from the other and I don't know there's probably 200 parents and children there yeah it is the best they can do I think but it looks really it's not the best we can do not the best we can do not the best the world should do I mean that's exactly right this is this is heartbreaking yeah so it's spreading man to your point I think it's now prevalent and I don't say prevalent but at least uh seen in cases in like 18 different countries yeah so it was spreading it's been around for a couple of years it's been around for a while but it's certainly a couple of years uh pretty prevalent um and it's not going away anytime soon yeah somebody steps up and and helps these folks yeah so Mina I wanted to bring it up its terrible images to look at but I think it's important to look at them cause it's yeah real yeah and I think just as a healthcare system we need to think about public health we need to give some time resources capital support to Africa 1 because it's the right thing to do from an ethical and human perspective into if we don't take care of this disease there it's gonna it's gonna spread so it's much better to let's go take care of the people yes in these hard areas that's the right thing to do and then also we limit the impact on the western world yeah it's a global emergency health right yeah w show just just announced I guess that that being the case 4% mentality rate man yeah that's real um so yeah I almost was like reluctant on it you sure want to show I know I know you're right it's real okay um less uh less scary we're gonna switch into the AI maybe maybe it's pretty scary maybe it's scary but not not seeing kids suffer is a whole different level I think so open AI is raising money again their value in the company a little over 100 billion hundred billion Thrive Capital is leading it the round hasn't totally come together yet it's an uptick from their last evaluation which was eighty six million billion 10 10 15% yeah less than 12 months right yeah um so maybe not surprising they've raised a ton of money they're gonna keep raising money yeah um they have it's rumored that they're coming out with a new tool the code name is strawberry ah um that they showed to our defense agencies I think Monday Monday or Tuesday okay because of how powerful it is they wanted to disclose it ahead of that okay um but they haven't shown it to me or anyone else so um yeah there's lots of news and lots of rumors around Sam Altman and Open AI but um I don't know what are your thoughts about them raising money again you know man it is no doubt in arms race uh yeah LGBT is still killing it I mean yeah but the growth and the money that's going to you talked to earlier about hey is this kind of space slowing down or is it SEC I don't think so yeah I don't think so uh and you know Microsoft continues to double triple down yeah on them as well the growth with what is happening with Amazon and Google and their play meta I don't see it slowing down yeah I guess I'm not surprised by the valuation and the need for more capital because it is kind of that right time for these top three or four to kind of figure out who's gonna be the lead whole yes cause it is an arms race right yeah yeah we we just had a um meeting with the portfolio companies about an hour ago where we we talked to a bunch of what they're building with AI and one of them showed off what they had built and they built it it saved I think it saves about 30 minutes per patient of humanly time yes the doctor's time so it's you know pretty valuable time yeah but the interesting part was they did a she had two interns working on it they did a full like study of should we use open AI Gemini or claw anthropic Claude um it turned out that Claude's was the most price uh attractive okay and the highest quality okay and importantly Claude and Gemini both sign a BAA very quickly and and it so fits all the hipaa requirements yeah yeah open AI will sign a BAA okay but their timeline was not quick you had to go in this waitlist and it was so bureaucratic that they just they never finished it early six companies don't have that kind of time so they don't so it is there's this competition at all different fronts and I think the the pricing was like $5 a month for what they were doing so it's almost employed was the cheapest but you know whether it's $5 or $8 and I don't know that it matters on a monthly basis not compared to what the alternative is right right exactly but the BAA in a quick answer to the BAA is really that's a difference that's a game change right it's little things like that that are gonna kind of help companies kind of win at the race and man I'll tell you we're seeing I don't know that there's a deal we've seen this year that doesn't have some capabilities if not yeah there mean if they don't have AI capabilities they're putting something in to try to raise money just what that's right okay then last story Juventus AI they're working with Northwestern Medicines kind of periodic surgery processes so all of those communications to make sure the patient is uh not eating the morning before and that they have a ride home and all of the prep work that goes into that um Juventus is now doing with this AI operational assistant that sort of reaches out and gathers all the information makes the notices helping the doctors and the clinical staff focus on the you know higher value things just incredible I mean this is where the road meets the road we're starting to see it now in action yeah in in assisting the operating kind of side of this we're gonna see it across the whole system I was surprised this thing calls patients oh yeah yeah this thing makes outbound calls for yeah I mean all of it yeah it's amazing yeah in the in those limited use cases are like you need to call this patient remind them about what they eat the day before what they it's like a set of things um and if you try you should I'll help you get a try we know someone that has one of these oh cool cool it's uh it's incredible yeah I can't tell the difference so it's not yeah they it's it's closes that it's a bot but if you didn't have that it you were saying that someone was a person calling that's exactly good that's all we have thanks for doing this it was a good show lots going on there is a intersting the policy the different policy dynamics kind of weaving into the yeah kind of the MNA and the changes in the landscape in the health systems payers and now drug channel it's amazing and I tell you man it's moving quick and there and there is a lot certainly humbled to be here look forward to Marcus coming back yeah but this was great man had a lot of fun yeah thanks for doing it we'll keep covering this stuff have everyone have a good Labor Day hopefully Marcus will be a new champion again that's right and we'll see you next week thank you see you