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Where we share our weekly news debriefs and discussions with industry experts. These are lo-fi recordings aimed at giving our readers more opportunities to engage with our analysis and a view into some of the conversations that shape it.
Martin: Good morning, Kevin.
How are you today?
I'm
Kevin: awesome.
Happy Monday, Martin.
Martin: Happy Monday.
How did you spend your weekend?
Kevin: You know, fun
Mother's Day activities.
It's getting nice here in Minneapolis.
Little bit of time outside.
Typical stuff.
How about you?
Martin: Same deal.
It was a little rainy in DC,
but aside from that, we- Hmm
we brunch for Mother's Day.
We got some- Mm ... some pastries.
It was a, it was a good time.
So one of the things I did before
the, the Mother's Day weekend was
listen to Molina's Investor Day call.
Hmm.
And I'm a, I'm a fan of, you know,
listening to Investor Day calls, and
a fan of, uh, reading through what
Molina's got going on to the entire
Medicaid managed care industry.
I heard a turn of phrase that I have not,
uh, not heard before on an investor call.
So Molina CEO Joe Zebrosky said, was
talking about their premium growth, and
he said, "We're gonna grow premium revenue
from 42 billion base that we have today
to 64 billion over the next three years.
You may think that 15% is pretty sporty."
What do you think he means,
Kevin, by, uh, sporty here?
Kevin: You know, when I think
of the word sporty, energetic,
potentially aggressive, quick.
Martin: Yeah.
Kevin: How about you?
Martin: Well, no, same, same deal.
I just haven't heard it
on investor calls before.
And then he says, uh, he gets a, a,
a question from TD Cowen, Ryan Ling-
uh, analyst Ry- Ryan Langson, and he
says, "Why are you only assuming 33%?
Not, why aren't you assuming a
higher growth rate given your,
your win rate on these RFPs?"
And he said, "The truth is we like the
15% CAGR at, uh, CAGR at 64 billion.
When you look at 90 billion of
opportunity and 20% market share,
it's a little too sporty for us."
So he was really, really, uh,
really liking this, this analogy
or this, this descriptive language.
It reminded me of, do you remember
the Silicon Valley bank run?
Uh, y- yes.
Okay.
This tweet has stayed in my head
since then, which is, you know,
if your, if your banker looks
like this, your deposits are safe.
And Joe Zebrosky saying
sporty, like, I think a...
You know, nothing on this show is ever
investor advice, but I think that if
your managed care CEO is using sporty
as a, uh, as a, a descriptor for
aggressive, I think your, your managed
care plan's probably gonna do pretty well.
Kevin: Seems right.
It's a good word of the day
at the investor conference.
Martin: Sporty.
Uh, let's get into it.
So today we are actually gonna start
talking with the earnings recap, and I
think the best place to kick it off...
Well, besides sporty, are there any
other words that come to mind for you
before we, we get into the first name?
Kevin: Single words?
I don't know.
It was a good quarter across the board.
I mean, after the past couple years
of earnings, this felt, um, uh,
this felt pretty straightforward.
A lot of companies' stock prices going
up after strong operational performance.
Operational performance is probably
the phrase of Q1, you know?
Everybody seemed to have their
examples of we're executing
on the play, it's going well.
Um, even the companies that had, like
Privia I think was the only company that
was really down that we were following.
They were down 7%, but, um, their quarter
was still pretty dang good on the whole.
Uh, so in general, solid
quarter across the board.
Martin: Pretty sporty.
Let's start with Agilon.
So, uh- uh, Kevin, is it good when
your stock graph for the last, the
trailing five days looks like this?
Kevin: It is good when the trailing
five days go up 100%, although if
you have the opportunity to go up
100% in five days- ... you, you, if
you, if you look back further, it
might be indicative of, of issues.
But yeah, Agilon, uh, it, it felt
like they turned a corner, right?
Their, one of the analyst questions was,
um, uh, about if Agilon is going back on
the offensive now, which to me kind of
purpose, per, uh, perfectly encapsulated
the tone of their earnings call.
Like, it feels like they have gotten
past the issues of the past couple years.
They've now got the needed data
infrastructure and clinical
model in place, and they're
starting to see results from that.
It's not the, the sexiest narrative
at the moment, it's just kinda core
blocking and tackling, which as we've
talked about repeatedly, is the name
of the game in value-based care.
Uh, so I thought they did pretty well.
I thought the, to, to our ongoing
fascination with AI and the
impacts of AI, this to me was one
of the more interesting nuggets.
An analyst asked them, Agilon,
"Where are you seeing the
impacts of AI organizationally?
Are you seeing a lot of it
in SG&A savings, and is that
driving out performance?"
Um, and Agilon's management response
was, "Well, uh, we're actually
seeing it mostly in revenue and, and
medical expense side of the world."
And it gave the example of managing
heart failure- suggesting that, and I
haven't seen this data, um, to confirm
it myself, but so I'll just, I'll s-
I'll sh- share the data they cited.
They said that, uh, generally speaking, 40
to 50% of new heart failure diagnoses come
after an inpa- or a hospital admission.
And Agilon has managed that number down
to 5%, because they're saying of their
risk management or risk stratification
capabilities as an organization.
Which if that's true, that's
a really solid data point.
Now, I, I don't know that you need
to convince me that there's much
AI to do that effectively, right?
Like that, that you could do risk strat
with an Excel model, um, in, in many ways.
But nonetheless, it's a, it's a good
part of the story for them, you know?
Martin: Yeah.
Yeah.
I, I, a quest- a sort of underlying
question I always have is like,
are you doing AI or are you
just doing fancy regressions?
And I don't know, but I do know that
to, to pull that off, to, you know,
go an order of magnitude lower,
there's definitely some operational
excellence happening that is- Mm-hmm
is making that possible, right?
I think like a lot of the conversations
that we have about AI and its promise
run into this reality of like,
it's actually really hard to enable
that in the human world, right?
Like, you can have the insight that heart
failure patients are expensive and when
they get admitted to the hospital it is
too late for you to do anything about it.
And also it is very hard to act on that,
and I think that's, even if it's not
what most investors are, are looking
for, like they're looking for the,
the AI thesis, like I think the, the
story about being able to respond to
that is much more fascinating to me.
Kevin: Yeah.
And clearly it's showing up in
business results for them, right?
It's, um, so cool to see.
Martin: Yeah.
Should we talk Evolent?
Kevin: Let's do it.
Martin: So, uh, Evolent is another
name we, we love to follow,
some of the, the originals in
v- the value-based care space.
And, you know, they have had a lot
of tailwinds in the oncology space.
They describe their business
as a tale of two cities.
Shout out Charles Dickens.
And- Always love a
Kevin: good literary, literary reference.
Martin: Yes.
And yeah, I mean, like they, their
business is increasingly oncology
value-based care, and it's interesting
to see the appetite from payers on that
front, to see that there are so many
payers looking to, to offload risk and
specifically offload it to Evolent.
They shared a note saying that
about 10% of the oncology market
is already on Evolent's books, and
50% is still insourced by payers.
I find the oncology
market pretty fascinating.
It's tricky for a number of
reasons, structural reasons, very
high dollar amount, but lots of
complicated points of negotiation
between the payers and providers.
And- That 10% figure is, like,
I think pretty impressive.
If you're trying to make a play in
value-based care oncology, like, uh, P-
Privia's, you know, one out of 10 patients
are, are on Privia's books already.
What was your, your reaction to the call?
Kevin: Um, you were saying Privia there.
I think you meant-
Martin: Oh, yes
Evolent I, I meant Evolent.
Kevin: Getting a- getting
ahead of yourself.
Um, I, I, I really like Evolent's
narrative at the moment and their
focus on the oncology market.
To your point, um, about market
dynamics, I think it's a really
interesting time in that space.
They got a question from an
analyst about Cigna and...
'Cause Cigna on their earnings
call, w- was that last week?
Time flies.
Um, Cigna mentioned that they were
leaving, not leaving, they were pursuing
strategic alternatives for their Everc-
Evicore business, and an analyst was
like, "What does that mean for Evolent?"
Right?
Kind of similar, um, dynamics at
play between those two businesses.
And Evolent was like, "Listen, um,
payers are gonna have a decision to make,
particularly for these complicated, uh,
disease states like oncology, and we think
it makes sense for them to partner with
organizations like us and not bring it,
not have it in, in-house, particularly
as it gets more and more complicated."
And as you think about the role payers
play in the ecosystem and public sentiment
towards payers at the moment, it makes
sense to me that they might be looking
for an arm's length, um, relationship with
a party that's m- making a lot of these
decisions, and ideally doing it in ways
that minimizes provider abrasion and so
on and so forth, like Evolent talks about
a lot on their earnings calls, right?
Um, but it, it makes sense to
me that we're gonna see that.
To me, the interesting question
is, is how many markets look like
oncology over time for Evolent?
Like, the general narrative I have in my
head of all these new drugs are coming to
market, there's all these care pathways
that are hard to, to sift through, I
would, I would think that as we kind of
generally talk about this wave of pharma
innovation in the market, that we're
gonna see m- more and more of that across
different disease states, which I would
think opens up an opportunity for a, a
organization like Evolent longer term.
Martin: It's interesting to think about
w- the story that they're telling and
what's going on in the private market.
So we've seen a number of venture-backed
oncology value-based care plays pop
up, Time Care being probably the
oldest and largest and best scaled in
the private markets, but a handful of
other ones doing interesting things.
And Um, number one, it's, it's, it's
sorta wild to see, you know, the incumbent
with 10% market share in what is pretty,
uh, uh, a pretty heterogeneous market.
And number two, it's interesting to
think about how these approaches are
going to, uh, going to align or differ,
and what that looks like for a major
payer who's thinking about partnering
with a Evolent or a Time Care or an
Atlas Oncology Partners or someone like
that, and how they're thinking about,
um, where to, where to offload their
risk and what's best for their payer
re- or their provider relationships
and their patient relationships.
Kevin: Yep.
For sure.
Should we go to Privia?
Martin: Let's go to Privia.
Kevin: So Privia was down 7%-ish on
the week, uh, which was interesting
to me 'cause I, as I've articulated,
had a very Privia-like quarter,
just solid progress and plodding
Martin: forward.
Kevin: What does that mean, Kevin?
Uh, Privia, of any player over the last
few years in the value-based market,
broadly speaking, I mean, they're...
So Privia provider enablement platform
popular- popularized the phrase
that's called risk for a reason, more
focused on fee for service than other
enablement platforms, and that has
enabled them over the past couple years
as the value-based care market's gone
sideways to just execute consistently.
That is what I mean, very Privia-like,
consistent execution, uh, slow and
steady growth up and to the right.
Uh, maybe not slow growth, steady growth
up and to, uh, up and to the right.
Um, it's interesting 'cause, 'cause
value-based care is playing a bigger and
bigger role in their narrative these days.
They're talking about the
opportunity in Medicare Advantage.
While I don't get the impression that
we're gonna see them jumping into global
cap full risk arrangements, and they're
still very centered on this notion of
shared risk is the right path forward,
so risk that is shared between payer and
provider, um, it does seem like there
is more and more of an opportunity.
So it'll be interesting to keep
an eye on that and Privia's stance
over time as it relates to VBC.
I- they are very much on board with MSSP,
talked a little bit about LEAD and how
they don't see LEAD as something they're
jumping into, but something they'll
keep an eye on over the coming years.
Last interesting note from their call to
me, um, they talked about the business
development pipeline being really strong.
And they talked about it from the sense
that, uh, they have their eye on the
market, they're looking at all the deals
coming, they're talking to everybody,
but it seems like they feel like they
can wait out the market essentially.
So they know there are all these backers
who are looking to sell assets, uh, who
are looking to sell them at a premium,
and they also think that there's not too
many buyers out there on the market today.
So essentially it sounds like they're
waiting for valuations to come down, and
they're gonna wait out sellers over time.
Which strikes me as a a good business
decision for Privia, assuming
they're right about the market of
buyers, which strikes me as true.
Um, also strikes me as a challenge for
folks looking to sell those platforms.
If your only buyer is essentially
saying, "I'm gonna wait for
the price to come down 'cause-
Martin: I can ... we'll
Kevin: find somebody else."
Yeah, you know?
Martin: Yeah.
That's
Kevin: tough.
Martin: Yeah.
And when you listen to Privia talk
about their free cashflow, their
balance sheet, you're like, yeah,
like they can afford to- Yeah ... pay
premiums but they don't need to.
And that is the optionality that, uh,
lots of positive free cashflow gives you.
Yeah.
Kevin: The it's called risk for a reason
narrative has really played well over
the past couple of years, you know?
I, I applaud them for, um, what
they've been able to accomplish.
Martin: Should we go to Oscar?
Kevin: Let's do Oscar.
Martin: So
Kevin: Oscar- Oh, yeah.
Martin: You go.
No, I was gonna say up 15% after a strong
Q1, reaffirmed fiscal year 2026 guidance.
To me, the most interesting thing about
Oscar is, uh, it's the cleanest read we
have on the ACA market, and the doomsday
scenario that everyone was worried
about does not seem to be playing out.
We haven't gotten the official numbers
from CMS yet on what 2026 enrollment
is, uh, effectuated enrollment is yet.
We've gotten some good insights from,
uh, Wakely and, and Milliman and others
saying, yeah, like there was a lot
of attrition, more so than in recent
years, but it is not, you know, the
like 30 to 40% that we were hearing
on, on earnings calls last year.
Kevin: Yeah.
It struck me that their...
It seems like it's
performing as expected to me.
The interesting part of the narrative
to me, so if, if you go back over time,
Bertolini has, um, I think it was Investor
Day, uh, he's talked about how he doesn't
think Oscar should be a one line of
business insurer because if you're in only
one line of business, you are subject to
the vagaries of that line of business.
ACA being a good example recently of,
you know, political headwinds hit it,
and there's not much you can do to, uh,
to, to work through that if there, the
market is structurally impaired, right?
The way you win over time is you diversify
lines of business so that you can
weather the storm when the storm comes.
So a core challenge for Oscar has
always been it is just an ACA business,
and they need to figure that out.
Plus Oscar was the, has been
the attempt for a while.
Um, if you remember back to investor
days, the campaign builder was their big
example of how Plus Oscar's taking off.
Folks are gonna use that.
Various plans and providers are gonna
use that for patient engagement.
That was gonna be their entree
into building this, like, platform
that other plans and providers use.
I don't think it was mentioned once on Q1
earnings, which continues this trend of
that has totally faded to the background.
ICHRA has taken over as the dominant
narrative for, um, Oscar's kinda
second product, if you will.
And it announced, um, this new offering
called Lucy, which I thought was a really
interesting play for them, where they're
essentially building a marketplace for
folks to go on and shop for, for coverage.
Um, and I think it'll be
interesting to keep an eye on.
One of the points they made about why they
launched Lucy, an analyst asked, like,
"What's gonna be the financial impact?
How, like, when are we gonna
start to see the numbers on P&L?"
Et cetera.
Um, and Oscar shared that, uh, they
launched it in part 'cause they're hearing
from large employers who are worried
about the size of their network offering.
So large employers always wanna offer
PPO networks, uh, ICHRA exchange plans,
generally speaking, smaller networks.
Large employers are apparently giving
feedback that they're worried about
network size, and so Bertolini's plan
is to create this marketplace where
if you have a whole bunch of plans
with narrow networks, you can go to
the large employer and be like, "Look,
we actually have a larger network in
aggregate that your employees can now
choose their narrow network from."
Which, in theory, like, I, I, I get
where he's coming from with that.
Yes, that does seem true.
If you get enough narrow networks
on, you can match the large network.
In practice, I don't, I don't know that
that's actually what large employers are,
are saying in their pushback, you know?
So I'll be curious to see what
happens with that, but it doesn't
quite feel like it's, like, a fully
baked idea to me yet, you know?
Martin: As you explain that, it seems like
a little bit of a tough sell if you're
out knocking on the Fortune 500 doors.
Let's talk about LifeStance really
quick before our first guest joins us.
Up 2% today, outperformed and
raised full year guidance.
One of the things that has been
fascinating about the behavioral health
space has been this idea that, you
know, affordability's top of mind.
It's top of mind for everyone
everywhere, and so insurance
dynamics are much more, uh, salient
than they were a little while ago.
Um, anything else stuck
out to you from the call?
Kevin: I thought, uh, uh, I mean, to me,
the two interesting data points that I'm
excited to dig in with, uh, Dan here in
a second, uh, one, their provider growth.
They got some, uh, question from
analysts talking about how they're...
they, they drove provider
growth ahead of expectations.
To me, as we've talked about, provider
growth is great signal for health
of provider-oriented businesses.
So, uh, excited to hear about
that, and then getting back
into M&A, tuck-in acquisitions,
and that strategy for growth.
So excited to have Dan on.
Martin: Yeah.
Let's, uh, let's bring him forward.
So Dan is the chief growth
officer for LifeStance.
Dan, welcome to the show.
Dan: Hey, guys.
How are you?
Martin: Great.
How are you?
Good.
How are you?
Dan: Doing well, thanks.
Martin: For folks who are not familiar
with LifeStance, can you walk us through
the sort of LifeStance model, footprint,
you know, inpatient, outpatient?
Like, what is the, the LifeStance
business as it exists today?
Dan: Yeah, for sure.
First, uh, Kevin, I was looking
today, I think I joined the
community in 2018 maybe.
So, uh-
Martin: Let's go
... Dan: fun to be on here and,
uh- Yeah ... progress and all
that you guys are building.
Um, yeah, so LifeStance, we are the,
uh, largest provider of outpatient
mental health in the country.
Uh, and we are a very
mission-driven organization.
As, you know, all of us, we've
experienced mental health industry
as, as loved ones or as patients,
and it's just too hard today.
And so our goal as a company is really
just to make getting timely access to
high-quality mental health care easier.
Um, to give you a little sense
of scale, uh, we'll see over
a million patients this year.
We have, um, 600 clinics
all across the country.
We have 8,300 employed clinicians
as, as, as part of our company.
And our goal is to offer comprehensive
outpatient mental health.
So whether you're 5 or 95, whether you
have anxiety or treatment-resistant
depression, whether you wanna come, c-
uh, come get care in person or virtual,
we want patients to, when they think of
LifeStance, to think that we can help
them make the progress they want on,
uh, their mental health care journey.
Kevin: Dan, as I think
about growth in Q1, I...
it looked like revenue growth was up
solidly, EBITDA growth was up solidly.
Curious to hear how you think about
the growth algorithm organizationally,
combo of inorganic and organic growth.
I think in one of the Q&A responses,
you guys talked about how, um, you're,
after three years, you're back to
executing on this tuck-in M&A strategy.
You opened up two markets via
acquisitions of practices.
Can you talk about how you think
about that inorganic strategy, how
that relates to the organic strategy,
and, and where you're seeing growth?
Dan: Yeah.
Um, we continue to really feel confident
about, about our organic growth engine.
What's great about our business
is our busin- our business
and our mission are aligned.
Like, when we do what we're supposed
to do and deliver high quality care to
patients, then we attract more patients
and more clinicians, and that flywheel
just ki- kind of keeps happening.
And so we will continue to grow.
You know, we've, we've committed
m- mid-teens organic growth, and
we see no end in sight for that.
Um, but we do see, uh, M&A as
being a helpful lever for us.
And for us, we think about our
tuck-in acquisitions as helping us
enter more communities that need,
um, help and more, you know, high
quality access to mental health care.
And so today we have clinics in 33 states.
We're in most of the major cities,
but there are still, still communities
across the country that we are not in.
And so if there is a high quality practice
that has great reputations and referral
relationships o- on a community level,
um, then we think adding them to our
LifeStance family is, is good business and
good for our patients and the clinicians.
And so that's what, that's what when
we talk about tuck-ins, that's wh-
that's what we talk about, just is
identifying, uh, local clinics that
are delivering great care that we would
like to add to the LifeStance family.
Um, and that's, that's not in replace of
our organic growth, and we will continue
to enter new geographies ourselves just
by, you know, um, uh, doing what we do.
But we think M&A is a
nice complement to that.
Um, you know, there are larger scaled
practices that we continue to think
about and look at too, but just from a
valuation perspective and e- expectation
of those practices, we've had trouble,
more, more trouble making the math work
on those bigger sorts of deals so far.
Martin: On the venture capital side
of the house, it seems like one area
that's been getting a lot of attention
recently is interventional psychiatry.
I noticed that you have, uh, you talk
about this on the website a little bit.
Can you give us the, the LifeStance view
on where this market is going, how you're
sort of evaluating, evaluating that
and, and what, what role that plays in
your sort of your, your growth equation?
Dan: Yeah.
Um, first, when you look
at the outcomes of TMS and
Spravato, they're life changing.
Um, and the stories that we hear
from patients that are on these
th- these therapies is incredibly
motivating, energizing, and make
us wanna, us wanna expand access as
quickly as we can to these therapies.
And so we think it's good medicine.
Um, our clinicians want, want to
provide these therapies and, you
know, from a business standpoint,
we can do it sustainably.
So for us, it's a, it's kind of
a no-brainer on, on an expansion.
And our goal is to make sure that all of
the markets that we operate in, those...
our, our patients have
access to TMS and Spravato.
And so we're just on that path
to kind of our national rollout.
Um, we're a little further on TMS than
we are on Spravato, but, um, just because
we started earlier on, uh, on TMS.
And so, um- Uh, yeah, and, you
know, f- I think payers are
increasingly seeing the value, right?
Like, the, the patients that
qualify for TMS and Spravato, they
are patients that have typically
failed two or more antidepressants.
And so, uh, these are patients that
have had chronic, typically high
acuity, um, symptoms, and th- they
can be, these symptoms can be quite
debilitating to their day-to-day life.
And so the impact, um, of both TMS
and Spravato on, on these patients
is, um, I think a winner, a, a, a win
for all stakeholders in our industry.
Kevin: Dan, it looked like, uh, top line
revenue was up 70 million in the quarter.
GNA was up around 6 million
in the quarter year over year.
Uh, Martin and I, one of our ongoing
topics we are fascinated by is
the adoption of AI and when and
if we can see AI evidencing itself
in the income statement results.
Yeah.
Uh, you guys in the prepared remarks for
the earnings call gave some good examples
of how you're leveraging AI technology
from an operational perspective, but
I'd be curious your reflection on where
we're at in that journey in mental health
market in an organization like LifeStance.
How are you seeing the impact of AI?
Do you feel like it's showing up in
the P&L and that kind of performance?
Um, and where do you
see it going from here?
Dan: Yeah.
So I, I do, I, I do think you're,
you're s- starting to see it.
Um, I think as we all feel, like we're
in the early innings of this thing.
I think we're all trying to figure out
kind of where and how fast and how much
of an impact, um, you know, AI can make.
You know, w- we think about AI in kind of
four different parts of our business, how
we can use AI to, to help our corporate
employees be more efficient and better
at their jobs, how we, how AI too is
how AI can help our kind of our back
office scheduling, intake, revenue cycle,
insurance verification, you know, how,
how we can help that part of the business.
Three is clinicians, and then four,
how AI can help with our patients.
Kevin, you're really leading
into, I think, you know, kind of
one and two, and like f- from-
Yeah ... from that framework.
And I would say for us, the place where
we're seeing the most clear ROI is
around kind of the back office shared
service sort of things, things like
revenue cycle, intake, scheduling.
We are still learning, uh, and we
still, uh, are, are more people than
AI in, in those functions, but we're
definitely, like, on the journey and,
and we're very optimistic about, um,
how AI can help us do our job better
in those areas and do it at lower cost.
And so, um, you know, we've signed
up t- with Wall Street to continue
to expand margins and a, and a piece
of that is, um, how we think AI can
help us be more efficient long term.
Martin: Affordability has been
incredibly top of mind as part of
the general discourse, and I feel
like that's especially true when
it comes to behavioral health.
One of the things we heard on the
earnings call was conversations
about increasing desire for
insurance options versus cash pay.
Mirrors what we're hearing
elsewhere, but I'm curious about,
you know, if you can talk a little
bit about those dynamics in- Yeah
you know, for LifeStance around
cash pay versus in-network and,
and how those conversations
with payers are coming along.
Dan: Yeah.
It's a, it's a super interesting question,
Martin, 'cause if, if you have insurance,
you have mental health coverage.
And so there is a sub-segment of our
population that chooses to do cash
pay despite having insurance benefits.
And so the question is:
Why would you do that?
Why, why would you pay more?
And the answer is is 'cause there's
a belief that you can get a better
service, either you're gonna get
a better clinician or a better
patient experience by going cash pay.
It's no different than doing
a concierge PCP, right?
Like, that is, that is the belief that
you have if you choose to do cash pay.
And so our belief is that we wanna make
sure that your insurance benefit gives
you the experience that you would go
pay cash for, because everybody should
have access to a high-grade consumer
experience with a great clinician.
And so, um, our plan is to continue
to be a insurance-driven business.
Um, and we wanna make sure that
we're giving a kind of cash
pay experience to everybody.
Uh, and that if we can do that,
then nobody will choose to pay
cash because there's no reason to.
Um, and, and for us, you know, you do see,
I mean, Talkspace went on this journey a
couple years ago, BetterHelp is on this
journey now, of companies going back into
in-network, because that's where all the--
I think that's where the momentum is.
As a, as a patient, you'd prefer to use
your mental health benefit, especially
when times are tough and you, you know,
you don't have infinite spending power.
You wanna use your insurance benefits.
And so, uh, we think that's
a logical place to invest.
Um, and we just wanna keeping, keep
making the experience better and better
for our patients and the clinicians.
Kevin: Dan, I wanted to touch on
the provider growth, um, numbers.
You talked about, uh, I think
it was you have 80-- y- you had
8,000 going into the quarter.
You grew by 300 to get
to 8,300, uh, in total.
Um, a mental model I have is that, you
know, when, when care delivery orgs
are growing providers like that, it
is a good sign of the health of those
organizations that they're growing.
Um- Can you talk to me a little bit
about what the, the dynamics inside
the organization are like for bringing
on providers, um, how you think
about consistency of that provider
experience across, across the country
as an organization like yours and
growing that and scaling that up?
Dan: Yeah.
Um, you know, we are nothing
without our clinicians.
Our business starts and ends
with clinicians providing
high quality care, and so it's
something we think about often.
And for us, we want to deliver
a consistent experience, whether
you're in Maine or San Diego
or Florida or Washington.
And so for us, you know, a car- a
core component of that is we have a
dedicated employee W2 clinician team, um,
because we want them to be part of the
Lifesense ecosystem, part of our culture.
Um, you know, we've, we've, we do a lot
of training and care pathways and, you
know, we have a culture inside our offices
and our clinics in which we care for.
And so for us, it's how do we create
an environment that attracts and
retains high quality clinicians?
And for us, that means giving them the
tools that they need to focus on the job
and the thing that they love most and
kind of eliminate everything else, right?
Like, our goal is to fill up their
schedules with the patients they want
to serve, take care of all the back
office stuff that they don't want
to, uh, deal with, and just allow
them to focus on high quality care.
Um, you know, it's, you know,
it's things like even offering
TMS and Spravato, right?
Offering, offering options for, for our
clinicians to grow and to learn and to
get into new and different ways to care
for patients and more like the innovative
side of, uh, mental health we know is
also really motivating for clinicians.
And so, um, there, there's not a single
answer to that, Kevin, but we do think
a lot about how do we become a place to
work that our clinicians are proud to
be a part of, and that they feel like
they can grow in their career, um, and
that they can do what they want to do
the most, which is care for patients.
Martin: We're coming up on the end of
time, so I think my last question for
you, unless Kevin you want to jump
in quick, is as you think about, um,
there's been a, like value-based care
has largely ignored behavioral health.
It's like hard to measure,
hard to figure out.
Mm-hmm.
Are you hearing any appetite or seeing
any interest from ACOs or employer
plans on starting to put some sort of
value-based guidelines around any of this?
Or are we still, I guess, is the
measurement problem- Yeah ... still too
Dan: hard?
It's hard.
You know, I was at, uh, the Behavioral
Business Value Conference last year.
It was all about value-based care and
how do we bring value-based care to
be- behavioral health, and I spoke
at that conference too, and it's...
I, I left thinking that we
were still in the early days.
You know, we are, we're doing baby
steps with a lot of payers, uh, but it's
still around the stepping stones, right?
Access metrics, uh, PHQ and GAD metrics,
and I think we're, we're a few steps
away from being truly at the total cost
of care of where, of what we, you know,
all think is the holy grail, but...
And so we're doing all the things to
prepare for that step, but, uh, in our
experience, payers aren't really ready.
The place that I do see a, a little bit
coming to fruition is, one of the parts of
business that we don't talk about as much,
uh, Martin, is our referral partnerships
with kind of the broader ecosystem, and
we literally have thousands of partners
across the ecosystem where we partner
to provide mental health to the physical
health journey, whether that can be a
primary care office, that can be a health
system broadly, that could be a care
navigation company, a value-based care
company, um, at-risk primary care groups.
Like, we have thousands of these partners
that we provide mental health to and,
um, a lot of those partners are farther
along the value-based care journey than
we are in the mental healthcare space.
And by partnering with them to provide
timely access to high-quality mental
healthcare that is metrics-driven and
outcomes-driven, we help them achieve
the metrics that they're desiring.
And so even though we ourselves
aren't necessarily contractually
obligated to VBC, we are partnering
with other players who are, and that
combination can be really powerful.
Martin: We're at time.
Kevin, do you wanna sneak in anything
else, or should we ca- leave it there?
Let's leave it there.
Dan, appreciate the time.
Dan.
Kevin: Looking forward to
Dan: continuing- Thanks,
Martin: guys.
It
Kevin: was
Martin: fun ... the conversation.
Thanks so
Dan: much.
Martin: Appreciate it.
I think that question that you were
getting at on this employed, you know,
as, as you think about the health of
an organization, being able to bring
providers in is a really great metric.
And I think if I was thinking about
a, an organization that, you know,
I wanted to track or wanted to, to
go to, the fact that they're able to
consistently grow their provider in what
is, like, a, I think a pretty competitive
market is my sense for behavioral
health, is a, is a good indicator
Kevin: I totally agree.
Like, I am a big fan of the star model
for organizational design theory, which
talks about, um, the interconnected
parts of, of designing an org.
And, like, I think if you think
about a care delivery org, what
is the core component of it?
It is the person delivering care, and
I know there's a lot of conversation
right now about, like, whether technology
delivers care, but at the end of the
day, it is, it is still a person perhaps
augmented by technology in my mind.
And so there's no better
indicator of the number of people.
And now, yes, like we've seen the games
in the industry over the last several
years of, you know, if you're not doing
that number via W-2 or you're doing too
many acquisitions, which I think is the
thing to try to unpack and understand in
these orgs, but if you're growing that
number thoughtfully and doing it right and
thinking about the clinician experience,
I, I think that's a really positive sign.
So it's cool to see.
Martin: This is one of the things we
talked about when UHS announced the
acquisition of Talkspace is that all
of Talkspace's partners are 1099.
They're contractors.
Mm-hmm.
And there's benefits and
drawbacks to both model.
I don't think there's anything sort of
inherently good or bad about the way
you design your employment relationship,
but a, in a competitive market like
behavioral health is, like if you, your
providers know that they can go out and
get cash payments, not have to deal with
insurance for 150, 160, 200 bucks an
hour, that them coming to work for you
is a real sort of vote of confidence.
Kevin: Mm-hmm.
For sure.
Yep.
I think this cash pay insurance dynamic
is really interesting to keep an eye on.
Like, it's...
I've been learning a lot about that in
the mental health behavioral space, and
it makes a ton of sense to me what Dan
is talking about in terms of that, the,
you know, as he described it, the cash
pay experience with an insurance product.
Logically, yeah, that should work, right?
Like to his point, it is, it is
covered under your insurance.
You don't need to go pay out of
pocket for access to these things.
And so if you can get to, uh, the
sense that experience access quality
is on par with what you're paying
for from a cash perspective, it seems
like a no-brainer to me, you know?
Martin: Yeah.
It does, I think, raise the question.
So there's these questions
about provider quality.
There is, I think, a sense from some
people in the market that there's
a degree of adverse selection.
So the best providers end up doing cash
pay, and then you're stuck with the
people who can't, uh, can't get cash pay.
Is
Kevin: the theory because they can pay...
Like, they get...
They can make more?
Martin: Yeah.
Kevin: Yeah.
Martin: Yeah.
So there, the, the sort of going rate in
some markets is like 200 or $250 an hour
cash, and- Providers will be, you know,
have a wait list at, at that price point.
And so why deal with insurance?
I think the LifeStance model is
fascinating because they're saying,
"We'll deal with insurance."
Kevin: Yeah.
Martin: And you might end up seeing
more patients, but, uh, I don't know.
There's like...
I think as you think about...
It'd be fascinating to talk
to some doctors or some, some
psychiatrists who are evaluating this.
The other thing I wanna hit on quickly
is this interventional psychiatry stuff.
The, it, it, it feels funny to call
it new, 'cause it's been around for
a decade or so, TMS and Spravato.
But the unlock here has really
been insurance companies
starting to pay for it.
Mm-hmm.
And for a really long time, it was
just like payers were like, "I...
You wanna do magnets on someone's head?
That sounds expensive."
Uh, but they're starting to pay for it.
It really works, and an organization like
LifeStance feels very well-positioned to
be able to finance the capital expenditure
build-out of these expensive machines.
Spravato, you have to set up a pharmacy.
I mean, it's like, it
is, it is not trivial.
And so, uh, that seems like a,
a great angle for, for Spravato.
But our next guest is here.
So we are welcoming
Patrick from Belong Health.
Bel- uh, Patrick, how are you today?
Patrick: I'm doing great.
Thank you guys for having me.
Martin: Uh, Patrick, is your
LinkedIn correct that you're in
the Greater Philadelphia Area?
Patrick: I am.
I'm in the suburbs of Philly.
Martin: I, uh, my wife is from
the suburbs of Philly and has
converted me into a, a big Wawa fan.
Patrick: Yeah, Wawa and all things, uh,
Eagles, and yeah, it's a, it's a great...
I'm, I'm a transplant here, but, but
we've, we've called it home for the
past, uh, 13 years, so we love it.
Martin: The Eagles are a bit
of a sensitive subject for
Kevin, who's a Vikings fan.
Kevin: We've, we've, we've had
some tough experiences against you
guys, but nonetheless, here we are.
Martin: So- Yeah.
Patrick- Yeah.
Kevin, you kick us off.
Kevin: Yeah.
I, Patrick, thanks for joining us today.
Excited to chat Belong.
Curious to hear a little more on the
model, how you think about planning
or partnering with plans, partners,
uh, and ACOs, uh, organizationally.
Patrick: Yeah.
So, you know, my background, I, I
started in the early 2000s actually
working, uh, for a company called
HealthSpring, which became a, a, a fairly
large operator of regional Medicare
Advantage plans across the country.
And so fast-forward to, uh, late 2020,
and we were thinking about starting
a company and reflecting back on
what, what I was operating individual
markets as a regional, uh, president
or a general manager, thinking about
the challenges that I had in standing
up, um, special needs plans as part of
the Medicare Advantage, um, offering.
And we really believe that to
compete at a, at a community regional
level, um, you have to have a full
suite of, of Medicare products.
And so, um, I, I knew from experience
that there were many great companies
that were offering, um, you know, very
targeted point solutions to health
plans, but there wasn't, um, a company
out there that was offering a platform
that a health plan could partner with to
stand up, um, a special needs product.
And so we launched Belong in
early 2021, uh, to do just that.
We had a, a initial very large
focus on dual special needs and
now, um, as well doing a lot of
work in chronic, uh, special needs.
So you can think of us as a, as a,
uh, a complement to what a health plan
already does well, and we try to then
help them either fill gaps where they
have it or, or, you know, differentiate
in, in, in the, the real integrated
care models that are needed to address
the, uh, special needs populations.
Martin: I was just gonna say, I'm
gonna ask a two-part question, but
they're a little bit unrelated.
So the first question is, what is
the, the sort of typical profile of a
plan that you're, you're working with?
Patrick: Yeah.
So, um, we...
A- again, based on my own personal
experience, in, in many cases, a community
health plan that has been in a community
for 30, 40, 50 years, they probably
started out initially, uh, providing,
um, employer, uh, sponsored healthcare of
some sort, and then they might have over
time, um, gotten into Medicare Advantage,
um, maybe via an acquisition, and then
they're probably starting to either think
about, uh, uh, Medicaid or, or maybe they,
they got into the Medicaid space as well.
And so the, the typical, uh, partner
for Belong i- is a, is a, a health plan
that, again, probably single region
or single community, um, and trying
to figure out how do they take all the
great work they do in being a real lean,
efficient, um, you know, great branded,
uh, lots of trust in the community, but
then how do they bring some of these
more sophisticated care models to special
needs populations and even general
Medicare Advantage populations they
don't have as much experience servicing.
Martin: And can you walk
through those different flavors
of, of special needs plans?
I think, you know, folks are-
Broadly aware that they exist, but
what's the, the difference between
a D-SNP and a C-SNP and an I-SNP?
Yeah.
Um, and then on the ACO piece, like
how do you, uh, work with MSSP players?
Patrick: Yeah.
So, you know, traditionally Medicare
has offered, um, a number of different
special needs, uh, components that would
go into the Medicare Advantage program.
So they could be additional
benefit offerings that a Medicare
Advantage plan would offer alongside
a, a general enrollment MA.
And so the largest is the dual
special needs, and that's for, uh,
you know, beneficiaries who are dually
eligible for Medicare and Medicaid.
And that has seen, uh, a lot of
growth since the early 2000s and,
and has like the lion's share of
special needs membership today.
The, the next largest segment is what
is, uh, called a chronic special needs
plan, and that has a number of different
chronic conditions that would qualify.
Um, you know, things that people are
aware of like, um, you know, uh, chronic,
um, kidney disease or, uh, diabetes,
but then it also offers the chance
to bundle a few of these together.
And so what's become very, uh, prominent
in the marketplace really over the last
two to three years are, um, these comorbid
bundles that allow you to, to really
treat a number of different conditions.
And then you mentioned the, the
institutional special needs or I-SNP
tends to be focused around, um, a
facility like a skilled nursing facility.
Those pro- that probably has the smallest,
um, uh, you know, penetration right now
a- across the country, but lots of focus
today in, uh, chronic special needs,
which has been the highest, uh, growth
engine over the past couple of years,
and then, uh, dual special needs as well.
And then for Belong, the way that it
relates to ACOs with Belong is that part
of our, um, model and how we work with
health plans is we also take a, a, a
leading role in going out and, and working
to, uh, uh, to enable the primary care
network within that community to enable
that commu- that, that network to work
more seamlessly with the health plan.
So again, one of the ways that we
differentiate is we try to help, um, form
a deeper relationship between the health
plan and the primary care community.
And so in doing that, we have been
using, um, ACO structures, whether
it be MSSP or others, um, as a way to
kind of get started or even broaden
the, um, percentage of the physicians'
panel size that we work with.
Kevin: Patrick, as I think about C-SNP
market growth over the past couple
years, that, that seems to be one of
the kind of dominant narratives in the
Medicare Advantage market 2026, right?
On the whole market, not a
ton of growth, but C-SNP is a
pocket seeing a lot of interest.
In my head, part of that is
because- Of the, the P&L dynamics.
As I understand it, C-SNP plans look
pretty different than traditional MA
plans, where if you're getting twelve
hundred bucks PMPM in an MA plan, C-SNP
plans, you might be getting two X, three
X, or more of that, and that allows
you to better manage that condition.
Could you...
I-am I, am I generally
right in that understanding?
Could you sketch for me, like, what
is the, what does the C-SNP plan
look like in Enable financially?
Why are we seeing so much interest
from plans in getting into C-SNPs?
Patrick: Yeah.
So I think the, the first part of your
question probably relates back to what
has been a, a really challenging, call it,
three to four years in the Medicare space.
It's been one of the more,
um, I think challenging times
that I've seen in my career.
And so what that really means is that
there have been utilization upticks, and
then there have been reimbursement changes
specifically re-related to the risk
adjustment model in Medicare Advantage.
And those two things have combined to
just make it more and more difficult
if you're an insurance company
and you're maybe, maybe have a PPO
offering in Medicare Advantage.
It's just very difficult to get
the accurate, uh, risk capture and
then, um, the engagement level at
the beneficiary and provider, uh,
side to manage medical utilization.
And so when you think about then a,
a dual special needs or a chronic
special needs, the, I think the biggest
benefits of those is that it allows you
as a health plan to really tailor the
offering to meet the, the needs of the,
of the members that you're going after.
And then likewise, you can provide more
tools, uh, enhanced benefits and, and
different things like certain models
of care that work with the physician
community to then help, um, wrap around
and, and help them, um, you know, do a
better job of managing the risk profile.
And so to your point, Kevin, we've
always felt like if you're doing the
right thing clinically, the, the, the
risk adjustment or, or, or the, um,
the, the, you know, the revenue side of
things, it, it, it will match, uh, the
clinical work that you're doing, and
that's be-becoming all, all the more
important because of the changes that have
been made in the risk adjustment model.
So that's how you start to see, um, the, I
guess the, uh, the, the, the differential
in terms of a higher reimbursement.
It would...
It, it's really just an indication that
you're, you're able to more accurately
capture what's going on with that patient.
Specifically in the case of C-SNP,
where the patient is, is actively,
um, opting in to a health plan that
works with their chronic conditions,
they're much more, um, active in terms
of going to see primary care and then
a-and participating with the health
plan in terms of care, um, coordination
and care management activities.
Martin: In hearing you describe, you
know, who you're partnering with, one
of the things we've been tracking pretty
closely is the financial challenges for
the regional nonprofit health plans.
Yeah.
It's been a rough year for all
insurance companies, but scale tends
to be pretty helpful in these things.
Yeah.
At the same time, we're hearing a,
like, special needs plans is a huge
focus area from the big nationals.
Yeah.
And we, you know, the, the McKinsey
Profit Pools report, they're saying
most of the profits in the industry
are gonna come from special needs
plans over the next couple years.
Um, I'm curious what you're seeing on the
ground as you're going out and talking
to plans on appetite for investing in,
in special needs plans and how they're
sort of thinking about their Medicaid
and MA plans as part of, you know, like,
bringing them together, integrating them,
and, and working with someone like you.
Patrick: Yeah.
So it really...
It, it probably is, um, from a strategy
perspective, it's very different when
you think about w- you know, what
you're hearing publicly, um, through
the, the publicly traded, you know,
nationals versus what's happening
in the, the, you know, the, the
not-for-profit, um, regional plans.
And so, uh, from, from a national's
perspective, um, they can, you know,
they can take kind of a portfolio
view of these product offerings.
And so in many cases, I think they're
using C-SNP as an example, as a way
to really drive, um, you know, a
differentiated benefit offering in a
set of zip codes or counties and then
try to use that to grow membership,
which has been, um, you know, a, a
very successful approach for them
over the past, um, couple of years.
And then further to your point, because
of the, the, the mix of, um, of, of
risk and, and the care model work that
we talked about previously, they can,
they can probably generate a higher
margin on that than just a traditional,
uh, general enrollment MA product.
On the, on the flip side of this,
though, if you think about the
mandate or really the promise that
a community health plan makes to
the community that they're in, they,
they can't take a portfolio approach.
I mean, they're fully
rooted in that community.
They're not going anywhere.
And so- It has been a really challenging
time for them, as you alluded to,
over the past couple of years because
they've seen a lot of pressure, um,
not only in their Medicare business,
but they've seen pressure across
even their commercial business.
And, and so there might be an
instinct to say, "Well, let's go,
let's go more narrow around what
we offer and try to stem losses."
But the conversation that we have with
these health plan executives is that
how, how do you really fulfill your
promise to the community where, you
know, you, you have been there, in many
cases 50 or more years in the community,
and you're, you're, you're telling the
community, "Okay, well, we're gonna be
there for certain lines of business,
but we're not going to be there, um,
for, for Medicare lines of business."
And I think that's a challenging,
um, approach to take.
And so what, what we try to do is work
with them to say, "Okay, how do you
turn this into a sustainable, you know,
profitable, uh, line of business?"
And then, you know, to your last, uh,
question about Medicaid, in the states
that are very much pushing for full
integration of Medicare and Medicaid, um,
it's, it's, it's really not a question of
if, it's just, like, how quickly can you
get to a sustainable structure that...
And I think every state has had a
slightly different, um, timeframe there.
But we, we again fully believe that
if you're a community health plan,
you know, operating, um, in a single
community or a single region, that it
strategically is very important for
you to have that full suite of, um,
of offerings for, for the community.
Kevin: Patrick, one of the things that
I'm curious about in C-SNP plans, you
mentioned this on the website, you talk
about product sales and marketing, driving
year-round awareness on behalf of plans.
The enrollment cycle seems different
for C-SNPs given that year-round-
Patrick: Yeah
... Kevin: uh, enrollment process.
We've also been hearing a lot about the
dislocation in the broker market the last
few years and some of the issues- Yeah
that has caused.
I, I'd be interested to hear your
perspective on- How are you, how
are you thinking about relationships
with brokers in the market?
Because it seems like there's
more awareness that needs to
happen and people coming into
C-SNP plans, uh, in particular.
How does that work?
How are you thinking about it?
How are you helping plans with that
year-round, uh, enrollment cycle?
Patrick: Yeah, no, great question.
So again, I think it, it, it's, um, there,
there are different approaches, again,
based on the type of plan that you are.
And so I think the, the nationals
are able to take a, an approach
that is probably the one that, that,
that gets written about most, um, in
the, in the, in the, in the press.
But, but at a local level, you
are trying to build, again, what's
going to be really a, a multi-decade
relationship with your broker community.
And, um, knowing that there are going
to be times when you might not be the
most, um, competitively priced offering
or, or your benefits might not be,
um, you know, as good as a national
that's offering a plan in the space.
You're trying to develop this, this,
this very much, this holistic approach
with the, with the broker community,
and then with any, you know, kind
of independent or captive, um,
distribution partners that you have.
And, and really working with them
to say, "Okay, we want to give you
options to work with us, not only
during, you know, open enrollment,
but also all throughout the year."
And so a D-SNP is a way to do that.
A C-SNP is also a way to do that.
But then most importantly with those
products is saying, you know, "Hey,
you, you're going to have a relationship
with somebody in the community as
a broker that probably starts, uh,
even before they turn 65 years old."
And then you're gonna try to nurture
that relationship all throughout,
um, the, the, the period that that
person ages as a Medicare eligible.
And so you want to be able, um, again,
to give them the confidence that they can
trust the offering that you're putting
out on the table as, as a community plan.
And so we think with the C-SNP
specifically, a lot of that trust just
gets down to the most active and highly
engaged primary care community that's
gonna be actively wanting to work with
the, with the patient once they enroll.
And then the, the, the, the most
comprehensive set of, um, you
know, supplemental benefits to help
address the, the, the chronic needs.
And then probably last is just knowing
that they have, um, a, you know, a
brand and a community health plan that
they can trust and who's going to kind
of be there for, for them, you know,
year in and year out, and they're not
gonna have to go shopping, um, you know,
one or two years after making a health
plan change, which is sometimes what
happens when you have maybe a national
come in for a few years, and then
they, they pull out a few years later.
Martin: Patrick, we are at time.
Thank you so much for
your time this morning.
We really appreciate it.
Where can folks learn more about Belong
Health, um, if they are, they're curious?
Patrick: Yeah, definitely,
um, on our website, which is,
you know, belong-health.com,
and then, um, can, can find contact
information there, and we would love
to talk, you know, um, directly and,
and one-on-one with anyone who's
interested in, in working with us.
Martin: Thanks so much for your time.
Really appreciated the overview.
Patrick: Yeah.
Thank you.
Take care.
Kevin: Yep.
See ya.
Martin: On from SNPs to hospital,
the hospital affordability
wars, did you see the...
I know you did, 'cause I read about
it in your, in the health tech.
But did you see the, uh, the op-ed
from Zach Cooper in The New York Times?
Kevin: I did see the, the, uh, the op-ed
from Zach Cooper in The New York Times.
I, I thought it was a, a pretty well-done
piece articulating the it's the prices,
stupid argument that I have, uh, heard
now for quite some time in healthcare.
And I also saw, which I also know you
saw, but I'll tee it back up to you,
uh, the AHA's response, which they
did not seem entirely pleased by, by
the argument as it was articulated
this time around, did they, Martin?
Martin: Yeah.
I, s- this conversation is, you know...
Okay.
So first of all, I thought Zach
Cooper, he's the director of the
Yale Affordability Lab, I thought
his piece was, was pretty thoughtful.
He says, you know, hospitals are
more expensive than peer countries,
which, yes, we all, we all know that.
I don't think anyone can argue with that.
Hospital prices have been the leading
driver of increasing premiums,
'cause they've gone up faster, uh,
than inflation and twice as fast as
prescription drugs and doctor's visits.
And what he says is,
like, uh, fundamentally an
argument about market power.
He says, market power, hospitals have,
uh, like very strong market power.
Some of that's for good reasons,
like hospitals often started off as
community nonprofits, and then some
of them bad reasons, like hospitals...
And, and then, you know, they
sort of grow in this community
and, and no one enters the market.
Some of it's bad reasons.
For instance, some hospitals are
very aggressive about poaching
their competitors' doctors in
the most profitable lines of
business and making sure that their
competitors wither on the vine.
And so it, it, it's this
hard problem, right?
The thing I find incredibly frustrating
about the, the AHA response, and it's
ironic because, like, what else were they
gonna say, is that the, the, the response
just, like, lacks- A lot of the thoughtful
nuance that, that Zach Cooper gives.
Like- Yeah ... it is not useful to
talk about hospitals in aggregate.
If you talk about a hospital,
you are talking roughly about...
Like, it is sufficiently diverse
that some hospitals can be negative
operating margins and on the brink of
closure and need every single dollar
that we could possibly give them
because they're operating in a tough
market, and et cetera, et cetera.
And other hospitals are hedge
funds that happen to operate a, uh,
uh, operate a care delivery wing.
I mean- Yeah ... m- m- I don't know.
So okay.
So the, the AHA says, you know, their,
their three points were, number one,
Zach treats hospital prices as the
driver, and there's quotes around
this, of high healthcare costs, and
ignores that hospitals are price takers.
This feels a little rude, but
I, I, I, I pulled up, and I...
The graphic I have here is
hospital, uh, market share info
for, uh, f- for hospitals in 2024.
In, uh, in roughly 19% of metropolitan
regions, there's one hospital with 100...
You know, 20% one hospital, uh,
with 100% market share, and then
another 27% where there's two.
Hospital markets are highly,
highly, highly concentrated.
So okay, they're sometimes price
takers, and also sometimes they
are, uh, price setters, right?
Like, that's just, that's just true.
Kevin: For sure.
Yeah.
I, I mean, it is entirely true.
It's...
Listen, a- as I look through...
So that was the first argument.
Their second argument was it excludes
commercial insurer behavior, and
it's basically like, well, insurers
are trying to make money too.
And I, I mean, even in the piece, you
can see kind of it jumping back and
forth between Medicare and Medicaid
only pays us 83 cents on the dollar,
which is its own argument, right, of,
like, what's actually happening there.
Um, and then they jump from, "Well, the
government underpays us," to commercial
insurance is dominated by these large,
vertically integrated pri- private,
um, uh, well, publicly held payers
for the large part, and they have
leverage against the hospitals, right?
Which, I mean, factually, yes.
Like, there is the BUCA plans who dominate
the commercial insurance market, right?
But it, to me, I, uh, similarly
I struggle with the AHA argument,
where it's just these, the...
It's, it feels like a rhetorical exercise
that is not actually digging into the
data in the same way Cooper's piece
does, and in many ways just- It plays
into the argument that he's making.
Like Cooper in the piece acknowledges the
fact that it is really hard to talk about
the hospital issues, and the AHA even
calls this out because of the role that
hospitals play in their local community
doing good for patients, um, but also the
importance that they play politically.
And you can see the AHA doing
what it does here, which is...
Uh, like my macro takeaway from reading
the back and forth this week is it seems
like a signal the AHA is worried about
this conversation right now, right?
Like, we've got the DOJ, um, going
after a couple hospitals in terms of
their market power and how they're
doing anti-tiering and steering,
um, from a competition perspective.
We've got folks like Zach Cooper
posting in The New York Times, and
to me, it's indicative th- with the
AHA coming out this strongly back at
Zach Cooper, they're worried about
it, which I think is an interesting
reflection at this moment in time.
Um, because clearly they are, they,
they are fighting back, right?
Martin: You're fond of saying
scale wins in healthcare, and
so much of this conversation is
rooted in the fact that scale wins.
And so the two sides of the negotiating
table very rationally decide-
Yeah ... that they're going to try to
get as much scale and concentration
in a given market, and then we end up
with these hyper-concentrated markets
where there's, you know, one and a half
insurance companies and one and a half
hospitals negotiating with each other,
and it, it's a bit of a stalemate.
It's, it's interesting to think
about how you might be able
to defeat that because a...
There's a story out of Missouri
basically where a Missouri MU Health
System was, was basically going to the
state legislator asking for permission
to, uh, get an antitrust waiver.
Like, "No, uh, we can do as
many acquisitions as we want."
And their argument for that was like,
"Look, we think a lot of rural health,
like rural health systems are gonna
go out of business, and we don't wanna
delay our rescue of those plans by
having, like, having to get tied up in
these, these antitrust conversations."
And yeah, it's like the...
A, a scaled health system is probably
a better owner for a rural community
than a rural hospital trying to
just, you know, g- go its own.
But the counties on the list that
they were asking permission for also
included counties where their competitors
are very, very large and active.
And so you're like, w- what
are we trying to do here?
And- For sure ... I, I like this
story because a, a monopoly in
a region is really useful if
your, the economics are bad.
Like, you don't wanna fight- another
hospital if the economics just don't work.
Like, it needs, probably
needs to be a monopoly.
But in a market that should
be competitive, you really
want the competition.
Kevin: Yeah.
I mean, look no further than my local
market, uh, recent dynamics, right?
Where, um, I mean, the Minneapolis
healthcare market has been challenged
in a whole bunch of ways recently, but
HCMC, um, the safety net hospital in
town, has had a ton of financial issues.
There's been a lot of conversation
about what the state needs to do
potentially to support them and, and
essentially bail that organization out.
And then you've got North Memorial,
which also, um, has a level one trauma
center, also seeing a lot of government
pay patients, and also in serious
financial, um, distress, to the point
where, I don't know if you caught
this in the, in the news coverage
of, uh, Sanford North Memorial and
their, so their planned merger this,
um, that was announced last week.
Uh, North Memorial reached out
to 22 different organizations
as potential merger partners.
Sanford wasn't even on that list, Martin.
So to me it's like, like it isn't...
Like, imagine you're the North
Memorial strategy person going down
the list of like, okay, we've been
pretty public that we need a bailout.
We are losing a lot of money.
We are going down a list of all of
the organizations we can think of,
22 of them, and none of them are
interested or can make a deal work.
And so we've gotta go to Sanford,
which has been trying to get into
the Minneapolis market for forever.
North Memorial certainly knows that
but isn't on their original list, and
that's who gets the deal done because
Sanford wants to get into the market.
And you can im- you can imagine the
launching pad that they can, um, see a
path to if they can turn that around.
And, uh, uh, to your point
earlier on the benefits of
scale, it's, it's there, right?
I don't know.
Martin: Yeah.
I, I, I think it's an interesting
question for Minnesota Attorney General
Keith Ellison on what you do with this.
Because-
Kevin: For sure
... Martin: HCMC, the, the sort
of the, the scale of the
bailout is quite large, right?
Mm-hmm.
Sanford is probably the next in line
if this merger doesn't go through.
I haven't spent a ton of time with
the financials, but that's like
generally the way things go if you're,
one of your safety net hospitals
is under financial pressure and
the other safety net hospital, with
quotes, uh, got said no to 22 times,
then They're probably next in line.
And it, it echoes a little bit the
sort of, uh, proposed JetBlue-Spirit
tie-up from, from last year, where
it was a, I think, a tough call.
The FTC said, "We, we don't support
this," and, uh, the judge, you
know, if you go back and read the
reporting on this, the judge, like,
really agonized over this decision.
And then it turns out that, like, yes,
it's, like, actually way worse for
competitive markets and consumer choice
because now Spirit is, is, is done.
Kevin: So are the hospital leaders the
Spirit leaders of this scenario, Martin?
Martin: I think so.
I think so.
And Keith Ellison is the, the
sort of stand-in for the FTC.
I...
It is a hard question, and I don't
know that there is any, any sort of
right answer, but it is clear that
no matter what you choose, people
are going to be very critical about
it, uh, in, in a couple of years.
Kevin: Yep.
What everybody's gonna love is their sales
tax increasing to pay for the losses of
the safety net hospitals in the region.
Martin: A, a sort of fun game is
figuring out, uh, and I say fun in, in
apostrophes, is, like, how we're gonna
finance these, these safety net hospitals.
And historically, we did,
like, provider taxes.
That's kind of going away with OBVA.
There's the 340B stuff, so there was
a, uh, an op-ed in The Wall Street
Journal talking about the 340B scam.
That's another- The Wall Street
Kevin: Journal editorial board does not
like 340B at the moment, apparently.
Martin: Yeah.
I, I said this in the Slack,
but, like, I find 3- the policy
design of 340B pretty offensive.
Like, if you wanna subsidize hospitals,
you should just subsidize hospitals.
You shouldn't, like, do a
backdoor tax on pharma revenue.
Like, just tax pharma and use
it to subsidize hospitals.
But, um, yeah, it's like the,
the financing mechanisms, like,
I think where it lands is a, a
sales tax hike for, for the good
people of, uh, uh, Hennepin County.
Kevin: Yep.
Martin: So, uh, our next guest, Sean
and Emre, are VCs at early-stage
health-focused venture firm Virtue,
and they recently wrote a hypothesis
about a new actuarial infrastructure
layer which is emerging, and I'm
gonna bring them forward now.
Hey.
Kevin: Sean.
Hey, guys.
Emre.
Martin: How's
Kevin: it going?
Sean: Hey, guys.
How are you?
Kevin: Good.
How are you guys doing?
Sean: Doing well.
Doing well.
And you?
Kevin: No complaints.
Excited to dig into the ac-
actuarial infrastructure layer, guys.
Sean: Pretty, pretty, pretty sexy stuff.
Kevin: Would, would be very curious to
hear, uh, you know, the, but the behind
the scenes of developing the thesis.
Um, tell me how you guys
are looking at the space.
What led to the report?
Sure.
Um, key takeaways from your
perspective from the report for
folks who haven't fully dug in yet.
Sean: Yeah, yeah.
And maybe, uh, maybe just
quickly taking a step back.
So Emmet and I, uh, represent, uh, Virtue.
Uh, we are both a stage-focused,
early stage pre-seed, as well as
sector-focused healthcare, uh, uh, firm.
About five years old,
125, uh, under management.
Uh, we're typically first money into,
you know, the vast majority of our teams.
Uh, and currently, uh,
investment of our second fund.
Uh, and so, um, I would say, you know,
we're constantly sort of, you know,
building, uh, internally and pressure
testing, you know, various, uh, investment
theses that we can then go, uh, be able
to invest, uh, behind, uh, in market.
And, uh, we've been doing, uh,
we've been doing that for the
better part of the last five years.
Uh, I think we've done a, a somewhat
subpar job over the last couple of years
in terms of actually, you know, doing
anything in the form- Yeah ... of, you
know, marketing and brand development.
So starting to share, uh, you know,
maybe, um, you know, starting to
share some more views of the, of the
world and where we think, uh, you
know, the healthcare market is moving.
And so, um, one of the more recent
ones was this, um, you know,
underwriting, uh, um, piece.
Uh, new actuarial, actuarial
infrastructure layer is emerging.
Um, where the basic, you know,
simple thesis is that, uh, you know,
most healthcare risk, if not all,
is either, you know, mispriced or
unpriced, uh, just about everywhere.
Uh, and the incumbents themselves,
uh, structurally cannot fix, uh, these
problems, and it's not necessarily at
all because they lack the, the, the
technology, uh, and/or, you know, just
general technical capability, but it's,
um, simply due to the fact that, like,
their, uh, business models depend on
this, um, you know, mispricing or,
or lack, you know, o- o- of pricing.
And so, um, we've been, uh, investing
behind this theme over the better
part of the last couple years.
We're starting to see the need, uh,
for the ability to, uh, underwrite, uh,
uh, for different types of healthcare
risks with a high degree of precision,
uh, increasingly, um, important.
Um, and, um, yeah, so, uh, happy to- Yeah
you know, happy to sort of
unpack that, uh, a bit more so.
But, you know, companies that can
be able to quote a number, bear the
risk, stand behind their math, uh,
you know, that's where we see, um,
uh, real moats, uh, you know, today.
Um, where we see, you know, increasing
margin, um, across the bar- broader
sort of healthcare, uh, you know, sector
and landscape, uh, migrating towards.
Emre: Yeah.
Yeah.
And, and I'd add to, uh, to your
question, Kevin, I think there's Two
fundamental reasons in thinking behind
this that was really instigated by work
with some of our portfolio companies-
Yep ... namely RightWise, which we,
you know, talk about in the pharmacy
space as a whole, um, throughout that.
But yeah, the first is
we talk about risk a ton.
Um, you guys have done a great job
talking about risk adjustment, uh,
in the scheme of Medicare Advantage.
But fundamentally when we're talking
about healthcare, whether that is risk
adjustment, whether that's site of care
arbitrage, whether that's pharmacy, like
we wanna understand risk, predict, predict
that risk and tie it to an outcome.
And so with RightWise, with that
experience, kind of broadened our
view a little bit more, uh, of how we
think about underwriting, how we think
about this actuarial layer, uh, and
what that means, which we'll get into.
The second, which everyone's
talking about is really around
AI and like what's defensible.
So you see in there as well, we kind of go
through the simplified stack that we, we
lay out with underwriting on the bottom.
And so o- o- on the first, that's what I'd
mentioned, Kevin, as we, as we get into it
a little more specifically, like our, our
aperture and view of how we think about
risk is purposely broad as we go through.
Um, and then we lay out that
simple kind of three layer stack.
The first piece of that
stack being dashboards.
Think all the BI and business
intelligence, uh, that we are used to
seeing that now can be done easier,
uh, with tools like Texas SQL.
And we talk about workflow,
things that are actually
touching providers and patients.
Think prior auth, formula
design, step edits again in
that pharmacy, pharmacy world.
And then underwriting is a kind of
chassis, uh, underneath fueling all those.
So I think we, we see the success,
um, early success of companies in the
portfolio and then try and take that-
lens and never perfect pattern matching
with any of these companies in, in
new markets or, uh, within healthcare.
Um, but just taking those
lessons and drilling down deeper.
Martin: Yeah.
I'd love to start a little bit on
what's inside, uh, inside your, your
aperture or your frame of reference now.
You...
The nice table in the piece, which
we link to in the comments, um,
but who, who's doing interesting
work on this infrastructure layer
today, and are there any spaces
that you're seeing where you're...
it feels like there's some, some
ripeness for, for someone to
come in and, and be disruptive?
Sean: Yeah.
Um, I mean, we, we...
Like, the, the company...
So we, we see there, um, as being,
you know, plenty of opportunities
to better, uh, you know, reprice g-
you know, certain types of risk and
be able to take, you know, uh, and
then be able to, uh, you know, take
balance sheet risk off the back of.
Uh, you know, certainly, you know, from
our sake, having worked closely with
the team over at Brightwise over, you
know, these last couple years, we think
they're a sort of a shining example
of, uh, you know, of this thesis and,
you know, really, uh, you never wanna
project too much, uh, from one company,
uh, against the entire future market.
But we think, you know, uh, lays a
certain blueprint for a model and
framework, uh, that we can, uh, you
know, apply on a go-forward basis.
So Brightwise, check them out,
uh, really, really cool company.
Uh, so what they do, they're basically
repricing pharmacy claims at the, you
know, individual drug level, um, you know,
selling into employers, um, namely, you
know, self, uh, self-insured SMBs, uh,
and guaranteeing them a, you know, a, a,
a fixed, uh, a fixed, uh, you know, PMPM.
So what they can do is be able to
aggregate claims data across, you know,
many different, uh, sources, um, not
necessarily, uh, uh, data sources and
access that a single, uh, uh, PBM has.
Also, you know, these PBMs, uh,
typically, uh, don't have, uh, you
know, much of an incentive to be
able to, you know, share this data,
you know, with, uh, with each other.
Um, Brightwise is able to, you know,
use that data to be able to, uh, price
that pharmacy spend at the individual
drug level versus the, the group level,
uh, which makes their, uh, makes their
predictions, you know, far more precise
than, say, those legacy benchmarks, and
then, you know, thereafter able to, um,
you know, has the sort of operational
prowess, if you will, to then be able to
actively route those, uh, those patients,
those, um, um, employees to the, you know,
towards the, you know, clinically, uh,
equivalent lower net cost alternative,
which can keep that, you know, actual, you
know, spend, uh, uh, below what they were,
uh, uh, below the price they were quoting.
And so, um, we've- We've seen this
model work quite, quite well with
respect to, uh, you know, with respect
to RightWise early on sort of building
up the, you know, the data access and
aggregation, having a very sort of,
uh, you know, specific go-to-market
focus initially on this, um, you know,
SMB employer side where, you know,
the costs, uh, are really, you know,
becoming out of hand for these employers.
Um, how do we sort of rein in
the, uh, the both the medical
and drug benefits, uh, uh, costs?
They're mostly...
They are focused on pharmacy, as well
as, um, at least introducing the levers
to, uh, you know, have predictability
on, you know, uh, go-forward costs
over a, uh, twelve, twenty-four,
thirty-six month, uh, profile.
And so just firsthand, we've seen
the RightWise team, you know,
run this model very, very well.
Um, we think there is the ability
to sort of repeat this, whether
that's in, you know, um, areas like,
uh, you know, in ACO land, med mal.
I think the, the list of, you
know, potential opportunities is,
um, you know, uh, uh, aplenty.
Emre: Yeah.
And w- we keep emphasizing RightWise
and, and pharmacy here for good reason.
I would say there are...
You know, pharmacy is a market
where people aren't fundamentally
taking risk today, today.
Yeah.
Sorry.
There are other markets where people are
looking at risk and data that might be not
the right resolution or time, like we see
with ACOs and the, the lag of data there.
Um, so Sean touched on this, but one of
the emp- uh, one of the points about this
is when we walk through is when we...
how we think about data, right?
In, in RightWise's case, um, I
mean, if you think about this, it's
everything from kind of the social
data and things you might be able
to collect to the hardcore pharmacy
claims and, and underwriting there.
So y- you need to be operating in a space
where you think you can get unique access
to data, whether that's a function of
your relationships or go-to-market, or
other ways to actually deploy within a c-
in a customer, maybe using a workflow as
a dashboard as a way to go collect data.
And so some other areas that
Sean, uh, touched on, ACOs,
we're seeing some work there.
Um, you can even think about
maybe more specific specialties
or intervention, interventions.
You can even think about
a center of excellence for
surgery- Mm ... as an example.
If you are, right, you're, you're
doing site of care arbitrage
on, in ASC versus what it costs
in a, in a hospital outpatient
department or inpatient, for example.
If you are confident that you can use
tools like- Voice AI, for example, to
actually impact the patient workflow,
you can better understand how you price
and, uh, think about these 30, 60,
90-day bundles for that surgery episode.
So there's kind-- like, there's
this cycle as we think through those
layers where they, they compound.
There's a view on how we think
about what's differentiated, where
we invest, what the long-term value
creation of the company looks like.
Um, but there are, of course,
opportunities throughout.
So ACOs, med mal is an interesting one.
Again, that's more of the cherry-picking,
um, example where you can get into
individuals, you can get into states,
you can get to demographics and
specialties and really understand.
Um, and then other examples, um,
like centers of excellence around
surgery, where that's, again, a
very similar set of care arbitrage.
And then even just to emphasize for
the whole discussion here, like for,
for RightRise, R-RightRise today, we're
really talking about the pharmacy benefit.
Um, there's a whole another
unlock o-on the medical benefit
as we think through that.
Yeah.
Again, different data flows, different
incentives, different entities that you're
working with in the space, um, and then
different entities on the back end that
you need to understand and work with
to actually backstop that risk as well.
Yeah.
Kevin: I'd be curious, guys, Sean, I've
heard this a little bit from you in this
conversation about, um, go-to-market path,
uh, and small and medium sized SMBs as
the kind of customer base of these orgs.
Sean, going back to beginning of
conversation when you're like, you know,
the, the traditional entities can't
structurally move into this market,
I would imagine the, the, the sale
of these new actuarial capabilities
isn't to the BUCA plans, the large
institutions in the industry and the
SMBs how go-to-market would, um, would
take hold here, similar to how we've
seen it play out in AI tooling be adopted
by private practices cross-country.
I'd be curious how you guys think
about that go-to-market strategy as
part of the investment thesis here.
Are you looking at that SMB adoption
of new a-actuarial tools as a key
part of it, or how do you think about
Sean: it?
Hey, uh, we're still in healthcare, right?
So, you know, uh, go-to-market and
distribution oftentimes is, uh, you know,
just as important as the actual, uh, you
know, uh, product innovation, uh, itself.
So 100%, you know, this is something,
you know, we, we think about quite a bit
and what specifically like gives you,
uh, you know, your, um, edge, right?
So we focus on, you know, uh, seed
stage, that first 12, 24 months,
uh, be able to get the product
market fit effectively is everything
and, um- Hey, like, you're right.
Like, there is, um, there is certainly
an element of a effectively what is,
like, a cold start problem, you know,
here, uh, that you also ne-need to be
able to solve for and account for, uh,
in, you know, in order to get, you know,
any sort of, you know, initial market
share that you can build out the back of.
Um, you know, uh, so, uh, you know, I
think about, uh, RightWise, you know,
in this example, first and foremost,
uh, it didn't hurt that you had a,
you know, CEO sort of in place who,
um, has been, you know, building
companies at this intersection of,
you know, employer, broker, uh, you
know, a carrier for some point in time.
So really understand sort of like
this, uh, the nuances of this corner
of the market sort of in and out.
But I think, you know, from a, um,
go-to-market focus was very, you know,
specific and intentional early on, right?
So they, um, whether it is sort of
like picking, you know, one segment
of the market, um, there's being
that sort of like, you know, that
SMB, you know, self-insured employer,
self-insured versus fully, you know,
insured, so you just have more, um, uh,
information, demographic information
on those employees at your disposable,
uh, at, at, at, on, at your disposal.
Uh, you can focus on, like, a single
drug class or, you know, a select group
of, you know, drug class, a, a, a, a, a
single geography or, you know, small, uh,
short list and just dominate that very,
very specific, uh, you know, go-to-market
focus early on and then be able to expand.
Um, and then, you know, I think there
are also ways, uh, we think about sort of
like your ability to sort of like produce
and think about almost like a kind of
like a creative aggregation early on.
So, um, you know, building, uh,
RightWise, for instance, like building
data assets like the PBMs, um, either--
I don't, I wouldn't say couldn't, but
like again, from a structural, uh, you
know, business perspective, a models
perspective, uh, weren't, uh, they
weren't going to be able to share, you
know, with, with, with one another.
And so, um, you know, we saw that,
um, uh, you know, RightWise had a very
specific, you know, go-to-market focus,
um, on these, you know, SMB employers.
They were seeing, you know, their
costs like skyrocket year over year.
I mean, the same cost trends
that we've been seeing over the
last, you know, fifteen years are
certainly affecting that SMB market.
Um, you're starting to see the, uh, the
rise of, you know, things like GLPs, uh,
you know, affect, you know, thirty, forty
plus, you know, percent of these employee
populations where these, uh, you know,
these groups have, um, little to no sort
of like tooling or defense, uh, against.
And, you know, they're, they're
thinking about, uh, how do they, uh,
reduce costs as much from a, you know,
economics perspective as they are just
from a, a marketing re- uh, retention
to these, uh, to these employees.
And so, uh, they're looking for, you
know, this style of tooling, um, and,
um, have now a, you know, certain
economic need to be able to do so.
And so, um, I think go-to-market early
on- I mean, as I think, I mean, it is,
uh, you know, uh, crucial to, to be able
to, uh, you know, get right early on.
And I think that just requires a sort of
outsized focus versus this, you know, boil
the ocean, you know, style approach where
maybe you're trying to go from, you know,
SMBs all the way to, you know, jumbos.
I don't, I, I don't think that would make
a ton of sense or to do, uh, not just, you
know, pharmacy, but pharmacy and medical.
Uh, there are, you know, uh, reasons
why, you know, pharmacy we think is
a little bit cleaner, um, a little
bit more straightforward from a, uh,
predictability of sort of expected
utilization to spend off of these, uh, you
know, uh, off of, uh, these drug classes.
So, um, yeah, that, uh, early go-to-market
is, uh, absolutely crucial to have a sort
of honed in, you know, focus and, uh,
ability to execute, uh, execute off of.
Martin: If...
So we are at time.
If we are, if, if I'm an actuary with a,
a dream of a new, uh, uh, infrastructure
layer play, what's the best way for
me to get in contact with Virtu?
Sean: Uh, we're pretty easy.
I mean, you got the entire, uh, you know,
investment team on the line right now.
So whether it's, uh, ek@virtuvc.com
or sd@virtuvc.com,
um, you know, we take just about every
single pitch, uh, almost to a fault.
So we're more than
happy to jump on a call.
Um, I mean, we, we wanna, uh, we
wanna meet with some like creative
founders who are thinking about,
you know, these problems under-
underwrite off the back of.
Um, I mean, we could spend another
hour on this, which we won't do.
But I think also just, you know,
given where, uh, how AI is effectively
commoditizing, uh, sort of competing
away a lot of sort of, uh, prior
moats, uh, and, you know, uh, company
advantages and, you know, uh, forms of
defensibility, um, you know, we think
that sort of ac- actuar- actuarial, uh,
layer, uh, is one that, uh, at least
not in the sort of immediate or, you
know, medium term, is going to be, um,
you know, uh, sort of abstracted away.
And so, um, yeah, we wanna talk with,
uh, you know, uh, with smart folks
who are thinking about, um, you know,
underwriting certain types of risks
that we're probably not even thinking
about in a very creative manner and,
uh, we will take that call all day long.
Emre: All day.
Yeah, I'd love to see
more of those, Martin.
Uh- Yeah.
That would be a pleasant surprise
and a great start to the week.
So, uh- Yeah.
Definitely keep them coming.
And yeah, thanks, guys.
We'd love to continue, uh,
the conversation on, on
this and many more fronts.
And thanks for all you're doing here.
Martin: Yeah.
Sean: Yeah.
Really appreciate
Martin: the time, guys.
Great work
Sean: you guys are doing at HM.
See you
Martin: guys.
Thanks, guys.
See ya.
Find the, the, uh- So the, the, you
should read, if you haven't yet, the...
I know, I know you've read it, but
you should read the, uh, the, the
hypothesis if you have a moment.
I, I found the charts in it
really useful in, in, in sort
of clarifying their thinking.
And I...
One of the worries, I think, when I
hear someone being like, "Oh, we're
gonna do actuarial infrastructure,"
is like, they're like, "Oh,
well, we'll just like throw...
Like, we'll create a better risk alg-
algorithm with the black box in AI."
And we saw this play out with
fintech, where a bunch of people took
a bunch of really bad risk, and it
blew up 'cause of, of correlations.
And so it was cool for me to hear
this like, "No, actually, the
actuaries are the defensible moat.
We're not just like, you know,
drilling for, for, for, uh,
interesting, interesting little
niches of, of, of insurability there."
Kevin: If I had a kid going to college
thinking about, like, what, what career
path to follow in this AI-centric world,
I, I feel like an a- a- an actuarial
career path is, is probably a pretty
safe bet in my mind, despite the fact
that I'm guessing a lot of folks would be
like, "Wait, Kevin, like, it's just math.
Like, you could, you could
automate away all of this."
But, uh, you know, I...
Y- you get inside of an insurer, and
you see how important the role of the
actuary is and how much creativity it
actually requires to do that job well.
Like, knowing what questions to ask
of the data to d- to do that well,
it's a, it's a real skill, right?
And to your point, like, I, uh, if
there are some creative actuaries
out there thinking about building
businesses, I think there's a huge
opportunity in front of them over
the coming years to, to do it better.
I mean, we've, we've seen what's
happened over the course of MA with
the last several years of how you
price risk, how you think about
that, um, all that kind of fun stuff.
It'd be a very interesting time to be an
actuary at Humana, wouldn't it, Martin?
Martin: Oh, yes.
Oh, yes.
Switching gears from the actuarial
world to the primary care world,
um, we've been following this,
you know, starting last week.
But MinuteClinic, MGB, Mass General
Brigham, uh, they proposed a interesting
little tie-up, little partnership
and When we talked about it last
week, you shared the headline number.
You said it's a $40 million increase.
And I said- Mm-hmm ... basically,
like, sometimes that's just the cost
of getting more primary care doctors.
Mm-hmm.
And I left it there, but you soldiered on
and dug into the, uh, the MassHealth or
the, the Massachusetts Policy Commission
report and found some interesting stuff.
Do you wanna kinda walk us
through what they found?
Kevin: Yeah.
It is, it is a really great r- read in the
nerdiest possible way about the dynamics
of a partnership like this, everything it
implies for healthcare costs, healthcare
access in, in the region, right?
So, um, stepping back, some context.
CVS MinuteClinic, Mass General
Brigham, they, they announced
this back in, in mid-2025, right?
Which in Massachusetts means you have
to submit, um, to the, the MassHealth
Policy, uh, HPC Health Policy Council, uh-
Martin: Commission
Kevin: Whatever.
I
Martin: think.
Kevin: Commission.
Thank you.
Um, and they have to do
a review of the deal.
And they did a quick review of the
deal, which is a 30-day-long process,
and they decided that this might
have a significant impact on costs.
Uh, and so they kicked off a
longer, uh, review of the deal,
which they just issued a report on.
And so that is what we started
talking about, um, uh, last
week after seeing that report.
So we're, you know, six, seven-plus
months into the review of this deal,
and we are seeing this, um, cost
increase number of $40 million.
The cost increase is driven by
what essentially amounts to...
So MinuteClinic has 37
locations in Massachusetts.
There are 80 advanced
practice practitioners there.
Obviously, Massachusetts, we've
been covering, um, over the past
several months, issues with access
to primary care in the state, right?
There was that, uh, KFF article from
earlier 2026 talking about a patient who
I think their pr- provider passed away.
They needed access to a doc to get
their medication on an ongoing basis,
and they called a bunch of practices
around Massachusetts, and apparently, the
earliest they could find from a practice
was a year and a half to two years.
So there is an access issue to primary
care, uh, in and around Massachusetts.
MinuteClinic, um, proposed, or, and, and
MGB did this transaction presumably, as
part of the narrative goes, to offer more
primary care services in Massachusetts.
You take those 80 APPs who today are only
able to provide convenience care services
because in Massachusetts, MinuteClinic,
I guess, is the only organization that
operates under a limited service clinic
license, which means it can only do
what you think of in convenience care
MinuteClinic locations: vaccines, strep
throat infections, routine labs, sports
physicals, um, some minor wound stuff.
And the pitch is that this will allow
them allow MinuteClinic to repurpose
these APPs by giving them 22 continuing
education credits in virtual learning
to be more longitudinal primary care
providers that are doing chronic disease
management, care coordination, all
the stuff you want for primary care.
So that's all kind of the background of
the transaction that's in that document.
Um, Mass...
The, the, the Health Policy Commission did
an analysis saying that, okay, for those
80 APPs, if you took them and you put them
under this transaction where they would
now be able to bill via MGB for primary
care services, they could see 120,000
patients with a 1,500 patient panel size.
And CVS is telling the commission
that they assume roughly 35% of
their panel will be in primary care.
So that's 42,000 patients on the whole,
34,000 of them are commercial patients.
And so that's what drives the analysis
here, because what the commission
did was they said, "Okay, those
34,000 people don't have a PCP today.
And when we look at our data, there
is a $650 per year increased claims
cost for patients when they go from
having no PCP to having a PCP at MGB."
So that's $22.1
million of the $40 million increase.
There is then also, on top of the claims
cost, quality payments, other things
like that, that accounts for another $5.6
million.
So $47 million or $27 million
of the 40 is from people having
no PCP going to having a PCP.
Now, I think we can argue over the
merits of whether or not MinuteClinic
is actually providing primary care
at, like, the utmost But it's, it's an
interesting question to me when we think
about market dynamics, when we were just
talking about JetBlue and Spirit and the
role of the FTC and what you're doing,
to think about that, that at the end of
the day, we're paying for 34,000 people
to now have access to a primary care
provider that they did not otherwise have.
Now, the other interesting last
thought before I, I, I get off
my soapbox here, Martin, um, the
other drivers of cost increase.
One, there is a pure
price increase of $6.6
million where for convenience clerk
that happens at MinuteClinic, they're
now gonna bill using MGB rates.
MGB rates are the highest in the state.
That's part of why they've got ongoing
issues with this commission, and
that's gonna be a $6 million increase
for just convenient care visits.
But then they're also like, "Hey,
we're gonna penalize you because
patients are now gonna have to go to
other places for access to convenience
care services," and those places
all cost more than MinuteClinic as
the low-cost provider in the state.
That's $6 million of
added costs on top of it.
And Martin, this is where I just get,
like, a little worked up and confused
because, you know, if I'm the pr- product
manager running MinuteClinic and I am
looking at my P&L and I'm like, "Hey, I am
the low-cost provider of convenience care
services in the state of Massachusetts.
Presumably, my business is not as
profitable as I would like it to be.
I don't think convenient care
models have ever been a bastion of
profitability in the care delivery market.
What do I do?"
I say, "Oh, well, I can go get into
this adjacent space of primary care.
I can provide more services that are
needed for our communities, and I'm
gonna partner with MGB to do it."
Now, you might say, "Hey, they
shouldn't partner with MGB.
Like, go with the
middle-of-the-road price."
But, like, I, I don't know.
I, I struggle with this one, Martin.
It's like-
Martin: I don't ... this
Kevin: $40 mil- uh-
Martin: This is ridiculous.
I don't struggle with it at all, Kevin.
Like, I think that the math here...
So first of all, okay, this is gonna
sound incredibly out of touch, but
we're talking healthcare dollars right
now, and $40 million, I don't know,
like, what the H- like, Health Policy
Commission's threshold is for significant
price increases, but, like, it's a 23...
I think it's, like, a $23 billion Medicaid
budget, just for orders of magnitude.
So, like, 40 million bucks, I mean, that's
just, like, change you find in the sofa.
Mm-hmm.
Number two, okay, yes, I get that it would
be better if a non-MGB rate provider group
was, was able to adopt them, but it seems
like the, uh, either the Health Policy
Commission or someone else has said,
"Well, these providers are not allowed
to, to do this without an affiliation."
with a, a hospital group,
and you're in Boston.
Like, who else are you gonna partner with?
I don't- Yeah.
I'm sorry, but this is insane.
This is so insane.
I think that the, the question
that you and I have been sort of
mulling over is, like, what is
access, increased access worth?
And, uh, you know, I, I think that a
promise of the Affordable Care Act and the
essential health benefits was, like, well,
having a primary care provider will make
healthcare in aggregate less expensive,
because primary care providers...
And this, this analysis is
suggesting the opposite.
It is saying that if you are able to
see a doctor, that it will cost more
in, in sort of same year stuff, and
you're, like, just scratching your head.
It's like, so do we not want
people to see primary care doctors?
Yes, it would be cheaper
if no one saw a doctor.
What if, what if no primary care doctors?
I could save you a ton of money.
Kevin: Y- yeah.
I, I mean, that is the implication
of the analysis, right?
It costs less to, to not have any
of that, which, yeah, it's hard.
We talk about the iron triangle a lot.
It is the iron triangle at work, right?
We want access to high quality docs.
Um, there's going to be a trade-off from
a cost perspective, and there is, there's
a lot to unpack in, in this, and we will
continue unpacking it on an ongoing basis.
Shall we bring on Otto?
Martin: Yes.
So very quickly before we do, uh, Photon
Health just closed a $16 million Series A.
It was led by Healthier Capital,
changing the way prescribing's happening.
Let's bring him up.
Otto.
Oh.
What's up, health tech nerds?
Oh.
Otto: How are we?
Martin: Looking great.
What a beautiful day.
Otto: It is a beautiful day here.
I'm, I'm, uh, coming to you live from
the garbage cans in front of Photon
World Headquarters here in Brooklyn.
Martin: Ooh.
Otto: What's going on?
Yeah.
Love it.
Martin: Fancy.
Otto: We recently got
some, uh, lawn chairs.
I don't know if you can see me.
I'm in a lawn chair.
Martin: Yeah.
Otto: Uh, it's a- That's the
Martin: exact lawn chair
... Otto: to take some meetings outside of,
uh, outside of the office this summer.
So-
Martin: Love it
... Otto: uh, here I am.
How are
Martin: you
Otto: guys?
Martin: So we're great.
We're great.
We were just talking about, about
primary care docs, but I wanna
switch gears and talk a little
bit about prescribing, uh- Yeah
an area that you and I both know and love.
Before we get into where Photon
is today, can you give us a little
bit of a, a, a landscape overview
of the e-prescribing- world.
And then also, uh, uh, when you
were starting Photon, what was
your going-in hypothesis on this?
Otto: Yeah.
Great.
Um, so e-prescribing is really just a, uh,
a transmission of a clinical order from
a clinician, uh, someone who's allowed
to write a prescription, uh, which is
an interestingly broad set of folks.
It's hard to define specifically,
but let's call them prescribers.
Um, you can click a button in the
EMR or some prescribing tool, and
then a, literally an XML document
moves through the internet and a, uh,
pharmacist is able to receive that
information, fill a prescription.
There's an enormous amount of state
built on top of prescriptions,
claims, adjudications, you know,
which is really sort of this
process before it becomes a claim.
Uh, prior auth, et cetera,
et cetera, et cetera.
But if you think about just, like, a
third of medical spend now is more or
less related to drugs in some capacity.
It's not all running through
e-prescribing, uh, 'cause you've got
lots of, lots of medical benefit drugs.
But the point is, prescribing
represents sort of the anchor
point of the clinical decision for
quite a lot of costs in healthcare.
So, you know, hearing you guys
talk about, uh, primary care
costs, et cetera, like, we all...
There's so much architecture built around
claims for medical care, but really
we s- sort of see prescribing as an
opportunity, uh, for major modernization
beyond just moving a clinical
prescription between point A to point B.
That feels like as complex as
sending as, an email, really.
Um, oddly, that was a problem that
a lot of the industry fought forward
from, you know, from 2000 to really
2014, I think we started to see
serious density in e-prescribing.
Good work Surescripts.
Um, but yeah, there's a ton of
opportunity, I think, to make that
process much more modern and much
more, uh, you know, sophisticated
in terms of the consumer experience,
which is what we're focused on.
But more, more importantly, it's a
trigger point for a lot of important
clinical spend, to, to tie into
what you were just talking about.
And then you asked, what is-
I- Why, why did I start Photon?
Martin: Yeah, yeah.
I was just like, w- what was
your going-in hypothesis?
Otto: Yeah.
Oh, it was, it was, it was actually a
little bit less of that versus, like,
you know, when you see behind the curtain
of something and you realize that it
is much less sophisticated than you
think it should be, or much less, uh,
you know, in my case it was much less.
Like, there was a missed opportunity,
uh, especially around engaging consumers.
The real hypothesis was that you
could build a modern ecosystem
around prescribing for prescribers,
patients, and pharmacy.
Um, so, you know, it really sort of
started with this, like, platform modern
data network thing and then, you know,
we realized further and further going
in that the consumer experience was the
sort of differentiation aha feature that
is a result of that type of network.
Um, but yeah, the hypothesis was really
just- Dang, this tech is actually not
that much harder to, uh, disrupt or
rebuild around the consumer or build
around a, a notion of transparency.
Um, but yeah, the hypothesis has sort
of been layered on as we've gone because
we've proven a couple of them to be true.
Uh, so it's interesting four and a half
years in here how, how it's changed.
Kevin: Otto, as I was reading the, your
blog post on the funding round, one of
the things that surprised me, not knowing
the e-prescribing market as well as
you guys do, and thinking that, like,
that hypothesis is, has been generally
the same, um, all along and kind of
you've been moving i- in that direction.
You describe the layoff in June 2025.
You describe kind of putting to, to,
to rest the old version of Photon
and, um, driving forward a new version
of Photon growth going forward.
Can you articulate, like, for someone
who doesn't understand the e-prescribing
landscape quite as well, what-
Yeah ... what was the old version?
What died?
What's the new version?
What changed from a business
model perspective underlying that?
Otto: So, I mean, a lot of this has to
do with the market we're selling in.
I think, like, the, the technical
product that I just described,
albeit not that clearly, uh,
really hasn't changed that much.
Um, but the, the observation
we, uh, focused on was that this
consumer enablement was the key
thing we enabled with this network.
So selling to anyone who needed a
network is not that interesting, and
you know, in this time last year really,
there was this huge spike in GLP-1
compounding where customers were using
our network to route from a prescriber
straight to a pharmacy, which is great.
We support that.
Um, the problem is it wasn't really
emphasizing our hero use case,
which was a scenario where a patient
could shop between pharmacies
with a prescription in hand.
So, um, the...
It, it was sort of, sort of a go-to-market
pivot really toward health systems, was
focused on, you know, who are the, where
are the organizations or the consumers
who benefit the most from transparency?
And you know, in retrospect, it's
obvious looking at, uh, health systems.
Health systems benefit enormously
from transparency for a lot of
reasons, primarily 'cause patients
have a lot of trouble navigating
even within the health system.
Uh, but more so, those
patients get the least support.
They have a few minutes with a doctor,
and then it's kind of good luck.
If you're routing prescriptions that
are all the same, the digital health
companies are actually pretty good
at support, uh, especially if most of
these medications are cash paid GLP-1s.
So we actually found that the more
complex and, like, diverse the set of
medications coming out of primary care
or cardio or whatever, um, the more the
opportunity for the marketplace where
the patient receives a text, they can
click a link, shop their prescription,
see, see their insurance pricing.
Um, that actually drives a much higher
value prop for the clinical team.
Martin: I think one of the things
that's interesting about where you're
operating now with the health systems
is, like, SureScripts would, I think,
like to do this, but their hands are...
I mean, I've worked there for six years.
From the outside, it seems like their
hands are tied by their ownership, now
minority ownership, and it's just hard
for them to actually do transparency.
You're spending a lot of time
talking to health systems.
It's an interesting
moment for health systems.
I'm curious what you're hearing as
you talk to them about, um, you know,
on the patient engagement front.
What's interesting them, what's
compelling to them, and why isn't
SureScripts able to, to pull it off?
Otto: Yeah.
I mean, uh, I, I'm not here to
say that they will or won't.
I, I don't think it, it matters what
SureScripts does or doesn't do for
us to succeed, which I think is a,
is an interesting facet of, of our
business because, you know, we, we've
long rhetorically positioned ourselves
as an alternative to SureScripts.
And the reason that is, is when a
health system or a large virtual clinic
goes live with Photon, they're sending
prescriptions through our network.
Um, but I, I kinda wanna think about
this a little differently because I think
there's a lot of companies that have
changed the way that people talk about
a space because, you know, I remember
in the, in, like, the early 2000s or the
mid 2010s really, when people built a
credit card integration on the internet,
they talked about, like, a merchant
account, and you'd go, like, get this
merchant account integration thing, and
they sat on top of Visa and all of it.
And, like, then Stripe came
along, and we stopped talking
about it as a merchant account.
Even though Stripe is technically, you
know, your, your merchant of record or
whatever the hell it is, uh, w- we got
to this place where, like, Stripe was
now a platform where it supported a ton
of different things, and it was oriented
around, like, the checkout experience.
So Stripe was able to sort of reposition
a market where they sort of did the same
underlying thing, like they charged your
credit card, but the product experience
around it was substantially different,
and that was what differentiated them.
We're trying to do the same thing
where, yes, we send e-prescriptions, but
e-prescriptions are a fricking commodity.
Like, if we could, we would make them
free or as cheap as possible to send.
You know, and we're really sort
of lowering our prices to transmit
as we grow, as, as, as economies
of scales make it cheaper for us.
But the l- larger phenomenon is, like,
the value we create is not in sending a
prescription, it's in actually helping the
patient get their medication physically.
And I think that if you think about this
in terms of the value to healthcare,
g- going and solving a much bigger
problem than moving an XML document
on the internet is really our calling.
Um, which I think is sort of the key
thing that's been true across our whole
journey at Photon, is we don't wanna just-
Solve simply the technical integration
problem, but actually the human
problem of did you get your medication?
Uh, which if you think about
that in terms of the value to
a health system is enormous.
Of the value to a payer is enormous.
The value to a pharma
company i- is enormous.
Like, the, uh, market itself is
inefficient between those three parties,
and if you can increase the likelihood
of those, that event occurring, that
transaction, that payment, that clinical
authorization occurring more rapidly, if
you will, uh, the value is pretty huge.
So, you know, that is
kind of an open problem.
It's existed well before Photon,
and I don't know what has kept other
organizations from solving it before
us, uh, other than the fact that
the immediate ROI on solving that
problem is a little complex to unlock.
Kevin: Yeah.
It's
Otto: like a, it's a hard problem.
Kevin: So in many ways it, it, like
it, it feels like you're expanding to
it, like, you know, having sat inside
health system and payers before, like,
there's always this conversation of last
mile engagement, how you actually...
It's one thing to tell a patient to
go take their, you know, Lasix dose
for heart failure, what have you.
It's another thing to actually make
sure that that happens, get the
data on it, understand what's going
on, track outcomes against that.
Am I hearing you right in saying that you,
like, y- you're stepping into that space
over time, and that's where you think
the interesting space is to play of that,
like, last mile engagement nut to crack?
Like, how- Yeah ... how are
you thinking about that?
Yeah.
Otto: Yeah, I mean, I, w- by, by means
of building a product that, uh, you know,
sends a prescription to a patient via
text- Yeah ... the opportunity to take
on a lot more responsibility for- For
Kevin: sure
... Otto: the state changes
related to a prescription.
So the obvious ones being,
is this pharmacy open?
Is this pharmacy nearby?
Uh, does this pharmacy take my insurance?
Is this pharmacy in stock?
Like, just basic fulfillment level stuff.
Kevin: Is the pharmacist on break-
Does this pharmacy- ... and I have
to wait for, like, 35 minutes?
I mean- Because I didn't know
they're on break before I get there.
Yeah, it's cra- sorry.
Otto: Lunch hours are real.
Lunch hours are real.
Um, and then more so we, we realize that
there's like nine other really complicated
transactions that sit behind this.
Prior auth is one we're
starting to think a lot about.
Uh, you know, not to mention the
actual adjudication or cost associated
with that medication varies depending
on a lot of different factors.
So, you know, there's like 12
different ways to pay for a
medication, it feels like these days.
Um, not, not, not including
the different pharmacy options.
So, you know, the, the big goal for
us is to sort of streamline all the
different decisions that g- go from
clinical order all the way through to
physically receiving your prescription,
where e-prescribing is only one
tiny component of that, and arguably
not the most important component.
It's a good gateway to go solve
these other problems, though.
And again, this is, you know, a common
startup company strategy, which is like
go take a sort of antiquated part of
the market, go solve a problem there,
and then go expand into the downstream.
Uh, yeah, I don't think we're
doing anything that crazy.
Our roadmap in some ways is
honestly kind of obvious.
Martin: Last question for you, um,
and then I'll let Kevin hop in.
But how much of the, the problem is
for, for, you know, sort of patient
engagement is price sensitivity
versus some other stuff that I guess
that people would, would not expect?
Otto: So price sensitivity or like
i- in some ways difference between
pharmacies isn't yet the problem,
because most patients don't even know
the price of the first pharmacy, at
least until you get to the counter.
So we think of shopping a little bit
less in the current state around,
you know, this pharmacy versus this
pharmacy, though that is important.
Some pharmacies are in
your network, some are not.
Uh, s- you know, some pharmacies are
just more expensive than others, period.
Um, you have this problem where
just knowing the price at all is
actually the bigger issue in pharmacy.
So, you know, we're focused primarily
on this notion of like a, a cost
basis, because when you go into
Walmart and purchase milk, you
have a cost basis for milk, right?
You, you know what a fair price is
relatively speaking, and you'd know
when to say, "Wow, that's a whole lot
for, you know, half a gallon of milk."
Um, so much so that you can even
disambiguate between different
offers of milk in the same store.
Uh, you know, this is the premium
milk, uh, you know, at, at $4.50.
So, uh, in some ways I think getting to
that level of granularity where consumers
feel like they have a cost basis in
prescribing is really what we think about.
Um, and it's amazing how many people
miss that w- when their own experience
in pharmacy yields, like you have no
idea what something costs, and the amount
that you pay for it actually has very
little to do with how much you're willing
to pay to access the treatment on the
other end of the, of the prescription.
I think that's actually a huge problem
in the way that the market works.
But we're not solving that one yet.
Kevin: Otto, if I'm a primary care doc
or other doc in a system who's listening
to you talk and who's like, "Yeah, I
want Photon for, you know, my patients
to, to get access to," where are you
finding entry points in health systems?
Who should they be sending you
to talk to inside their system?
Like, what's the, what's the sales
process of getting a health system
to say, "Yep, we're on board"?
Otto: So without a doubt, the f- the
health system pharmacy Uh, is the best
place for us to, to work because I think
they see the underlying inefficiency
because in a lot of ways the pharmacy
at a health system sort of holding
the bag operationally for a lot of,
a lot of upstream complexity like
patients, A, not even showing up, not
knowing what their medications costs.
Um, you know, pharmacies are operational
powerhouses and health system
pharmacies have a lot of opportunity to
basically take some of the operational
burden and put it either into the
patient experience or automate it,
which is a lot of what we're doing.
Um, so that's just where
pharmacies are most focused.
It's also where the ROI is,
is creative directly in terms
of pharmacy transparency.
Um, health systems from a clinical
perspective also usually always have
like one, you know, CMIO type who's a
huge champion for clinical experience.
Those folks generally love what we're
doing, but they're not our buyer,
primarily because they don't think about,
uh, the prescribing already exists in
all their workflows, so we're not really
doing anything net new for the clinician.
We're really doing something
net new for the patient.
And I think this is actually an
interesting phenomenon that Blake, uh,
wrote about in the hospitalogy coverage
of Photon, that there isn't really a
structure within health systems from an
executive perspective where someone owns
the patient experience end to end from
an ROI or from a financial perspective.
And, you know, Blake, I think,
has been kind of pushing on this
directive for, for a while, and, and
he's not the only one doing this.
Like, health systems need to think
about patients from an LTV perspective.
And Blake actually made an argument
more clearly than I think I've
made it to a health system, which
is that a patient interacts with
primary care maybe once a year.
W- I think the stats officially are 1.8
across the whole population.
They interact with pharmacy 10
times more often, uh, especially
if they're on multiple medications.
So you get to this point where, okay, the
obvious consumer touch point for a brand
to focus on is the pharmacy touch point.
You could even think of a world where
the health systems operate around the
cadence of pharmacy fulfillment more than
they do around medical claims or labs.
Uh, w- which could start to make
sense, especially if you think about
what actually makes people better.
You know, a doctor can spend as
much time as they want with you,
but it's not gonna make you better.
They need to either cut you open
or put medication inside of you.
Maybe they can give you a medical device.
So there's one that is the most common
treatment pathway, so it does actually
make sense at scale, especially as AI
becomes increasingly able to provide
clinical care directly, that health
systems should operate around pharmacy.
And if you start to look at the books
a little bit closer, health systems
already operate around pharmacy from
a margins perspective, so it's not
too much of a stretch to think about
health systems really as Much more
complex pharmacies in the future.
Um, and, and I think that, you know,
I'm not the first to say that out
loud, but that's, that's why we
spike on, you know, CPOs and VPs
of ambulatory as our core buyers.
Martin: Well, if I am a CPO or a, a
VP of ambulatory and I wanna get in
touch and bring Photon in, what's
the best way for me to reach out?
Otto: Honestly, just, uh, you
know, send, send us a note.
I think, you know, uh, no one likes
going through a sales channel, right?
You know, like signing up on a
website or emailing sales@photon.
But I think, you know, just send
me a note, otto@photon.health.
Um, and, and, you know, let me know
where some of your pain points are.
Like, whether it be, uh, you know, helping
patients understand what, you know, where,
what pharmacies are available to them.
I think one common pain point we
hear among clinical leaders at
health systems are that pharma
rapidly around their locations.
So building infrastructure inside
of the health system experience that
helps patients navigate that, uh, is,
is critical for them meeting outcome
as, outcomes measures or, you know,
let alone just, like, providing care.
Like, these, these
systems care about that.
So yeah, drop us a line.
Um, we've actually this week oddly been
having a lot of health systems sign
up on our website, which is kind of an
amazing thing, um, that, like, health
systems are signing up on our website.
So, uh, yeah, feel free to sign up on
our website and we'll shoot you a note.
But generally speaking, we're trying
to be as responsive as possible,
uh, to folks who, who reach out.
Martin: Otto, appreciate the time.
Best of luck with everything.
Enjoy that beautiful
Brooklyn, Brooklyn afternoon.
Otto: Appreciate you guys.
Thanks for your time.
Thanks, Otto.
Martin: See you.
Otto: Bye.
Martin: Well, that's a wrap, Kevin.
Martin,
Kevin: where can people find
you if they want to when
we're not talking live on TGR?
Martin: You can always
find me in the Slack.
And so I, I'm, I'm
there literally all day.
So go to healthtechnerds.com,
sign up for the community,
come chat with us.
It'll be great.
You can find Kevin there too.
You have a good rest- Hang
out ... of your, your Monday, Kevin.
It
Dan: was fun
Kevin: catching up.
See you, Martin.
Martin: Bye.
Bye