AngelMD On Call: Dr. Mario Ramirez – From ER to Entrepreneur

Dr. Mario Ramirez is a practicing ER physician, Chief Medical Officer of AffirmHealth, and the Chief Medical Development Officer of Briovation. This myriad of experiences makes him uniquely qualified to tell the story of going from practitioner, to entrepreneur, and to investor. We caught up with Dr. Ramirez after his time at Health:Further. He talked about his personal journey into entrepreneurship, and how his perspective gives him an advantage when it comes to investing.

Transcript is below for those that prefer reading to listening!

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Brad McCarty: Mario, it’s not really fair to even say Health:Further. You’ve got a lot of titles behind your name and a lot of companies, right? So kind of give us the rundown here.

Dr. Ramirez: Sure. Well thanks for having me, Brad. I’m really excited to be here with you. So, I am first and foremost a practicing ER physician. I still practice about full time out in the community. But then in addition to that, I hold two jobs. So the first, I’m the chief medical officer of a software company named Affirm Health. We help physicians with opioid regulatory compliance. In addition to that, I work as the chief medical development officer here at Briovation, which is the parent company that sits over Jumpstart foundry, Jumpstart Capital as well as Health:Further. Each of those are three sort of distinct verticals. The first two primarily focused in the health investment space, and then the third, Health:Further, being our health ideas festival.

Brad McCarty: And so I actually have a chance to hear you talk a bit at Health:Further, and that’s kind of what spawned this conversation. Tell me a little bit about for those people who are unfamiliar, kind of the Genesis of Health:Further and what it’s become today.

Dr. Ramirez: Yeah. So Health:Further initially started four years ago. This is the fourth year that we just added in late August, and it originally started as a way for us to bring ideas and thinkers together who were interested in talking about health innovation. And in some ways, a little bit differently than other conferences and other festivals have positioned themselves. I think Health:Further is very much a grassroots effort, and we make room for everybody in the tent. I think we’ve traditionally had a digital health heavy focus. Some of that is broadened over the last few years, but the festivals grown from about 600 attendees to nearly 2000 this last year. We pulled participants in from all over the country. I would say about half of those come from the Midwest and the Southeast, and then the remaining half come from the coasts in other parts of the United States. And we were excited this year to have three different international delegations, so a lot of great growth in the festival. I think we’ve expanded the tent now so that it’s not just about I think health and digital health innovation, but now we’ve got a number of tracks that focus on other things including clinician entrepreneurship, which is a scenario that’s certainly near and dear to my heart. But then also, talking about things like blockchain interoperability, healthcare financing. So a lot of growth going on without further-

Brad McCarty: Right. Talk about the geography of side, or the geography of things. We’re in the healthcare city. I think pretty much anybody who has been around healthcare for any amount of time knows Nashville as healthcare. What do we know here that other people haven’t learned yet? What makes it special to be in Nashville to kind of base things out of this area?

Dr. Ramirez: That’s a great question. In some ways I feel like Nashville is healthcare’s worst kept secret. Because when people think about Nashville, the first couple of words that come to mind usually are music city and people don’t realize that it is a healthcare heavy city unless you happen to live here or you work primarily in healthcare. I think people tend to equate cities like Boston or necessarily silicon valley or some of those other locations as being sort of more healthcare focused. But here in Nashville, I think we occupy or have occupied in the past a particular niche. They’re really focused around healthcare services delivery. Certainly HCA is headquartered here, a number of other sort of big hospital corporations have their headquarters here. But, I think that’s changing over the last few years. I think Nashville is undergoing a little bit of a pivot. There’s a lot more growth in this sort of entrepreneur community here. And so, there’s people that are moving to Nashville and I think are using that sort of backbone that existed for the last 40 years and building off of that and turning this into a much more sort of innovation focused city.

Brad McCarty: It’s interesting that you talk about how long it’s been here. I remember when I moved here eight, 10 years ago, something of that nature. I kind of did a deep dive on local startups and wanted to try to find 10 startups that the people who are around the world should know about. Kind of what I found through my interviews during that time was that there weren’t necessarily at that point 10 startups that the world really needed to know about. There were definitely 10 startups, but there just wasn’t a lot of activity around them yet. What has changed in the past few years to make this area more viable than it used to be?

Dr. Ramirez: Yeah, that’s a great question. I mean, I think there’s a number of things, some of which are specific to Nashville, some of which are not. I mean, I think as a whole across the country the barriers to entry into the innovation, into the innovation space have come down. Some of that is in part due to things like increased broadband access, increased education around accessing digital health in software development. But then also, I think there’s been an increased focus since the high tech act on interoperability and some of those other policy changes that have sort of created a more fertile landscape, for people outside of the big sort of hubs or traditional hubs to kind of break into that space. The other thing specific to Nashville, I think there’s so much more capital that’s flowing in here in I would say the last 20 years. Specifically the last 10 years, that has created an opportunity for people to maybe take some more chances. Maybe sort of move a little further to the left in the innovation and entrepreneur space-

Brad McCarty: Sure.

Dr. Ramirez: So that people are willing to invest earlier and kind of help foster and nurture some of that growth that we traditionally didn’t see, because capital was a little more restricted here.

Brad McCarty: So, you had said that you are a still practicing physician. When did you know that you needed to move and do something beyond the emergency department?

Dr. Ramirez: Yeah, that’s it. That’s a good question. I think I’m like a lot of emergency physicians because I think this is a theme that you’ll hear resonate frequently in er physicians. But also I think in physician specialties that are a little more amenable to specific scheduling, which is different than like an internal internist or a surgeon or something like that.

Brad McCarty: Sure.

Dr. Ramirez: I think among specialties like mine, we see a little more of this attitude. But, my story was a little bit different. I came up right after 9/11, and actually my first foray out of the traditional ER world was in the defense space.

Brad McCarty: Oh, wow.

Dr. Ramirez: So I actually joined the military for a while, spent some time overseas and was working in sort of the National Security Structure for a while. And then, at that time had moved to DC and went to go work in government for a while. And at the end of that had, helped start a nonprofit company with a friend of mine that was essentially helping the federal government supply public health infrastructure around the world. I really sort of got interested in creating something from scratch that hadn’t been there before. I mean, essentially there had been no company or no nonprofit that was really trying to do what we were doing, but there were challenges associated with a public health funding and having the federal government as your primary funding.

Brad McCarty: Sure.

Dr. Ramirez: So about two years ago, my wife was getting recruited back to Nashville, and we decided we were going to come back. I decided that I really wanted to try to use that as a career pivot time a little bit, and try to figure out how I was going to move away from the national security structure. But also, hold onto that idea of creating something from scratch, and something where I felt like the private sector really had a little more to give in some ways than working in the public sector did. The great thing about Nashville is that the barriers to entry are low and if you’re willing to come back to the city and you’re willing to just roll your sleeves up and start working people will meet with you, people will talk to you, people will give you a chance and that’s something that’s a little harder and other places.

Brad McCarty: So what does a typical day look like for you now?

Dr. Ramirez: So I spend about 14 days a month in the ER, so those are usually scattered throughout the week and the weekends at nights. So, those days tend to get blocked off first.

Brad McCarty: Sure.

Dr. Ramirez: And then apart from that, I spent about two days a week in the office here at Briovation, and then sort of constantly working at night or kind of in off hours. And then, the rest of the time I’m working for Affirm Health.

Brad McCarty: Okay.

Dr. Ramirez: So, it’s a pretty fluid structure. Every day is different.

Brad McCarty: Okay. It keeps things interesting.

Dr. Ramirez: Yep, that’s right.

Brad McCarty: So, tell me a little bit more about Affirm Health. You talked us through a little bit of the three verticals of the company. How do these all play together, or do they play together? And, how does it play into kind of the bigger picture of healthcare entrepreneurship?

Dr. Ramirez: Sure. Actually, I think you’re talking about Briovation, not Affirm Health.

Brad McCarty: You’re right.

Dr. Ramirez: Briovation is the parent company over three distinct verticals. So the first is Health:Further, which I think is our largest sort of tent, and we welcome everybody under that umbrella. It’s a chance for everybody from entrepreneurs to investors to payers to providers, to come together and talk about where they think healthcare is headed in the next several years. Where they think the space is right for innovation, and maybe try to create networks that wouldn’t otherwise exist. A big part of that is tapping into the entrepreneur community and trying to attract people. They want to come and show off their work and possibly tap into that community. And so of that, a subsegment will apply to Jumpstart Foundry, which is our second vertical. And Jumpstart Foundry initially started as a traditional kind of accelerator, not specific to healthcare, although that focus changed several years ago and now all of our investments are in their healthcare space. But, that operates in some ways similar to an accelerator.

Dr. Ramirez: We raise a fund every year. We invest in between 15 and 18 companies for some equity stake in the company. And then, we help nurture them along. I think it’s a little bit different than some accelerators, in that our help has traditionally focused around getting those entrepreneurs out in front of healthcare buyers and healthcare change makers who can help connect folks to help those companies flourish.

Brad McCarty: Okay.

Dr. Ramirez: So, different than some of the others that offer like a primary teaching curriculum, or some of those other things.

Brad McCarty: Right.

Dr. Ramirez: And then the third is Jumpstart Capital, which is a larger fund that’s in the current process of being raised. And, will traditionally focus on I think late seed to early series A investments, to really start to help nurture those companies that are kind of in that valley between the really early seed stage or the angel stage-

Brad McCarty: Sure.

Dr. Ramirez: … and are not quite as series A, and as a value where we’ve seen a number of our companies and number of other companies struggle to raise funding a little bit. And som we’re going to help bridge that gap.

Brad McCarty: Okay. It’s interesting. I heard a presentation on the last day of Health:Further about what you guys are doing as far as your fundraising and where you invest. It actually lines up pretty similarly. There we go, if I could spit the word out, to what we do with AngelMD. Where it’s either seed or kind of almost series A, an occasional series A round as well. What does the funding landscape look like when you are more focused on a singular area?

Dr. Ramirez: Yeah, that’s a great question, Brad. It was an area of focus that I wanted to make sure that we talked about at like this clinician investor breakfast that we had. Because I think if you’re a clinician and you’re looking at the investment landscape and you’re trying to figure out where you may want to sort of invest some of your money, there’s a couple of different things to consider. I think there’s a difference between Jumpstart Foundry jumped our capital and AngelMD. I think you’re right in that both groups try to leverage clinician expertise. Jumpstart Foundry I think operates a little more like a traditional fund in that you choose to invest in the fund. We have a fund manager who helps make those investment decisions, and then after the investments are made you own some slice of 18 companies as part of this portfolio.

Brad McCarty: Right.

Dr. Ramirez: AngelMD I think is a little bit different in that you pull from the kind of intellectual capital that exists in the physician and clinician community, but then you essentially get to decide what it is exactly that you want to invest in.

Brad McCarty: Right.

Dr. Ramirez: It’s really interesting and I think they’re not exclusive. We certainly know lots of folks who do both, I don’t know. I’m a member of AngelMD, and I happen to really enjoy the platform because I think it gives me a chance to rely a little bit more I think on the clinical expertise that I’ve built. I think the direct answer to your question about what the funding landscape looks like in a way, depends on where it is that you think you want to sort of deploy your capital.

Brad McCarty: Sure. So when we’re talking in the Nashville area, what’s the future look like for us? I mean, we’re pretty exciting times as far as anyone kind of at a glance can tell. Is that a fair assumption?

Dr. Ramirez: It’s a great question. And if you asked 20 different people in the city, you’d get 20 different answers. I think Nashville is in some ways at a really exciting place, right? There’s lots of capital that’s come to the city. There’s lots of new intellectual capital which is different than financial capital, obviously.

Brad McCarty: Right.

Dr. Ramirez: But the other thing I think is that there’s so much change that’s going on in healthcare in particular because of organizations like HCA, and some of the others that are here in the city. Nashville grew, and has grown on the backs of fee for service, healthcare delivery. And depending on who you ask or which way your politics blow or any other number of sort of X factors, managed care is either going to come in and revolutionize healthcare and this fee for service model is going to go away. Or, people are going to double down and say we’ve just got to figure out how to deliver that more efficiently. I don’t really think that anybody knows yet. I think a big part of Nashville’s future is going to depend on how all that plays out. I can see a world where things really don’t change that much either because political inertia discontinues.

Brad McCarty: Sure.

Dr. Ramirez: Or, we figure out how to deliver things more effectively. I think Nashville will kind of continue to innovate on the margins. But, I think you could also say as things like bundled care, accountable care organizations, some of these other things kind of really change the payer delivery model.

Brad McCarty: Right.

Dr. Ramirez: Nashville will need to change with that because if it doesn’t, it will struggle.

Brad McCarty: There was a really interesting talk at Health:Further from a gentleman whose name I don’t remember off the top of my head, but he was from Walmart of all places, which kind of at one moment made my jaw drop. And so, he was talking about kind of the market as it stands today with it being a consumer’s market, a shopper’s market when it comes to healthcare. Do you think that that’s going to play into what we see here? I mean, it’s kind of that larger conversation of ACO’s versus fee for service, and what have you.

Dr. Ramirez: You know, it’s great question and it’s one that I’m kind of like internally conflicted about a little bit. I’m wearing my hat as a clinician on some days of the week and then-

Brad McCarty: Sure.

Dr. Ramirez: Because I think … Let me take a step back and say that that first day of Health:Further, one of the messages that I took home was change is coming to healthcare and you can either get on board with this or you can get out of the way.

Brad McCarty: Yeah.

Dr. Ramirez: I think that sometimes that creates a little bit of a gut check for people who work clinically who have devoted a lot of time to education, a lot of time to actually delivering care at the bedside. When you have some of these folks who aren’t as directly connected to patient care, sort of big taking what they think is gonna happen in the healthcare space.

Brad McCarty: Right.

Dr. Ramirez: And I always think it’s interesting how much of that population says that it’s a consumer driven market. And then when I go into the hospital, how little of it feels like it’s actually a free choice market.

Brad McCarty: Yeah. Right.

Dr. Ramirez: It’s because most patients don’t directly pay out of pocket for their healthcare. We’re talking about a very inefficient market space that is not driven by traditional consumer behavior. I think there is a real interest and a real desire for increased access to care and trying to find a way to make it easier. But, I think there’s also a reason why we’ve seen things like Telehealth and some of these other things struggle a little bit because people don’t consume healthcare the way that they consume other commodities.

Brad McCarty: Interesting.

Dr. Ramirez: And so, I think that there are still some struggle that’s got to play out there before it really becomes a true consumers market. I think it’s more than hints, but it’s not total uptake model yet.

Brad McCarty: Okay. More than hints, that’s a good way of putting that, I think.

Dr. Ramirez: Well, I think you got to look at players like Amazon, Walmart, some of these other folks and recognize that these are huge market shifters who are going to really change the market.

Brad McCarty: Right.

Dr. Ramirez: But, what that looks like is still anyone’s guess.

Brad McCarty: So, I want to kind of finish out with the last couple of questions here as pieces of advice, if you had to give them. As a physician who has made the transition into entrepreneur, who has also made the transition into at some level an investor as well, what advice would you give to those people who are sitting back and thinking about doing it and are still kind of on the fence?

Dr. Ramirez: Oh, that’s a great question. So, the first piece of advice I would say is take any advice that I give you with a grain of salt. That’s probably good advice for anybody’s advice. I think in a way, some of what is going on in healthcare and among the clinician community is I think a struggle for the soul of what medical education needs to be now. I think there’s a recognition that the way that we’ve taught and trained clinicians over the last 60, 75, even 100 years has to change with the new way that we’re delivering care.

Brad McCarty: Okay.

Dr. Ramirez: And as part of that, the curriculum needs to change, right? So that there’s a reason that we see MD MBAs as one of the largest growing segments of postgraduate education.

Brad McCarty: Right.

Dr. Ramirez: Because, people realize that there’s market forces at work that are changing the way that care is delivered, but also what it takes to be successful in this marketplace. And, it’s not always even the definition of what success looks like, right? Because so few people actually own their practices anymore. People are increasingly seeing their practices bought up. So I think if I was going to give people advice, I would say it’s important to diversify your exposure to things early in life and earlier in your career.

Brad McCarty: Okay.

Dr. Ramirez: Because, I think there’s two sort of competing models. So the first are people who are relatively early in their clinical training or clinical practice, and still have that kind of intellectual rigor and bandwidth to kind of explore other stuff. But then, you sort of get into this valley. You get into your forties and your fifties where your primary focus is on revenue generation and putting money away for retirement or college, or all these other things that you start to get handcuffed a little bit.

Brad McCarty: Sure.

Dr. Ramirez: What you sometimes see is people coming out on the back end of that. Sometimes, not always frustrated with their clinical practice or sort of feeling intellectually void, and trying to find that out on the back end. All of those different things lend themselves to different ways of getting involved. So, I think folks who follow that second model tend to be a little more investor heavy, and have the actual capital to deploy. So my advice is that if you feel like your primary interest is going to be in seeding and funding early stage companies, that you go out and work really hard clinically or do something that’s gonna generate a lot of revenue for 20 or 30 years before you try to get into that space. But if you’re interested in being a part of the process and you want to work in startup space, if you want to be in an early stage CMO or you to be a part of an accelerator like I work at here, I think you’ve really sort of got to redouble your efforts and plan to spend more time in your career doing it.

Brad McCarty: Sure. I had an interesting talk with Dr. Jeffrey [inaudible 00:21:06] a couple of days ago, and he brought up a point that I had never really considered, but I want to bounce it off of you because I think that you’re an ideal person to ask this question to. He said that there’s less of a stigma now about going through medical school and spending maybe a year or two in practice and then basically dropping it to become either an entrepreneur or an investor or what have you. Would you agree with that?

Dr. Ramirez: That’s a great point for discussion, and I love Jeff actually. I think Jeff is one of the smartest people I know in this space.

Brad McCarty: He’s incredible.

Dr. Ramirez: I think you’re right on the one hand, and there is less of a stigma towards … I mean, I think traditionally there was a guilt complex associated with leaving your clinical practice to go do some of these other things. Because if you go to medical school, you should ideally apply that training and the care of actual patients.

Brad McCarty: Right.

Dr. Ramirez: Because if not, there’s no point. That’s part of why I still practice, because there’s a part of me that still feels that way. The chance to sort of lay your hands on patients, actually deliver healthcare is something that so few people get to do, that in some ways it’s unfortunate that we give that up early in life. But, I think it’s also undeniably true that you can’t be all things to everyone. You can’t do everything all the time. And so, it’s extremely hard to practice clinically and do some of these other things at the same time. I think in this sort of existential search for happiness and the meaning of professional fulfillment, I think that’s going to mean different things to different people at different points in their life. The other thing that I think sort of phrases from interesting perspective is that we’re also depending on who you ask, coming to the end of a relatively economic boom time.

Brad McCarty: Right.

Dr. Ramirez: So, their risk trade-off calculus there has been different. So for so many physicians who came out of their training in the last 10 to 12 years, your chance of success with a startup was certainly better than it was 20 years ago, or 25 years ago.

Brad McCarty: Right.

Dr. Ramirez: And so coming out of that place, I think that helps shape the discussion a little bit. I think if we see an economic downturn and things aren’t as successful as they’ve been for the last 12 to 15 years, we may see people sit back in the other direction. And I think the other part of this that’s directing a lot of this is just frustration with the sort of payment and delivery things that are-

Brad McCarty: Yeah, the status quo.

Dr. Ramirez: Right, exactly. I think if we could find a way to fix that and people actually enjoy the act of delivering healthcare again, we may see more people who want to stay clinically.

Brad McCarty: So Mario, final question for you. This has kind of become my favorite go-to ending question because my library is ever expanding. What’s the last book that you recommended to someone?

Dr. Ramirez: The last book that I read actually I think is great. Not just in business, but actually great for healthcare folks is Never Split the Difference by Chris Voss. Chris Voss is a … He’s an old FBI negotiator, and he makes this interesting argument. I think that negotiation is not in the act of finding the best middle agreement, and that’s actually a bad outcome when we kind of agreed to meet somewhere in the middle, and then it actually really doesn’t effectively meet anyone’s hands. It’s interesting how many of the sort of techniques and his approach to negotiation we can apply not only in business, but I also frequently lean on some of these when I’m talking with patients.

Brad McCarty: Right.

Dr. Ramirez: Because I think there’s a lot of the patient care delivery model is a negotiation in some ways. That’s changed over the years, right? I mean, we’ve moved from a very paternalistic medicine model to one where we kind of cooperate with our patients. Which I think is a good change, but that means that we are in the sometimes awkward position of trying to do what’s best for our patients without them necessarily feeling in their best interest, trying to negotiate that difference. So I think that book is great. I would highly recommend it for anybody who’s working clinically or interested in some of these outside ventures.

Dr. Ramirez: Let’s see. Are there any others that I really recommend? The other one that I read that I think is great is Venture Deals.

Brad McCarty: Ah, yeah. Brad Feld.

Dr. Ramirez: I think there is a real absence of information and understanding within the physician community about how venture deals are structured, how Angel Investment actually works. So for people who are either interested in starting their own companies are interested in investing in different companies, I think that’s a critical book for just understanding how this whole thing works. It’ll take you from not knowing anything to knowing more than 95 percent than the people in the room.

Brad McCarty: Absolutely. Well, and Brad Feld is a long time incredibly smart investor who has been wildly successful at what he does. So, kind of speaking from a position of authority on that as well. Mario, thank you very much for your time. Really appreciate it. And for opening up the offices today, which is interesting by the way, as kind of a parting note. When I asked for an address, I kind of figured I’d be in the medical part of downtown, but we’re not. We’re over here. What is this officially? Five points east Nashville?

Dr. Ramirez: We’re in East Nashville now. I mean, it’s funny, right? You can be a guy with a laptop and you’re a startup company. Right? So, we’re in east Nashville and I think this is as much a healthcare focus in Nashville as Cool Springs or any of these areas are.

Brad McCarty: Sure, sure.

Dr. Ramirez: But thanks for coming in, and thanks for having me on the show.

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AngelMD On Call Podcast – Healthcare in the Trump Era

As we come closer to the 2018 midterm elections, healthcare is on everyone’s mind. After two years of a new administration in the White House, it’s time to take an objective look at what changes have happened, and what might be coming next.

Dr. Wendy Whittington is a pediatrician, prolific investor, and self-described policy wonk. In this episode of the On Call podcast, we pick Dr. Whittington’s brain on subjects ranging from the Affordable Care Act to the FDA. We discuss both sides of these political stories without delving too deeply into the politics surrounding them. We also take some time to talk about the current state of healthcare investing, and whether now is the time to invest or hold.

Transcript is below for those that prefer reading to listening!

Subscribe to AngelMD On Call via iTunes.

Welcome back to the AngelMD On Call podcast, I am Brad McCarty from AngelMD, and I am joined this week by Dr. Wendy Whittington. We will be discussing politics without getting too political. We’re discussing the age of the Trump administration and the impact that it has had on healthcare. So Dr. Whittington, please give me your background here and I can then explain a little bit about why I wanted specifically to have you joining me for this.

Sure, sure, happy to, thanks for having me. So I am a general pediatrician first and foremost. Practiced for 20 plus years, but toward the latter part of that career made my way into hospital administration and have held CMO roles, CMIO roles, technology roles, CIO roles, and also have done consulting particularly around things like clinical effectiveness. So all the while I’ve considered myself and amateur health policy wonk or enthusiast. So I’m thrilled to be chatting about all this today.

Yeah and I think that’s actually kind of what started this conversation between the two of us a few months ago actually before we went to the Alpha Conference was that we both kind of are a little bit of policy wonks. We tend to get involved with what’s happening in Washington and locally as well and keep an eye on that. So we’ve got a few topics to discuss in this podcast, but I wanted to start off by talking about the Affordable Care Act, the ACA, Obamacare, whatever nomenclature you wanna go by here, and where it stands today, and how it’s different, you know what sort of differences we’re going to see moving forward because of things like the repeal of the individual mandate, for instance.

Right. You know for starters, Brad, it probably makes sense to just clarify it is still in effect. There was an interesting study, I think it was done at the end of last year, you know polling people about Obamacare, or the Affordable Care Act, and something like 25% of folks in that study believed it had already been repealed errantly. So there’s a lot of myth and misunderstanding out there. So getting back to your question, it is still there. I wouldn’t say it’s alive and well because it’s being whittled away at, but it’s still very much out there.

Okay, and when we’re talking about the ACA, there are obviously for people who are in the healthcare profession, we’ve got a little bit better idea about what it means and what it doesn’t mean, but we also are speaking pretty heavily to investors on this podcast. So let’s kind of break down what the ACA is and what it is not, and I think first and foremost from a legislative perspective, the ACA set about a number of standards that insurance companies had to meet as far as quality of care, availability of care, and in some ways the cost of insuring that that care was available. Is that fair to say?

That’s totally fair to say. And I think to your point about speaking to investors about this, there’s always for me a little bit of a push and pull here, so to do right by healthcare within the ACA I have to put my “Do the right thing” hat on, and when I think about this as an investor I like to kind of go by the premise that doing the right thing is also good for investors, you know do well by doing good. But there are some conflicts and I think we just have to be clear about those, and I think we’ll probably hit on a lot of those today.

That’s I think what makes this topic so interesting is that there are so many potential conflicts to discuss. Most recently, to kind of get people up to speed with it, one of the tenets of the original ACA was that everyone had to have health insurance, and if you couldn’t afford health insurance through the marketplace and what have you, then there were ways that you could get a premium reduction, or you could get some assistance in affording those premiums, and the idea of this like it is where you have mandatory insurance say for automobiles, is that the larger the pool, the less responsibility each individual person has and so the lower cost.

That’s exactly right, and that was the whole premise behind it, right, and the whole reason that it would work is because in doing that not only do you bring more people in, but you bring a healthier population into a pool of folks. So it just makes a whole lot more sense.

To be fair, on that point of a healthier population, part of what I think took the insurers by surprise was exactly how many unhealthy people were signing up for these plans. The initial thought on this was if we have a 100% pool of everybody here and everybody’s signed up, then we’re gonna have a pretty healthy overall group that are going to be splitting these costs. What we actually found to be the trust was that the overall level of health was somewhat lower than what was predicted, and so the costs were therefore somewhat higher because you had less healthy people. You’re going to hear a lot of anecdotes about you know “I couldn’t keep my doctor,” or “My premiums went up 15 times what they were,” and those cases certainly did happen, but largely the ACA was pretty effective in accomplishing what it set out to do. I think that, again, I hope that’s fair to say.

I think it’s fair, but I think in all fairness let’s look at it from a devil’s advocate perspective as well. One of the faults was that the impetus for healthy folks to sign in, to your point a lot of folks with health problems signed on if you listen to the insurers, you know the carrot for healthy folks to sign on was not all that great and the penalty, and the stick wasn’t all that great either if they didn’t do it.

Sure, so you ended up having a number of healthy people who didn’t sign up because it was not that big of a deal for them to deal with the tax based penalties of not signing up for the care plans. It was cheaper for them to pay the penalty than it was for the insurance. So most recently, to kind of get us up to current day, there has been a repeal via the Trump administration of that individual mandate, and that’s kind of the cornerstone of the ACA is that it can only work if everybody is involved with this. So we started seeing a little bit of whittling away of that during last year’s open enrollment period which was shortened, and there was significantly less advertisement behind that, thought we still did see good numbers sign up. This year we have had the repeal of the individual mandate which will then go into effect … did that go into effect immediately or does that wait until next tax year so for 2019?

That’s a great question. I’m not exactly sure. There may be different parts of it that go into effect at different times. But you know I would agree with you completely that we’re seeing that, and at the risk of sounding too political on this issue, I think rather than just let’s repeal Obamacare all together, it’s a little quieter going on behind the scenes and a little easier politically I think for the folks that wanna see it gone to just chip away at it. And in getting rid of the individual mandate that’s part of I believe what is happening here. So ultimately if you take away the things that was going to make Obamacare successful in the first place, ultimately folks that are against it are just gonna be able to turn around and say “Look, it failed.” Well, it failed because we’re chipping away at a lot of the basic tenets.

Right, we might have cut the cables on the bridge and then said that thee bridge fell.

Right the bridge didn’t work, right. So you have the repeal on the individual mandate, but then you also have the short term health plan.

Right, and so let’s … you have actually looked into this a little bit more than I have I believe, so would you kind of give us a clue as to what’s going on with the short term plans?

Yeah, so basically the Trump administration, and I think they just finalized this rule last week, said ‘Okay, now it’s gonna be okay for insurers to offer these short term health plans,” and the short term health plans basically are able to skirt a lot of the rules that Obamacare put in place for the insurers. So short term health plans, for example, are potentially going to be able to exclude people with preexisting conditions. There’s all these things that were, again, some of those cables to the bridge if you will on the ACA that are being chipped away at with the short term plans.

To clarify, short term plans are not a new thing, right? They’ve been around, but they were intended to be kind of a gap filler. Like I left one employer, I was starting with another, so in order to meet the ACA requirements and not have an insurance gap I would get the short term plan for 90 days or something like that.

Right, but I think the short term health plans that we’re gonna see coming about as a result of this recent rule is … it’ll be an expanded version of that, and I think that there are a lot of insurers that are saying “Great, I’ll just offer these plans.” They’re money makers, you know one of the big things that I found offensive about it is that brokers who sell those plans can make commissions in the 20% range on the short term plans, and those commissions were limited to 5% on ACA plans. So there’s all these little things in there that make it profitable for opportunists to jump into the short term health plan game, and that will also chip away at the ACA.

But these are really only for catastrophic coverage is what I’m seeing for the most part.

That’s right. So most short term plans aren’t gonna cover maternity care, they don’t need to cover outpatient prescription drugs, substance abuse, mental health treatment is a biggie that they don’t need to have. So those are some major major gaps in my opinion.

Who bears the burden of this, because at the end of the day we’re going to have fewer people, fewer healthy people and unhealthy people inside of these larger more standard plans. So do we expect to see premiums rise on those plans as well?

That’s a great question. You’d have to ask an economist, and I’m not one, but I suspect the answer is yes. I suspect the answer is yes, and then again, at the end of the day, the opponents of the Affordable Care Act are gonna be able to come back and say “See? We told you premiums were gonna rise.” Now, if you look at the CBO projections I don’t wanna mislead, the ACA was not perfect and there were some things to be worked out for sure in the premium department.

For anybody who agreed that the ACA was at least functional, we all agreed it was imperfect and needed a lot of change, but I think you covered, you actually touched on a really big point was that for the first time in a long time mental health coverage was a requirement for any type of ACA qualified insurance plan. So I think that a lot of people are gonna be unpleasantly surprised when they get into these plans and they’re saying “Sure, now I’m only paying 45 bucks a month or whatever it is for this lower tier plan, but it’s just not gonna cover anything unless I like lose a limb or I’m hospitalized for an incredibly long period of time.”

Right, right. Exactly.

One of the other arguments that I’ve read against these plans, and I don’t have a whole lot of experience here so I’m hoping that maybe you do is that there is an elevated risk for nonpayment on these plans as well because you have, I think it’s in some cases a lack of education where somebody signs up for this plan, they go see their primary care provider, their PCP puts them and says “You need to go into, you need to be admitted,” and then they get out of there, they’re stuck with this massive bill because they have maybe it’s 10 or 15 thousand dollars worth of co-insurance that has to be paid upfront.

That’s a great point. That’s a great point, and time will tell. So when we first saw the ACA come into effect we had a lot of folks looking at inpatient care for example on the hospital side, and thinking “Wow, great, there’s gonna be more covered people therefore less uncovered care that hospitals are providing.” And I think we did see a shift there. For a while things were heading in the right direction, but I think you raise a really excellent point, and I think you can add onto that point that what most experts think will happen is folks sign on for these short term health plans, then they become ill, realize the plan doesn’t cover what they really need, and they’re gonna end up then going back to the ACA to try to get coverage, and it just really complicates things. So yeah, who’s gonna get stuck with the bill at the end of the day? Somebody is. Right? And the bill is likely to just keep going up, I don’t see how it’s gonna go down.

You know the goal of this episode is to look at both sides of this, but I don’t really know that there is a potential upside to repealing the individual mandate and where the ACA sits today because we’ve been told, or they’ve tried to kind of sell us on this idea of repeal the ACA, replace it with something better, leave it to the free market, but that’s where we were before the ACA, and so we somewhat have already seen how that story ends, or am I missing something?

No you’re not missing anything. And you know it’s interesting when you think about healthcare reform, you know a lot of folks think “Oh gosh, they first started trying to do that during the Clinton administration,” but not so, you know you can go back and back to the Truman years and see attempts to change or fix our system. I think the increased urgency is the fact that in recent years healthcare spending has approached now what, 19% of our GDP. So yeah, I’m with you. I don’t get it. I think we need bigger fixes. I do think that part of the ACA that we haven’t talked about … I have to give you this part is happening outside of the ACA as well, but there was certainly kind of link between the ACA and the move toward value based care. Those two things went hand in hand even though I’m hopeful that some of the movement toward value based care will keep going. I think that’s where we have to shift a lot of our thinking.

There’s been a lot of legislation, there has been, well interestingly a lot of it’s been delayed. You know if you look back over the past couple of years and you start looking into like centers for Medicare, CMS, and you look at what CMS has finally come out with as far as their standards of care, a lot of these things never really got a chance to take off because the rules surrounding them took so long to come out, and then by the time that their implementation dates hit then we were already into the current administration which then changes things.

That’s right, that’s right. And in all fairness not all of it I think was as successful as CMS had originally hoped. If you look at the accountable care organizations, for example, right, there wasn’t a lot of savings that has happened in that trial to date. I think just yesterday CMS came out and said “You know, we’re gonna change this a little bit. We’re gonna get rid of some of the accountable care organization structure that we had put forth to date, and we’re gonna require that providers take on more risk.” You can’t just say “Okay, I’m gonna be an accountable care organization, and I’m gonna collect these bonus point dollars for doing well,” there also has to be a risk portion of it. So it hasn’t been perfect, the move toward value based care, but I think much like the ACA itself if we don’t keep working at it and moving in the right direction, if we keep slapping it every time we change administration we’re not gonna get there. Healthcare needs a slow, steady fix. I’d rather see a fast, steady fix, but we’re not gonna tolerate that. So what it really needs is consistency, and we change the rules all the time and that doesn’t help.

I think that’s a perfect segue into … I don’t wanna continue to hammer on this for too long because I think we’re somewhat in agreement at least from our viewpoint that yeah, the individual mandate repeal and the ACA is problematic at the very best right now. But we are coming into midterm elections, so we have an opportunity there I guess to once again change the story of what’s happening. So it should be interesting. What should we watch out for? Anything in particular?

Boy, and you want me to keep it not political? Brad this is a tough one.

I know, that’s really really hard to not get political when we start talking about elections especially, but the thing that I wanna do is at least present both sides of this story.

Sure, sure. Well I don’t think when you look at healthcare policy, I really care about these midterms personally, but I think as a healthcare executive, or a healthcare policy person, I’m maybe not as interested as I am in a presidential year because when you look at the appointment of the head of the FDA for example, when you look at who’s running Health and Human Services, that’s gonna come from the president. So I don’t see a lot of great big shift back toward a healthy, thriving ACA even if the democrats were to take majority.

Which is actually a perfect segue into the next section that I wanna talk about, which is the FDA. So if we’re talking about positives, the FDA is kind of a bright point right now in a lot of ways, especially or young companies or companies who are delving into new drugs. So we’re seeing … I think across the board we can definitively say we are seeing faster drug approvals today than we have in the past.

Oh without a doubt. Without a doubt.

But what’s interesting about that, if you go back and you pay attention to the legislation around it, this actually started in 2012 but was never really enforced, and I don’t know why that is. Do you have any insight there or is that a mystery to you as well?

Well I think Dr. Gottlieb has something to do with it. So you can have a rule in place, but if your leader is leaning in one direction or another the speed with which a rule is followed or not followed might change. So I think leadership has a lot to do with it, and I’m not saying it’s necessarily bad either. There’s certainly some good parts to less bog down at the FDA.

The feeling that I’m getting is from the high end on down, so if we look at Wall Street, so if you look at these large corporations like Pfizer, AstraZeneca, and whatever, they’re seeing some pretty nice returns off of being able to bring new drugs or new formulations of their drugs to the market and to get them trough clinical trials faster than they had previously. So obviously for investors in these companies that’s wonderful news. But I wonder about newer smaller companies. I wonder if there is an increase in competition for them, because you have these larger companies which have more resources to be able to put toward investigating these different drugs or different formularies of them, or if it really isn’t making much of a difference as far as a battleground between the establishment and the upstarts.

I don’t know exactly, to be honest, but I don’t think it’s making that big of a difference. I think that the part that I would highlight there when you look at the lobbying efforts of big pharma and all of that is how does this relate to drug prices. So not only did Trump campaign on we’re gonna decrease regulation all over the place, but also we’re gonna beat up these companies and lower drug prices, and that hasn’t happened. So you would think that an easier, smoother FDA process might go hand in hand with seeing some prices come down. There’s actually a great editorial in the New York Times over the last couple of days about why, why haven’t the prices come down, and what would we need to do to make that happen. It’s not rocket science. It’s within reach, it just I think where there’s a will there’s a way.

We’re seeing some interesting developments within drugs as well. As a matter of fact you and I were talking earlier today about the new surrogate endpoints that the FDA has kind of unveiled here, which again should help make these authorizations and make the approvals go even faster than we’ve been seeing. So I think there’s definitely room for improvement here, but I think that across the board we’re seeing the potential is there for lower prices, we just don’t, you can take the skeptics view as to why we haven’t seen them yet.

Yeah, yeah. I think there’s a lot of question marks there. I don’t have the answers either.

So you pointed to something that I found very interesting from the Brookings Institute that kind of talks about the deregulation within the Trump era, and when we’re looking back, so kind of across the board, which if you followed this administration at all you’re fairly familiar with the idea that anything that went into a proposal during the Obama administration or became final during the Obama administration has been delayed within the Trump administration. Basically everything that we’re looking at with healthcare.

That’s right.

I’m sure that that may be different in other areas, but certainly within healthcare. Are there any potential negatives to what we’re seeing with this change at the FDA and the speed up of this process?

Well when you look at the changes at the FDA, I’m sure there are pros and cons to that process, right, and things going faster, but that’s not everything that’s going on at the FDA. The FDA is responsible for other things like protecting us from harmful substances like tobacco. So you look at all the things, regulations that were set in place during the Obama era and now delayed during the Trump era, some of those fall under the FDA. One in particular is the deeming rule. So the deeming rule was put into place during the Obama administration really to allow the FDA to regulate tobacco outside of what we traditionally were regulating and to move into e-cigarettes and vaporizers and all those other things. Well the Trump administration has delayed that. So there’s a lot of other functions of the FDA that I think are important that we think about that may have been a little bit of an evasive question on your fast track drugs, but I think we have to look at the FDA wholistically.

There’s a lot of other stuff within the FDA that’s not really been the topic of discussion here, and so I think that has to be at some level at least a point of contention for these younger companies, or even established companies who are trying to bring new devices to the market and get caught up kind of in this regulatory process mud puddle as it tends to be. So I almost wonder if … there’s room here it seems to me for this administration to make some more positive impacts, to be able to say “Okay, why don’t we figure out a way to make this process better than what it is today?” So credit where it’s due, even though the rule came into play in 2012 it was really enacted until this administration comes into the office in early 2017.

Right, right. There’s a fine line. You know I haven’t seen anything, although I’m not looking at every little thing that they pass through, I haven’t seen anything that has made me say “Ay yi yi, we’re going too fast, we’re letting the wrong things through,” but that’s not my job. It’s somebody else’s job to make sure that that doesn’t happen, and I have some level of faith in that section of our government, and we just have to remain vigilant.

So the final area that I wanna talk about today, which is something that you alluded to earlier, you are an investor as well, and so let’s talk about the impact of investing because of this administration and the changes. Personally, have there been any kind of big flashy neon stop signs for you, or maybe big flashy neon go signs that have changed because of the regulatory differences with this administration?

Big flashing stop signs definitely not. Big flashing go signs might be an overstatement, but you know it feels like a good time to invest. It feels like a good time to be investing. There’s a lot of exciting companies coming up now and I think just the overall atmosphere at the FDA is creating a little enthusiasm for some of those companies as well. So I think it’s an exciting time.

So one of the things that we kind of harp on, maybe that’s the wrong term to use but it’s the one that I’m going to use anyway, at Angel MD is diversification and playing the long game, because we all kind of understand, and I think that this is one of the special parts about what we do at AngelMD is that we have so many physicians who are also investors and they understand that it takes in some cases seven to ten years for something to go through FDA processes and to come to market, and sometimes much longer even, and so that long game as Warren Buffet has often said and still says even in, that’s the advice he’s given for investing during this administration is to just focus on this long game. But diversification so if you’re talking to an investor who has not really stepped into early stage healthcare or alternative investments such as angel investing, is today still a really good time to do that?

I think it is. I think it definitely is. There’s just a lot of exciting opportunities out there and …

I think we can all say with the understanding that wage growth is a little more stagnant than we’d like to see it, but unemployment numbers are low, the stock market is high, things are looking pretty good, it’s fair to say that this is by pretty much every measure a strong economy right now, which makes investing and taking that little bit of extra and putting it into something that’s gonna work for you, that makes that, today’s a pretty good time to do that. That being said, what about the potential impacts of a president who’s very active on Twitter, and likes to take aim at companies and things of that nature?

Yeah, so we can kind of wrap those statements together. So yes, it’s a great time to invest, but most savvy folks that are looking at our economy in the future are saying “You know let’s just prepare for what might be coming as a result of whether it’s the trade wars,” or you name it, there’s a lot of liability out there. So I think as always don’t invest what you can’t afford to lose, but seize the opportunity as well.

Yeah, but generally speaking we may be a little frothy right now. I don’t think anybody … I think anybody who is honest with themselves is probably gonna say that things may be a little toward their high end before we see a return to normal, but I think that there is, obviously, after a period of high growth you kind of tend to have that regression to the mean. So the investors that I’m talking to most recently are saying, you know they’re still very optimistic about things, but they’re cautiously optimistic because we do have so many factors in play that we haven’t seen with previous administrations, whether it is kind of across the board deregulation, or improved speed in the FDA, or a president who’s very active on Twitter. We haven’t really seen these before.

Yeah. No, no, I didn’t mean to interrupt you, sorry, I just wanted to go back to that point about Twitter. I think most of us in healthcare, and maybe healthcare is not special, maybe everybody’s feeling this way, but I don’t think we put too much weight into those Twitter rants. I mean you have to kind of look at it at face value. This is a president who very early on in his tenure here said “Who knew healthcare could be so complicated?” Well all of us in healthcare.

Yeah literally everyone who’s ever walked inside of a hospital and gotten a bill knew.

All of us knew, and most people not in healthcare knew. So I don’t think we put what he says on Twitter about healthcare, whether it’s aimed at Amazon or anybody else, I just don’t give it any weight because I don’t think.

Yeah, so I think that actually may be an interesting parting shot. What about this Amazon thing? Amazon, Berkshire Hathaway, and there’s a third name in here that I’m not remembering off the top of my head, and what they’re trying to do with a large conglomerate of healthcare, are we gonna see more of it you think? Any guesstimates there?

Well they’ve been pretty secretive about it, right, so see more of it, I don’t know that we know what it exactly is. But I do know that there’s a lot of truth, if you go back and read Clayton Christensen’s work, there’s a lot of validity to the fact that when you have an industry like healthcare that is so set in its ways and has been so kind of barge like in the way it moves, that the way to really disrupt it is for somebody to come in not from inside and to make a big change. So you know that if you believe that basic premise, and I do believe that there’s some truth to that, and you look at how big Amazon and friends is and what they might be doing, I think it’ll be interesting to see.


We need disruption. I don’t know that this is the disruption I want, or we’re all gonna want, but…

But it is disruption regardless, right, it’s definitely stirring the pot somewhat.

Yeah, and that needs to happen for sure.

And stirring the pot with a really big paddle. So when you start talking about companies the size of Amazon and their market cap, and Berkshire Hathaway and the amount of money that they can put at something, that’s a really big pot to stir. Well Dr. Whittington, thank you so much for your time and for your insight. If people want to connect with you how can they do so?

Through my AngelMD email. You’re welcome to put that out there.

Great, so that is, you are Wendy, I believe, at, and you are connected not only to a number of our other physicians and investors but you also follow a lot of great companies on AngelMD. So if you’re interested in who’s doing interesting stuff, definitely see who Dr. Whittington is following. It’s a great way to kind of get a little insight into what’s new and what’s exciting within the platform. So once again I’m Brad McCarty and this has been the AngelMD On Call podcast. Thanks for listening. Make sure to drop by on iTunes. Leave us a rating and leave us a review. Let us know what you like, what you don’t like, what you’d like to hear and who you’d like to hear it from. We will be back with a new episode soon. Until then, make sure you’re signed up on Complete your profile. Keep in touch with us, we’d love to hear from you.

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On Call Ep 12 – Riding the Silver Wave

As the Baby Boomer generation nears 65, the United States healthcare system must find a way to handle the generational shift in both its staff and patients. On this episode of AngelMD, we’ll explore the oncoming “silver wave” and how it could be solved by entrepreneurship.

Transcript is below for those that prefer reading to listening!

Subscribe to AngelMD On Call via iTunes.

Susana: Hi again! Susana here and back with episode 11 of On Call with AngelMD, the podcast at the intersection of healthcare, technology, and finance. I know I say it every episode, but I’m going to say it again: please rate and review us on iTunes or if you’re listening from soundcloud give us a like and a follow or a comment. Thank you in advance for your wonderful feedback. Now let’s hop into the episode.

Growing up, my mom and I joined the organization Furry Friends. Furry Friends is a pet-assisted therapy service that is made up mostly of volunteers who get their dogs therapy-certified and then visit places where pets aren’t usually allowed. For our group, that was a senior living community.

I was pretty young at the time, around 13, and I had a really hard time connecting with the residents and understanding what their day-to-day life is like. Even now, as grandparents on either side are in senior living communities, I still have this difficulty.

But as I get older, and my parents get older, I realize I need to be more comfortable with that part of life. In a weird way, I think my unease is reflected in America right now.

A little less than 80 years ago, the American birth rate spiked and remained high from 1946 to 1964. Those born during this time period are commonly referred to as baby boomers. The Baby Boomers have had quite the impact on America, and they will continue to do so as after that spike, the US birth rate has dropped significantly, making baby boomers a large generation. In fact, according to the Census Bureau, senior citizens will represent more than 20 percent of the US population by 2030.

So America also has to come to terms with its aging population, and it has to do so fast.

Potential Solutions
Earlier this month, The Elder Law Journal Published an article by Sharona Hoffman entitled “The Perplexities of Age and Power.” In it, Hoffman chronicles the urgent need to focus on the approaching demographic shift in the American population.

Hoffman’s article in The Elder Journal proposes five actions America should do to better prepare for the so-called “silver tsunami” that’s coming. Of those 5, 3 directly relate back to healthcare.

The first of these three is long-term care for the elderly. This exists in a couple of different ways, those with greater mobility may just need an in-home aide, other may have conditions that require them to reside in a nursing home or assisted living facility.

According to the U.S. Department of Health and Human Services, the national average for the cost of a semi-private room in a nursing home is $225 dollars a day – that’s over $80,000 dollars a year. Assisted living is slightly less at $119 a day. Medicaid does cover some of that expense, though the future of that program is somewhat uncertain as certain states have taken steps to roll back Medicaid coverage.

If you really want to get an idea if how expensive long-term care can be, check out the AARP’s long term care calculator (which I’ll link below). Caution: If you’re from the Bay Area like me, results may cause you to choke on your coffee.

The next action Hoffman discusses is about improving the working conditions for those who provide the long term care. Professional caregivers captures a wide variety of professionals. Health aides or certified nursing assistants are common for those still living in the home and are usually paid less as they require less training. However the most common professional people associate with long term care is a nurse.

Nursing homes are the third-largest employer of nurses, following hospitals and outpatient clinics. According to the Bureau of Labor Statistics, employment of nurses is projected to grow 15 percent from 2016 to 2026, partially because of the aging population and partially because of care gaps in the healthcare system.

Unfortunately, this means the U.S. is not producing enough nurses to accommodate this growth. That’s why other positions like a nursing assistant exist. But it’s also why Hoffman suggests incentivizing the move to a healthcare profession, specifically one in the geriatric field. The incentives could range from loan forgiveness to medicare payment increases. According to an article in Hospitals & Health News, 1.6 million new aide positions will be needed by 2020 and the Bureau of Labor Statistics estimates the healthcare industry will soon be the nation’s largest employer.

Additionally, of the many nurses in the US today, about a third are baby boomers, meaning they’re about to retire and leave the workforce. An 2017 AMN Healthcare Survey of Registered Nurses found 27 percent of nurses plan to retire within the next year.

The supply and demand of the healthcare industry is not a new problem, but it will be exacerbated by the baby boomer generation. This is why Hoffman argues for more attractive benefits to nonclinical care providers.

These three points: more accessible and affordable long term care, better working conditions for caregivers, and incentivizing the healthcare profession – make a lot of sense logically, but how easily could they actually be implemented? Is the industry able to adjust to this on its own? Or will it need to be confronted by the next great disruptor? Let’s zoom in on long term care options to explore that a bit more.

Long Term Care as Ripe for Disruption

So home care and home health care are two types of long term care. Hey, wait, aren’t those the same thing? Actually no. Home health care is medical care provided to an individual in their home and home care is more help with day-to-day activities. An alternative to home care are is assisted living facilities or nursing homes. Earlier, I said Medicaid covers some home care and home health care expenses. And that’s true. Sort of.

Medicaid is funded by both federal and state governments which means the federal government sets some baseline standards, but states have flexibility in what they decide to cover. In case you weren’t confused enough, states also have multiple medicaid programs. Most states do have a Medicaid plan that covers at least part of the cost of any long term care solution.

In contrast to seemingly little coverage is the number of those who need it. 40 percent of adults over the age of 65 will need daily help and 70 percent will need it at some point.

So if 56 million people will be over 65 by the year 2020 that means over 22 million people will need daily care by the year 2020.

Now the three points Hoffman makes, though good, can mostly only be accomplished through policy. Which as we all know, is incredibly slow-moving at times and usually requires quite a few sacrifices.

But something needs to change, so what if, senior care, is ripe for disruption?

First, let’s define disruption because it’s all too often used as a buzzword for things it is not. A TechCrunch article defines two different types of disruption

New-market disruption – a disruptive product addresses a market that previously couldn’t be served and low-end disruption – which offers a simpler, cheaper or more convenient alternative to an existing product.

It’s unlikely we could classify senior care as ripe for new-market disruption, because there isn’t a clearly defined market that was not being served. When it comes to low-end disruption however, if you look at the cost and the potential market size for an alternative to assisted living or any form of care, a company could definitely come along and disrupt that space.

There is an awareness of this within the entrepreneurial community, but it hadn’t picked up until a couple years ago. A 2016 Guardian article cites ageism as a possible contributing factor, but also points out that the generation now moving into the caregiver role are the first to be digital natives.

There’s been a handful of gig-economy type startups that allow the family to be matched with a home care provider. It’s a plus for families as it removes some hassle and can be cheaper, and it’s a plus for caregivers as in some cases the caregivers of company employees with better pay and benefits and thus a better incentive to do good work. And hey, that sort of sounds like the incentivization part of the Hoffman article with talked about earlier.

Though we haven’t exactly seen an intense disruption takeover in the $80-100 billion home health care market yet, as America reaches a tipping point of it’s over 65 population, we may see one rise.
Now I know I said earlier that home care is non medical, but in a way it is healthcare at its most basic: ensuring an individual is fed, getting exercise, and getting extra care when need it. You might even call it preventative medicine.

Thank you for listening to on call with AngelMD. Visit us at for more information. You can follow us on twitter @angelmd_inc, we’re on facebook at /angelmdinc and you can find us on LinkedIn as well. I’m also on twitter @smacha1995. As this is the first season of on call, we’d love to hear from you! Tweet us with the hashtag #AngelMDOnCall and let us know what you thought of the episode. Thanks again for listening, we hope you join us again.

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On Call Ep 10 – A Seat at the Table: Boards & Startups

Boards are an important part of any company, but can be especially critical of a startup’s success. In this episode, we go over some pitfalls in board organization and leaderships with the help of Ana Dutra, CEO of Executives’ Club Chicago.

The full transcript can be found below.

Susana: Hello hello and welcome to episode 10 of On Call with AngelMD, the podcast at the intersection of healthcare, technology, and finance. I know I say it every episode, but I’m going to say it again: please rate and review us on iTunes or if you’re listening from soundcloud give us a like and a follow or a comment. Thank you in advance for your wonderful feedback. Now let’s hop into the episode.

[Clip from HBO’s Silicon Valley]

That was a clip from HBO’s Silicon Valley in which Richard, CEO of the fictional Pied Piper is basically fired from the company he founded. Much of the Season 2 and 3 storylines revolve around the board dynamics and show just how critical a board is to the future of a company, though obviously with a lot more drama.

In this episode, we’re going to explore board dynamics: why boards are important, the impact they have, and what to avoid when assembling your board.

Putting it extremely simply, a board is made up of important people and exists to guide and advise the company through important decision-making. And having a solid board with developed leadership skills is critical. This is something Ana Dutra, CEO of the Executives Club Chicago, has learned in her 28-years of experience consulting C-level business execs.

Ana: The one thing that I can tell you, for those of you who are investors or founders or inventors, is that I have seen great products and great companies failing or not having sustainable success because of poor governance and because of poor leadership. In fact, it is the highest factor for failure of companies no matter what size and what stage they are. You can have the best product, you’re going to be successful for a few years, but if you don’t put the right people in the right places at the right time, that is just not sustainable.

Susana: Organizing a board is an important step in any startup’s journey and it’s one of those tasks that’s never really done. Maybe somewhere along the line you’ll want to add a board director, maybe as your company grows you’ll need more or less input from your board, etc., etc.

In terms of who should be on a board, it varies. You will definitely want to make sure they have a good understanding of the industry you’re operating in. Some board members will join the company through an allocated seat after the close of a funding round. According to a TechCrunch article, it’s common to add a board seat for the lead investor of each funding round.

It’s a good practice (and Ana will talk about this later) to have an “independent” seat who is not an investor and not an employee. Though they should still be well-versed in the company and industry, this allows for somewhat of an outside perspective. Here’s Ana speaking about that and best practice for the size of a board.

Ana: Board Size. For startups, you have investor, you have the operators so the executive directors or the executive advisors. As I said, as least one or two independent directors should be in place. Think about who you serve. Think about the people who are validating your science or the data behind the company. Think about diversity and the … I was just having a conversation right before we started and just look around this room. I cannot believe that the markets that you’re serving are not low diversity as we see in here. So think about adding, not only people who can add value from a content perspective, but who can also represent known diverse segments in your company. They will help you to get more business. They will help you to see things from different perspectives. They will help you to attract capital from other sources as well.

So many times having one, and just one for startups, independent director on the board can make a huge difference. The other question is around who that the independent director is going to be. In the health care space, for those of you who followed what happened with Theranos or Outcome Health, just to site two very recent examples. Theranos did not have one scientist on their board. Didn’t have anybody who was there just to ask the right questions. It’s not to probe. It’s not to confront. It’s not to run the company. It’s just to ask the right questions. Outcome Health, I don’t believe that there was any poor-ill intention, in terms of the data, the big data, that they were analyzing and disseminating. But you know what? It was not right. When investors discovered that, they felt they were being deceived. So that’s why having an organization like AngelMD who is bringing all of you together to actually talk about those issues. Thinking about governance and organizational models in your startups and in the companies that you’re thinking to invest in and what are the right questions to ask, can be incredibly helpful.

Susana: So building a board takes a lot of work, and it’s an ongoing process so let’s talk a little bit about possible pitfalls in that process.

Ana: Let’s talk a little bit about the most common causes of disruptions in boards. The first one is misalignment around the mission of the board and the strategy of the company. That misalignment, of course usually in two ways. It’s either amongst board members, as I said if you have investors, those of who are in the room, the founders, the operators and they’re all looking at the business in the long term from a different perspective. We have a problem, Houston, right? The other one is between the board of advisors and the CEO and the person who’s running the company. Again, I couldn’t be more clear, boards are not meant to run companies. They are meant to ask the right questions. They are meant to advise, but if you have an adversary relationship or if you don’t establish roles clearly enough with the CEO operating the day to day business, we will have problems. This should be a partnership relationship not an adversary relationship.
The other type of misalignment that I’ve seen very commonly is around the future of the company. Are we growing to sell? Are we growing to acquire? Are we growing to IPO? What the heck are we doing here? Until you have that type of alignment, you will have serious discussions in the room that are not necessarily going to touch on alignment, but that are caused by the lack of. So we see very clearly when companies are talking about succession. So who is going to succeed the founder or the CEO? You start to see different board members coming up with different competences or profile requirements for the next leader. When you see people in radically different camps in terms of who they think should be leading that company, I can assure you that the misalignment is not around the individual of the role, it is around the strategy of the company. That’s the difficult conversation you need to have – unprepared directors.

Which takes us to the third point. Which is misalignment around expectations for directors. The first thing I always ask when I’m being asked to sit on a board is, what do you expect from me? Why are you asking me to be a candidate for this board? Is it because of my experience, technical competence, or is it because I can make connections for you or I can help you to raise money or is it because, in the case of some advisory boards, you expect me to be a little bit more hands on? So, for both sides, investors and board candidates as well as operators in the room, founders in the room, that needs to be abundantly clear.

Susana: These misalignments Ana’s talking about? They can pretty much all be explained as a breakdown of communication. She points out three misalignments: those around the mission of the board and the strategy of the company, those around the future of the company, and those around the expectations of the board member.

Those three aspects: mission, future, and expectations basically boil down to culture. So no matter what side of the table you are on, you need to ensure there’s a culture fit.

A board member position is essentially a part-time job. Would you accept a job where don’t think you fit it? Would you hire an employee who doesn’t seem to get along with the existing team? No! Of course not! And the same applies here.

A board should not be a source of conflict, but rather a resource. That’s why boards have evolved over the years and regulatory standards have been set, I’ll let Ana elaborate on that.

Ana: So, boards started very simply because people were investing money in companies and they wanted to know how they were run so there were no legislators, there were we no organisms regulating how boards should work. As I mentioned over the course of the last few years, not only because of the world financial crisis, or Sarnes Banes Oxley or you take World Comm and other big scandals and the scrutiny increase quite a bit. Investors also became savvier, so stock holders are saying hey, we want to have a say on pay of CEO, we want to understand how much equity is being given to employees at the top. Now you have the ISS with institutional investors saying if we are institutional investors, here are some guidelines that we want to impose on you.
So now there’s so much more responsibility over directors, which changes the role of directors as well, as well as investors. What we even think about in the span of investors? Because so many times the interest of the founder, the inventor, the interest of the current operator and the investors might be at odds, so although, at the end the ultimate goal is to increase value of the company. Whether you’re going to sell it or you’re going to continue to grow it, but you have investors and I work a lot with private equity groups, and when you have many private equity partners on the board, that creates already a tension point. With the CEO who is hired sometimes to replace the founder to take the company to the next level but one wants to accelerate to sell fast, the other one is thinking long term growth and sustainability.

Susana: No matter what side of the boardroom table you’re sitting on, the experience can be incredibly rewarding. As a board member, you get the opportunity to guide and enthusiastic individual as they pursue the unknown. And as a startup exec, you get a wealth of information and experience to take advantage of, so take advantage of it!

There’s countless stereotypes around board meetings and how they are a waste of time, but you’re only going to get out what you put in. To start getting the most out of your board, try drafting one big question for them per quarter. Not only does it show you value their input, but it’s also a great way to get feedback on “big picture” topics.

Do you have tips and tricks for how to best utilize a board? Have advice for future board members? Join the conversation on Twitter with the #AngelMDOnCall.

Thank you for listening to on call with AngelMD. Visit us at for more information. You can follow us on twitter @angelmd_inc, we’re on facebook at /angelmdinc and you can find us on LinkedIn as well. I’m also on twitter @smacha1995. As we’re a new podcast, we’d love to hear from you. Tweet us with the hashtag #AngelMDOnCall and let us know what you thought of the episode. Thanks again for listening, we hope you join us again.

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