This episode features an interview with Siobhan Nolan Mangini and Bob Kocher from Venrock. Siobhan is a Partner at Venrock, where she focuses on investments in healthcare technology and services. Prior to joining Venrock, Siobhan was an operator passionate about transforming healthcare through building and scaling innovative companies at the intersection of healthcare and technology. Also a Partner at Venrock, Bob focuses on health tech and services investments. Before joining the company, Bob served in the Obama Administration as Special Assistant to the President for Healthcare and Economic Policy on the National Economic Council and was a Partner at McKinsey & Company. In this episode, Kirk, Siobhan, and Bob explore Venrock's philosophy and approach to investing in transformative healthcare companies, the importance of aligning incentives, and the potential impact of AI and technology on healthcare delivery.
This episode features an interview with Siobhan Nolan Mangini and Bob Kocher from Venrock. Siobhan is a Partner at Venrock, where she focuses on investments in healthcare technology and services. Prior to joining Venrock, Siobhan was an operator passionate about transforming healthcare through building and scaling innovative companies at the intersection of healthcare and technology. Also a Partner at Venrock, Bob focuses on health tech and services investments. Before joining the company, Bob served in the Obama Administration as Special Assistant to the President for Healthcare and Economic Policy on the National Economic Council and was a Partner at McKinsey & Company.
In this episode, Kirk, Siobhan, and Bob explore Venrock's philosophy and approach to investing in transformative healthcare companies, the importance of aligning incentives, and the potential impact of AI and technology on healthcare delivery.
-------
“ Taking these dials that we're talking about and realizing, oh, I can carve out my PBM, I can put in benefits like Lyra, for example, behavioral health solution for my entire employee population. I can layer on maybe dynamic copays or narrow network designs, high performing networks, and actually have control. That idea that I am an agent of change, of providing better care, but a lower cost for my employees, is actually there and that they have the tools. That much more empowered driver's seat, to me, is where we'd be a decade from now, if not sooner.” – Siobhan Nolan Mangini
“ Changing healthcare is painful. It might be better at the other end, but the change is hard. People will have to change their insurance or change their doctors or change how they access care or it changes. We learned from the ACA and we've learned from everything since that people don't like that. You have to have something that's even stronger than the pain of changing how healthcare works. And then I think there's lots of ways to imagine how it could be better.” – Bob Kocher
-------
Episode Timestamps:
*(00:43): Siobhan and Bob’s paths to Venrock
*(04:38): The state of US healthcare today
*(15:44): The importance of aligning incentives
*(20:14): Empowering employers as agents of change
*(25:29): AI’s impact on healthcare delivery
*(27:45): Headwinds and tailwinds in the healthcare system
-------
Links:
Learn more about Collective Health
[00:00:00] Kirk McConnell: Healthcare costs are rising. Benefits are confusing, and the system doesn't always work for the people who need it most, but it doesn't have to be that way. Smart employers and their brokers are flipping the script, cutting costs, making things simpler, and creating a health benefits experience their people love.
[00:00:23] Kirk McConnell: Welcome to the Benefits Playbook. I'm Kirk McConnell, and in each episode we uncover the bold strategies that are rewriting the rules of self-funded health benefits. Today I'm really excited to be joined by two partners from Venrock Siobhan Nolan Manini, and Dr. Bob Kocher. Thank you both for joining us today.
[00:00:41] Bob Kocher: Thanks for having us.
[00:00:42] Siobhan Nolan Mangini: Thanks for having us.
[00:00:41] Kirk McConnell: Now, I'm excited about this conversation because you two sit in a really unique spot in the healthcare system at Venrock. You're able to look at the healthcare system, see the problems and the opportunities, but also be a part of fixing them through the companies you find and fund and help develop.
[00:00:59] Kirk McConnell: And so as we get into that conversation, maybe Siobhan, I'll start with you first. What was your path to Venrock?
[00:01:05] Siobhan Nolan Mangini: Absolutely. I'm someone who's had a lifelong passion for healthcare. I started out actually in health policy then I was a management consultant at Bain, and over the last 15 years I've been an operator building and scaling companies at the intersection of healthcare and technology.
[00:01:19] Siobhan Nolan Mangini: I had the opportunity to work at Castlight alongside you, Kirk, which is a Venrock portfolio company. Actually, they were co-founders of Castlight and got to see Venrock from that angle. I then worked at a biotech company and while I was there, began to serve on a couple different boards that were Venrock portfolio companies.
[00:01:37] Siobhan Nolan Mangini: Realized exactly what you just said. Venrock has the privilege of working with some of the most amazing companies from the ground up and really building them to be agents of change within healthcare. And so it's been an absolute privilege to be part of the team.
[00:01:49] Kirk McConnell: And Bob, walk us through your path to Venrock.
[00:01:52] Bob Kocher: Super serendipitous. I was having a chicken burrito at the American Indian Museum in Washington, DC with a guy named Todd Park who happened to found Castlight. We were working together in government and I was about to graduate from government. And I was talking about what to do when I grow up, I guess.
[00:02:09] Bob Kocher: And I said, what should I do? He said, you should go to venture capital. And I laughed at him and said that that sounded crazy. Like, I mean, I kind of wanna be an astronaut too. And it seemed deeply implausible. And he said, no, no, no, you'd be great. 'cause I've done a bunch of work on the Affordable Care Act that had a bunch of ideas for how incentives would change.
[00:02:24] Bob Kocher: Now healthcare would. And I'm like, well, I've never heard of a venture capitalist, never met one. Like, I have no idea. I'm a doctor, like, I dunno. And he called up this guy named Bryan Roberts, who runs Venrock and told him to meet me. And the lucky part is he was flying to Washington DC like three days later and he sent me an email saying, do you want to get coffee?
[00:02:43] Bob Kocher: And we met for coffee and it was a really fun conversation. And then that led me down a path to where he offered me a job and I moved to California and then I discovered I didn't know anything. So that was my path.
[00:02:53] Kirk McConnell: Well, that path to Venrock. So for those folks that are less familiar with Venrock, talk about the philosophy at Venrock and kind of the role you play in the types of companies you look for.
[00:03:03] Siobhan Nolan Mangini: I think Venrock has a history of working alongside entrepreneurs, kind of at the earliest stages idea on a piece of paper, founding seed stage series A, and to building really transformative healthcare and technology companies. I'll focus on healthcare given the discussion we're having here. So, you know, all the way Bob mentioned Todd Park to Athena and its early days.
[00:03:24] Siobhan Nolan Mangini: Bryan Roberts was very involved there. That's an EMR company. But then you think about more recently, there's been companies like Lyra and Behavioral Health, really a pioneer in that area, devoted in Medicare Advantage. Same thing. They co-founded that company, you know, and then maybe more on the tools and life sciences side.
[00:03:40] Siobhan Nolan Mangini: There's companies like 10x Genomics, which is a diagnostics company, or Illumina. And so really, I would say taking the full spectrum of healthcare and thinking about what's that next frontier of better care. Higher quality, lower cost innovation.
[00:03:54] Bob Kocher: Our goal is to build really large independent companies that hopefully do something originally and better by taking a clean sheet of paper and a line incentives and great people and just doing it.
[00:04:04] Bob Kocher: And then I hope that they get emulated by the rest of the healthcare system. And I think about Castlight when Castlight began. The idea of sharing prices and quality was like, why would you do that? That's a crazy idea. And today every single American has access to price and quality information on their healthcare.
[00:04:19] Bob Kocher: And like I think it's made healthcare better. And so I hope that these can be emulated and I hope that we are end devoted and companies like Accompany Health and Virta and show what's possible. And then I hope that people try to copy 'em and I don't think they'll ever catch them.
[00:04:32] Kirk McConnell: You know, there's a lot of opportunity to define possible in healthcare because we're kind of in a messy spot right now.
[00:04:38] Kirk McConnell: So, Bob, as you step back and just critique and look at the healthcare system as it is today, what do you say? What are the challenges? What are the problems? What are the opportunities you see?
[00:04:50] Bob Kocher: Well, I'd first say we're blessed to live in America, where for many people, we're able to actually deliver the best healthcare in the world.
[00:05:00] Bob Kocher: Like we, we have access to therapies earlier. We have the best teaching hospitals, we have great doctors. We can do things that just can't happen anywhere else right now. My mother-in-law, sadly, has pancreatic cancer and she's in Taiwan trying to access the health system there. And while the healthcare system has universal access, like getting all the things to happen as quickly as it should, really, really hard, and it's easier here. Actually, the problem we have is that it's really uneven access to care and navigation's challenging.
[00:05:25] Bob Kocher: And so like the work that you do at Collective’s a, you know, a great example of like how it should be done, but most people have a hard time accessing the healthcare system and getting to the right places in it. And then every single thing we do is, is too expensive. I mean, one of the things that just drew me down a path into health policy was
[00:05:42] Bob Kocher: I was working at overnight shift at Beth Israel Deaconess hospital and I was having terrible abdominal pain and fevers and totally sick, and then hindsight probably shouldn't have been working, but that was before we, we gotta work when you were sick. And I went to the ED and I felt terrible and the doctor like did a quick exam.
[00:05:56] Bob Kocher: They gave me some Tylenol to go back to work. I got a bill for that visit, and the bill for the visit was more than a thousand dollars and the Tylenol was $500 and I'd just been to Costco and bought like my HRA year supply of Tylenol, which is like 500 tablets for 20 bucks and was outraged. And unfortunately, every time you access healthcare, you can get great healthcare, but the price is just too much.
[00:06:16] Bob Kocher: And so I've been on this path ever since to try to understand like why, like why is it so expensive and how do we untangle the spaghetti knots of incentives to like make it more efficient and cheaper. 'cause every single thing we get in the economy, other than education, is, you know, getting cheaper and better.
[00:06:31] Bob Kocher: And healthcare is gonna be more expensive and may be better, but more expensive. And so we should be able to figure out how to drive down the cost here. And I think technology and AI and imagination is gonna help us do that. But first it's a puzzle of incentives and how do you align 'em so that everybody does better when you make it more efficient.
[00:06:47] Kirk McConnell: Bob, you talk about some of those knots that you're trying to untangle. What are those core drivers of why things are so expensive? You mentioned incentives. Maybe talk about that a little bit more, but also what other knots are you trying to untangle?
[00:06:59] Bob Kocher: Well, they're all interesting, but one of the biggest knots is that most of the healthcare system does better when the patient gets sicker, and so that's just a really sad problem, which is hospitals make money from complications and from complexity and doing more stuff to you. That's a hard one because I would hope that we can make people not need to go to the hospital and when they go to the hospital, like make them better and make them not come back.
[00:07:22] Bob Kocher: But that has led us to not have much preventative care to not have as many antibiotics as we'd want, and frankly, to not like reverse things like type two diabetes, which can be fixed. And so that's the one that I think is most fundamental that I'd love to change. Capitations. One mechanism to sort of get at that, where you give people a budget and say like, if they don't spend the money, but our periods for which we do the capitation are only one year, and that's not long enough.
[00:07:46] Bob Kocher: And so one of my dreams is to actually figure out how to have like five year or longer insurance policies so that there's time to actually prevent the disease and then get the payback. Second big knot is just the ROI periods.
[00:07:58] Siobhan Nolan Mangini: I was just gonna build on what you were saying in terms of the timeline is we have employer-sponsored health insurance in the United States, and as a result, your insurance is tied to the duration of your employment, which typically isn't very long.
[00:08:09] Siobhan Nolan Mangini: And so you end up just with this underlying duration issue, which I agree with problem number one that Bob was saying. And problem number two is just that like the time period is for you to think about in as an employer to invest in. Preventative care is reduced just because you aren't gonna be necessarily sitting with your employee for as long as required to get that ROI.
[00:08:31] Kirk McConnell: Let's dig into that for a second. You hear this a lot on the Medicare side as well, that in your enrollment is tough because you only create a one year cycle. What is the length of incentive where you think you would start to get meaningful change? Is it two years? Is it five years? Bob may maybe start with you.
[00:08:47] Bob Kocher: The best example is Valencia, Spain, where they do a 25 year policies and there they build sidewalks, parks, farmers markets. Nobody smokes like you totally rethink your health status. I think that's impractical in America 'cause we're not that patient. When I've talked to actuaries and experts about this.
[00:09:04] Bob Kocher: Most people would say five years is a period where you can really get payback on things like better chronic disease management, on weight loss, on improving your mental health, on sleep, on nutrition. What I would say is, you know, devoted, we keep Medicare managed pay. I was Chief Medical Officer at Devoted Health and built our care model, and so I'm more familiar with that Medicare population there.
[00:09:22] Bob Kocher: We do see ROI in five years. Now, these are older people that are an employer population. I think that's a reasonable period. I think it's hard to imagine longer 'cause people also move and context changes and your health status may change in ways that would make your choices hard to make sort of in a longer window. And so I'd start with that.
[00:09:38] Kirk McConnell: We talk about all these knots, let's talk about where we go from here, but let's do in the context of what a breaking point could look like. I think we've all been to those conferences where someone puts up a slide and says healthcare is gonna be unaffordable by 2030. All employers are gonna drop coverage.
[00:09:54] Kirk McConnell: Doomsday is coming. Maybe Bob, I'll start with you first. Is that the breaking point you think?
[00:10:01] Bob Kocher: 2030?
[00:09:54] Kirk McConnell: Yeah.
[00:10:01] Bob Kocher: God no. I have no idea. But I've given talks saying that healthcare was gonna break in 2018, 2019, 2022 and we're 2025. And it seems like it didn't break yet. So I've not been right. So I would first discount whatever I'm gonna say next, but I think healthcare breaks when we have a macroeconomic breakage in America.
[00:10:18] Bob Kocher: So I think about when we passed the Affordable Care Act, we could only do that because we had a great recession and we had 55 million people who were unemployed and had lost their insurance and didn't have access to care. We had a Medicaid system that we couldn't pay for. 'cause states their tax revenues went down 'cause we're unemployed and they had to balance their register and they couldn't pay the Medicaid bills.
[00:10:41] Bob Kocher: And so that caused us to have to do something. It was like a, an external event. It was the mortgage crisis, not a healthcare crisis that cost us to have a healthcare crisis to fix it. So I think it's gonna be when we have a, unfortunately, an economic disaster that forces people to be like, whoa, whoa, whoa.
[00:10:55] Bob Kocher: We gotta stop because healthcare is 22% or whatever of the overall US economy. It's a big part. So if we have a GDP problem and an interest rate problem or a debt problem, like it becomes a problem. And so I think it's something like that that causes it. Otherwise it's too painful. Changing healthcare is painful.
[00:11:13] Bob Kocher: It might be better at the other end, but the change is hard. People will have to change their insurance or change their doctors or change how they access care or like it changes. And we learned from the ACA and we've learned from everything since that like people don't like that. And so you have to have something that's even stronger than the pain of changing how healthcare works.
[00:11:33] Bob Kocher: And then I think there's lots of ways to imagine how it could be better. But, to me, that comes in the future. I do not know when that will come. Our economy's been more buoyant and more resilient than I think anybody expected and we should be thankful for that. And I guess, I hope it doesn't break for quite a long time,
[00:11:48] Kirk McConnell: But Bob, employers start to feel their back against the wall because of cost.
[00:11:53] Kirk McConnell: Do you think they act on that by dropping coverage, or do you think they're just gonna change how they think about it?
[00:11:59] Bob Kocher: Employers haven't really done that much yet to control costs. Like they've been unwilling to choose new networks. They haven't carved out their PBMs yet. They don't make people use mental health from Lyra instead of bad mental health from their health plan.
[00:12:09] Bob Kocher: They're not having people use Virta for type diabetes reversal at scale. They've been reluctant to take choice away from people. I mean, they have a lot of their employees and PPO networks going to doctors that are well valued, like. We all know that from the data, but they don't stop it. So there's a lot of levers they have.
[00:12:24] Bob Kocher: I mean, the easiest lever in the world is carve out your PBM. You'll save 20% of the cost right there, but they haven't yet. So I think there's a lot in front of them, but they've been unwilling to sort of go through the, basically, the behavior change that will have to happen for their workers. I think that they'll be better off when they actually get more serious about cost, but they've been basically accepting these increases because their businesses have largely been growing, as has the economy and so they may be able to pass through the cost, but there's a bunch of stuff you could do to make healthcare cheaper without dropping coverage and to be better at the same time.
[00:12:54] Kirk McConnell: Siobhan, let's talk, I know pharmacy is an area where you think a lot about. What are the opportunities you see in pharmacy that maybe employers haven't taken advantage of yet?
[00:13:03] Siobhan Nolan Mangini: Absolutely. And you know, pharmacy has been the fastest growing area of spend for employers. So it's 30% of health spend is actually now on the pharmacy side.
[00:13:12] Siobhan Nolan Mangini: It's growing 10 to 20% a year. And there's a lot that can be done, but it requires what Bob said, which is actually really doing the hard work of changing your benefit designs. And so one example is moving to a transparent PBM. I'm on the board of Smith, and that is fully passing through rebates. So not taking any of those, which is what the legacy PBMs tend to do.
[00:13:33] Siobhan Nolan Mangini: It's also getting an individual to the lowest cost drug. So Humira has biosimilars out there now and Stelara has biosimilars. You look forward, there's quite a bit of biosimilars that will be out in the future and actually ensuring that patients are getting to the lowest cost drug takes work.
[00:13:49] Bob Kocher: And so some employers are like, I'm doing a great job because I have CVS and people are getting on Cordavis or the CVS branded biosimilar.
[00:13:53] Bob Kocher: And it's true, they've branded a biosimilar and it kicked, actually, Humira off the formulary, but I think that drug's like $5 cheaper than Humira. So it's not any cheaper. And CVS is keeping all the profit.
[00:14:06] Siobhan Nolan Mangini: And who keeps the premium? Because biosimilars cost nothing.
[00:14:09] Bob Kocher: CVS does. And so you actually have to do the work of like not buying the one that costs 99% or the branded one. But there are a bunch of those and so that's the actual work is like, well, don't do that.
[00:14:19] Siobhan Nolan Mangini: Yeah, absolutely.
[00:14:20] Siobhan Nolan Mangini: Another example, GLP-1s. I'm sure you've been talking about this on the show.
[00:14:25] Siobhan Nolan Mangini: You know, that's a huge driver of employer spend. Well, if you're gonna offer GLP-1, make sure that you're getting someone to go onto something like Virta, right? A diabetes reversal or sustainable weight loss solution. Because the issue with GLP-1s, they are amazing, but when you go off, you see the bounce back, right?
[00:14:41] Siobhan Nolan Mangini: Like we've all seen that of the 12 to 13% increase in weight. So like ensuring that when you put someone on GLP-1. It's actually maintained the benefits of that therapeutic. And so that's another program that both Bob and I have spent quite a bit of time on and is a really hard dollar ROI for employers.
[00:14:59] Bob Kocher: And the benefit there is that you don't need it for life then because you lose weight, you learn how to keep it off, and then you stop the biosimilar and the weight doesn't come back. Nobody should be injecting drugs for the rest of their life. You should actually inject the drug, lose the weight, and then during that time that you're having great weight loss, learn how to live life differently.
[00:15:17] Siobhan Nolan Mangini: Well, I was gonna say one of the benefits of both of these too, is just when Bob was talking about what's been happening within the health insurance system, we've really been cost shifting to the individuals and to families paying more and more out of pocket. We've all seen this in terms of adoption of high deductible health plans, and so not only is this a win for employers, but actually employees are actually bearing the benefit of not necessarily being on GLP-1 with copay for the rest of their life.
[00:15:41] Siobhan Nolan Mangini: It's a win-win on both sides.
[00:15:44] Kirk McConnell: You know, Bob, I want to go back to one thing you said about incentives and the importance of aligning incentives. That's such a basic idea, but also so complicated. I wanna go back. All three of us were involved in transparency in the early 2010s, you know, Bob, what did you learn from that first effort to align incentives and kind of where has your thinking evolved since then?
[00:16:04] Bob Kocher: What I learned is that it's really hard to align in status for individuals because at the same time as we want to have them have skin of the game. We also don't want them bankrupt them and be regressive and unfair to people who are born with genetics that require them to use more healthcare. And so this intersection of like out-of-pocket maximum and like skin of the game makes it tricky.
[00:16:23] Bob Kocher: 'cause most of the cost actually is borne by the sickest people and all their cost is above the out-of-pocket max. And so these aren't really working for that population. So, one thing I've thought about is I need to shift the incentive from actually the patient to the provider. And so a lot of my work since Castlight has been thinking about capitation and care arrangements and primary care and how to actually have the clinician who's
[00:16:46] Bob Kocher: driving the care have an incentive to be value conscious. And so I think actually that moving the incentive from the patient side to the care side is a more effective way to actually align incentives. First of all. The second thing I think about is how do I make the incentives actually more compelling for people?
[00:17:02] Bob Kocher: I remember some of the incentives I would get, you know, is like, fill out your HRA and here's a $10 Starbucks gift card for coffee, or do a steps challenge and then you get a badge and then you can be in a lot a, a lottery retail, like you know, whatever thing. And those incentives aren't that aligned with actually.
[00:17:20] Bob Kocher: How I consume healthcare and how I behave, and so I, I wish we would attach the incentives to complying with the therapy that's recommended for your chronic disease or for. Achieving your weight loss goal and, and maintaining it off of your GLP-1 or engaging with your mental health provider and completing all the CPT so that you actually aren't gonna relapse.
[00:17:40] Bob Kocher: Like things that are gonna matter a lot more than sort of the superficial incentives that employers have given out. And then finally, I think it's about simplification. I mean, I'm an expert in health policy. And I still get confused about like how much I'm gonna pay and what I pay for and when I'm paying for it and what the prices are different across places and why is it not always the case that it's cheaper to go to like this pharmacy instead of that one.
[00:18:02] Bob Kocher: And so I think a lot of about simplification. 'cause I think right now the incentives are so dispersed. Like you have them cost sharing, you have network ones, you have health promotional ones, they're acting on me. The employer has incentives. The health plan has different, like they're just so dispersed that it's very hard to actually know the incentives.
[00:18:19] Bob Kocher: And unfortunately the provider incentives are almost always working against the incentives that you want me to have, which is they wanna do more stuff to me.
[00:18:25] Kirk McConnell: That sounds so clear to say, shift the incentive from the individual to the provider tactically and tangibly. How do you do that?
[00:18:34] Bob Kocher: Well, I think one mechanism employers have is to actually think about HMOs, not PPO products.
[00:18:39] Bob Kocher: A second one is have every employee have some mechanism for primary care. Maybe they need a primary doctor, maybe they need telemedicine, but to have like a first step, which is through a primary care source. And then finally, I think it's to think about pushing on their TPAs and health plans to build them some value-based networks, these existing Medicare Advantage and Medicare, and they've been shown to be lower cost to higher quality.
[00:19:03] Bob Kocher: On the commercial side, employers haven't been demanding of this, and so, they don't exist to a great extent,
[00:19:07] Kirk McConnell: If employers start demanding it, do you think provider systems or provider groups will meet them in the middle?
[00:19:13] Bob Kocher: No, they'll meet them all the way where the employers want them. Every employee coming into a health system is like a person lining up outside Neiman Marcus with a bag full of money.
[00:19:23] Bob Kocher: Like employers are paying 200 to 400% more money for the same thing as Medicare and way more than Medicaid. Like we are the high margin. We are like why hospitals exist just to serve employer-sponsored insurance. People like we are like paying like rack rate on the hotel room door. If we say we're not gonna do that anymore, we're gonna go away.
[00:19:42] Bob Kocher: We're gonna line up outside of a different store now to buy our stuff and they would do it. Employers have not been willing to do it. You have to be willing to actually say, yep, we're not gonna send our people to your place if you're gonna keep charging me the rack rate. But if they did, the system would respond.
[00:19:55] Bob Kocher: All of the profits from the for-profit health sector system come from the commercial insurance segment, they break even on Medicare. They lose money on Medicaid. We are all the profit pool here, and so if we chose to, we could use our power. Employers have been not willing to do it, and therefore health plans haven't been willing to do it either because they're like, I have to have everybody in the network.
[00:20:14] Kirk McConnell: Siobhan, do you think employers realize the true power they have? I think unfortunately we have a healthcare system that has really disempowered employers to a large extent, or told them that there are other stakeholders more powerful than they are. Do you think employers realize the power?
[00:20:29] Siobhan Nolan Mangini: I think they're starting to, and Kirk, you know, you go back to our early days at Castlight.
[00:20:32] Siobhan Nolan Mangini: When we brought employers really together, it was almost evangelical, right? Like in terms of what that realization was at that point. It was around transparency and actually even just getting access to basic claims data for them to understand the costs. I think, you know, fast forward 15 years now, and given some of the baseline increases in costs that we were just talking about of what employers are encountering, I think that this is now a point where they realize they can start to make these network design changes, for example, that Bob was talking about.
[00:21:02] Siobhan Nolan Mangini: They need assistance. You have to like give them the roadmap. But I do think we're actually at a point where employers are willing to make some hard decisions.
[00:21:09] Bob Kocher: I think another decision employers should make is to not accept every doctor in a health system as like in-network. At the same tier, doctors, like human resources professionals, there's a curve of their quality and like, well, I'm an internal medicine doctor.
[00:21:24] Bob Kocher: I'm really good at some diagnosis and less good at others. And so they should be using the supply using in a much more thoughtful way. You know, every surgeon is not the same, even if they work at the same health system. And so I think that's another piece where employers have a lot of power. Health plans sort of can't do it alone.
[00:21:40] Bob Kocher: They need employers who insist upon it, but I think you could actually build sub networks inside of health systems.
[00:21:45] Kirk McConnell: If we were to go forward, let's say 10 years, how do you hope the employer mindset has changed in the next 10 years? Maybe Siobhan, we'll start with you.
[00:21:54] Siobhan Nolan Mangini: I think it's actually taking these dials that we're talking about and realizing, oh, I can carve out my PBM.
[00:22:00] Siobhan Nolan Mangini: I can put in benefits like Lyra, for example, behavioral health solution for my entire employee population. I can layer on maybe dynamic copays or narrow network designs, high performing networks, and actually like have control. That idea that I am an agent of change, of providing better care, but a lower cost for my employees is actually there and that they have the tools.
[00:22:22] Siobhan Nolan Mangini: The tools actually, I think are out there today, but that much more empowered driver's seat, to me, is where we'd be a decade from now, if not sooner.
[00:22:30] Kirk McConnell: Hmm. And Bob, how do you position that with what you hear soften from employers right now? Is that there's point solution fatigue? We've tried doing too much.
[00:22:39] Kirk McConnell: What is the better version of this so you don't get point solution fatigue?
[00:22:43] Bob Kocher: I guess buy better point solutions to people. My first answer, I think that the point solutions that have high ROIs, like the Lyra and Virtas of the world. Just use those and stop using the ones that don’t work.
[00:22:53] Bob Kocher: But actually I think it's gonna get a lot easier. So I don't think point solution fatigue or I don't know joy is gonna matter. I think that in 10 years or maybe in two years, we're all gonna actually have really engaging and awesome navigation. And I think navigation's actually the answer. We don't figure out how to fix our own cars and most of us like use people to help us in our taxes.
[00:23:14] Bob Kocher: Healthcare is even harder than fixing a car or doing taxes. So having a navigator to help is important. I think navigation is gonna completely remade into a really engaging, you know, AI enabled experience. Mm-hmm. Where you'll just start there always, and sometimes you'll get fulfillment right there from a prescription.
[00:23:28] Bob Kocher: Sometimes you'll get pushed to a provider, sometimes they'll tell you where to go. And I think that's also how you guide people to the lowest price thing, actually better navigation. And with great navigation you can have a lot more point solutions and you'll use them a lot more wisely because it's gonna be the way in which you'll access all care.
[00:23:42] Bob Kocher: I do think that all care will initiate lithic, basically a chat-like text experience in the future. And that will be true if it's pancreatic cancer or pink eye, like you're gonna start there. And that's also how I think you, you build these sub networks and sort of guide people within a complex system and that's also how you hide, I think, so much of the complexity today.
[00:23:59] Bob Kocher: The other wish I have. Because the thing called co-insurance just goes away. I've yet to know a person that understands it and knows how to apply it and I think it actually doesn't work as mid-incentive 'cause it's just such a surprise when it comes too late.
[00:24:13] Kirk McConnell: I wanna go back to what you said about navigation.
[00:24:16] Kirk McConnell: Do you have a hypothesis on where the navigation should live? 'cause I think we've seen in the early days of, Siobhan, at Castlight, it was digital navigation. Then you saw the rise of carve out navigation vendors. Then you see health plans trying to build it in. Where does it make sense, do you think?
[00:24:31] Siobhan Nolan Mangini: You may get two different answers.
[00:24:32] Siobhan Nolan Mangini: I think integrated with primary care, like as like the front door, and maybe there's moments where you don't, it could be virtual, like what Bob was saying. You know, like it's an AI-driven solution. But I think one of the things we learned at Castlight was being the virtual front door by itself actually was not sufficient.
[00:24:50] Siobhan Nolan Mangini: And so you need to have some level of integration with medical care as a way to know where to go. Whatever that could be. It could just be to a standalone point solution, or it could be going within the healthcare system, but you have to have both the digital and the physical or virtual in one place is my perspective.
[00:25:08] Bob Kocher: I agree with that and I think it needs to be kind of omnipresent, always on with no friction to use it. And I think it has to do more than primary care. It needs to connect to your medications and to the point solutions. So that's where it gets complicated. It can't just be like, oh, I go to a health system and they do all my navigation because then they're gonna not be thinking about value in the same way as the patient or the employer.
[00:25:29] Kirk McConnell: And Bob, do you think AI will be a big part of that? You mentioned kind of that triage point. Do you think we're just going to get to a place where we're all comfortable using that modality?
[00:25:39] Bob Kocher: Absolutely. I think, you know, every doctor, since there's been doctors and computers has been using, I think, called UpToDate to help assist them in like kind of what to do for a patient.
[00:25:48] Bob Kocher: And UpToDate now is being atomized and put into the scribing solutions and prompting, you know, listening to your visit and popping up on your screen saying like, here's what you should do next. I think that doctors are getting very comfortable with AI and I think patients are, you know, at the same time playing with ChatGPT for their healthcare questions.
[00:26:06] Bob Kocher: And I think getting comfortable too, and I think we're gonna have a nice blending of the two. Where AI and care and primary care is connected in a way that allows us to actually get a lot of the care done and the question to answer and people feel confident that it's great.
[00:26:18] Bob Kocher: The other great thing about AI is that I have to go through and read a thousand pages in your EMR to figure out everything about you.
[00:26:23] Bob Kocher: And AI never gets tired and so, and they never miss anything. And so it's gonna actually allow us to not ask you all the same questions again and to remember things that doctors can't remember.
[00:26:35] Kirk McConnell: Siobhan, one of the things that you talked about was some of the knots are triggered by all the layers of administrative complexity in healthcare today.
[00:26:42] Kirk McConnell: You could argue that if you add more pieces, like you carve out more things, you're creating more complexity. But I don't think it has to be that way. What do you think are the keys that you see to both make it more specialized but also less layers in there?
[00:26:54] Siobhan Nolan Mangini: Yeah, well, I think we're at a unique moment, and not to sound like AI, AI, but we're at a moment where the administrative complexity in multiple dimensions, certainly on benefit design, can be taken down dramatically.
[00:27:07] Siobhan Nolan Mangini: And so there's the care delivery piece, which Bob was talking about, but I would actually say just purely administration, benefits administration. Think about even benefits enrollment, right? Leave of absence management, just like to get like basic workflow, all of that. It's actually quite simple. It's just been humans.
[00:27:22] Siobhan Nolan Mangini: Which has made it expensive and complex in the past or even up to now, like that's actually, a lot of times it's humans and that can be now I think, much more automated and frankly, a better user experience through AI. So I'm very optimistic in terms of the administrative layer, which is unfortunately a third of healthcare costs in the United States.
[00:27:42] Siobhan Nolan Mangini: So like over a trillion dollars will be reduced over the next decade.
[00:27:45] Kirk McConnell: Let's wrap up with looking forward a little bit, and let's do pessimism first then optimism. So, Bob, we'll start with you. What is the headwind that you're most daunted by in making the healthcare system better right now?
[00:27:57] Bob Kocher: I am worried about access to care for poor people.
[00:28:00] Bob Kocher: The Medicaid cuts that are coming, I think are just really sad and gonna cause a lot of people to lose access to care and get sicker, and then come to the hospital when they actually need to be hospitalized. It's gonna make it more expensive because they're not able to get actually outpatient care.
[00:28:13] Bob Kocher: That's sort of one thing that's just a bummer. I think employers, you know, are gonna have to pay more because bad debt from hospital is gonna be the higher prices for employers. And so that makes me feel bad. I think our skepticism about science is also bad. I like things like vaccinations I think are unequivocally wonderful.
[00:28:30] Bob Kocher: And Tylenol, I think it's a very safe medication and people are now like they're being able to sort of call questions that are where we have scientific information and that makes me worry. Because I mean people will benefit from actually like good advice from their healthcare providers and healthcare providers are overwhelmingly thoughtful and caring about giving advice and I worry about like sort of the loss of confidence in the health system more generally from a bunch of things that I think don't make sense.
[00:28:52] Kirk McConnell: Siobhan, before we go to the light, what is daunting to you?
[00:28:57] Siobhan Nolan Mangini: Yeah, I do worry that I think we started this conversation about some of the shining lights in US healthcare as the innovation that we have. And we are doing not just near term, but long term potential damage to being at the forefront of innovation in many different areas and discoveries like therapeutic discovery and otherwise, you know, has come out of basic research that gets funded.
[00:29:19] Siobhan Nolan Mangini: I also worry that we are, in a way, rationing care, and it's partially through this reduction of benefits through Medicaid and otherwise, but also the cost shifting that I discussed. I think Kirk, when you and I were working together, the adoption of CHPs was just really on the rise, and now we're able to see that people don't get the care they need as they have these high deductibles and so.
[00:29:40] Siobhan Nolan Mangini: That has real consequences back to like, you play it forward if you're not getting the care that you need. And so the restriction of care is worrisome to me as well.
[00:29:49] Kirk McConnell: Well, you two have the unique opportunity 'cause you can watch TV and see the headlines. Then you go to work and you get to be a part of making it better.
[00:29:55] Kirk McConnell: So Bob, what are the things that you're most leaning into and what keeps you excited about making healthcare better?
[00:30:01] Bob Kocher: What I'm really excited about is actually the way to make care a continuous experience for people and to help them kind of between visits. And so Lyra Health, company that I started and I'm president of still, I'm really proud of the fact that like you get same day access to care to a evidence-based, awesome Lyra healthcare provider who are awesome in the in-person interaction, but what's super cool is in between now you can have a chat with your provider augmented by AI and with lots of information that helps you practice the skills, like ask questions. And then our providers before each visit, it's a summary of what all the stuff has happened between so they can pick up where it left off.
[00:30:40] Bob Kocher: And so people get better several weeks faster with fewer visits, and then they stay better longer. And so what we're seeing is how like you can build this sort of way of getting care, which isn't the sort of 50 minutes once a week, and then you're done. But like as you do it for primary care, a company called Accompany Health, which I started a few years ago, which takes care of dual eligible patients, where, you know, very complex.
[00:30:59] Bob Kocher: We text every patient every day and say, good morning Kirk, how are you doing today? And if you say, I'm doing great, we say, We wish you a great day. If you say, I have a question or not well, or like something sore, we then have you tell us more if we need to. We jump on a video if we have to go to your house.
[00:31:14] Bob Kocher: But by being in-dial with people every day, we learn earlier when things aren't right and we can make them better when they're easy to fix and much, much cheaper and everybody's happier and they don't miss days from work, and then they can like go with healthier lives. And so I love that we can now do that because tech has made it sort of almost free.
[00:31:30] Bob Kocher: To have those interactions in between or before it was like a nurse doing it, it cost you much like, or they'd call you like it didn't work. And so this way of kind of blending the synchronous in person with like the between dialogue that you have is just super, super exciting. And I think it works really, really well.
[00:31:47] Bob Kocher: And I think for most people, it actually allows them to like have the care get done at the right point in time before it gets to the point that it's so bad that you deal with, like, how do I get to that doctor and go to the office? Take a day over, like today, the barrier to care is just so high that you wait till you're dying or you're really sick.
[00:32:03] Bob Kocher: And that's often like not the right time. You show it sooner.
[00:32:06] Kirk McConnell: Siobhan, what about you? What are you excited about trying to fix?
[00:32:09] Siobhan Nolan Mangini: Yeah, and I'm an optimist. I actually think that so much innovation happens when you have this like pressure on all sides, and so I think there's so much exciting innovation that's happening.
[00:32:20] Siobhan Nolan Mangini: I realize I named a bunch of problems, but I think we're finding lower and lower cost ways to serve different populations. And Bob gave some examples for disadvantaged population. I think employers, because costs have increased whatever it is, 62% in the past eight years and are expecting, I think 9% trend next year, they're going to deploy these different solutions that we've mentioned.
[00:32:39] Siobhan Nolan Mangini: Like they are gonna carve out their PBMs. I think over half of them are saying they're going to in the next couple of years. So it, this is a moment in time of change is happening. And then I think ultimately I realized I was painting a negative picture of rationing care and putting too much responsibility of out-of-pocket costs on families.
[00:32:55] Siobhan Nolan Mangini: But, people are moving with their feet. Like it's been very interesting to see the shift of like when the dollars have been put on individuals, they are going, and I think you used friction, Bob, but like they're finding ways to reduce friction in their own, be it buying prescription, the lowest cost prescription drugs, or it could be in getting access to primary care and advanced primary care in their own ways, low cost ways.
[00:33:17] Siobhan Nolan Mangini: There are ways that people are doing this that we can now, I think, learn from and integrate back into a more integrated system. They've been fragmented. How do you bring them into our care delivery system?
[00:33:27] Kirk McConnell: I think that's a great note to end on because there are the headwinds, there are the cost pressures, but Bob and Siobhan, a point you've made is there are solutions.
[00:33:35] Kirk McConnell: Employers just haven't adopted them yet. I think that headwind, what you can do is actually flip that around to say that's what's gonna blow you into needing to do things. I think that's a moment that's gonna be really exciting. And so Bob and Siobhan, thank you so much for this conversation today. If folks wanna reach out to you or can they continue the conversation, what's the best way to get a hold of you? Maybe Bob first.
[00:34:00] Bob Kocher: Go to Bob Kocher at Venrock and quick contact me and I'll respond to you.
[00:34:00] Kirk McConnell: Siobban?
[00:34:02] Siobhan Nolan Mangini: Same. Siobhan at Venrock.com. Happy to respond.
[00:34:05] Kirk McConnell: Excellent. Well, thank you very much for your time, your wisdom, and showing up every day to be part of what's better.
[00:34:09] Bob Kocher: Thank you, Kirk.
[00:34:10] Siobhan Nolan Mangini: Thanks.
[00:34:11] Kirk McConnell: If you're enjoying the Benefits playbook, we'd love your support. Take a moment to rate or interview the show wherever you listen. It really helps others discover us and join the conversation. And while you're there, don't forget to hit Subscribe, so you never miss an episode. If you know a colleague or friend who'd enjoyed the conversation, share it with them too.Thanks so much for listening, and we'll see you next time.
[00:34:33] Producer: This podcast is brought to you by Collective Health, a health benefit solution that guides employees toward healthier lives and companies toward healthier bottom lines. Check us out at collectivehealth.com.