Transcript
-
00:00
Venky Ananth:
Hello and welcome to Pacesetters. This edition of Pacesetters is an interesting one. We shift to academia and I'm here at the beautiful campus in Columbia Business School in New York City, and our guest today is Professor Falci. Professor Falci, engineering background and a Wall Street venture partner from a venture capital firm focusing on health care and technology. Tell us about yourself.
-
00:36
Professor Raymond Falci:
Well Venky, thanks for inviting me. It's great to be here. Yeah, my background is, I started my life as an engineer, strong technical background and always thought I would go in that direction and soon found the world of business, which got me to Wall Street, which is where I began following the world of what we used to call Healthcare IT, most people call it Digital Health today.
-
00:58
Professor Raymond Falci:
And as you noted, I started initially as a research analyst, following all the publicly traded healthcare IT companies on Wall Street, converted to becoming an investment banker, where I advised a lot of those same companies. And as you said, now I'm teaching a class here at Columbia Business School, as well as working as a venture partner, finding new, exciting companies to invest in, in the same in the same sector.
-
01:23
Venky Ananth:
Awesome. Ray, I'm going to call you Ray, please. That's okay. Typically in Pacesetters, we focused on execs and senior execs in the industry. And today, with your academic background, I'm very curious to know on how you think about from an academic perspective how things are evolving. And you have this unique perspective because you play at the intersection of Wall Street, venture capital and health IT. So looking forward to your views on some of the topics that are really a burning platform in the industry.
-
01:58
Venky Ananth:
So let's talk about value based care. As you know, it's been around now almost for a decade now. We've been talking about it. There's systematic shift of multiple players in the ecosystem, both payers and providers moving into value based care. I just want to hear from you your perspective on where you think the state of the market is from a value based care perspective.
-
02:20
Venky Ananth:
How is the adoption and what do you see in the future coming up from a VBC perspective?
-
02:27
Professor Raymond Falci:
Sure. Now it's a great topic, I think, to enter your question succinctly. I think we're in the very early stages of where we can go, but it's exciting to see the potential that we've already established. Having, again, followed this industry for 30 years now, I've seen probably several iterations of risk shifting from insurers to providers of care.
-
02:50
Professor Raymond Falci:
And candidly, until the last five or ten years ago, those examples have not gone well. And really the single data point that I would point or the single reason is, providers historically have not been equipped with the tools to understand risk. You know, they're trained as clinicians, as physicians, nurses to treat patients and to do the best possible care, which is what I would want if I was a patient.
-
03:18
Professor Raymond Falci:
But they're not really trained to understand all the parameters of sort of population health and managing, you know, full populations and all the things that are the tenets of value based care. What's exciting for me is we're seeing today innovation at all stages, but arguably at some of the smaller companies really creating some pretty interesting capabilities to fundamentally change the ability of providers to understand how and the best ways to treat patients, how to manage them, how to assess that risk.
-
03:52
Professor Raymond Falci:
And these are all disciplines that they were pretty poorly equipped to manage in the past.
-
03:59
Venky Ananth:
Which really brings me to the question, should they actually be? Is this a distraction at all for them, too? Because the fundamental job of the physician is to really care for the patient and for driving outcomes. So is this a distraction, in your opinion, or you think it's a necessary evil if you want to advance, you know, focus on outcomes rather than fee for service kind of a model?
-
04:22
Professor Raymond Falci:
That's a great, great question. You know, it's funny. I think physicians are truly focused on optimal outcomes, and the engineer in me has always felt like every physician individually is only as good as their own personal experience, for the most part, particularly in the olden days before we had good clinical decision support and things like that. And so I think the good things about value based care is they're creating the tools for physicians to do the right thing, which is what they went to medical school for in the first place, giving them all the tools.
-
04:59
Professor Raymond Falci:
But they're also deserve to be compensated for it. And, you know, one of the other, you know, principles of value based care that I am fully aligned with is I've always had trouble with insurers making the kind of margins they make for many sort of administrative and sort of classic middleman type functions that they provide to the health care system.
-
05:20
Professor Raymond Falci:
They provide many other values, and there's certainly a role. But I think providers can be incentivized properly but can still do the right thing clinically. So, you know, if my mother, who's a patient someday needs help, I can feel good that she's still going to get the right, you know, attention.
-
05:37
Venky Ananth:
Wonderful. You play at the intersection of healthcare and technology.
-
05:42
Venky Ananth:
So I want to get your opinion on let's compare health tech and fintech, right? FinTech is so much more advanced. As consumers we are, experience level is far more richer when we interact with the financial world. When are we going to get there from a health tech perspective? What are your perspectives, especially with Wall Street being very near? What's your view on that?
-
06:09
Professor Raymond Falci:
No, it's a great question and it's a great comparison. I can't tell you how many times in my 30 years I've seen business plans from, you know, successful entrepreneurs who built really great businesses in fintech to automate, you know, something in the credit card processing industry or something like that. Who said, I did it in fintech, so I'm going to do it in health care.
-
06:30
Professor Raymond Falci:
It's going to be just as easy. And nine times out of ten, they found out it's not as easy. And I think, you know, in terms of the comparisons, in my view, until very recently, health care had many unique attributes that fintech didn't. Lack of standards of data across all the different data silos that exist in health care.
-
06:51
Professor Raymond Falci:
FinTech has been really good at having central processing entities and clearing entities and other banking regulatory bodies that kept everybody on the same page in terms of how they, you know, track data on consumers and so on. Whereas in health care, we can't even get sometimes one epic system at hospital A to talk to an epic system at hospital B and it's the same vendor.
-
07:14
Professor Raymond Falci:
So that's point number one, I think identity of patients or you know, of patients or of consumers. Again, the financial services industry, I can use my ATM card anywhere in the world. I can get off a plane in China tomorrow and mature $50 for my banking account and there's no, it's seamless. Health care – If I go across the street, you know, they may not even know who I am.
-
07:38
Professor Raymond Falci:
There's no mechanism. You know, we're starting to have things like health information exchanges in Q hands and some of the other things that are just starting to gain some traction. But again, that's something health care has dramatically lagged. And then, you know, thirdly, I think a lot of the incentives have been misaligned with some of the goals that the banking industry has had about having everybody on the same page, whether it's at the provider system level, at the insurer level, there's been a lot of incentives to not share, to keep all of your information.
-
08:10
Professor Raymond Falci:
You know, sort of in house, to build your own models, to build your own capabilities. And again, a lot of those things very recently, the 21st Century Cures Act, among other things, have been, you know, getting broken down some of those barriers. So that's why I'm excited for where we're going to go.
-
08:27
Venky Ananth:
Then let me ask you an adjacent point, Big Tech in health care, right?
-
08:35
Venky Ananth:
You know, they have the muscle, they have the deep pockets, Amazon, Google, Apple. Now, I think they're now called the Magnificent Seven, as Wall Street calls them. But the point is that we've had several false starts. What's your opinion? Where do you think, you think you know, you're going to have Amazon finally get it, you know, or, you know, I just want to, I'm just curious about your opinion on this.
-
09:04
Professor Raymond Falci:
You know, it's a great question. And sort of picking up on some of the points, the earlier points that I made. I think five or ten years ago, I would have been less, less optimistic that Amazon and some of these other companies are going to be successful because of the lack of standards. And I've seen many of them come into health care, as you noted, with some limited success.
-
09:26
Professor Raymond Falci:
And they've all come away saying health care is so different than consumer, than fintech, than other parts of our economy that it's just not worth my time and investment. I think the health care industry has grown up now to the point to make itself more open to these solutions. The other big, big changes we as consumers, you know, have also become much more open to managing our own health, aware of our health.
-
09:53
Professor Raymond Falci:
I feel like my generation and certainly my kids generation don't sort of just blindly follow what our physicians tell us to do. You know, we grew up being able to Google everything or Web M.D., everything, and it makes us all feel more, now ChatGPT. Yeah, exactly. Yeah. And I think I think that changes the whole mindset. And I think that opens the door for some of these big tech models.
-
10:16
Professor Raymond Falci:
They still need to understand, you know, that they need to fit within workflow, within existing regulatory and other operating models, which are very different in health care compared to. But the other final point I'll make there is that the big tech companies are being much smarter about hiring a lot of health care talent to augment their tech expertise, which is helping to bridge that gap.
-
10:40
Venky Ananth:
So we speak about big tech. Let's talk small tech, which is really the start-ups. Sure. You're a venture partner in early stage healthcare technology firms. What are you seeing out there? Because it's a super crowded space. Everybody thinks that, you know, like you rightly said, it's just going to come and change because you have the right technology. The next generation AI is available, so I'm going to change the world.
-
11:06
Venky Ananth:
But then when you land, you realize that it's far more complex. What are you seeing there? And we're also seen many actually go belly up in the last 24 months. Yes. Funding is becoming far more challenging, interest rates are high. Where do you see the future for start-ups in healthcare?
-
11:27
Professor Raymond Falci:
Yeah, so I think, you know, what we're having is what I would call a healthy correction in that market.
-
11:33
Professor Raymond Falci:
We had, you know, the investment in digital health that just exploded over the last decade, most of it coming out of the high tech act, which was passed, I think in 2010 or 2011 and really stimulated all this investment. And in hindsight, you could see maybe it got a little ahead of itself. And, you know, there was a lot of money, I would say, from a lot of investors outside of health care who didn't appreciate some of the challenges, who just saw, you know, an interesting looking business plan and put a lot of money into it.
-
12:03
Professor Raymond Falci:
Now, I think we have a healthy correction going on where all the companies I'm speaking to and all the companies in our portfolio, you know, we're very fixated, like most venture investors, on profitability. You know, we don't have the patience to wait three years to continue this, you know, invest in ideas that may or may not fit within the health care ecosystem.
-
12:24
Professor Raymond Falci:
So it forces the entrepreneurs of these businesses to be more disciplined about market fit, good go to market strategies, how to integrate and create interoperability more effectively. They don't have the luxury of two or three years or five years like their predecessors did, which again, I think is healthy for the industry. It's going to be painful as we go through the cycle.
-
12:46
Professor Raymond Falci:
And as you said, many companies have gone bankrupt in the last couple of years, including I think we're up to two or three IPOs of the last four years.
-
12:56
Venky Ananth:
So I want to shift gears Ray. I want to talk about equity. Healthcare has always been local, but then, you know, healthcare equities, obviously much more fundamental. How do you see this, especially with the advent of new technologies that are out there? How do we drive better equity in the healthcare system?
-
13:15
Professor Raymond Falci:
Yeah, I think there's so many ways data can be used to help better understand the healthcare needs of a community. And you know, there's been studies that have shown that your zip code is the single biggest predictor of your health. Then more so than even your family history or other dynamics and understanding your zip code.
-
13:40
Professor Raymond Falci:
Do you have access to good, healthy food sources? Do you have good access to good, healthy water or other things? And housing is a big predictor of what your ultimate health status is going to be. And so if you're whoever is responsible for your health care, your insurance company, if they know these things in a better way, they can create programs to provide better support for you versus what the old model used to be.
-
14:06
Professor Raymond Falci:
That's point number one. And point number two, I'd say is we've also seen tons of data that show that the best outcomes on, you know, complex procedures are done by the physicians who do that operation most frequently. And so we're seeing a lot of a lot of activity in creating these centres of excellence and channels where we can we can sort of move patients to the best sites of care for their particular ailments, either for more, you know, sort of complex kinds of things, but it ultimately gets the best care to the to all people in the best setting, which is, you know, should be a goal.
-
14:43
Venky Ananth:
Sure. So you speak about leveraging data to drive better health equity in the system. I want to talk about an adjacent or a corollary problem. We know that the health care constituents, especially the payers and providers, are sitting in absolute truckload of data, right? I mean, on an average we generate about 50 petabytes of data from a hospital, right? So how do we, but then 97% of it is unused, only 3% is really used.
-
15:19
Venky Ananth:
So how do we kind of leverage this information and data that is out there to actually drive better outcomes, better care for patients and members? Well, what's your sense on it?
-
15:32
Professor Raymond Falci:
It's a, it's a heavy lift is the short answer. It's not it's not easily accomplished. But, you know, I've sat on the boards and I sit on the board now of one very large provider organization.
-
15:42
Professor Raymond Falci:
I've worked with many big payers and I've been hearing, you know, people say this for years, I've got all this untapped value, how do I figure it out? And I really think the average the advent of large language models and some of the recent advances in AI are starting to help us untap that value. But to get more specific, I think you need to be targeted in your in your use cases.
-
16:03
Professor Raymond Falci:
So you can't just say I've got this huge, you know, 50 terabytes of data and help me figure out, you know, how to treat patients better. Then in my mind, the more, more constructive approach is to say, let's look at patients of a certain clinical, you know, diagnosis group, maybe even a certain racial group. You know, let's let's look at four or five parameters and then let's really zero in on all the all the elements that we can understand for those patients and what works and what doesn't work and ultimately start to build models and then obviously continually retrain those models.
-
16:37
Professor Raymond Falci:
But it's you can't boil the ocean. And I think people have conceptually thought about it more as a boil the ocean exercise, and it needs to be targeted, I think.
-
16:46
Venky Ananth:
But then the related problem really is really around interoperability, right? The ability for hospital systems, providers, you know, independent physician practisers, payers, pharmaceutical firms, PBM’s, to talk to each other.
-
17:03
Venky Ananth:
Right. I'm just sitting through the case competition that, you know, we just had earlier in the day. Fascinating. A number of ideas that came up in terms of things that can be done, A, just to make it interoperable. What's your view on interoperability, where we are? You know, the regulation has been now on for more than almost a decade now.
-
17:22
Venky Ananth:
So what's your sense on where we are and how do we advance this interoperability to truly put patient at the centre of it all?
-
17:31
Professor Raymond Falci:
It's I still think it's the most underestimated challenge by particularly the start-up or early stage companies that I encounter. And I will tell you in my class that I teach, it's usually slide five of class one is just one word interoperability.
-
17:46
Professor Raymond Falci:
And I think it's so important to not underestimate that. So I think we've had tons of legislative advances to help sort of force this and make some of the big vendors of some of the key systems more open to, you know, creating APIs and better access to their platforms. We've had some of the, you know, operating models of providers and payers also begin to get opened.
-
18:10
Professor Raymond Falci:
But it still is not anywhere near where it needs to be to be as sort of seamless and ubiquitous as it should be. And again, in an ideal world, I think about, you know, I'm Ray Falci, I live in New York. If I'm in California, you should be able to just look up everything you need to know about my health history.
-
18:28
Professor Raymond Falci:
If I, you know, have some health incident in California. And today we're still so far from that. So I think it still is one of the challenges that still, you know, has a lot more work to be done on it despite all the support that's been, you know, passed to it.
-
18:41
Venky Ananth:
Awesome. Thank you so much. I think we've covered quite a bit today.
-
18:45
Venky Ananth:
Value based care, FinTech, Health Tech, Big Tech, Small Tech, Health Equity, Interoperability, quite a bit. So thank you so much for sharing your perspective. I agree with you that the future definitely looks great. There is so much of regulation that's come in, so much of standards that’s come in. There is a lot more of awareness. It is a consumer grade experience from every patient, and the future most definitely looks exciting and hopefully you find it interesting and hopefully you'll enjoy it as much as I enjoyed this conversation.
-
19:23
Venky Ananth:
Thank you so much and thank you. Thank you Ray.
-
19:27
Professor Raymond Falci:
Thank you. Thank you.
