Healthcare Fixed: No Insurance Needed, Same Doctors, 60% Less - David Goldhill

29:22And then you remember, healthcare's tens of thousands of SKUs. What we've been lacking in healthcare is the competitive urge to serve different types of customers because there's been three customers, insurers, Medicare, and state Medicaid agencies. And those three customers actually don't demand the level of innovation that 330 million customers demand. But interestingly, those three customers also don't really well match what human beings need, the diversity of what works for us. I've made the argument that healthcare is too complex to be served by government. And the traditional expert argument is it's too complex to be a normal market.

30:03Now, I do think government's got a big role to play in healthcare. But I actually think markets will drive innovation around service. Let me use another example you just used. And Sesame's taken enormous advantage of this. Telemedicine and remote medicine generally are going to be extraordinarily disruptive to healthcare if we allow. because the number of things a doctor needs to physically be in a room or even lay hands on a patient to diagnose with a monitor is shrinking. Yes. And we're even getting to the point where we can see robotics. There's robotic surgeries being done in different continents.

30:44Now, when you think about what remote really means in terms of bringing the cost of care down, the resource cost of care down, it's gigantic. The need to see a doctor, by the way, doesn't just create difficulty for having to maintain offices, but the patient's got to lose half a day at work and take care of child care or parent care. It's enormous amounts of costs being taken out of the system. What I've argued is we need a health care economy that incents those costs to be taken out and to have it reflected in price. when you have cost plus payers, whether it's insurers who get 15 % of the amount spent or Medicare that has no actual budget and can spend whatever it wants, you're not going to drive that type of innovation.

31:32So places like Sesame does. So on Sesame, you know, if you don't need to be in person, the doctor's happy to see you by video. You're happier to be seen by video. Costs have been taken out of the system and it's reflected in the price. it's it's very much like this podcast you don't know if i'm wearing pants or not because i didn't have to go to the studio no i think this is what we talked about before we were allowed to wear pants to this you didn't tell me see for everyone who's not watching this we're both naked um so for this is where it talks about geolocked there and i mean this is nicest way possible you know you're talking about your travels i love switzerland more than i could possibly tell you there are great doctors in switzerland there really are there are great doctors i'm sure all over the world but predominantly the best doctors out there are here and now those doctors can literally turn on a webcam and service and be in support to anybody anywhere ever and that changes how we work look at health care completely because in the past it was well i know you've got a great doctor in new york but i'm down here in south florida i can't get to your doctor so i'm gonna have to deal with this schmuck that that lives down here that's going away we're getting ourselves in an environment where that's no longer a problem, where I can simply connect to you and we can do it remotely.

32:49And now I don't have to be under your plan or with your provider or anything else. That's going to change the market. It's going to make things easier to do because God knows we know the government can't do this. Yeah. I mean, I think, so I share that radical vision. I mean, I think you're right that changes are going to be far beyond what people think. all of these national health systems are based on helping people pay for care. But the way they work is that they've been able to geofence who could provide care. And I think that's going to change. I think no matter where you are in the world, you don't want to see the best oncologist in your neighborhood.

33:29You want to see the best oncologist you can possibly see for your condition. And we'll have to figure out ways for those people, instead of having a patient panel of a few hundred or a few thousand, to have tens and hundreds of thousands in different pyramid structures under them and probably involving AI and technology. But the most important thing, I think, about that is that these are business models where you've got declining marginal cost of care. And the question we should be asking, because I think we've had declining marginal cost of care for 20 years is how do we make sure that as the marginal cost of care declines it's reflected in the price we pay my belief is if we're going to rely on governments to pay the price it won't work because they will simply i don't think that's a belief data that's not a belief we've seen it we've already seen for 20 plus years for decades now that that hasn't been the case that it's only increased and it's getting worse and worse and worse and it's not that it's this getting worse because like oh it's going up therefore the doctors are making all this money doctors are broke and i mean this in the nicest way possible i've been working with them for two decades doctors don't make what they used to make they're they're nickel to dime and their insurance is astronomical so they're most of the doctors i know who have been doing it for a long time come to me and they're like hey how do you exit me out because i'm done i can't do this anymore i wouldn't make more money if i went and bought you know three apartment complexes and i'd make more rev so it's not just an opinion we know it's not working anymore so everyone so if you're in the audience you are usually during the cost of health care invariably increases and the more uh the better we get a treatment the better we get at science the more we bring in advanced technologies the more personalized we get it's going to get more and more and more expensive and that's the amount of money and then think about what you just said charles which is if you look at doctors incomes and it's really for the last generation they've been flat in some cases down with inflation.

35:25If you look at what's happened with hospitals, the average number of days a patient spends in the hospital have been defining meaningfully almost no matter what they're diagnosed with. If you look at the commanding heights of care, they've moved from things that were surgical and labor intensive almost entirely to pharmaceuticals, which have a very low, in some cases, zero marginal cost of production. The first pill is$900 million, the second pill costs a penny is true. So all of those things have happened in the last 20 years. And yet the price of care keeps going up. And it shouldn't. I mean, what you and I are saying is that wasn't necessary.

36:08That's not about healthcare. That's about how healthcare is paid for. Because the reality is in any other industry where we see those things happening, prices decline. And they didn't decline in healthcare, I would argue, because the payment system prevented it from. And what we're doing in sesame is saying okay for this corner of healthcare cash paying customers let's look what normal looks like and what happens prices decline yeah and service is fantastic and quality is regarded as very good and you know patients are helped because many most of the people on sesame are very price sensitive and are making tough decisions about affordability and what they're going to be able to pay for their family and the idea that healthcare treatment should invariably go up and up and up and up is a disastrous one.

36:56Yeah. And people shouldn't have to make that choice. Do I eat or do I get my kid his meds? We shouldn't live in a world that that even exists. And what we're trying to do is we're trying to pivot that. I remember when I was working at hospice, the average stay, the break-even point was, I think, six and a half days for a patient to come in when they were doing inpatient care. It was six and a half days. So you get them there, we get them to two weeks, hey, muzzle, everyone's making money, the person has better quality, not quantity. of life but better quality of life well then vitas came in and i was working for a not-for-profit and vitas came in and the doctors started realizing hey you know we could squeeze a little bit more out of this because again they're just trying to make their nut and survive and the patients went from being there for two weeks to being there for 47 hours that was the average intake that we would have when we would get a patient the person would be down to 47 hours and we left it was less than 16 hours because people were holding on to him to that point so they were transferring and and taking every dollar out.

37:52That's a broken system. That's an absolutely broken system, and there's no humanity to it. And while that has absolutely no humanity to it and just gives you the chills to think about, it's interesting that hospice, when Medicare first started covering it, had the opposite problem. They were paying per day, and people were taking hospice patients who weren't really dying, and Medicare had to extend a maximum number of days to hospice. And some of the hospice companies were keeping patients for the maximum number of days and then discharging them because they were still alive. And neither of it is a good human response.

38:27And this is something, again, for people at home who think there's a fundamental difference between capitalism and serving people well, and that's why it's scary to think of more capitalism or more markets is probably a better way to put it in healthcare. These results are not great results. Unfortunately, when your governments run these things, they have to have relatively simple one-size-fits-all rules. And here's the thing about healthcare. When we invented these systems in the mid-20th century, one-size-fits-all, probably okay. There wasn't a lot healthcare could do. One-size-fits-all, good.

39:00Now, it's catastrophic for a lot of families because it means that patient-specific needs are not being addressed. They're being driven by a rule. That's not good. And interestingly, as we get better at, you know, what used to be intelligence is now artificial intelligence, we have the ability to serve people in a much more personalized way if we give the economic incentives to do so. And I would love to sit there and completely bash, okay, it's the government and how horrible the government's done it and these healthcare providers and, you know, the insurance providers and look how bad they are and yada, yada.

39:36I will give an example that I will take no credit for. I was at an event and this individual, and I'm going to clear all the names and the nouns off of this, but basically he said, okay, the average number of people that were on welfare in this specific environment, kids, with five kids, that was the average that they had, the people who were on the system, they had five kids. And then they saw this radical change in less than 24 months that it rocked up to six. And they're like, what the hell happened? How did we go from the average of five kids to six kids? And what happened was the plan said, oh, we'll cover six kids.

40:08I'm like, oh, well, that's the case. Mazel. So they went and had another kid because they drop out another 40 to 60K in a year. Or whatever the numbers are. And I think that speaks to humanity as a whole. It's not always the system. It isn't always government. Sometimes we as humans kind of suck and we kind of abuse the system as well. So being able to face that as well, because it's not a single pill solution. It isn't a binary solution. It's not black or white. It's like, hey, we've got to get some gray in here. Yeah, and I think that's, I mean, I think that tone is so important because I'm personally, I'm someone who doesn't believe in villains, which is why I've made terrible films and televisions.

40:51But I don't just, but no, I just, that's not what, you know, the government's not evil, right? People who work in the government are trying to do well. People who work in insurance companies overwhelmingly are trying to do well. It's the problem is incentives always win. and we made a mistake in thinking that mid-20th century healthcare is what healthcare would always be like right when there were only a handful of things healthcare could do well most of the stuff that cost money was sort of urgent and pretty rare and so we said you know what we'll fund everything we'll fund it like insurance because that covers the bulk of anything anyway well guess what we're coming up on a world where the bulk of healthcare spend would have been seen in previous generations is preventive.

41:38It's managing chronic conditions and metrics you have that suggest you're going to have health issues down the road. My heart surgery was preventive in a sense. I had a valve that was going to fail. It didn't fail. It was going to fail some period of time, right? That's what the bulk of it is now. It's far more personalized. We each have far more information than we ever did about our health, far greater ability to deal with it. And a top-down insurance-based system no longer matches healthcare need. And so you've got all of these people trying the best they can, and I do believe that, to fit this system in something that's eight years old and out of date.

42:22And that's the problem. It's not the evil this guy and the evil that guy. I know it's fun and easy to talk about that, but everyone's trying to do their best. you just cannot get you know as a square peg to fit in a round hole and that's our health care and payment systems today it's it's outdated and it's broken and i want to speak to what you said about people are trying to do the best i've been in dc a lot a lot it doesn't matter what side has been in office the the lonely intern that the low level is running around with duct tape holding this thing together you would be shocked for if you to see how the sausage is made they're like wait If it wasn't for Susie, who's literally an intern, that wouldn't have happened?

43:02What the? Because that's just how the system's built. It's held together with duct tape. And that's just been humanity since the dawn of time. People are trying to do their best. You might ideologically disagree with one thing about them. But trust me, at the end of the day, they're trying to do their best. And it is a big ship to turn. And I think until we put in different factors into the market, until we bring in different providers or different solutions, it's never going to change. And what we have right now is all of us are sitting in a bus driving a thousand miles an hour straight into a wall.

43:34And we've got to sit there and say, hey, maybe we should turn to the left a little bit. And I think bringing in those different, because if not, we're all going to die. This isn't going to work. We've proven this hasn't worked for over a generation. We need to pivot. And it's once we get away from, oh, it's this political party or that political party or it's this evil empire or this one. Yeah, there is. That's just humanity. But until we sit down collectively and say, we need to have other options. than those options, much like the Walmart example I gave. It just won't do it. So what are the biggest changes you've seen for your patients or for the market now that, because you've been doing this for a while now, what are the biggest changes you've seen?

44:08Well, I think there's, on the demand side, patients are getting much more sophisticated about managing their own money, right? Deductibles had a lot to do with that, just the growth of deductibles, but recognizing that, I wind up paying for a lot more of this than I expected to. I need to think a bit more as a customer, I think, is one thing financially. I think a second thing is that people are willing to pay for convenience. Yes. Because convenience is— Well, but I mean, but a lot of people of a variety of economic circumstances say, this thing is so opaque that even if someone's paying for it, I'm not sure I got what needed.

44:54Yeah. And so the simple, and this helps us enormously, the simple English language communication of a bill, of your data, is something that people are willing to pay for. And then I think the third thing, of course, is people are becoming far more proactive about their health. The healthcare system in the mid-20th century was entirely reactive because that's all we can do. So the healthcare century of the second half of the 21st century is going to be entirely proactive, which is another reason this architecture won't work. On the provider side, one change is exactly what you mentioned, which is more and more doctors are no longer independently practicing, that being part of an institution is essential just for their sanity and often for their economics.

45:41I think another thing that's happening, though, is the big hospital chains, which have gobbled up a lot of these practices and are trying to do integrated care and all the rest, are not going to work. You know, I don't want to be – I do want to be a nerd. Let me be a nerd. Be a nerd. Outside of reimbursement rates, hospitals don't really have economies of scale or of scope. They're kind of a senseless institution. So they charge a ton of money. they get way too big a share of the healthcare pie, a share that hasn't gone down in 60 years, even though hospitals play much less of a role. They're all about their political power and their ability to drive reabriffments.

46:20But they can't be well run because they don't have economies of scale and economies of scope. And so over time, they're unlikely to win. And seeing how that plays out is really interesting. The general hospital I'm referring to, especially hospitals or somewhat different actually might be winners. But general hospitals increasingly just have a bad business model. And then the last thing I'd point out is that, particularly ironic when people hate their insurance company, the big insurance companies now are basically wards of the government. Their economics go up and down based on Medicare policy and Medicaid policy because a huge amount of their revenues come from running those programs for the government.

47:00and the government is in fact private insurance companies because Medicare and Medicaid are now run almost exclusively. Medicare is only 60%, but Medicaid now entirely through private insurance companies. So this thing all of us believe about how the healthcare system works is changing right in front of our eyes and most people have noticed this. I think one of the things we missed out on is that the consumer is now becoming significantly more sophisticated. Take something like true diagnostics or anything like that where you get your blood work. I know what's in my blood. I do it routinely every 30 days.

47:33We're doing blood work. We're checking things because I'm a hypochondriac. So we just keep an eye on this. Like, hey, what is this doing? What is that doing? And, you know, for those of you who aren't paying that much money when it comes to all these things, just be racist when it comes to putting anything in your mouth. If it's white, don't put it in your mouth. Sugar's bad for you. Don't put it in your mouth. White flour, bad for you. Don't put it in your mouth. This doesn't work. I think that's the basic. But you have this more sophisticated environment where consumers are coming in. It's just a matter of how long can the specialist doctors hold on versus these juggernauts.

48:03Because when I go see a specialized doctor for, like, I have a torn labrum, I'm not going to a hospital to have that conversation. I'm going to go to the person who helps major league pitchers. I'm like, hey, what do we do? And we have that. We also are, you know, stem cells is a thing. And I can't tell you how much I love stems. They're just absolutely amazing. My insurance won't touch them. But stem cells completely changed my ballgame. When you go in... Sorry, I was just going to say, I think that's really right, which is we're seeing that, which is the boundaries of what's healthcare and what's personal responsibility are changing very, very rapidly.

48:38And a lot of the more important things in healthcare are things like you mentioned, where the patient's going to do it on their own with or without medical advice. Because there's a ton of medical advice they can get from being online. but just remember AI does mean always incorrect because you know my AI is completely convinced that I need to have my uterus fixed and I'm very confused by that so I think there is this idea it's a different time and you know what whatever you want to identify as I think you know as we come into this and we have a more sophisticated because that's happening I would love to see the market have a more responsible consumer as well to take that ownership that self-ownership, but that's never happened in humanity.

49:24So I'll hold my breath on that one. Well, I want to actually comment on that because I think that's a really interesting thing. So one of the things you hear all the time in healthcare is you can't have consumer-directed economies because consumers don't know enough. They're not sophisticated enough. I don't think they're responsible enough. Not that they're not sophisticated enough. But here's the thing. Here's the thing. Consumer-driven economies aren't driven by consumers. They're driven by sellers chasing consumers. Correct. I don't walk into Walmart and or Costco and get a tube of toothpaste and say, I'm going to make sure this is the cheapest.

49:57Let me look at the ingredients and compare it to its costs. Right. They just say I'm pricing at the lowest possible price and you know I will. And that's why you're buying it. And what we forget is that consumers have to do a ton of work in our current health care economy. Third party payment doesn't take the work out of your hands. If anything, it makes it even harder. Consumer driven economies. I mean, if I look at Sesame, I have to look for the price on sesame because every provider on sesame knows i can't get a penny a business without posting my fixed price period full stop there's no requirement there's no law but who can sell anything without a price right and we we think that oh that requires consumers to do a ton of work it's less work yeah and it's also it's right there in front of you but i do think there is a sense of responsibility for example if you're going to sit there and you're going to kvetch or sorry for the going, you're going to complain about, you know, your health being so bad and you being obese or whatever it is, maybe just maybe don't stop at McDonald's.

50:59Just saying, maybe just maybe don't eat food that you know is just not healthy for you. Make better choices and don't just blame healthcare. So I think that level of responsibility hasn't stepped into it yet. Just get off the couch and go for a walk every once in a while. I don't think that's stepped in yet because there's so many people who, as I travel the world, and I know our food system is completely broken here in the United States. And you've got some travel coming up. I can eat gluten outside the United States. No reaction whatsoever. Here in the United States, it's not good. So we know that things are changing.

51:34We're becoming more aware. And awareness is great, but awareness without action creates problems. And I wanted to kind of circle that back into what you're doing because you're taking action and you're raising the level of awareness against some pretty intense juggernauts as a, as a founder, as someone who is a CEO that's running into this, you, this is working, you're proving this is working. What are some of the things that you've run into these walls of, okay, you're going to run, they're going to, you know, have some pushback that the market's given you. Yeah. I mean, I don't think the market's given us pushbacks, but I think some of the conventional wisdom in healthcare gives you pushback, right?

52:07Which is, I'll give you an example, which is, well, doctors aren't going to price less than insurance. Of course they do. Because insurance imposes an enormous amount of cost on a medical practice. And we take that cost away. The first one I heard is doctors are never going to be willing to post an actual price because there may be other services they need to do. And it's like, you know what? Tons of other professionals have figured this out. Doctors will figure it out too. Then there were things like, well, good doctors are not going to have this discount prices. But the interesting thing is more and more of the best doctors in the country say, how do I get out of the third-party payment system?

52:47Because I didn't go to medical school to spend 20 % of my time as an insurance clerk. And if you take insurance in your practice, your physicians, your nurses are spending meaningful amounts of time managing insurance. Not a great use of that education. And so what Sesame's benefited from is some doctors try to diminish the amount of third-party pay or just go cash pay. And for some nations, they're willing to offer discounts. For other patients, they have high-price concierge treatments structures. And others are in between, the point being, like we see in most markets, you price for different types of customers and different service, but you have no trouble saying, I'm happy to bring in a good customer who pays.

53:32One of the things Sesame saw on day one is we have our customers pay up front. Reducing the cost of collections for doctors is a gigantic gigantic administration for them and causes them to give the best price and yeah you know sesame customers are desirable customers already paid before you started your appointment um and i say that again reminding you we've got 95 satisfaction rates so it's um you know a lot of the conventional wisdom when you got a little marketplace out there moves wrong pretty quickly yeah it does i think one of the things that proves correctly all the time is you were rewarded for how much pain you eliminate in the market.

54:10Period. Full stop. That's what you're selling. You're selling for the elimination of pain. So if I'm a doctor and it's a Friday night and I'm on your patients, I flick on an app like yours. I flick on Sesame. I'm like, hey, let's, here, I'm going to do it for X, Y, Z bucks. You're good to go. Because at the end of the day, they don't have to deal with the insurance and the collections and all of that. It's just, it's a different mindset. And I think the more that people see this, that this could be a way to help fix the system. And is it, is it the way? No, I don't think there is a magic pill.

54:38I don't think there is that 900 million dollar pill that's going to save us all i think there's going to be lots of these very specific actions where we take that ownership back from a very broken system and what's great about it i think churchill said it really well he goes americans always do the best thing after doing everything else and i think that's the process we're in right now we've got to start trying these other things because we'll get there because i don't think americans are willing to have crappy insurance not a crappy health care i don't think that they're willing to do that. So I don't see the costs.

55:10I see the costs coming down, but I don't see the demand of standard coming down. Like I'm not going to go to a doctor and have them, instead of giving me a cast, he's going to write me a duct tape. I'm like, no, no princess. That's not happening. I want the cast. So I think we're going to still have that demand. We just have to get the spending under control. If not, we're going to lose it all because it will sink the ship. I think that's definitely right. And I think, you know, I would take what you said one step further, which is not only is there not a magic pill to solve the problem, there shouldn't be.

55:37Right. Healthcare is a massive industry that all of us are consumers of at different stages of our life, different elements of health, different needs, different preferences. Those industries are supposed to be complex if the service is going to match the broad range of consumer need. the attempt to do one size fits all doesn't just make it expensive and distortive and all the things that economists would hate it makes it less human it makes it less tied to the individual demand the reality is health care looks nothing like it did in the 20th century it's already far more personalized and it's going to be even more personalized it's going to be even more targeted recognizing the enormous differences in the way people live in their preferences as to how they live in the relationship between what they choose to do during that i mean there are going to be people who eat at mcdonald's they deserve health care there are going to be people who pay a lot attention to health they deserve health care probably different structures right probably different relationships to the system we got to be able to serve all of those people there is no one time no way to do so the only way we've ever figured out how to do so in complicated businesses is by having markets and letting people get paid for finding a consumer, a patient they treat well.

56:54And I think that's what we're doing here. And I think having the ability to change the ballgame that easily and that quickly, this is just going to speed up. Because people want to be able to control this. So if someone's going around, David, and they want to track you down, they want to ask more questions, because I have access to you, so you and I get to have great conversations. But if people want access to you or they want to learn more about Sesame, how do they do this? What's the best way to get a hold of you? Well, I mean, the best way to get a hold of me is just david.goldhill at sesamecare.com.

57:26Or you can just drop by my house. And yeah, that's how most people do it. 1 ,600 Pennsylvania out of here. Not quite. Not quite. But obviously, the best way to use Sesame is to use Sesame. You don't need to be a member of Sesame. You don't need to be a subscriber to Sesame. We have both, depending on what your needs are. Next time something comes up and you think, you know what, I'd love to talk to a doctor in the next five minutes and find out what this is, come use us. Come try us. I think you'll be surprised how easy it is, how great the doctors are and how good the value is. We have a lot of patients who come to us through Costco with whom we're partners, and it's a terrific relationship.

58:05I know a lot of people think that maybe we should let Costco restructure the healthcare system. I would vote for that, but we'd be a part of it, which is great. um as long as they stop moving things around when i'm shopping there because it was here and then they move it somewhere else i got run around the store i get the psychology but stop moving my stuff costco sorry moving on next time i meet them i will pass would you give me the particular item i will yeah they're never going to do it the buyer psychology is brilliant you move it and i got to run around the store and find other stuff i know why they do it it just pisses me off that they do it i would do the same thing but i think you know your model of it makes so much sense because it It isn't, trust me, give us a shot.

58:44It's, we already have all these proof. We already have these. This is already working. You can already see the reviews here. Give it a shot. This is a different model. I think people will be surprised, not just the price, but just how great the service is and how motivated the providers are. I'm aware the doctors and nurses and clinics are to be great at what they do for our patients. Thank you for taking the time out and trying to, my pleasure. this massive issue that's going on in our country and the entire world. I really appreciate it. Great to see you, Charles. Thank you. That's David Goldhill, founder of Sesame.

59:21If you want to talk to a doctor without the insurance mess, check out Sesame Care. Thanks for listening, and we'll see you next time.