“Healthcare isn't working for anybody,” says Cityblock Health’s Dr. Toyin Ajayi | Term Sheet

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0:42Allie:Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a$75 sponsored job credit at Indeed.com slash podcast. That's Indeed.com slash podcast. Terms and conditions apply. Need a hiring hero? This is a job for Indeed Sponsored Jobs. We've chosen a market-based approach. We've privatized much of healthcare, and yet our market is set up for failure because we lack all of the fundamental sort of economic drivers of a healthy and functioning market. Hello, hello. Welcome to the Termsheet podcast. I'm Allie Garfinkel, senior writer here at Fortune.

1:20Allie:And every week on Termsheet, we go over the latest deals, news, and insights in venture capital, private equity and startups. Here is where you can listen to some of the most exciting figures in the private markets.

1:34Allie:Now, if you'll notice, we're not in my usual gaming chair today. I'm actually visiting my parents. So what you're seeing behind me is my childhood bookshelf. Let's see what we got over here. We've got for anybody who's into it, we have some Charles Dickens. We have Batman The Dark Knight Returns. Oh, and then we have my dad's a big Winston Churchill fan. I could talk about books all day, but we are actually here to talk about the news of the week. Now this week, I think is a really great week to talk about consumer because unless you have been living under a rock, you have heard that Kimberly Clark for more than$40 billion in cash and stock is buying Kenview, which among other things is the maker of Tylenol.

2:21Allie:Now, there's a lot going on here. First of all, Kimberly Clark stock did actually drop in the aftermath of this news to imagine that this is in part tied to how the Trump administration is questioning the safety of Tylenol, particularly for pregnant women. It's important to say the American College of Obstetricians and Gynecologists say that Tylenol is safe to take during pregnancy in consultation with a doctor. Despite what medical experts have said about the safety of Tylenol in pregnant women, this has put Kenview on the defensive. And it's easy to imagine that Kimberly Clark might have seen the opportunity for a$40 billion bargain deal.

2:58Allie:Speaking of Tylenol, this week we're talking to Dr. Toyin Ajayi, CEO and co-founder of CityBlock Health. Now, CityBlock Health is a primary care provider that focuses on populations served by Medicare and Medicaid. Toyin and I talked about her journey from doctor to entrepreneur, AI, and the future of healthcare in the most vulnerable populations in this country. This is our last interview from Brainstorm Tech. Here's Toyin. Toyin, welcome to the Termsheet podcast. Thank you. I'm so happy to be here. And welcome to Brainstorm Tech in Park City. It's great. I am really excited you're here because we're going to talk about some really intense stuff.

3:38Allie:I would love to start big picture. What is wrong with healthcare right now? Ooh. Yeah. I know, really broad. Like all of it. Yeah, everything. Okay. So it's not working fundamentally for anyone in the system. So I mean for patients, I mean for payers, I mean for doctors and nurses and other healthcare providers. Everyone is unhappy. And for the privilege of this global dissatisfaction, we also spend like way too much money. So I'll start with the sort of the economics. And, you know, if you think about sort of the value equation, right, like what do you get for how much you spend? We're failing on every aspect of that.

4:18First of all, the United States is pretty unique amongst developed countries in that we spend north of 20 percent of GDP on health care. It is massive, massive and has been growing. I remember 10 years ago, we sort of thought, like, we continue to say, this is an unsustainable rate of growth. We cannot tolerate anyone. We just continue to grow more. So we're spending a ton of money.

4:40Allie:So people have been saying this for decades. Forever. Like, it is just, it is unsustainable to spend this much money. Especially when we also have some of the worst health outcomes for developed countries. How bad are we talking? So we're talking about life expectancy that is below OECD countries. We're talking about disparities in health outcomes. So the people who have the best health outcomes versus the people who have the worst, the gap between them is large. And as you know, when you have some folks who are doing really well and some folks who are doing unwell, not well at all, that creates a whole bunch of other social problems as well.

5:13We pay more for drugs than other countries. At out-of-pocket costs, so at the household level, health care is the number one reason for personal bankruptcy in this country. American families spend more money on health care than families on average in developed countries. And again, we have the worst outcomes. How did we get here? Okay, so here's the problem. So we've taken an approach which in principle sounds great. We've said, look, America, what we do really well is we do innovation and we do capitalism. We have market forces that drive people to build the biggest, best ideas and bring them to market.

5:53And we let the market determine how much things cost. We let supply and demand curve sort of drive utilization. And we sort of sit back and let the market operate. Now, as you know, markets only work if a few things are true. You've got to have information on both sides. So if I'm buying something, I know what I'm getting and I can value it. Do I like this white t-shirt? Is it going to fit me right? Is it going to keep me warm and dry? Yes, then I'll pay you$20 for it. You need information. You need regulation. You need systems and policies set from above that prevent bad actors, right? And you need some ability to manage competition effectively so that people can actually shop for choices.

6:36We have none of those things operating in healthcare today. So we've chosen a market-based approach. We've privatized much of healthcare. and yet our market is set up for failure because we lack all of the fundamental sort of economic drivers of a healthy and functioning market. What does that look like for you and me? So for people who have insurance through their employer, so folks who are fortunate enough to have a job that pays them a good living wage and also provides benefits that include healthcare, how much visibility do you have in the cost of your care?

7:11Allie:I will say as somebody who has one of those jobs, Actually, not that much. I will get bills that I am genuinely surprised by. Right. And luckily, nothing that bad has happened yet, but I could foresee getting a bill that I couldn't afford. Totally. And if I asked you to shop for healthcare, to decide which doctor to go to in terms of what would deliver better value to you, how would you even figure that out? I'd go on a doc. Yeah, but you don't know how much anything costs. Yeah. Well, it's actually, it's the sort of thing that it is one of the only markets where the absolute lack of price transparency does not change the fact that you actually need to engage with that market.

7:46Correct. So you have no choice but to utilize it. You have no way to discern what is high quality. So cost is only one value, one input into the value equation. What's a good doctor? What is a good doctor? Excellent question.

7:59Allie:Yeah, what actually is a good doctor? You are a doctor. So I am a doctor. I would say a good doctor is somebody who has the time, the training, and the right incentives to spend time with you as a patient, To understand what you need and to recommend actions that they can support you to take that will help you live a healthier life. So one of the things I find very interesting about doctors is it has to be such a very specific psychological experience in the world. You see people in really vulnerable positions. You know things about them that sometimes their friends and family don't know in a lot of cases.

8:31Allie:I think there's a reason a lot of doctors have been artists over the years. It has to be psychologically difficult. It is, and it's also really beautiful. You get to be with people in the fullness and richness of their human experience. And if you do it well, you have the opportunity to make what would be a very scary and an awful experience less bad by being present, by accompanying a person, by being accessible, and by actually listening to them. The problem, of course, is that many doctors don't have the necessary preconditions to show up as a good doctor. And it's not because they're bad people.

9:05In fact, they're often the kindest, most mission-driven, most compassionate people. But when they're forced into a system where they don't have enough time, they don't have enough context, and their alignment around incentives is totally misaligned with yours, right? So give you a typical example. If you go to see a doctor today, they operate within what we call a fee-for-service environment, which means they get paid for the encounter. So if they see you and you have a complaint, they need to see as many people as they possibly can that day in order to make the money work. Turn it over. To keep it going.

9:40Yeah. And say, for example, you come in with a condition that they have a 50 % probability they know what's going on, but they're going to write a prescription anyway. They write a prescription for you. You may not have enough time to describe or really understand what the risks and tradeoffs are, so you don't feel quite fully informed. And you don't take the medicine. You don't even pick it up. or you get to the pharmacy and the co-pay is too high, it's more than you expected, your doctor still got paid for that encounter. It actually doesn't matter to them whether you picked up the prescription or not from a financial perspective.

10:10If you go from their office straight to the emergency room because you were unsatisfied, it actually doesn't matter. They still got paid. Now, it's not the doctor's fault, but if what we want is someone who is incentivized to actually help you get healthier and feel better, then we've actually created the wrong economic structure for that, right? And you think about health systems as a whole. So these are the large organizations that own hospitals and radiology suites and surgical suites and also primary care doctors. They make the most money when someone gets really sick and is in the hospital, right?

10:44They get the most money when they do a procedure. They actually... It is a long encounter. It's a long encounter and it's complex. They will make less money from taking care of somebody with pre-diabetes and helping them with nutrition and coaching and diet and exercise and doing all the really hard incremental work over time to get them into a better position than they would if they just waited until the person comes in needing an amputation for a gangrenous foot. Now, of course, doctors don't want you to get sicker. That's not why we did this. But the system and the market and the incentives we've created actually incentivize all of that reactive, high cost care way more than incentivize all incentivizes all the upstream care.

11:30Have you ever wondered what happened? What would happen if you missed a doctor's appointment, you scheduled it and for some reason you forgot or what have you like.

11:36Allie:What does happen? Nothing most of the time. Because your doctor doesn't have the incentives or the resources or the time to chase you down. They're focused on the person who came to see them. But actually in the world, especially the folks that I care for, I care for people on Medicaid and people who are on Medicare and Medicaid. These are folks who represent people with the highest level of chronic conditions, with highest needs in the health care system, primary care needs, mental health care needs, high utilization of the hospital. It's often the person who didn't make it in to see you who needs you the most.

12:15That's the person who might be sleeping on a park bench last night, who may have had their cell phone stolen, who may be in the hospital because they had a mental health crisis, who may be so overwhelmed with the day-to-day challenges of just keeping their household running that they weren't able to get there. That's the person who needs me to go to their house, knock on their door, call them. But we actually haven't incentivized most of the healthcare system to do that. So why is it broken? It's broken because we kind of fooled ourselves into thinking we've got a market-based economy for healthcare.

12:46We've privatized a whole bunch of things. We've under-regulated the core components of our healthcare system. We've over-regulated some parts that have created opportunities for people to make money without necessarily delivering value. We've made it so complex and so opaque that customers, patients, cannot actually act as real consumers. They can't shop for value. They don't have the agency that a consumer has. That a consumer has. It's broken, right? And as a result, doctors are unhappy because we're spending all our time seeing patients one after the other and really knowing deep down that we're not actually helping people.

13:21And so that's, you know, the burnout, all of that was happening way before the pandemic, but is exacerbated by the feeling that people are churning really hard, but we're not seeing the outcomes that we want to see. We want to see people healthier. And the systems don't set us up to do that. Patients are unhappy. Trust in healthcare is at an all-time low. 40 % of people say they trust their healthcare provider. Wow. How,

13:44Allie:I mean actually that might and that has declined consistently over the last three decades if I'm honest that feels a little high to me then it's possible that it will be anecdotally you know it's I mean how did these experiences as a doctor inform your founding of CityBlock I mean it's foundational like I didn't I didn't start my career thinking I'm going to be a ventrobacterium it doesn't seem like that was the plan that was definitely not on the vision board okay no it's So what happened? What's the story? Well, I mean, like so many of my peers and colleagues, I graduated from medical school.

14:21I finished my residency. I did my residency at a safety net hospital serving mostly Medicaid patients, people with tons of complexity, and fell in love with how privileged and special it feels to sit by someone's bedside when they're going through a really hard time and being able to help them navigate this complicated healthcare system. And then very quickly realized that actually I wasn't really able to help in the way that I wanted to for all these reasons. How did you realize that? I just saw the same patients come in over and over and over again. Right. So I was working in the hospital. I was taking care of people with complex needs.

14:56So you have a heart attack. You had a stroke. You had cellulitis or an infection in your leg. Your diabetes is out of control. Your mental health was out of control. And I was taking care of people at the worst moment. You know, they're in the hospital.

15:07Allie:Seeing people at some of the worst moments in their life. Things have gotten really bad. And we would patch them up, essentially. You know, we'd get their kidneys working as well as we could again. We would take care of that infection as best we could. We'd get them started on treatment for their addiction. We would sort out all of their problems. And we'd then send them back to the world in maybe a slightly better state than they came in, but certainly nowhere near as good as they could be. And then, sure enough, six weeks, six months, they'd be right back in. And I started to take this very seriously.

15:39I'm like, well, okay, so what gives? And I started trying to experiment and learn from my patients. Why are you back here? Well, okay, if you send somebody who's struggling with diabetes back to a house that doesn't have food, they can't afford their food, they can't afford transportation to all the follow-up appointments you scheduled, or they're too busy taking care of all their kids, or they didn't actually understand any of the instructions because it was so complicated. They're on 14 medicines. They don't speak English as their first language. like how in the world would I expect a different outcome and and I started um just trying to figure out who was going to come back in and why um and one of the things I learned was that if I asked people three questions and the answer and based on the answers to these three questions I could sort of like internally predict whether they were going to do okay and the questions were first of all do you have a person in the health care system that you know and trust and the way I would describe it is if you were in your regular clothes on a Tuesday afternoon you bumped into into them outside Costco, would they recognize you and would you recognize them?

16:43So it could be the doctor. Yeah. Could be the nurse. Could be the medical assistant who weighs you and takes your vital signs. Could it be the security guard at the front desk of your clinic? How often do people say yes to that? Very rarely.

16:54Allie:I was going to say, I don't know. Far too rarely. I don't know if I can say yes to that necessarily. Right? Would your doctor know you? Yeah. And like, maybe it's okay for people who are, I'm sort of making assumptions, but who are generally healthy. Yeah. You know, I see my doctor a couple of times a year. Yeah. Not a tender. In my doctor's case, my doctor would probably know me because I asked a lot. lot of questions in a journalistic way. But it's the, it's the sort of thing that that would be the only reason. And that, and even then it's, it's maybe, and I'm, and I'm luckily very healthy right now.

17:18Allie:Right. And so I'm talking about people with three, four, five chronic conditions. I'm talking about people with 14 medicines, people who go to the hospital three, four times a year and stay for four or five days. Like you gotta have at least one person who knows you, right. Who you could just like ask a question when you're confused. The second question I ask is, do you have a human in your life who's a personal friend or family member who you trust and you could call 24-7 and they know you? Like any human. How often do people say yes to that? More frequently, but not frequently enough. Do you have a human, any human?

17:52And we know loneliness is an epidemic now. We know social isolation is an epidemic now. But so many people would say to me, I have no human. And the third question I would ask is, if I gave you a set of written instructions, could you interpret and understand them? Most of the time we give people instructions in English. Very rarely are they written to a fifth grade level. Probably should be a third grade level. There's all these acronyms we put in medicine all the time. For what? We don't know. We're so used to them. So you came in, you get a discharge summary, and it says you were admitted with a DVT.

18:26It means that you need to take this medication. You need to inject yourself in the gluteal region. What does that even mean? What does that mean? They don't know.

18:34Allie:And even if you think you know, you're probably slightly afraid you're going to get it wrong. So maybe there's a certain paralysis too that sort of sets in. Correct. And so these are structural problems. Then there's the problems of poverty and proximity to poverty. So Medicaid covers people who are in and around the federal poverty level. Different states have different thresholds for that. But these are people who, generally speaking, have too few resources to operate in the world in the sense of abundance around them. They're pinching their pennies. They're not paying all their bills on time because they're trying to balance their resources.

19:05They're struggling to make their daily needs met. And when we take care of new members and new population of patients, we survey them. We ask them, what are your big needs? More than half of them have an acute social need. I'm worried I'm going to lose my housing. I'm not sure I have enough food to eat for me and my family. I don't have transportation to go to the oncology appointment I know I need to go to. And so we're sending people back out into the world with all of these problems without the safety net of relationships that they need and with a lack of sort of trusting emissaries back into the healthcare system.

19:39And it became really clear to me that I could spend the rest of my career seeing patients every single day in the hospital, in the clinic, patching them up and sending them right back out and we wouldn't change the outcomes for them. And that actually the problem was that we have a system that isn't set up to incentivize and to orient healthcare in the places that are actually going to drive most leverage and that the impact is going to be catastrophic for people. I saw so many people die as a doctor in the most incredible, innovative, and developed country on the planet.

20:13Allie:It sounds like it wasn't necessary that it went like that. No. No. And for me, it's just like, on a human level, I mean, so doctors, as you probably read, and people have talked a lot about this, have been experiencing very high rates of burnout and dropping out of the healthcare system. And again, this came before the pandemic. The pandemic was a singular, awful experience. I was practicing that and I was seeing patients as a volunteer in our safety net hospital where I live in Brooklyn. I was seeing our city block patients in their homes and in our neighborhoods. It was horrible. But even before that, doctors were feeling burned out and unhappy.

20:55And the psychologists described this as a moral injury. It's not because being a doctor is more strenuous than it was 20 years ago or 30 years ago. I mean, old school docs, they were on call 24-7. They were doing home visits. They were like, they were grinding it out and they stuck it out. The reason that it's different now is because when you're working this hard and you feel like it's futile, when you feel like you're actually, there's a misalignment between your values. Why do I keep showing up every day? Why do I keep showing up every day? Right. And so, and so for me, it felt very much like that.