#426 Outpatient care, reimagined from the ground up: Sam Winward from Pastel Health

0:00Welcome to the Health Tech Podcast. Here we talk about everything healthcare and technology. and I'm your host James Somery.

0:11Sam welcome to LTEK podcast how you doing sir? Thank you very much very good thank you and thank you for having me on. You're very welcome long time listener first time caller I believe. Yes that's right that's right. For the biggest use case of this podcast I think which is the the old listen to it before an interview to impress the interviewer. Yes I've used it many times most recently at Aviva. Nice which I which we'll definitely get into because Mark's a friend and yeah, know him well. And you know Umang as well from your time at Babylon. We got loads to talk about, man. We got loads to talk about.

0:41Yeah, absolutely. But not least, let's start at the beginning. So you're a medic, right? Yeah, by background. What did you do in medicine and what led to you leaving to join all of this health tech nonsense? I think I was always more interested in the commercial side of healthcare. Okay. Like right from the very get-go. So my dad was a GP, so was often involved in like the business side of that. And I helped out on Saturdays at the practice. Nothing to do with the business from summarizing notes. Anything takeaways, basically. But yeah, like that's what got me into medicine, I think, and got me starting to think about it and was more interested in health tech and that side of it.

1:26And I think it's partly to do with the impact you can have as a doctor and especially as a junior doctor. It's very one-to-one. I mean, just as a junior doctor, obviously that changes as you get more senior in your career. But that was kind of frustrating to me. And obviously the downside of that is you never get the same amount of satisfaction from anything ever as like helping a patient. You just can't replace that. um but the other parts of it you know helping more people the ability to impact more populations greater population size greater greater number of people across multiple specialties i was more interested in um and i was always more mathsy and there isn't much maths in in medicine and i kind of like that and the financial side of things so yeah so that's what drove me to to leave yeah the only maths is in like pediatrics isn't it where you're just constantly calculating body weight and surface area yeah and anesthetics a bit yeah anesthetics a bit yeah to be fair yeah so how far did you get in medicine i did f2 okay and then left after that yeah um and uh yeah when i was kind of when i was leaving the day after we finished f2 yeah i had a um kind of moment that was like you shouldn't leave right um shouldn't i shouldn't yeah i kind of left the house was really hung over it was raining um because we'd been celebrating finished finishing f2 um stopped raining rainbow came out um and this lady that i'd been looking after on my previous job for like the whole time was walking down the street i hadn't seen her walk the whole time i'd been there and she was with like 20 of her family this was right outside my house and she was like there with a son who we'd seen and her son was crying saying thank you so much and i was like i should never have left um wow and so that's been like that's been that's like it's kind of driven me to stay in healthcare and being like that as a sign i can't leave yeah but yeah it was that kind of made me second guess it a bit i guess it's so nice to have that feedback loop though yeah exactly exactly and that and that's the thing it rarely happens and like one of the things we'll talk about later which we're doing with past dollars trying to increase clinician fulfillment and that feedback is part of that like and that story is part of why we're trying to do that yeah because people have heard it on this podcast before but this is the one thing that i've said that i do miss or one of the things that i've said i missed which is being being thanked first of all yeah i don't tend to get thanked like all day every day like you actually did as an anesthetist or in medicine um but also this like transcending everything about how you feel for the good of someone else yeah it's so difficult to get that in any other field and any other specialty but then but then to have all of that all of those things that drove you you know out of medicine which was definitely not the patient care but all the other stuff but then having all of that kind of vindicated in this moment of like extreme thanks outside your house with a rainbow in the background with 20 family members whilst oh goodness but thankfully thankfully it happened because you obviously stayed in healthcare so what was the first thing that you did then what what were you looking for outside of medicine how did you make the move out i wasn't sure what i was looking for i was looking to work in health tech and that was what i was looking for really and um i thought consulting would be a good way to so i did consulting okay i thought consulting would be a good way to transition from from medicine and open a lot of doors sure um so so joined a company called kandesic who i think you know you know michelle yeah yeah maybe and mark maybe um but yeah joined them and uh i absolutely loved the work they do it was very very intense and kind of just what i needed to kind of like snap me into a new role and it was like another education for me they do um they do commercial due diligence and strategy consulting um so looking at private equity companies buying healthcare assets and we would be the kind of like commercial due diligence of that business okay and so you'd see lots of businesses it was very high turnover good times lots of deals happening lots of work to be done long hours weekends um but amazing experience and like it kind of made me into like what i then became okay taught me financial discipline taught me how to think about businesses showed me the breadth of stuff that was happening in healthcare across like we do the deals in life life sciences from care homes through to medical technologies like all different things it was really I can't emphasize enough how an amazing opportunity interesting it was commercial stuff as well is quite different in fact probably like the opposite to clinical care yeah as well yeah so I often hear when people talk about the move out of medicine that so much of it is mindset and so much of it is changing the way that you think about things and the way that you see the world almost it must have been or you tell me is it or was it like a shock seeing how much money there is in the system because those yeah the amount of zeros that you're dealing with especially at private equity level of businesses buying businesses you know you it's on you're unlikely to know what to kind of think about that as a clinician even but then to see it i don't know is that a bit daunting is that a bit weird is it was it was it was yeah it was very eye-opening to like see the to see what like how different companies created value and what was happening yeah because obviously i didn't have much insight into this before i yeah before i did it um and so it was a kind of a whirlwind of you know it completely changed my my perspective and understanding of healthcare um in general because there's so many different ways that different companies fit into the kind of, you know, we would just see the clinician part of it.

7:29And you could imagine what a hospital might sell, like how you might sell a hospital or how you might look at a hospital. But every other aspect of health care that contributes on the journey before hospital, after hospital, the things that are used in the hospital, there's such a big value chain extending from all of those areas, which are kind of really eye opening for me to see. And the work was like, it was fascinating stuff. And I learned so much there and I'm very grateful to Michelle for giving me a chance. Yeah, definitely. And the education, really. And we're going to talk about you becoming a founder, obviously, but were you thinking about starting your own business even at this point?

8:05Yeah, at that point, my way to work, I'd be listening to health tech podcasts and the VC podcast and all the things coming up, Stanford and these things. That's what I was listening on the way to work. are you so you are you someone that's always got loads of ideas then and you're trying to figure out a way to commercialize it or are you yeah i think i'm i think i'm more on the like execution side sadly okay yeah sadly i can see an opportunity i can see an opportunity and judge an opportunity and maybe i'm too harsh on that which means that i don't have loads of ideas because they're all shut down um but yeah i think i'm more on the latter side of it okay i i i kind of relate to this because i do i do have a lot of ideas but similarly i shut so many of them down myself i think because in the in the spectrum of entrepreneurship i'm probably quite risk averse yeah so i've not raised money because i find that frightening yeah the fact that you would raise millions on something that may or may not work i i couldn't i just couldn't do it um not this part of my career anyway um but yeah i also run accelerators and when you run accelerators you you just see so many pitch decks and just as a function of time you see all of the ones that don't work which by the way is basically it was literally all of them like yeah even you know Babylon which we'll talk about didn't work in the end so it's like I don't know where those successes are um but thankfully people like yourself are still trying which is excellent and we'll come to it um yeah it is I mean the odds are stacked against you and you you have to be comfortable with it or or suffer yeah there's two ways or not do it i guess yeah absolutely right absolutely right so um what's next after candace again so i joined babylon um with uh in the nhs team with probate at the time and umang later um and i saw umang by the way on tuesday bumped into him waybridge he was at a loose end uh his car was in for an mot and he was just wandering the streets of waybridge where i live so he said do you want to go for a coffee and uh he said yeah why not i've got half an hour um and he said to let you know that uh he taught you everything you know so absolutely true i thought i'd definitely get that in another podcast absolutely true he's a good friend and um i'm very grateful for his like counsel and friendship yeah he he did teach me a lot and we we worked on some awesome things together so it's his team that you were in his yeah so his he took over that team okay um part way through my time at babylon okay fine so was that was that the team on gp at hand yeah we did nhs stuff to start with so i joined the nhs team and we looked at gp at hand uh for the first section of it and then paul bait left to be the um to eventually be the um ceo of space oh of course he came from the cqc didn't he and then went to the space thing yeah yeah at that point umang took over the team nice so gp at hand then um really interesting model that got a lot of criticism yeah you're taking the worried the worried well or not even the not even worried you're just taking the well and you're getting all this revenue they're the ones that don't have chronic disease they're young they can use tech all that sort of stuff how did you guys view it internally yeah so it's a great question and it it still amazes me how how like you know the the comms piece on this around what was said about babylon was never kind of corrected at the time or never counted really um or never clarified okay potentially yeah and that yes we did sign up loads of young people who wanted to use the digital technology who in theory young people are easier to look after they're also associated with a lower fee and they're also so they you know so the fee differs per per age group and sex um so they were on the lowest fee and normally this group doesn't use health care that much um but the group that we attracted did because the offer was unlimited of keep the appointments within minutes and so they did use it a lot and so they were very expensive to look after and they weren't the kind of they weren't the low cost um members of the public they were high cost because they had lots of appointments the worried well argument like is very difficult very difficult to say um you know they weren't a tip the young aunt group with lots of chronic disease um but we did have very complicated patients on the book too we did an excellent job looking after um it's just that's a difficult like battleground that one um so yeah And I think, you know, ultimately we're offering people a choice and anyone could have joined it and those people selected to join it and they got an amazing service for it.

12:59But the unit economics of it was very difficult because of that model of unlimited, you know. Let's go into that a little bit. So the unit economics being difficult, was the goal to make it profitable independently as a service or was it a loss leader to something else? Yeah, I think it's difficult for me to know. Obviously, these are all like my perspectives as not being inside Ali's head and his view. But I think ultimately a service has to be profitable in the long term. Like there may have been a time where growth at all costs is fine and growing the numbers is good enough and think about unit economics later and maybe that was a time when this was okay to do.

13:45However, that's not always the case. And eventually these services, they have to wash their own face and be profitable to be sustainable and to invest in the service to make it better because that money can't keep coming into a service that's consistently loss making. So, yeah, I think it has to be profitable. And I think the struggle there is you can't have a fixed fee and unlimited use in the model of primary care. This is very difficult. Yes. but i think the evolution and this again this is my story of my journey at babylon but the evolution of that is okay so you're you're running a gp at hand you know a very accessible primary care service you can try your best to make that unprofitable uh sorry profitable and we did we did loads of cool stuff there so i think in a year we overturned gross margin by 100 percent wow and through like a combination of product initiatives clinic clinical initiatives head office initiatives where are you making that margin you've done a list there but like the like specifically though where's the where's the where's the yeah where are you exactly where are the big chunks actually coming from so there's a big part on the administrative function like automating parts of that and working the you know the call center and things like that big part scheduling a big part on running a slick clinical service and so this is like the basics that actually i like i love and is so important and you know when i was at kandesic with businesses that would sell would be right bang on on these right it's like how do you what's your utilization how do you manage your staff how do you get what can you take out of appointment time what can you put before interesting oh i see how can you help clinicians do their job you know what can you take out it's kind of like metrics and you know a big one was skill mix as well like how do you triage people up front and get them to the right clinician which everyone's doing but at the time it was it was it was 100 gp when i think when i started and so that skill mix was a huge um and thing and these are like these are actually basic things but done well they can make a huge impact got it got it and in terms of like this the system with gp at hand because when you're introducing something disruptive there's obviously the impact on you know those patients who are getting a better service or unlimited appointments and that kind of thing but there's there's obviously sometimes it's a benefit sometimes it's not uh i guess the entire system you know the knock-on to secondary care for example so what was the yeah what what was the system that GP at hand fitted into and how did that change?

16:29We were convinced that, I mean, the whole thesis of Babylon ultimately was that accessible primary care and high quality primary care and innovative primary care creates net savings to the system. So we were convinced that that happened. And then, you know, so there's this benefit that's accruing outside of the system that we're, you know, we're involved in. So the wider NHS is benefiting from these patients not going to A &E, you know, these are all hypotheses not going to A &E so much. These patients, chronic disease being better managed and they're not going to, like, not exacerbating as much.

17:03Like all of these things that good primary care can do. Yeah. And primary care, like good primary care is obviously the key to unlocking savings in a healthcare system. And so we were looking at ways to find deals where we could do the primary care and then we could share the savings that were created in the system with the system. And that is essentially value-based care as it's known in the US. You know, they have managed risk populations and they do the primary care and then they share in the savings from their secondary care spent. That's how like most of or a lot of care runs out in the US and what Babylon eventually did and how Babylon grew in the US.

17:46And Umang and I did a sign a deal in Wolverhampton that did this. because i can because umang was excited i remember umang's excitement about this yeah because and the reason i remember is because i grew up in wolverhampton yeah it's just very strange hearing umang talk about wolverhampton at the time um because we've been friends a long time he was my boss in pediatrics so that's how long i've known umang since i was an f2 yeah um which is super interesting um but yeah so what what exactly what exactly did you set up then in wolverhampton so you were taking the the primary care of the region yes what was uniquely set up and that it had 10 at the time practices um that the trust owned so vertically integrated primary care huh okay and but there are you know there are um a lot more practices in that so it's about 60 of 300 000 uh people were in those practices in so 300 000 people in wolverhampton 60 000 in those practices and the deal with babylon was like we would implement our technology and services for those 60 000 we'd then measure their costs over time benchmarked adjusted for needs and all these things the nhs um the allocation formula and if there was a saving the system we would share it with the trust if there was an overspend we would be accountable for that over so you were just super transparent about yeah your p &l basically yeah and it was a really um it was a really amazing deal and i really was like very proud of it we we worked so hard um to get it done it's obviously it's umag's deal he let out i was supporting him yeah um but uh yeah it was it was a i think the first of its kind and i think probably the only one that's ever been done in the nhs that may all change now with with the aco contracts yeah that we're um we're talking about now and yeah so i i wish it had been it had more chance to fly because it could have really shaped this 10-year plan and these aco contracts do you know what's happened to that since babylon's obviously gone under do you know what did that take that over no that contract was ended um as the focus turned to the us ah i see i see so it didn't it didn't have a chance to fly which is really sad but it's just i think it was a decision that had to be made and it's a shame god that could have really changed things in the uk right yeah it could have i believe it if if done well it could have changed things either way right if it was terrible if it was terrible it you know it could have changed things for the worse it would have done well it could have set the scene for the 10-year plan and um for acos but it's all hypothesis now so is so is that is that opportunity still there then for vertically integrated primary care trusts to buy up practices yeah and for some management company call it to come and run that primary care i think you you have to have you have to have willingness to spend more on primary care than the budget in order to make the savings yeah Because what's happening right now is everyone is spending the primary care budget on primary care.

21:03And that limits what primary care can do. Yeah. Whereas if you're saying, okay, and it's a bet, right? Like this is the hard part about it because you may spend more in the first few years. And so you either need a partner who can absorb that with you or you need a balance sheet that can absorb that and you're happy to do that. um but so that's why it's so hard to set up with a with an independent agency within the nhs is a bit different um but with an independent agency that's that's tricky needs a lot of capital that's a big big raise that's needed basically yeah okay i understand did you stay at babylon long after that deal yeah i worked i worked in out in the us from london oh did you yeah so back to my kandesik hours uh like all night and um yeah it so it was really intense really interesting completely different worlds what were you chasing in the us what was your what were you so i was doing thinking about their value-based care strategy so what interventions do you do for your populations um how does that all add up with your financials um how do you how do you believe there's a saving from doing this intervention in that population yeah and so i was working with a lot of um u.s clinicians and a lot of the u.s team um was was difficult you know being from being in london at the time all the conversations were happening in america um but it was like it was fascinating work and like really interesting like healthcare economics yeah god you must have learned loads about the US space yeah yeah I did is that useful now um I think some of the thinking is yeah some of the thinking definitely is and the approaches we took and the the complexity of the problem you know solving those type of problems definitely is like a is a helpful thing um and I think well not for what I'm doing now but maybe in the future if you know if family-based care becomes a thing in the uk definitely so then oviva came next so mark jenkins who's a friend of this podcast been on a couple of times i think yeah how was that it's good timing to go to oviva i think yes it was um mark hired me and um yeah mark hired me into oviva and we worked together on just as the grp1 boom was starting okay you can call it that I think Sexenda was obviously out in the wild and Wagovi was just coming through.

23:35Nice approvals. And the world was starting to talk about it. GOP1s. Aviva was growing crazy fast as well. Yeah. Yeah, yeah, yeah. And I think partly due to the boom in weight management. Right. I mean, it's a shame that we had to wait for the drugs to come in. I mean, it has materially changed the impact of the effectiveness of the services. but Aviva have been doing that service since 2013 and yeah and so it's just been struggling to grow you know three three year waiting this yeah of course it's just not been prioritized which is now great to see it get prioritized but it's had to have these game-changing medications come out to get it prioritized we call ourselves a preventative healthcare system but we had obesity there which we were doing nothing for which causes all the diseases we spend our money on um so it's great to see and like a good great to be i've been a part of it to get uh weight management services like accessed by much more people much more yeah people who need them um so yeah so really there was a amazing time to join did a lot of thinking around you know do we do self-pay or do we stay nhs did a lot of um work on how do you make this work in the nhs and how do you then scale that in the nhs and you know it's it's a great success story um to skip to the end of even now as like over doubled the market size and the people who can access these these services on the nhs they have um you know the people coming into the service to talk about advocacy for digital services their their bottom deciles are overrepresented which is true like within obesity so you're getting that like access to um to those populations i think we were talking about before you know through digital care that you know the average bmi of people on that program is 47 and the cut off to get in is 35 so it's like really people you know it's not like the fringe getting no it's people who you can have the most chance to benefit from that service like from a health perspective and you know it's doing some great things for for sick days as well you know i'm i'm not sure in stats but i think around 35 reduced sick days for people on their program so like it's a really great example of how um of how digital health and innovative companies can scale in the nhs and transform you know outcomes and and patients lives what was it like going to a company like another startup after babylon was would you did you find the culture yes same different like because because it was so many different things about you know how balabon was run and like what it was like in there versus other places yeah it's interesting to me that oviva also being a fast growth vc funded startup that okay didn't grow as quickly but is still growing is still like i'm just interested in like yeah what did you learn about culture there yes i was a whole it was a completely different culture oh wow completely different completely different yeah i think i think it's my view is affected a bit by the fact i was working in the us for a year okay yeah and the culture there is was wholly different to the culture of babylon before i worked in the us right um it was a lot more commercial and um a bit more like a lot more direct right okay than Babylon was before that.

27:05Right. And Aviva, you know, Aviva's, it's grown, like if you were going to choose how, like in retrospect, how to grow, it's grown through like building evidence and building partnerships with the NHS and with the NHS as a partner and always firmly anchored in that like partner sense. And I think that was always at the core of what Babylon was doing as well, but it wasn't always how that was perceived. And I think that there's a difference in perception and I think that that was like a big a big difference you know if you had something like 80 clinical studies published about their services um that like showed the evidence and had really good partnerships with commissioners and it's just that you know it's a different it was a different market like the Babylon the markets Babylon were in like they were just different how how to get into those really innovative ways that they got into those those markets um and aviva's you know done it in a different way they've gone in you know traditional like commissioner relationship build up and that's like a really hard business to challenge and a hard position to challenge you know and it's worth it's worthwhile the the hard yards that you know mark and team did it's a heck of a moat yeah trying to displace to get to yeah yeah where they've got to yeah you know i can remember this is years ago um when i was i just left the digital health.learning accelerator so we're talking yeah we're talking 10 years ago probably or nearly there anyway um but i can remember i saw mark present at london business school and he put up a slide of his nhs partnerships and bear in mind the narrative at the time was that you know the nhs is very difficult it's you know it's hard to get nhs contracts and of course it was and it still is mark put this line up of like all of these nhs logos i'm not joking like people in the room like gasped yeah of like how on uh what like how on earth and then it just gets swamped by all of these people like what on earth is your secret to this yeah yeah yeah it's hard it's hard you did some hard yards and he did he did a fantastic job and yeah now so mark's moved on but it's now led by martin who i don't know if you know him but he's a he's a great a great guy and he's taking the business from strength to strength nice nice onto the main course this conversation really pastoral health so you're another ex babylonian that has started their own company i don't know what was in the water in that place like honestly um that you guys have all seen like what can be done with your own companies or something but or just whether it's just testament to the hiring of of umang frankly i don't know but um yeah past the help yeah tell me tell me the whole story man so yeah you're you're living the dream you got your own startup and you've got a live service so you've done a lot of a lot of hard work to get to where you are already you also had a lot of like announcements and stuff recently but yeah no tell me start at the beginning let's talk about the whole thing yeah so i guess the beginning is um i've got an amazing co-founder called kush kush patel um he's he's like a uh we went to medical school together um and so we've known each other for years we were at babylon together um so he's another ex babylon who started business yeah um and yeah he's he went down a product route after that also at babylon and after that at GSK, he started his own women's health platform at GSK Ventures.

30:41So yeah, so, and we're very complimentary in lots of different ways. And I'm super grateful for like him putting up with me and like for the, for the, you know, it's what you need, right? You need someone there to like, to lean on and be there for you. And he really is. And I think moving forwards, we've got like such complimentary skill sets to do it. And we always talked about doing something and it feels like it felt like now was the right time. So. So, yes, so we founded Pastel Health. The the mission and the vision is kind of we want to build a multi-specialty nationally, nationally scaled NHS focused outpatient clinic.

31:20And the two things we want to do are transform patient lives and give clinicians the most fulfilling care experience that we can. and that those two things obviously kind of fly wheelie yes and the last one being in the mission is like super important to us as ex-doctors um and i think you know part of that like being able to say like the fulfillment story we talked about earlier like that fulfillment can mean so many different things it can obviously mean salary and what you reimburse it can mean how you feel about work it can mean the outcomes that you've created and resurfacing those so this it can be like how easy your job is day to day or how easy your job is made by the person by the technology so i think it's really important for us for that to be front and center for us so many so many so many questions on this um let's talk firstly about what exactly what exactly this is very very practically in terms of um what does it mean that you're doing a national multi-specialty nhs outpatient clinic like what does that mean that secondary care hospitals consultants that have clinics are going to refer to your outpatient like what what does this actually mean like is this brick and mortar is this digital it's a high so yeah so it's um it's a hybrid model so we will have brick and mortar and we do have brick and mortar for our first service um but we'll also be remote and remote we have a preference remote um we're we're choosing so that's that part we'll always be like referred to from a gp from a gp okay so a gp will refer patients to us we will provide consultant led services that are referred to by a gp um we'll be a hybrid service so we'll have some face-to-face brick and mortar facilities we'll do you know we'll do things like we're doing procedures for our first service um so interventional pain procedures and um and we'll do a remote remote service as well and we'll lean towards the remote side because obviously it's just preferred and um uh and as we've talked about how it helps to access different different population groups but can't have it on its own i think yeah it's a good message so we've got a hybrid model there yeah and yeah that's the vision where we are right now yeah we've started with chronic pain so we are our first service is chronic pain and is live and you know we started treating patients and it we chose chronic pain as our first specialty for a number of reasons one is has some of the worst weights in the nhs today yes um you see often you hear a year plus weights for these services this drives health care inequalities and pain is one of the things that drives most healthcare inequalities in the uk if you can point to a single thing pain is one of those things what do you mean by it drives inequalities the lack of access to treatment for pain is driving health inequalities so got you so it poor it caught um pain is skewed deprived the sufferers of pain chronic pain skews skew deprived and there those patients has less ability to advocate for themselves within the nhs and less ability to like navigate waiting lists and less ability to like navigate the gp even so so those populations are left to suffer in pain and i you know not being in pain is like something you shouldn't have to wait a year for yeah so it's so it's one of those things where we it's a really important thing to us to be widening access and solving health care inequalities so that's that's one of the reasons we went for pain i think elsewhere elsewhere where you've got long clinician facing appointments yeah long pathways you know programs of care yeah lots of potential for disruption and basically none of that's been done so far yeah because you've got long it's not come in see us and go yeah it's come in see us and have your true like pathway of care and go and there's lots of stuff you know all the good stuff we talked about from from babylon and how aviva do their weight management programs so much stuff you can put into the to the pain management journey yeah um and then lastly and like really importantly clinicians in this field are like really enthusiastic and they've got you know it's difficult for them to deal with pain patients every day in and out because they're difficult they've got difficult problems to solve and to make their to make their job easier and more fulfilling i think they're a group are very receptive to that so i think it really fit with our mission um to for that to be the first one i love this so business model wise it's fascinating because you're you're basically using everything that you've learned on your career journey right from candesic understanding the commercials and knowing what drives value to then at babble on the gp at hand thing knowing that if you knowing exactly where you can drive that margin increase so therefore you know how to really smooth the service out and make it efficient and then obviously Aviva the way that that's been actually practically executed in weight management all that stuff it seems that this is the culmination of lots of different things right so what can you can you explain how that how that is a business for me so who who pays you who do you have to pay what it what is the business model here like yeah quite practically yeah so black and white we have contracts with icps yeah and the commission the integrated care boards they um we will we then can accept gp referrals uh gps refer to us we do a kind of package of care at that point so we do a really long first assessment we do um and we're paid as an activity payment by right yeah okay And then we'll do, you know, first appointment, understand the person, understand their life, understand their pain.

37:14And that's a really long, deep appointment to really make them feel heard and start co-creating how we're going to. Very much need in chronic pain. Yeah, how we're going to treat them. And then a multidisciplinary care team will then deliver that care. So involve one-to-one psych, one-to-one physio, pain management programs, nursing, medications reviews, interventional pain procedures. and those things in different sequences and different volumes for each patient. So you're kind of constructing a care package and then delivering that journey. Are you subcontracting that or are you? So we're doing that end-to-end service.

37:49Wow. So they're your employees that are doing that? Interesting. Wow. So we're providing a healthcare service. Yes. And that's a full end-to-end outpatient service. And that's one of the many we have planned. the idea then obviously being to do that cheaper and better than what the current standard is yeah well this is the thing to come back to right and i mentioned is like how do you so babylon go in with a disruptive service off the bat right yeah the new service that's not been existed before and a lot of people do this in healthcare and doing that in the nhs is so much more difficult than doing a service in the way they you know it's already done are you still uncomfortable you know like this is how they pay for these services this is how these services run yeah you know so there isn't actually and it is actually i think the wrong approach to go in and say here's a new model it's cheaper and better because that's what like aviva were doing and they did and they came in with a cheaper service with evidence the problem was you couldn't say it was better because the evidence didn't exist for the trusts um so but it was cheaper and had high quality evidence and still we're not getting commissioned and it's so difficult to to do and so i think there's an element and it's one of my beliefs you have to do things in the way that they're always done to start yes and then bring in the disruption later yes um and so that that is our approach so the so the business model is super basic it's enough there's no um innovative way we're doing it we're doing it how the nhs is used to it except there is in the clinician fulfillment fulfillment angle which i find fascinating because this this issue dude like you'll get it as an ex-medic right like the the conditions we talk about it so much there's no need to go over it the conditions we know the conditions right it it's causing so many people to just think about leaving it's causing so many people to waste some of their time during the day some of their time a lot of their time probably complaining about things or feeling anxious about things or just like all of the above and so actually having something that's business model positive for improving the experience of clinicians i just think is so so so important and that's not just a that's not just a moral argument or a or an argument based on the fact i'm trying to side with my people as as an ex-medic it's it's more that people talk about the the unsustainability of health care for many many reasons but the nhs is is stood up so much on people being overworked and a business can't make margin on people being overworked because the whole thing will just then decay yeah and i don't i i personally don't see that the i don't need to explain it but i you can you staff can leave and you can turn them over and then they'll be fresh and green for a little while but then yeah they'll undergo the same thing and that can only happen for a certain amount of time until people stop applying to be doctors surely yeah and surely this story that's been playing out and you kind of feel that maybe is starting to happen now that it's that's it's nowhere near perceived as the career it once was but finding the business models is so hard so what have you what have you done there are you are you just assigning it as no this is just something that we're doing it's going to help us with hiring it's we're going to use sell some of our margin down to increase the enjoy not enjoy fulfillment of staff or is this something that you've actually turned into it if we do increase fulfillment we get increases elsewhere in it is a flywheel yeah i think it's something we are we are doing without considering the finance of it but i think it has a financial benefit um in that you obviously you have lower churn you have more effective clinicians per day you know yeah so it's a long arc of realizing i think it's yeah i think that's what that's why it's in the mission because if it wasn't in there those yeah those things slip right um it's our commitment to clinicians to work with them on that and it's easy for me to say all this right we haven't we haven't proven any of this or like done hardly any of it yeah but it's at the stage we're at it's like it's like signaling our intention to work with clinicians to make this a more fulfilling job and that more fulfilling is so broad like we discussed earlier that we are like our intention is to go out listen and see which bits of those like how we can increase fulfillment with clinicians because we want them to come and work for us this is a very small group of pain clinicians out there we want them to like want to work with us and uh so like it's it's just i think we haven't thought of it from a business perspective yeah we haven't crunched the number which is unusual for me but it's more of a like a i guess it's part of the passion and also probably intuitively you know that there's value to be made there yeah and that probably is based on your intuition from everything that you've done before and all the skills and knowledge that you've stacked over time yeah you probably are quite aware that over a long arc this is very likely to pay back um it's not an insignificant amount of money something like this will take in terms of upfront capital to get something going that's in part bricks and mortar in part service these people you're doing end to end so you've got a lot of employment to do with clinicians and all the rest of it so how much how much does that take to get something like this off the ground and how was that fundraising journey so we're delighted to close the first our first investment round congrats thank you the albion venture capital lenny and christoph from there nice and i think we had such nice um conversations with them where we were just aligned and the the way we saw the nhs market and their investors in aviva as well yeah so they really good point yeah So they really, really get it.

44:10And it was just a really refreshing conversation and process and super great. And so, yeah, so it does require a lot of money. It's an undisclosed amount that we've raised. It's a small round. We're super lean at the moment. And maybe, you know, there's lots of, the way we're thinking about it is giving ourselves options. Yeah. um so we're building uh to start you know and pace is the option like do you want to go faster you need more money yeah do you know but our key thing and like one of the again a learning accumulation of my experiences so far is to become like break even cash flow positive as quickly as you possibly can and then grow from there um rather than grow like grow before because i think it's just it's just how i prefer like how i prefer to to look at it and kush is the same but it also sounds obvious but it wasn't always like this yeah bablon being the perfect example of you know when i spoke to ali on here that's what he talked about that back then it wasn't about profit it was about revenue it was just about getting as many customers as you can and then at some point yeah you can flip into profitability the problem with it it just that that relies on capital always being available and that's what he said was their undoing towards the end and that's his you know version of that story of there just wasn't the capital available when he needed it for that final hurdle and it's fun and it's funny because my instinct is always well that's what a business is you spend less than you earn and you make profit yeah and it's only when you've got a bigger vision that you're like no no you need upfront stuff you need to be loss making for a while and but it's a balance it's it's it's a balance right because then also if you say you run this super lean that's a decision to run it super lean it's a decision to not raise loads of capital up front because again you'll you'll probably crunch these numbers but the more you raise as well exactly then you're giving away and then the valuation it's harder to do the exact thing i just said right if you've raised you know five million at the start you you that comes with extreme growth expectations and then you can't focus on that okay can we make this business work do the economics work i mean they almost don't matter at that stage like it's you're back in that world where you've got to grow and fulfill this this um big ambition and like that maybe that's the direction we go but we go there from a percent a position of strength exactly position of strength and from being informed that that's exactly what you need and you have a much better plan of what you would do with it as well i guess exactly tell me about your co-founder what are you guys you said you're very complimentary in your skill set what what he's handsome

47:05so he's front of house um yeah what are your what what what are your roles like what's you versus him like what what what do you bring together to the table i've taken the kind of like commercial side, business development, finance, investor relations type things. Yeah. And marketing. Okay. And he's taken like the big lift, which is like the running the service, HR, operations, these kind of things. Which is basically ultimately the product. Yes. And he is a product. He's a product guy by background. so so that's the broad division of of things but we're very close on everything and i think the division's working quite well i think as we grow i think the ops he'll hand over the ops and then he'll focus more on the product and the technology and the services that we that we do um more so but right now as i said we're lean so we're doing everything so you're in chronic pain now is that in one region is that multiple regions and are you going to increase in chronic pain or are you going to start to diversify across different specialties yeah i think this comes down to the funding i think if we'd raised five million we'd be yeah multiple specialties yeah um we are going after one specialty um and expanding in pain so we've got one live service we have another one confirmed um not launched yet probably in the new year yeah and we have a number of other opportunities we're excited about coming around the same time uncertain um on those but uh but hopefully you know it's a game of pipeline you have enough in the pipeline and that something will come through so uh that's a big part of the time i'm spending right now and then yeah i think there's other opportunities coming around like there's you know as i said wait lists are bad so you don't necessarily need to get original contracts in icbs you can go to trusts and outsource work and you know there's a couple one of those opportunities at the moment we're looking at so it's i think these things will start this will start to develop you know we're super we're super super early and we went live on in october oh wow okay okay so it's really really new but you know really exciting to be live and to have treated patients yeah yeah yeah it's a it's a really really cool to see it happen it's exciting it's exciting times man do you so do you see that this is the this this is the future the way that obviously you're gonna say yes but is it and what future does this fit into what what how do you view what healthcare is going to become because in part as a founder you've got to be building for a product that you've got to know what else is changing around you right in healthcare you can't be building completely in isolation not caring what the advances are everywhere else i can't believe we've got this far without mentioning ai by the way yeah and unfortunately we might have to mention it now um but feel free not to but do you understand the question i'm trying to ask like really clumsily like what what's the what's the vision of health care broadly yeah this front door fits into or say front door it's the it's the bit after that isn't it but the referral into our patients but yeah where's health care going big question i think i think for for our services for our patient services and for the business we're building, I think we're, well, we have three things that the way we're thinking about it.

50:32We have the mission that drives us. So whatever, whatever we do to build the business, this is like a preamble to the answer to your question, whatever we do, does it fulfill our need to transform patient lives? Does it fulfill our need to increase clinician fulfillment? does it need does it um help us scale to more specialties and does it help us scale nationally you know is it scalable across the the different specialties and different places um so that drives us then we've got like a second thing which is do the basics right and you know you can build a good business in like there are so many businesses transacting outpatient clinics that have just done the basics right and i say just that really underplays it by saying just and by calling it the basics i hear you but it's like good operations like do you know your numbers are you on top of your finances have you got your clinics running like good utilization rates how is the flow through your pathway have you managed dna's appropriate like all of this basic stuff it is not basic in aggregate and i think the experience of like both at you know looking at the private equity business i did and the experience at babylon has like really drilled that into me or maybe i drilled it into those two places to babylon at least but they that is like a really big lever of like building a good outpatient clinic it's not disruptive in the sense that this is anything new but it's just excellent ops and then the third part is like this is the disruptive part and it sadly is AI so we are gonna talk about it um but just you know it's like it's an amazing time to be building a company because so many people are building different use cases for AI all around you that you can use and the and the complicated thing around that is anyone can use them so you're not just you're not disruptive or different from using it but how you use it is really important where you use it in your business and how you use it to like how you use the just any type of AI, any product, will differentiate the businesses.

52:40And I think to build a competitive advantage, if you've vertically integrated AI to your business, you can change your central cost model. So like your central function, marketing, finance, analytics, like you can run skeleton teams that leverage AI there. So you've got a fundamental cost advantage to other people. Then you can obviously optimize your service and you can, And, you know, so far what we've been doing, we've been running with an extremely lean team and AI. You know, we like I built our website in the weekend on Lovable, watching the Ryder Cup. We do our marketing with AI. We do our analytics through AI.

53:20It's like all of these things. Another just boring but concrete example is our policies. You know, we've had to write and think how we're going to run this business, go through like rounds of checks from the CQC and from commissioners. And normally you'd have like a really expert team that does this, but like with AI, you can write, obviously we've written them, but you can write these policies and they all link together. AI can like help you make sure you've known, you've done all the things in your policies. They all link together correctly. They track the meetings properly. Like there's so much there that we're using it for to like leverage ourselves right now.

53:55And it's these exact things, you know, they're not new things, but in aggregate, they transform a operating model. and so if you've then got a different speak to me in a few years see if we've been able to do this but you've then got a different cost structure um you're able to invest more in services and ultimately the way the nhs is going is there's a big part in patient choice um that's that's like you know my choices and the nhs app and if you're a brand name of like high quality excellent service that you can invest in because you've got lower costs than everyone else then you're going to like that's how you eventually win that market well their margin is your opportunity etc and the more margin you've got to play with the more that you can compete in quality of service and all the rest of it we think about things so similarly i i completely agree with you because i even when we started salvation you look at the you look at the the competitors particularly the larger more bloated agencies that just have overheads left right and center that aren't built ai native whatsoever it's so obvious and true that it's it's similar to what people talk about actually with hospitals in the middle east that they're undergoing this leapfrog yeah tendency right now where they're not built in decaying buildings with you know the trope fax machines and all the rest of it but this infrastructure that they need to consistently improve and to your point earlier you know you have to go into a service and mirror it and sort of be it before you can then improve then you have this issue you can sort of leapfrog everything it's the same as companies now that are starting today i mean harry and i have had this conversation he's producing this so literally that people can start a company today and leapfrog all the infrastructure of of absolutely all their competitors so exactly your point then spend the margin down on beating that competition elsewhere on the on the battlefield which is ideal and it's what you're talking about sort of reminds me of neco health as well the you talk about doing the fundamentals the you know you call them the basics but you might say the foundations but yeah that's a better word but it's true i mean i've said this all the time you know if we do what we say we're going to do and do it on time it'll be the best agency on earth it's literally as simple as that and i just call the same thing doing the basics right but no it is this group of foundation fundamental foundational activities yeah that when they are done right you can then sprinkle a bit of good design good joy yeah like in various different places and then all of a sudden you've got this really solid and joyous service it sort of reminds me of what neco health are doing because i saw some um i saw someone critiquing it saying well you know it's not more than you'd get at a gp if you asked for it and then you did this other thing and then you did this other thing you'd be able to get all this for free rather than the couple hundred credit costs or how much it is but i was looking at thinking well no that is the point though that you don't have to jump through those hoops you don't have to patch anything together yourself and then when you go there at the specified time it does all get done in the moment the results delivered to you right there the referrals made and then you're booked in for the same time next year so you've got the adherence to it yeah there's the experience component of it as well yeah you know there's a prestige with that right that you had this like there's that yeah as well yeah right now it's a whole yeah and but that's it stitching together different parts into a nice journey it's like good experience and patients will eventually know about you and come to you for that reason um and hopefully the the way the nhs is going hopefully that becomes through the nhs app obviously very hopeful um that's the way hopefully the things unfold last question so for patients then what is the perfect outpatient experience that you are trying to deliver so through the patient's eyes now yeah rather than a system lens or a financial one or anything like that what's what's the standard that you're aiming for what are the goals that you're aiming for for those for those patients specifically yeah i think i think in the basic level we just want them to feel like feel impressed by the service yeah happy you know yeah and and that's happening right the it's kush kush is on the phones like yeah answering to patients and is like so nice to them and i think you know it's really like a part of the experience to build that in as we as we hire and grow sure um but like oh thank you so much and they're so surprised they've got an appointment so soon and you know and then they have it and it's with a really nice clinician who spends the time with them it's convenient for them because it's remote it's booked soon you know i think it's being the stage one is them being impressed with the service um stage two i mean this is like unique to the service as well so for pain for example we want people to feel empowered to manage their pain without us so we want them to not need us that's the whole point like we give them the skills the education the um the ability to manage relapses and to manage like their pain when they've left the service that's the whole point um so i think it's i think it's very specific to like the service i think there are some general things but pain as a specific service that's the that's the goal i love that man and and listen i i particularly love it and this is quite timely because we've just come from our team off-site like our retreat that we were in the outskirts of bath for a couple of days and we were having a conversation last night about um about some nhs services and we were all talking as patients actually we're talking about our own experience going through certain outpatient style appointments and procedures and a couple of our staff were talking about their experiences with smear tests and not to go into the the details but they had really like negative experiences of those for no other reason really i think from listening to the stories than i think the the clinicians were overworked the cl the clinics themselves weren't run efficiently and i don't mean efficiently that they didn't have the throughput of stuff they were trying to get too much throughput through i think that that ended up being it feeling a bit frantic exactly and and real kind of human factors stuff of trying to get stuff through too quickly just led to some things that caused embarrassment or things that caused upset or like all these things that that just seemed so easily avoided by getting the incentives right of getting those staff fulfilled in their jobs so that and actually not not and as a result of that then they don't need to push so many people through in a certain amount of time that they get measured on a blah blah or like whatever it is but like it's so it's so interesting in timing that this was literally like 12 hours ago that we were having the conversation of the problem that this exact thing solves yeah yeah yeah i think it's so important to hire right for that high right and like that's culture you know the the fact that those staff are rushed and perhaps not being as personable with patients because they're too rushed or whatever the crane doesn't run well like it's it's good management good hiring good culture and that's easy to do on a small scale it's hard to do on a big scale that's exactly right so we're in it's easy for us right now but yeah it's something that's so so so important and like it it links to the mission right if we can't transform lives if patients aren't engaging with us and like you know want to be at our service because a lot of dna rates in pain services are really high um so for our service to feel like something they're getting something good is like that's going to help us with dna's as well yeah definitely i actually think as well increasing patient choice is going to help massively with this because one thing that i did actually say last night was part of the the the issue seems to be that they they can't now say well i don't want to go there i want to go somewhere else and vote with their feet that's not that's not a hugely available opportunity for most people yeah in this setting which is interesting although it does seem to be coming in did you see the um the announcement about the nhs doing a virtual hospital and it seems to be something along these lines you probably know more about it than i do but it seems to be that you would have this kind of ability to spread care across nationally because you could have a remote appointment with someone somewhere yeah i mean these things work i mean that i i can't comment on the the specific virtual hospital thing yeah but like that model works you No, because if you don't have that model, then you have like postcode lotteries.

1:03:29Yeah. You just, oh, you can get a remote service here, but you can't get it here. Yeah. Like it's a postcode lottery. And so you should have these national services and you should compete for patients based on quality. But it's obviously that's easy to say and hard to manage and practice. Yeah. Final, final question, mate. What's one thing that you're particularly excited about with what you're building? Is it like a particular feature or particular thing or just something random? what's the thing you're excited about yeah good question i think um i'm excited to i'm mostly excited to see how the next nine months goes like the next nine months is so critical for us it's like you know that puts us to a point where we're like you know maybe we're ready to raise again maybe we need to do much more work maybe we've got loads of contracts and too much work to how the next nine months unfold like how services is going how our patients are giving us feedback like that i think in nine months time i'll i just i just want to that right now i want to see where we've got like what's happened yeah i'm so excited to see what's happened obviously i'm trying to shape it for the favorable um and hope that you know i've i've got a hope of what it would be um but yeah i'm really excited to see how that unfolds awesome mate thank you this has honestly been awesome and thanks for coming around it's nice it's nice to do this one at home again yeah it's awesome um but yeah for people that want to learn more about pastel health or about you or they want to get in touch what's the best way for them to do so um pastel health is website www.pastel-health.com um and then on linkedin amazing appreciate you man thank you thank you very much for having me hey everyone thanks for listening and making it all the way to the end of this episode remember to subscribe rate us and leave a review and you can head to the description of this episode to follow me on all of my social media so you don't miss out on any of the latest health tech content