[00:00:00] Stacey Richter: Encore Episode. The Five Business Models for Digital Health Companies. Today I speak with Nikhil Krishnan
[00:00:25] Stacey Richter: This week I am with my Aventria team on site at one of our clients. We are holding a full day workshop to help our client figure out who all across the healthcare industry they will need to get aligned with to achieve greater success in the market, and how to handle all of these inevitably conflicting interests strategically and also potentially from a messaging standpoint.
I'm one of the subject matter experts who gets to pipe up during the part where we talk about all of these market dynamics, what everybody is up to and who is going to want what, so the client team can do their thing and get paid for it. Anyway, I say all this to say that this week I am pretty darn busy, but also thrilled to encore this episode with Nikhil Krishnan, founder of Out of Pocket.
And one of our most popular episodes in the past 12 months. With that, here's your encore. My guest today is Nikhil Krishnan, who is the founder of the Out of Pocket newsletter. I was talking with Nikhil, And we identified, or more accurately, he identified five business models of digital health. What makes each model distinct is a few factors.
If you weren't in the healthcare industry, you'd probably expect that. I'm going to say that. The biggest factor a business model must hinge on, must have something to do with patient outcomes or care, or something that has something to do with the hopes and lives of patients. Except no, mostly our models do not define themselves by attributes of their patients except on one dimension who is paying their bills.
Who is paying has enormous downstream consequences that I don't think people outside of healthcare or even people inside of healthcare sometimes really appreciate. It's because of all of the perverse incentives. It's, its angled web wewe, for example, let's just say your startup founder trying to cook up your unique selling proposition.
You can't just decide you're gonna lower costs and improve patient care as general constructs, because let's just say you do that. That's your USP, lower costs and improved patient care. And then you try to sell your thing to Medicare Advantage plans or large provider organizations. Oh, right. Medicare Advantage plans or even commercial ones, they don't care about the total cost of care.
Neither do provider organizations unless they take on sufficient risk to care and. Do not. In fact, as came out in that JAMA article the other day, link in the show notes, it could be construed that entities such as these carrier health plans have a perverse incentive to see total costs of care go up. So right you naively, you're the startup founder again in this case study.
Don't forget you naively trot into some administrator's office with a great something or other to reduce total cost of care. And you'll get cast out upon your P tard on the quick every single day of the year. In my world, I see people make the same mistake over and over again, not tailoring their product market fit to any particular market with the recognition that some in this.
Healthcare industry have a vested interests to see costs going up, and some have a vested interests in costs going down. Either way, if we're talking about large organizations here and even some small ones, the money wins over patient care. So sad to have to say that. But listen to episode 3 5 1 with Dr. Eric Bricker and you'll get all the context you need on that point. Here's the thing though, I don't know about you, but I can tell you how many digital health startups I run across where I look at their decks or have a conversation with the founder and I ask who their customer is. Is it employers or health plans or question mark?
And they don't know they're gonna figure this out later. I don't get how to successfully. Do that. I'm indubitably wrong here. Given all of the pivots I hear about that seem to go okay, but the prospect of completely redefining my operational goals and operations and market positioning at some point in the future seems like a daunting and avoidable prospect.
I would be remiss not to mention, however, the number of really good mission-driven healthcare companies out there, really trying hard to figure out how to create sustainable businesses, a fair profit, while at the same time serving patients really well. There are companies adding value commensurate with the dollars that they come by, and I certainly applaud everything that they are doing.
At the same time, given all this, here's a message for all of you, VCs and private equity, et cetera, people with money out there. Let me quote Dr. Vivek Garg here. This is at VAR MD on Twitter. If you are financing care delivery without a board level focus on clinical outcomes, you're part of the problem. So let's talk about these six business models that health and healthcare startups eventually settle themselves into after they figure out who their customer is.
Nikhil Krishnan, my guest today and I discuss how they can be financially viable And if we think they'll actually be able to provide superior patient outcomes. Trumpets play here in no particular order. This is what we've got for our five business models. Number one, completely avoiding incumbents, creating a cash pay ecosystem.
That's number one. Number two. Better middleware being the pipes, as I've heard so many times these past couple of weeks. Number three, companies serving incumbents either by being a virtual front door for them or disrupting the competitive landscape somehow. Number four, joint ventures. Number five, old school digital health, who are now incumbents in their own space.
My guest today, Nikhil Krishnan, has a bunch of things going on. He might be best known for his newsletter out-of-Pocket Health, which you should certainly subscribe to link in the show notes. He's also working on a healthcare 1 0 1 crash course to teach newcomers about the Wild West we call American Healthcare.
Besides all of this, Nikhil does some early stage investing. My name is Stacy Richter. This podcast is sponsored by Aventria Health Group. Nikhil Krishnan, welcome to Relentless Health Value.
[00:06:19] Nikhil Krishnan: Thanks for having me. I'm excited to chat.
[00:06:21] Stacey Richter: Let's discuss the different models of digital health, and there's a lot of talk right now about digital health, so this is probably amazing timing.
Let's tick through each of the different models of digital. Number one business model that entails completely avoiding incumbents, so some kind of cash pay something or other. How would you define that? What's going on there?
[00:06:45] Nikhil Krishnan: Yeah, this is probably the easiest one to find. These are basically companies I think, that are just really focusing on the cash pay ecosystem.
This, I think, has really grown in the last five years, and interestingly, there's like the premium luxury version, and then there's the uninsured market version of this. You have your company that may be selling branded generics like your himss, your row, et cetera. But then you also have companies providing more accessible cash pay medication rates like GoodRx for people who are uninsured and trying to get their meds under without even touching their deductible at all.
The cash pay ecosystem is really trying to take advantage of this consumer sentiment that everything's really. Complicated. Everything's really expensive. I would pay extra for a simpler version of this. Of service that I need. And I think the Cash Bay ecosystem has really leaned in there and it's mostly primary care related or single transaction related.
I think there's some interesting stuff around areas like direct primary care where companies are really trying to build more longitudinal relationships with patients, and even a lot of these direct to consumer pharmacy companies seem to be trying to shift a single transaction to a more longitudinal relationship.
But yeah, it's mostly cash focused. It's, you really gotta win the consumer over. And it's trying to avoid insurance altogether.
[00:08:05] Stacey Richter: As you were talking there, I was thinking to myself that in a way, this cash pay ecosystem could probably be hived into maybe three categories. Cash pay for luxury or convenience.
That's number one. Cash pay for cheaper prices. That's two and cash pay for better care, which might be number three in the number one zone, the cash pay for luxury slash convenience zone. You've got ro, which patients could just go to their doctor and probably get the same thing. So it's probably, And this is a question which I'm stating as a, not a question, but it's the convenience play.
It's just like easier to go online.
[00:08:46] Nikhil Krishnan: I think convenience is one. I think stigma is another, right? Like for a lot of people. They don't want to go talk about their erectile dysfunction issues with their primary care physician. And also, frankly, it's just sometimes really hard to get an appointment with your primary care physician, And this is way easier to do so.
I do think there's also another version of this, which is even if you've been taking a medication for a long time, and let's say you maybe move states or change insurance or whatever. To need to go back in person to get a lot of the refills, et cetera, done. Just seems like overkill. This falls into the convenience bucket, but these can just an easier way to do that.
You really wanna lower the friction as much as possible too. Getting them to start treatment.
[00:09:28] Stacey Richter: These are people who have the luxury to pay cash for something that they, they could, in air quotes, use their insurance. Then, as you mentioned, 'cause you've got the, you can actually get this at a lower price version, the number two cash pay.
Business model, like your good RXs, maybe sidecar, I don't know if you'd put them in that category. And then you also have the number three, better care. Like people who really want a relationship, they wanna feel like they're being taken care of. And that's where I'd probably slot the direct. Primary care.
[00:10:01] Nikhil Krishnan: Yeah. Yeah. I think it's funny. It's like a lot of people want to bucket themselves in the better care category on the cash based side, but for a lot of, for a lot of this, we just don't have longitudinal outcomes for a lot of this to compare. I think at the very least though, it's about establishing an actual relationship with the patient.
That's a bit more, I know. High trust. Yeah. That's probably where the direct primary care falls in.
[00:10:22] Stacey Richter: Okay. So we just talked about number one, which is a cash pay model. Here's number two. How do we basically create almost. Middleware, there's this new term that keeps popping up, which is pipes. You've written about this.
Mm-hmm. You wanna talk about that one?
[00:10:34] Nikhil Krishnan: Yep. Yeah. I think it's interesting. It's because the VC-backed startup slash care delivery ecosystem has gotten so large, it can now support businesses that basically only serve. New care delivery models. I think no matter how much efficiency you bring to the patient facing side, inevitably on the back end you actually run into a ton of incumbent players that kind of ruin all those efficiency gains you made on the front end.
There's a lot of, a lot of companies now who are basically trying to better solve those roadblocks piece by piece, and a lot of them also are alumni of these care delivery companies who saw the issue firsthand and then went to go start it, for example, like. I've invested in a company called Candid, which is doing easier build submission to clearing houses slash insurers.
That's just a process that sucks for providers right now. It's just a mess and they're using a lot of different kind of new technologies to make it easier. And you have lots of different versions of this. I'm just giving one, but if you look at the kind of. Stack of software or even people that providers have to use on the backend to either gather information, help display information to patients, et cetera.
There's a lot of kind of gaps and missing pieces, and so you have this whole wave of API first companies that have. Been created to fulfill those needs. You have true pill to do pharmacy fulfillment, you have ribbon to have provider directories, like I said, candid to do billing submission. So there's a lot of, I just think much tech first, new approaches to these problems.
Ribbon, which is doing provider directories. Sure they like pipe in whatever, more accurate provider data into your application. But as you, the end user start verifying whether a provider is correct and et cetera, it pipes data back to ribbon so that the RI, so that the product on ribbon side actually gets better for other customers as well.
So I think that's actually important to like understand that. You need to have a kind of bi-directional data flow that's passive, right? Because for a lot of, I think companies or providers, they'll have people do this, right? And if you ask a person to not only whatever, update the provider directory on their side, they're not gonna go back into a service provider and re-update that data back on the service provider side manually.
So I think having an automated kind of bi-directional data flow is really important here. There's just a huge wave of kind of building better backend infrastructure for these companies.
[00:13:01] Stacey Richter: Yeah. It's, you know, I think you raise a very interesting point given the data silos, which are rampant in this industry.
Mm-hmm. And, and cause problems that we all know are big ones, frankly. Effectively what you're saying. I'm shocked
[00:13:16] Nikhil Krishnan: that's, this is the first I'm hearing of it.
[00:13:17] Stacey Richter: I'm certain I just read about it this morning, but the point being that by aggregating these backends or middle sorts of services, then all of these probably smaller companies, interestingly, might wind up with a better data set in aggregate because the middleware is collecting all of their various updates.
Then potentially some incumbent.
[00:13:41] Nikhil Krishnan: Yeah, it's totally possible. One part of this is if you're building for a use case that assumes better interoperability than even just the way you structure your data, ingest it, et cetera, looks very different. Versus I think healthcare's, one of healthcare's original sins is that every solution deployed has been a custom solution for the end user.
EMR is being probably the, the number one example there, but if you build thinking, Hey, listen, we're gonna have a centralized structured. Version of this from a lot of different customers that's in a standardized format. We can do more interesting things down the road. Then you build very differently. I will say though, which is the thing I'm interested in just watching develop when a lot of these companies realize how valuable their data is, it's unclear also how, I don't know, willing.
They are going to be to making it easy for third parties to access as well. A lot of startups today also worry about things like patient leakage and all that kind of stuff. Same way that a provider would just, I think I, I'm interested to see how they navigate this going forward of being a.
Interoperable company that is friendly for patients to port their data in and out, but also trying to make sure that they keep patients in their ecosystem
[00:14:49] Stacey Richter: when they figure out the value of their data. It's gonna be a tug of war between the mission driven portion of their value prop, so to speak. And then the financial one.
Yeah, so we'll see whether some of these startups turn out to be. Let's just say a little bit more patient focused maybe than we some of the incumbents and where their fiduciary responsibility takes them.
[00:15:15] Nikhil Krishnan: Yeah. It's worth noting that there's different types of data sales and data interoperability, and so you can, if you're selling de-identified data And the aggregate.
Uh, whatever Mark Data marketplace or or data broker that's being used for very different use case in a lot of cases than things that patients would see. So it might be used in the backend for identifying physicians who have certain prescribing behaviors or might be used to identify, I don't know, like when treatments are switched from one to the other.
It just needs to be directionally correct. It doesn't need to be specifically correct versus if you want, if you wanna be able to port data from one application to another patients, basically initiating, that's a very different kind of use case. And there's not really, it's not like there's a business model for that.
This is just something that. Would be good for patients. So I think that makes it tricky because if you do a de-identify data, sale's, very beneficial to the person who owns the data. But being able to let data be ported from one application to another because of a patient is not beneficial to them. So I, you know, I think that's gonna be, that's why I think you, it requires legislation to allow for that.
And that's why we have the interoperability rules and ONC has been pressing their thumb on the scale here. To push for that because it's really not in the best interest of any individual party. They kind of have to force it.
[00:16:33] Stacey Richter: Which is funny because that's the whole point of an API, right? So you get these companies that their business model is their API, but then they're like, we're not gonna use it for some things.
[00:16:41] Nikhil Krishnan: And I think in fairness, I think a lot of the API first companies, a lot of them are trying to provide either like really backend services that probably aren't super useful to patients. Like what is a patient gonna do with direct access to a provider directory? More likely than not, they're going to interface with it on another application that they're using or an API for pharmacy fulfillment.
Like again, like directly patients are not gonna do much with it, but through another application or service that they're using, they probably would.
[00:17:08] Stacey Richter: All right, so moving on number three, companies who are. Serving incumbents and by incumbents what we're talking about. And most people who listen to the show probably know the big PBMs or the big health systems maybe, or the big carriers, the BUCA plans, blue Cross United, Cigna, Aetna, Humana, who are the startups who are serving these gigantic entities?
[00:17:31] Nikhil Krishnan: I think this was probably the first wave of any digital health company was. Targeting these large players. 'cause contract sizes are huge. They need to build in a lot of new tech capabilities and all that kind of stuff. People who are selling analytics solutions or selling a lot of point solutions to solve specific workflow pain points within them.
And I think the reality of the situation is, I'm personally just not a huge fan of startups that are like selling to these large incumbents. And there's a few reasons why. One, I think they're just, the universe of them is just really small. And so unless you're the person who gets in. Then that channel gets saturated pretty quickly.
And then the other thing is also just that for a lot of these comp, I don't think selling tech to large incumbents is going to move the needle in healthcare. Like they're not gonna rebuild processes from the ground up. Their business models are very focused in fee-for-service or rebates or whatever the, like, you know, thing that has been dominating for the last 50 years is, And they're not gonna.
Meaningfully change that. So you basically just have companies who are coming in and offering to do the, do that, but marginally faster maybe, or with can enable more volume to pass through, et cetera, which I just don't think is that interesting, frankly. And I think it gets, that channel gets saturated pretty quickly.
But a contract sizes are huge. You can be a company that sells a one or two of of these guys and basically be riding high. So,
[00:18:49] Stacey Richter: yeah. Yeah, I agree with your points. If we're thinking about this from a patient or even a doctor or any of the other types of, of healthcare workers perspectives, on one hand, from a business model perspective, it's a whole lot easier to sell to one carrier than to try to convince however many employers.
Who aren't interested in talking to you anyway. For example, to purchase your product or to go after the Medicare Advantage market, which everybody has obviously realized what a Don Berwick called it the other day, the money machine. So anybody trying to cash into that money machine get that till drawer to open in their direction.
[00:19:27] Nikhil Krishnan: I will say that one, one area that I think is exciting is helping. Sell into, I call them incumbents, but really old school. The, the traditional business model that you see for small, medium sized businesses and help them transfer to new business models. So for example, ADE who's helping primary care groups transition more to value base and, and different kind of CMS models and take advantage of that.
I've invested in a company called a pair team, which is helping. A lot of Medicaid focused primary care clinics take part in value-based care models. So I think there's actually, there is something about helping smaller versions of companies pivot into new business models. I'm mostly talking about these like large Fortune 500 size, fortune 500 size incumbent.
Trying to sell into them or get them to turn their business model is just an impossible.
[00:20:18] Stacey Richter: And then also one thing that seems to surprise everybody who is trying to sell anything to, for example, a carrier dealing with the self-insured. Insurance market or Medicare Advantage, like they don't care anything about total cost of care.
If you go in with a total cost of care message, they're kind of like, what else do you have? Considering that the majority of Americans, I think I just read the other day, are delaying care due to cost. This is not something that if we're thinking about from a patient perspective, that we can overlook that you have these incumbents who honestly have a business model that is.
Bolstered by increasing healthcare costs, and one of the promises, at least that I see for some of these smaller entities is their ability to reverse that trend.
[00:20:59] Nikhil Krishnan: It's like a really dark and twisted thing when you realize that one, most of the existing healthcare companies make more money. The sicker you are.
Right? This is not really shocking to anyone. But the thing that I also think is really weird is that these companies, most of them are actually getting extra money for the more expensive stuff. So that makes maybe more sense for hospitals. Like it's maybe more intuitive, oh, you need more. Complicated surgeries, like you'll probably end up getting more money.
The thing that I think is weird for a lot of people is if you look at payers, for example, because of even how medical loss ratios work where they, you know, can only keep 15% or have to pay out 80 to 85% in claims, they are optimizing for the 15% they can keep. So they actually don't really have a huge incentive to negotiate.
Prices down, and I think now with a lot of the new price transparency stuff, you can actually see how bad of negotiators they are. In a lot of cases, even worse than what you probably could do as an individual negotiating cash pay or PBMs, for example, negotiating. But you think they're supposed to negotiate better rates for drugs, but for more expensive drugs, they get.
More rebates, and so they're more incentivized to actually push people towards the more expensive drug. So there's just such a convoluted mess in the backend that I think the average patient maybe thinks that they're buying when they're going to health insurers, et cetera. They're like buying access to their group, negotiated rates when it's actually not true.
The incentive misalignment because of the core business model. Really just like messes that entire thing up anyway. I think for at least some of these new companies that are maybe trying to go at risk earlier or really building from the ground up in, you know, competition or total cost of care models, they at least are just, they're building at least something new.
[00:22:41] Stacey Richter: And by the way, what you were just talking about relative to many of these incumbents are incented to see prices go up. There was just a big JAMA article the other day, which I talked about in episode 3, 5 2 with Dr. Eric Bricker that. Actually validated that with math. So let's talk about business model number four, which is joint ventures that work in tandem together.
[00:23:08] Nikhil Krishnan: I think as a digital health ecosystem matured, I think a lot of companies tried to figure out what their core competency was, and for a lot of them it was not distribution specifically. And so I think for a lot of people. A lot of companies, they view joint ventures or you know, partnerships as a way to take advantage of the best of both worlds.
They're them being good at things like r and d and actually product and then relying on a much larger company to help with distribution of their brand name associated and use, utilize their Salesforce. Some examples might be Verily doing joint ventures with a lot of large pharma companies, large med device companies.
Pair are doing. Para therapeutics, do a digital therapeutics company kind of commercialization partnerships with large pharma companies. I think the thing, I actually don't think that this is impossible to pull off. I definitely think it is, but what I have seen is that it is really complicated, I think for companies who are supposed to be the distribution angle to distribute a totally novel product if it's not as analogous to the existing products that they normally sell.
So an example is if you look at pear. They are selling a digital therapeutics product, which looks very different than a drug. And I think that their original, I think their original partner was Sandoz, which is focused on generics like a novel digital, therapeutic looks is a very different sales and distribution process than a generic drug.
And so I think, and then even when you see Verily working with Onduo and Sanofi being their partner there, I believe SFI actually pulled out the, really, the novel of these care models And the novel, the novelty of. The products themselves, I think make it really difficult for a lot of those companies to really understand what they're getting into and what if their value proposition actually aligns with this new business.
So I don't think it's impossible to pull off. I actually think it can work really well. But I think it's just, I think it's, it was way easier, I think before you actually hit the commercialization part to, to see how that might work.
[00:25:02] Stacey Richter: I think that it probably works best if it's something that either, you know, for example, when a health system works with a payer, I'm just talking about this from a business model situation, not necessarily from a provider or patient standpoint.
They both get a Medicare Advantage contract together, and then share the savings. So there's a common goal. Both of them have their unique capability And they put them together and then both share the rewards, or if it's like a product that's being exchanged, there's some distributor who is purchasing, to your point, like generic drugs at a discount so that the.
Generic drug manufacturer can share in the distribution savings, And the distributor can always have a line on the best price of generic drugs. Like I think those things tend to be frictionless. And I don't mean without friction, I just mean relatively speaking. I think where you get into trouble is if you have two gigantic or one gigantic organization and then the small startup.
And it's a culture clash, number one. And I think one of the things that both forget is that to work together is a very strategic, it requires a lot of strategy and sometimes I find myself in the middle of some of these conversations. And I think that is is something that both really neglect that they are, think about things in their own.
Silos. They do not think about how it's gonna affect or be received. Like communication is all about what someone hears, not what you say, and, and I think that's something that is universally overlooked.
[00:26:33] Nikhil Krishnan: I'm very curious. A lot of the partnerships I talked about, were a little closer to the pharma side of the things, but I think right now you see a lot of partnerships that are focused way more.
On the payer and provider side, a lot of these health plans offering virtual health plans in tandem with a virtual primary care provider or a lot of health systems, basically working with companies that are doing more patient engagement solutions, I think. That's new right now. HIMS part, partnering with the Ochsner Health System, or United and Galileo basically doing virtual first health plans.
There's a lot of, I think, diff different kind of experiments happening, and I'm just curious to see how it works out because I think that's like a little bit more of a. Culture clash. That and anything else, but we'll see how, how it plays out. I think maybe companies have actually figured this out after years of seeing other companies experiment.
[00:27:23] Stacey Richter: I certainly hope so. But if you buy the popcorn, I'll, I'll watch with you.
[00:27:26] Nikhil Krishnan: Yeah, yeah, yeah. We'll see.
[00:27:29] Stacey Richter: All right. Fifth business model here that will discuss today, old school digital health, who are now incumbent. In their own right.
[00:27:35] Nikhil Krishnan: Yeah. I guess this is like less of a business model and maybe more just like a observation that a lot of these companies now, your Oscars, your sock docs, Castlight just got bought Flatiron.
I think a lot of them, they had to build a lot of their own stack, like Tech Stack and services, et cetera, themselves, because it was at a time where digital health was a very new thing and now a lot of them are pretty large and you can. Actually build companies way faster, even today with some of the new API services that we talked about before, but also just because the, the ecosystem has matured so much.
So it's just interesting to see a lot of them, first of all, become customers and acquirers and their own, but also just that it's just such a different time. Like even a lot of those companies now feel like there are new challengers coming to try and replace them.
[00:28:24] Stacey Richter: Indeed. And they probably do have their own.
And different challenges than the upstarts. Like for example, as you just said, they have an older tech stack and they're competing in the market in a sort of different way. So it will I agree. Be interesting to see how the dynamic plays out between the really big incumbents versus the upstarts versus some of these.
Maybe middle children. Yeah. Who, who are, have a foot in both camps really.
[00:28:57] Nikhil Krishnan: Actually some of those, first of those first wave digital health companies, like your Oscars and all that kind of stuff. They may actually even be more palatable acquisitions for a lot of companies that maybe want to bring more whatever tech talent into their companies for the larger Fortune 500 incumbents than the really small, tiny.
Not proven out companies yet. PillPack was acquired by Amazon. Flatiron was acquired, acquired by Roche. Not only do you gotta get tech talent there, but if you want to actually expand into new business lines or buy a book of business, some of these might actually look more attractive than the smaller companies.
So. The time will tell.
[00:29:35] Stacey Richter: Let me ask you this, Nikhil, so somebody said this coming out of JP Morgan, and I was kind of thinking this my myself the other day, based on a couple of conversations that I have had with a couple of different founders or people who work at startups. If you ask them about their business model or even to a certain extent, if you ask who their customer is, who's gonna pay for this?
You get this like stare that's somewhere in between squirrely and blank, and then they can't answer your question, so I'm not sure if they can't answer your question like they, it's something that they haven't really thought through clearly, or they have thought it through And they came up with six ideas And they haven't yet decided, or whether they honestly don't know.
[00:30:15] Nikhil Krishnan: Yeah. It's funny. If you go to a startups page And they don't have the case studies or a four. Hospitals for payers tab. That's when I know. I'm like, oh yeah, they're like still figuring it out, like they're not totally sure. You know, I think the thing that's hard for startups is their solutions are, in a lot of cases, broadly useful for a lot of different use cases, but there's a lot of feature specific stuff that they need to target.
One channel at a time. And so I think a lot of them try to build the core product that they believe is useful first, and then try and see who would find it beneficial, valuable, et cetera, and would pay for it. And then a lot of them will come up against the, the unfortunate reality that like maybe X person actually does care.
About this generally, but there's a lot of feature specific stuff that they need to add to make it broadly useful. Yeah, I think a lot of companies just struggle to figure out who their core customer is. It's not a, and for anyone listening to this, if you're starting a company, you're not the only person to go through this.
I think a lot of, a lot of founders really struggle with this and. But they maybe will do pilots with different org types to see where the like real pain point is versus where it's like a nice to have for those people and then try and double down on one channel or one or two channels.
[00:31:30] Stacey Richter: Sometimes I wonder whether it's a really hubristic naivete, like some very smart engineers who.
Really think they understand this incredibly complex market, and at a very fundamental level, they do not.
[00:31:48] Nikhil Krishnan: I will say that I think that the experimentation path has just gotten much faster now, like for new, and again, my goal is to get new people into healthcare, so I always encourage people to. You know, come try experiments, see what works, what doesn't, and whatever.
There's like a, the term idea maze, which is trying to hit on a bunch of different ideas until you find the one that kind of sticks and works well. I think actually the ability to go through the idea maze is way faster now because so many previous people have tried the path before that you can come in, experiment with one.
Business model you think is good or product you think is good and there's now like a whole host of other people who have already tried it or other, even people at Fortune 500 large incumbent companies that have seen so many solutions like X that you can get feedback way quicker versus I think if you started five, 10 years ago and you tried to pitch X thing and you were so new to the market, like no one really knew what to do with you.
So now I just think you can come in and. You can learn much faster. And again, yeah, this is like what I'm trying to do. If I wrote like a whole white paper called The Six Stages of Health Tech Grief, which is the most common businesses I see pitched, and I'm just trying to explain what's really difficult about those businesses.
You know, I think I see like a personal health record pitch like every other week. It's like the very common thing when you come into healthcare to be like, yeah, EMRs suck. Like we should build a patient first health record. Okay, let's at least look at the past failures of this and why they failed. You can be the judge of whether this time is different and why, but it's worth actually just taking learnings from prior companies.
So yeah, of course. I think there's a lot of people who come in and they're like, oh, I know healthcare, like I can fix it. But I think they, I still think that there's a lot of room for newcomers to come in with fresh eyes to tackle some of these problems, which I think is, which I think we should encourage and is good.
[00:33:32] Stacey Richter: Yeah, absolutely. I would definitely, I wouldn't want to be discouraging to anyone. I, you just don't want people to run into that cognitive bias. I forget what it's called. Like Steve Jobs had it, when he invested heavily in Segway, that went nowhere. Because if someone's very good at something, they tend to believe that they're very good at everything.
Sounds
[00:33:52] Nikhil Krishnan: like someone has knock on on some of these cool segue tours in other cities because, uh. I don't know. Those were fun.
[00:33:58] Stacey Richter: Apparently my life was not complete.
[00:34:01] Nikhil Krishnan: Exactly. You know, Steve Jobs missed hoverboards, which, you know, that came a few years later. That's really where the segue shined.
[00:34:09] Stacey Richter: That's true. I mean, he was just ahead of his, his time.
So, Hilel, talk a little bit about out of Pocket, your newsletter and about the course that you're currently building and where people can find them.
[00:34:20] Nikhil Krishnan: Sure. So yeah, I'm building something, building Outof Pocket. It's out-of-Pocket Health for. Any of you who wanna check it out. I write a newsletter each week or a sort of deep dive into different part of the healthcare industry of my thoughts on the trends and all that kind of stuff.
And I have a course coming out that is a healthcare 1 0 1 crash course to teach newcomers to healthcare, the basics of who the big players are, how they make money, the how they interact with each other. I also do some pre-seed and seed stage healthcare investing. So for companies who are trying to build some cool stuff in healthcare, uh, hit me up and yeah, you'll see more stuff coming out soon.
I think the field is wide open to help teach people how. Healthcare works and I do it in like the most shit posting E way, which I think is hard for the existing people to replicate since they're so buttoned up. But yeah, if you wanna like learn how healthcare works and crack some jokes along the way, check out-of-Pocket dot Health.
[00:35:12] Stacey Richter: Yes, I definitely would second that. Definitely check out-of-Pocket Dot Health. Nikhil Krishnan, thank you so much for being on Relentless Health Value today.
[00:35:19] Nikhil Krishnan: Thanks for having me. This was fun.
[00:35:20] Stacey Richter: So let's talk about going over to our website and type in your email address in the box to get the weekly email about the show that has come out.
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