Outcomes Rocket Podcast_Sempre Health_ Mike Waterbury: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.
Kyle Wildnauer-Haigney:
Hey everyone! Welcome back to the Outcomes Rocket Pharma podcast sponsored by Sempre Health. I’m your host, Kyle Wildnauer-Haigney, and today, I’m excited to introduce you to Mike Waterbury. Mike Waterbury is one of healthcare’s most influential voices, often referred to as the 10th man of healthcare due to his grit and unwavering commitment to change the status quo. Mike takes a stand on the misaligned incentives, growing medical debt, and legacy, thinking that many industry leaders shy away from his passion for an improved system where insured individuals aren’t struggling to afford out-of-pocket healthcare costs, coupled with 25-plus years of learnings at the top of healthcare organizations in the US, led him to found Goodroot, a community of companies focused on reinventing healthcare and the systems that no longer serve us. As president and CEO of Goodroot, Mike is focused on freeing and amplifying the talent that’s trapped within the industry. He brings visionary leaders, innovators, and seasoned healthcare experts together to champion private companies focused on making healthcare affordable and accessible through innovation. Mike, thank you so much for joining the show today.
Mike Waterbury:
Kyle, thank you for having me, and the nice introduction. It’s exciting stuff we’re doing a Goodroot and challenging, but I think as I look at the healthcare environment and industry in the future, it’s very important and motivates us every day to try to have an impact.
Kyle Wildnauer-Haigney:
Awesome, I’m excited to dive into that and share that with the audience. And so maybe to kick it off, I would love to hear really what inspires your work within healthcare and what motivates this.
Mike Waterbury:
I think ultimately I look at the future. I think so many industries, and healthcare in particular, have to be focused on this quarter or such immediate objectives, and really as a country, we’re struggling with that to some extent, but I look at healthcare and I just don’t see a sustainable path for the future. And I think about my kids, and my family, and friends, and my employees and just really every American, and I look 50 years out and I don’t see how we’re going to provide affordable, equitable healthcare to everyone in the country. And I’ve spent 25 plus years, I think we stopped counting after a while, Kyle, but really understanding the detail of how things work, mostly administratively, I mean, you have to understand the clinical aspects, but I sort of leave the clinical aspects to the experts, and try to make sure we can pay for it all. And I really look at it and say, well, what can I do for the rest of my professional career with that knowledge and information? And my team here at Goodroot and me, personally, are just really passionate, focused on how to leave a lasting legacy that will work and take advantage of all the great things we do in the country from a healthcare perspective, but figure out a way to make sure everyone has equal access and it’s affordable.
Kyle Wildnauer-Haigney:
Absolutely. So it sounds like Goodroot is really an umbrella company with a number of different plays throughout the healthcare ecosystem. Is that correct?
Mike Waterbury:
That is, I think, sometimes I joke, Kyle, that if Goodroot existed when I was 30 years old, I would have had my both hands up and jumping up and down and saying, please let me come and bring my ideas to you. And so we formed Goodroot after starting a few companies, really with that idea that there’s just a lot of talent in healthcare, administration of healthcare, there’s obviously a lot of clinical talent, and really just felt like if we created a platform where that talent could bring their ideas to life and deal with some of the hurdles in terms of having the right support, having the right financial partner, being able to sell new ideas, and in some ways just being able to make a few mistakes and survive that the ideas were not the issue was really bringing them to life. And so we started Goodroot to, as we say, free and amplify the talent that exists inside of healthcare, to give them a platform to think differently, innovate, bring ideas to life that maybe wherever they’re working today, they have to do it a certain way. That’s how those companies make money and that’s what they’re expected to do with their jobs, what they see and they understand how it can change. So we’re very focused and we talk about reinventing healthcare one system at a time. I don’t think there’s sort of a big-bang approach. I mean, you really have to get in and understand all the pieces and then start to see how you change one piece. How does that fit into a broader change that can have a meaningful impact?
Kyle Wildnauer-Haigney:
Sure, and so it sounds like, if I were to synthesize some of the work that you do, that you’re a capital partner or venture capital is more or less that provides a full suite of services such as the talent piece, which is so critical right now. I mean, I live and breathe that every day as well as some of the other capabilities, just understanding how the ecosystem works. Is that correct?
Mike Waterbury:
That’s perfect, I mean, I think we, I think I always thought, when I started my first business seven years ago, RemedyOne, I knew exactly what I needed to do, but I found that like getting support, legal, finance, paying taxes, setting up emails, all those things were just very difficult. Should I raise money and get a partner who, hopefully, aligned with my interest and how much time would they take away from me working on a business? And then ultimately I’m a decent salesperson, but, how do you scale your idea past your network, past the people that are really interested in how do you commercialize an idea? So those are really the three things that I saw that were failure points that I felt like if I could bring an infrastructure and a platform to others who have good ideas, we could bring those to life and support them and strategically fit them together so that we could eventually put those pieces together and have a meaningful impact of changing how healthcare is administered in the country.
Kyle Wildnauer-Haigney:
It makes a ton of sense and it’s a huge need. With many of the startups that I talked to day in, day out in my daytime job, many of those startups are looking for that support. So hats off to identifying this opportunity and very excited to dive in here. You know, I think, before the show, we were chatting about really some of the work that you’re doing within the pharmaceutical value chain, specifically around how drugs are priced and paid for by patients and really how today’s model doesn’t make too much sense. I wonder if you could kind of share really what you’re excited about within that opportunity and some of the work that you’re doing there.
Mike Waterbury:
I appreciate that. I think it’s interesting, sometimes we talk about, we’ll start a business, and we sort of talk about doing it the old way and then when will we be able to do it the new way? We even say things like we play the game until we can change the game. And so we started a company RemedyOne in 2015, that was a rebate aggregator, people refer to us, but we basically brought transparency and better value when it comes to rebates that are paid on drugs and started to really transform that industry. But we were really doing it the old way, like we were just giving people more transparency and better rates basically in trying to control their healthcare costs, but not really able to change things as we were, we had customers and commitments within that old way. And so, we then worked with a partner of ours to start a business, Famulus Health, and Famulus was very much on a path around really looking at the technology of health, how pharmaceutical drugs are paid for, and really the switch technology. A lot of people won’t understand the switch technology, but basically, what the switch does is when you walk into a pharmacy, it says, who are you, do you have benefits, and what should I charge you? Essentially what it does, but it has a lot of power because it’s controlling how these scripts are really identified and what the patient has to pay and in some cases interacts with pharma and all kinds of things that you don’t even know are happening. And so, Famulus worked on a capability of technology called FAST that redirected sort of how the switch worked and sort of took the control of the switch to the payer, whoever is paying the bills versus the PBM and the pharmacy, and had a lot of success doing that. And so when we started to say, okay, how can we use our knowledge of how drugs are priced, this technology, to change how drugs are priced in the country, and how they deliver to patients? And so we started, and one of the things that was really a game changer for us, Kyle, is we brought in some people from the pharmaceutical industry and it was fascinating because we were like, we thought we knew everything, right? We thought, we know how pharma thinks, we know what they want. And until we had someone who had been doing that for 20, 25 years, we really didn’t. And so they shared some insight around what’s important to pharma, how they talk about Gross-to-Net pricing, meaning here’s our gross price, and here’s the net price we receive after we provide discounts to everybody who’s involved in this supply chain. And if you could give the net price to the patient and allow patients to have access to our medication when the physician prescribes it, that’s all we want. And so when we looked at our technology and our knowledge of how drugs are priced, we’re actively working on a solution and having conversations with every major pharmaceutical company around Gross-to-Net pricing being delivered to a patient with a simplified benefit structure. And really, it’s kind of crazy to say for us, but really no formulary to speak of, I mean, if the price is net, we don’t really need to get involved in sort of deciding which drug they use, it’s the physician’s choice. As long as we get the net price and we don’t have to use co-pays and tiers to drive down pricing, why do you really even need a complicated formulary? Why do you have to tell someone who’s on an insulin next year, because you change your PBM, they need to change their insulin? It doesn’t make any sense as long as the price is reasonable. So that’s, we’re working on that today where, we see a pathway to reinventing how drugs are priced in the country, and it’s very, very exciting to all of us that have been in the middle of this for 25 plus years plus, plus.
Kyle Wildnauer-Haigney:
Yeah, I love that, and personally, it sounds like Famulus is really targeting to archaic systems. And these are the things that I’ve kind of learned throughout my career in the pharma value chain. I think like a decade ago I tried to understand what is the pharmaceutical switch, has changed healthcare really worked together, what mechanically actually happens, and then also at the same time learning about formularies, right, and to think about the price that a patient will pay is determined by a very long, complex PDF that is.
Mike Waterbury:
Like a list of like 100,000 pages. It’s just crazy, right?
Kyle Wildnauer-Haigney:
It doesn’t make sense, right? You take a technology focus, you take some best practices from other industries, and you think about how would you redesign it or re-imagine those two systems with all the key stakeholders or different stakeholders kind of in mind. I think that’s super exciting. So very, very excited about what you guys are working on.
Mike Waterbury:
One of the things it’s interesting is, as you said, Kyle, it’s interesting, sometimes I sort of, how would you design it if you were the alien that landed here, and so how do you pay for drugs? It’s interesting because we have a way to totally change how the prices are delivered to patients, but we have to sort of still work within the system. Like, sure, pharma will get very concerned, rightfully so, about best price and regulations, how can they deliver it? And so one of the things that’s really exciting to us, because you take every discount that’s applied from Gross-to-Net, so you’ve got GPO fees, and rebates, and especially pharmacy fees, and data fees, but one of the ones that pharma is very interested in is co-pay assistance. So like we have these co-pay assistance cards and programs and companies that are maximizing co-pay assistance, but what if you could deliver a co-pay assistance rebate and all these other fees to, in the discount directly at Point-of-Sale without a lot of complication, especially for those patients who need it? And so the way we’re designing it is within the current system and rules, there are some that you just can’t really change today, so you got to kind of understand that landscape and pick your battles. But like I would like to design it differently than the way we are, but I think the way we are is the best and most effective way within the current system. So sometimes you got to pick your battles and not sort of write it on the wall and say, How are you going to do it better? But really understand the limitations that exist today that can’t really change until there’s bigger change.
Kyle Wildnauer-Haigney:
I mean, that’s one of the inherent challenges within innovation and doing startups within the healthcare space, right? Large incumbents, highly concentrated market share, and highly regulated industry that has profound impact on individuals’ lives. You know, we’re not just playing around with a new consumer social app for whatever new generation. We are impacting individuals and having a profound difference on their quality of life and length of life as well.
Mike Waterbury:
Yeah, I think so, Kyle. You said it right? I mean, sometimes you, the key that I’ve learned is that you have to find those places where you can’t really massively change certain things, but you can definitely, I think delivering Gross-to-Net pricing to patients at Point-of-Sale without a formulary with a simplified benefit sounds pretty exciting and really game-changing. And yeah, I think I’ll have a big impact on the PBM space, but I think the time has come for some of that disruption to happen and see how everyone reacts, but I think as long as we’re putting the patient first and allowing physicians who think they should be on a certain medication to be able to, right, the minute within reason, right, you still need to do some prior awesome things on high cost, and maybe we learned a lot from the opioid crisis and still need to have some oversight, but it should be a lot less than it is today.
Kyle Wildnauer-Haigney:
Sure, and maybe for the audience, you could really focus in on the patient experience and help us understand what will this new technology, this new kind of switch and beyond the formulary pricing mechanism, how it will impact individuals trying to afford their medications.
Mike Waterbury:
Now, it’s interesting, and we talk about certain therapy classes where, take a condition like cystic fibrosis, right? There’s really not a lot of discounts, there’s not a lot of patients, thank goodness, but there’s not a lot of rebates and other things that go on within cystic fibrosis, but there is a lot of co-pay assistance to help people pay for these medications. And so, or even oncology, you can see there’s a lot of co-pay assistance, less rebates. Then you get into like anti-immune disorders, there’s a lot of everything because there’s a lot of competition in terms of rebates and fees and a lot of those things, but I think ultimately for the patient, the beauty of it is that when the patient gets that script or goes to the pharmacy or maybe they’re dealing with mail order or whatever their situation is, especially pharmacies, they won’t actually have to do it. They don’t have to go get a coupon. They don’t have to like have talk to somebody other than their physician, and the price will be delivered at Point-of-Sale net of all those discounts. And in a perfect world, it’ll be a price that they can afford, it’ll be a simplified process with a simplified benefit where the physician just writes the script, and they get the medication at the net price, which is all pharma wants. Like they’re paying these discounts to other parties and all they really want is access to the patients that the physician and they think should be on the medication. And so it really, in some ways will just drive down the price and simplify the process and eliminate a lot of headaches when you’re dealing with like denials and prior awesome things with a physician. So in some ways, it’ll be interesting because I think as I say this out loud, we’re going to have to do a lot of work to sort of educate the consumers and make sure, but in some ways, it’ll just seem a lot better, and they won’t even know why, because it’s all happening through technology, but wherever they’re getting their medication, and to me, when you describe it, that, where that sounds like where we should be.
Kyle Wildnauer-Haigney:
Removing friction for the patient, making it easier for them. And anecdotally, I think some of these coupons or market access budgets from foreign manufacturers can have a profound impact on the patients’ out-of-pocket costs. But maybe for everyone listening, what is kind of the total amount of dollars that could save, whether it’s a percent or absolute, is this a lot of impact, a little, how do you think it’s going to kind of have an impact?
Mike Waterbury:
I mean, it’s interesting because obviously in most cases, if you have insurance, your employer is paying for some of the patients, pay for some based on the benefit. And, but I think overall pharmacy costs can be reduced by over 50%. Certain medications, you think of a drug, I won’t name specific drugs, but take a drug that costs $100,000 a year and you’re getting a shot every month. That drug should cost $20,000 or $25,000, and we feel like the conversations we’re having, we can deliver that. I mean, there are a lot of places like mental health and diabetes where, insulins, for example, it’s really sort of crazy to me that we disrupt insulin care as much as we do as an industry, right? I mean, that’s life and death medications, right? And people are struggling with it all the time. So you take, rough numbers, but you take a monthly supply of it saves $900. I mean, that should be $100, right? And so there’s significant impact, especially when there are a lot of discounts that exist today for medications that have been around a while where there’s competition, and there’s a lot of rebate activity. But also, I think on co-pay assistance will, you take an autoimmune disease where there’s $14,000 of co-pay assistance and the pharmaceutical company wants the patient to get it as long as they can stay on the drug and pay for the drug. And so we’re trying to figure out a way to more effectively and efficiently deliver those discounts to the patients who need them and making sure that pharma’s needs are also being met, but take all the money that we’re giving to all the parties in between, and all you have to do is look at the big PBM’s financials. I mean, they’re making billions of dollars a year in profit. And I would love to see us allow folks to have value for what they’ve created, that’s capitalism, but deliver the majority of that money in discounts to patients. I mean, that’s what it should be used for.
Kyle Wildnauer-Haigney:
Absolutely, you’re taking those discounts and helping with affordability so that the patient can take that drug and be healthier and happier and live longer.
Mike Waterbury:
I think one of the things we look at a lot, and sometimes the studies get a little confusing, or you sort of dismiss them, but how many people avoid care specifically taking their medications because of either fear or for the cost? I mean, we deal a lot with, on some of our other businesses the rising costs of medical debt, the rising amount of medical debt in the country, and the fact that people are just avoiding care. And it’s very frustrating from where I sit, that if you avoid care that you need and it drives up the overall cost of healthcare and you have insurance and you paid for it, it would be nice if we could start over, but we can’t. What we’re doing at Goodroot is really trying to identify systems that we can fix and then start to see, similar to what we’ve been talking about on the drug pricing side, how those pieces will ultimately lead to a reinvention of how healthcare is administered in the country.
Kyle Wildnauer-Haigney:
I love that. And so maybe very interested in hearing, kind of, if you take a step back and think bigger picture, what are some of the key trends or themes that you’re seeing play out in the market today? And it doesn’t have to be just within the pharmaceutical value chain, but really from your purview across all healthcare that you are most excited about or interested in.
Mike Waterbury:
Well, one of the things we think about a lot at Goodroot, I mean, the rising cost of healthcare and the increases in medical debt is something we’re working on every day, trying to raise money to alleviate medical debt, and really understand the trends, like how great would it be if we could see the top ten reasons why medical debt exists, right? I mean, number three on the list might be that no anesthesiologist participates with a health plan because they don’t have to, and you get the surprise bill when you go to a hospital for your pain medication and you have no idea why. But if we knew that we could actually do something about it, right? We get all the parties to the table and talk about it. There’s a lot of people at stake there and there’s a lot of money at stake, but we should start dealing with it. We should start holding ourselves accountable for why that is not working. So that’s a big trend I continue to see that, as just a platform for us to start to analyze information, hold the industry accountable, and start to fix the real problems. That’s when we talk about the 10th man. It’s like, work your way back from what’s totally broken. Like if you have insurance and you go to the hospital and you get a surprise bill for $20,000, and there’s been some good regulation around surprise billing, that’s a failure point and we need to identify what’s causing that and work our way back. I think the other thing, Kyle, that might be a more simple concept, but we’re working on our own way to distribute our products to employers that have, say, less than 1000 lives or 5000 lives. My team always jokes, our industry calls them small. I mean, I have 100 employees at Goodroot, and so that’s not small. But we call it small so we can kind of like make sure people don’t feel like they have choices or options. And you don’t have your data, you don’t have, and so we don’t have a great way to distribute our innovation to an employer that has 250 employees. And so we’re working very hard to create our own platform where we can package up all our solutions and sell them to small groups, right? Or maybe we call them large groups, but, because if we just deliver innovation and solution to companies that have aggregated millions of lives, we don’t have a way to make sure they deliver those savings to employers that are the backbone of our country. You know, somebody who has 300 employees and you see them at a soccer game, they go, hey, I’m reading what you’re doing, can I get all that? And I have to say, no. I mean, I just went through my own renewal and I’m not really in a position to get all of the things that we do. I mean, we’re frantically working to be able to do that, and there won’t be another renewal where we don’t take all of our capabilities. But I think that’s a really big, maybe not a trend, but something we’re focused on, because somebody will say to me like, well, how do you know the employer gets the savings if you sell this to a big health plan or a big PBM? And I don’t. And so I got to find a way, you know, without disrupting the competitive balance and my customers and things like that, but we have to find a way to make sure an employer that has 100 employees can reduce their healthcare costs, provide great value their employees, and make sure their employees are getting, are staying healthy with the amount of money we’re paying for their healthcare.
Kyle Wildnauer-Haigney:
I mean, the two themes, topics, right? Medical debt, which is a massive problem. I think there was just an article in New York Times this past week about some work that one of the top consulting firms did with a nonprofit hospital. And then also what it sounds like that second piece is creating a new channel to those smaller, larger employers to support those patients and really address the sense of principal-agent problem or moral hazard within the healthcare system where you have a buyer that is not the end consumer, that can create a lot of these misaligned incentives that we see today. I mean, those are two fundamental … and really negatively impact patients.
Mike Waterbury:
Yeah, no, it’s a great point on both topics, was briefly I mean, when it comes to financial system plans and nonprofit hospitals, we have a company, Breeze, that’s working to automate that entire process, and hopefully, we’d love to see a national registry where people can pre-enroll and understand when they can get hospital care at certain income levels, we think that’s critical to the future success of the industry. So we’re working hard at that and it was very good reporting. It was very well said and articulated an issue around the require to provide financial assistance based on your income level, yet everyone’s getting billed and they don’t understand it and it’s too complicated. I think on the second point you’re out, you said it very well. I think maybe we’re calling it our own health plan, but I think it should be sort of thought of as something different as the way to kind of access healthcare in a simplified way at a fair price that’s equal and affordable for everyone. It’s got to, so whatever we end up calling it, we’ll figure it out, but I think right now we’re sort of looking at it as like our own health plan that you get all of Goodroot and anything else that we’ve vetted that we think is really effective. And if we can get pharmacy pricing, say, 50% to 70% down, and maybe hospital care, at least for certain income levels, 50% to 70% down, and we’re working on getting cash pricing for all of our other services in between, and we have a capability to provide concierge and debt resolution and pre-negotiation. Hopefully, figure out one of our companies is working on a way to pay for care more effectively. It’s like the basic thing insurance should do is pay for care, but it’s so complicated, we can’t even figure that out. And so if we do all those things, I think we see a pathway for a future where we really can change things and reinvent healthcare, so it gets us out of bed and motivated every day. And as I said before, you think about what’s important, and to me, one of the things that’s important to me is leaving a legacy where my kids or their kids can’t afford healthcare in the United States, and that’s pretty exciting thing to be working on.
Kyle Wildnauer-Haigney:
Mike, I’m rooting for you and Goodroot. It sounds like true, wonderful work that you guys are doing on behalf of patients. And maybe before we conclude, if you could just share one closing thought and where listeners can get in touch with you.
Mike Waterbury:
I appreciate that, Kyle. I mean, we’re very active on social media. I mean the website is www.GoodrootInc.com, and you know, sometimes I think as consumers or patients, we are definitely accountable as well I mean especially if you own businesses. So I think it’ll be a two-way street. I mean and it’ll be hard because it is complicated but I think a patient, definitely an employer or CFO, CEO, head of HR, I think it’s even though it’s challenging because it’s not your day-to-day business, I think you have to get engaged, educated, and put in some effort to change things. I think part of it is the complexity leads to sometimes people say complexity leads to margin, but you have to come up a little bit in terms of your level of engagement, sort of meet us in the middle, and hopefully, we’ll be able to deliver you a much greater solution for health and value in your healthcare dollar. And so a little bit of a pep talk for everybody to get a little more involved, even though I know it’s hard. I mean, so I’ve had so many conversations at those cocktail parties where people just don’t understand. And they do understand medical debt, though, and bills that they get, so that’s been a good place to sort of connect, but we all got a role to play and it’s really important for our future.
Kyle Wildnauer-Haigney:
Well, Mike, thank you for chatting with us today. It was an absolute pleasure and really enjoyed hearing about all that you’re working on. Have a wonderful day.
Mike Waterbury:
Thank you, Kyle. You too.
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