In this episode of Health Biz Talk, Tony Trankle, former CMS CIO, interviews Greg Kunst, biotech entrepreneur, former CEO of Orion Biotech, and board member at multiple medtech and health innovation companies. Their conversation spans Greg’s personal and professional journey, the economics of healthcare innovation, the promise and challenges of AI, and the systemic changes needed to sustain the future of healthcare.
Transcript of the Podcast
00:00:00 Intro
Welcome to Health Biz Talk, the industry’s leading podcast that brings you today’s top innovators and leading voices in healthcare, technology, business and policy. And here’s your host, Tony Trankle, Former CMS CIO and health IT industry leader.
00:00:16 Tony
Hello, welcome to another edition of Health Biz Talk. I’m pleased to have is my guest this afternoon, Greg Kunst. Greg is currently the Board Chair of Biomimetics and a board member of Prevent and Filiquis. Greg has had a long career on biotech drug development, Med Med tech, diagnostics in the emerging fields of digital health and AI in health. Greg was formerly the founder and CEO of Orion Biotech, a large stage cell therapy company targeting blinding diseases of the cornea. Greg recently sold an Orion Biotech to Alcon and raised over 250 million in capital over a four year period. Prior to Orion Biotech, Greg worked at Glaucose, Alcon, Kinetic Concepts Accelerate and Ocular Sciences. So, Greg, welcome to the podcast.
00:01:16 Greg
Thanks for being my appreciate.
00:01:19 Tony
So the first question, Greg, I like to ask people is kind of a little bit more your background. Of course, we’ve given kind of the thumbnail sketch, but really would like to hear how you got to where you are today. What were some of your interests growing up and what kind of made had you make the decision to move in this direction?
00:01:40 Greg
Yeah, I mean, so that’s an important question. I mean, look, the reality is my father was a serial Med tech entrepreneur, primarily in the optometric side. So worked on, he found a cofounded a contact lens company called Octa Sciences that ended up becoming the 4th largest contact lens company in the world. So, you know, as a child, you know, when most of my friends were out, you know, doing dumb things, I, I was working for my, my dad and, and really trying to get a flavour for, you know, building companies. And so I knew two things. One I was very interested in in building companies too. I was very interested in healthcare and I guess I have 3 is the contact lens business wasn’t for me. So I knew I needed to to do my own thing, but I wanted to do in healthcare.
And you know, when I was in college, you know, I thought about being a doctor and wasn’t smart enough. And certainly I went to undergrad at Brigham and University. I probably spent more time on the ski resorts in Utah and studying. So that probably limited my opportunity to go to medical school, but I knew I wanted to be in healthcare. I knew I wanted to be on the, the innovative side of healthcare and, you know, and likes the eye. I mean, you know, dad liked the eye and, and, you know, I grew up with it and the eyes, you know, vision seems like an important sense that, you know, people wanted to maintain. And I knew that the agent demographics were such that, you know, that vision health would be in something important over the next, you know, 30-40 years. And and that’s kind of how I got into it.
00:03:04 Tony
OK, great. Yeah, well, as someone who’s had to wear glasses since I was 7 years old and got contacts in my early 20s and and I had a mother and a grandmother had macular degeneration. So that’s been the eye has certainly been a big interest of of mine for many years. So I appreciate the work that you and your, you know, others have done in this area.
00:03:29 Greg
Absolutely. I mean, and like you, I mean, I’ve been in glasses since I was a young child. I’m a high myop, you know, you know, I’ve got floaters, you know, I’ve got all the ageing stuff that, that we all face. I mean, I’m, I’m sure I’ll have an early cataract. I’m sure, you know, I’ll face retinal tear as being a high myop. And you know, what I know is when my glasses and contacts are off, I can’t see a thing and my productivity goes to 0. And so that to me speaks to like, why vision health is so important in many parts of the world. I mean, yeah, we take it for granted in the US but many parts of the world, you know, simple problems like myopia or hyperopia are just or things that go unaddressed. And and, you know, those are those are, you know, here in the Western world, we don’t, you know, we have good correction for those things. You know, it just speaks to the, the underlying needs, you know, for, you know, for more, more innovation in our space.
00:04:18 Tony
Oh, absolutely. Well, I, I think one of the areas that I’d really like to touch on more deeply with you is you’ve been involved in this space for a long time and you know what, What do you see as some of the major challenges to bring in new products or therapies to market? It’s certainly, obviously there’s been a lot of changes and regulations and other things over the years, but but what are your kind of thoughts?
00:04:45 Greg
Yeah. So we, we, we’ve got some interesting kind of dichotomies and at least in the world of of ophthalmology as I think about, I mean, and I think it speaks broadly to healthcare as well as on one hand, I mean the population is ageing and so that’s obviously for the innovative side of healthcare. That’s a, you know, that’s an interesting, you know, demographic feature that, you know, certainly creates a large, a large investment thesis into healthcare.
The, the downside of that is governments around the world are struggling to pay for healthcare, including the United States. I mean, I think our GDP now, Healthcare is now over, over town with 12% of GDP. We’re on a track to this country to go broke, you know, with healthcare and there’s got to be changes. And so you got this kind of, you know, Ying and Yang of sorts, where we have this large population of patients that need treatment. The science is out of stage now. We can solve most major underlying disease pathologies. I believe in my lifetime that we will solve cancer, I think will solve most of the infectious and viral diseases. I mean, the, the the pace of innovation is such, particularly in the biotech side around the underlying biology that is such that, you know, I think there’s great promise in the future. The flip side is how we pay for all this stuff. And you know, that’s a problem every country in the world is facing in different ways. But I think it’s certainly very acute here in the US because the current path of of growth in healthcare spending and the current percentage of GDP is not sustainable.
00:06:08 Tony
Yeah. And, and, and we can, we can, we could talk about this for hours, but actually healthcare in the US is, is, has been right around 18% for the past number of years and.
00:06:20 Greg
So I’m I’m off by by 2X even worse.
00:06:22 Tony
Yeah, it hasn’t been, it hasn’t been down at the down where you were at probably for two decades. So, but the, the good news is it’s been fairly, I won’t say flat, but it hasn’t risen as much as the, as the GDP over the last number of years. So it’s stayed as a percentage kind of constant. But what we used to say is if it ever gets over 25%, then we’re in a big problem because then it kind of dries up other investments that that actually support better health care, if if indirectly. But one of the things that that that I’ve been interested in for a long time is this kind of balance you just talked about a few moments ago.
And, and we’ve got things like GLP one, we’ve got other blockbuster drugs and therapies. I know a number of people who were receiving cancer therapies today that would have been dead years ago. But without insurance, they’d be paying hundreds of thousands of dollars a year. So as we keep going down this sliding slope of, as you said, an ageing population, ageing population has more problems. It has higher rates of cancer, it has other health problems. And at the same time, the innovation curve is, is flattening in a lot of ways. So we’re getting more blockbuster drugs and therapies coming out. And of course, we all see AI and quantum computing and other and technologies helping that even more. So it’s kind of long winded, but it’s, you know, how do, how do we, how do we go forward with this without either bankrupting these private and, and, and public insurance companies or Creighton A you know, more of a 2 tiered system where the, you know, the few get the therapies, but the rest can’t because, you know, insurance can’t pay for afford to pay for it.
00:08:23 Greg
I mean, so I think there are probably 3 of a couple big, big step changes that that, that we have to face the healthcare system specifically in the US. One is, you know, what’s always troubled me about Healthcare is, you know, we, we struggle taking old things out. And this is a very controversial item, right? I mean, there’s a point where a treatment, a therapy, you know, a procedure is no longer effective in, in our, in, in the kind of current state of, you know, state of healthcare. And we really do a poor job as a healthcare system at removing old things to pay for new things. So I think there, you know, we’ve got to be a little more constructive and instead of the same, we want to bring all these things in. Well, you know what, what’s going to come out to pay to pay for it?
So that’s, you know, that’s one item. And if you’ve ever, you know, seeing exam, I mean, you were at CMS for a for a long time. I mean, if CMS are commercial pairs, take things out like it’s, it’s, there’s a huge political backlash around that. That’s a troubling problem that we got to figure out how to, how to solve for. I think the second one is, you know, and, and, and the Trump administration’s already started this a little bit, which I fundamentally agree with. We pay too much for our medications here in the United States. The rest of the world’s paying too little. And there’s, you know, I do think the US has been fleeced by, by the European countries relative to the price of drugs. And just like I think the US taxpayers has been fleeced by, you know, by big pharma and our prices here in the US. So there’s got to be equilibrium where we start to share, you know, share risk amongst countries in a more balanced way, you know, to address it. It can’t be the US paying for the R&D for the entire world.
And I’m, I’m glad that that’s an area that seems to be a bipartisan area of interest. And I and I hope that we make progress there because there’s without question, the US pays way too much for our medications and, and you know, the system, the system’s created in a way where incentivizes companies to price higher than the true economic value of the, of, of the drugs. That’s another one. I think the third one is to be able to support that. What we have to say to big pharma is we’re going to increase the cadence of innovation vis a vis by reducing the underlying cost innovation and in the reducing the time to approval and how we do that, I think AI has a great potential to do that. If you look at inefficiency that we have in the development cycle of drugs and even medical devices, I mean, you can make a lot of arguments terribly inefficient. I mean, so I think starts with look you know once we get through phase three, we’re still two years away from approval about a six months to a year to develop and to develop ABLA or an NDA or an I or AID approval package or 510K package in a year review by the FDA. Why you know these when I was a prior company, before you could submit to the FDA electronic package, we sent a whole, you know, semi truck full of people to the FDA for review. Now you think about the inefficiency of that It’s remarkable. It takes a year to create one those documents. The AI can write that document in about in about a day. And and so let’s suppose that the AI writes in a day and you take another month or two, you know, hand reviewing, you know what, what spits out you still have a dramatic improvement in, you know, in the timeline. Conversely, when it’s submitted the FDA it’s a year review process.
Why can’t the, why can’t the FDA have AI and, and the, and the, you know, the manufacturer of AI and the AI talks to each other and, and, you know, kind of gets it down to the, you know, the, the five, the last 5%. And so you can dramatically improve just the, I mean, you could shave just two years off the development cycle of, of drugs and devices just on that approach. And that would have a dramatic change in certainly in the, you know, in the, you know, the proposition for healthcare and the cost of developing drugs and devices and procedures, etcetera. The flip side of that is if we go earlier in the treatment out in the early in the development algorithm, I think there’s lots of companies working on how we use AI to increase the probabilities of success of targets, whether it be a biologic or a drug, you know, so you can massively screen from compounds and protein structures in, you know, probabilize what’s going to work. So you, you increase the probably success, you, you decrease the research time required. I think we made strides by removing some of the animal test requirements.
I think some of the animal, we shouldn’t get away with animal completely move away from animal tests because we don’t want to hurt any, any patients. So we, we try to get safety out of it, But I think you know, the, the convergence AI and minimise animal, animal testing will certainly also speed up the timeline and reduce the cost. So there, there’s lots of little efficiency things that you see. I think lastly, I’d say in the back end, once the drug gets approved, usually it starts in the US, then we go to Europe, then we go to Japan and then we go to the rest of the world. That that’s kind of commercial cycle takes years and it’s usually driven by reimbursement why that cycle is reduced. So as we start to normalise prices around the world, there’s less incentive to start in one country and then slowly work to the other. But additionally, that’s kind of common the FDA review cycle using the AI, the AI can create the economic model by country and again, we can speed up reimbursement dramatically. We do those things all coupled together, we’ll drastically decrease the cost of of drug, you know, drug discovery and development. And then we’re talking about, you know, really gaining efficiencies. And these are things that are not ten years away. These are things that are happening now.
00:13:51 Tony
Right. And I and I don’t and I don’t disagree with anything you’ve said. I do think we’ll get there with, with AII think there’s a, a number of issues that we have to deal with. One of one of which I wanted to kind of pose to you is this whole issue of measuring costs and benefits. And I think I’ll, and, and I know with, with the government budgets and, and, and private sector budgets to some extent as well. I know when the government, we always had a, there was always a challenge of claiming certain benefits unless you could really provide proof for it. So a lot of times people will try to justify a programme or investing, you know, the government investing something and it would get shot down by the budget folks, whether it be OMB or, or other places, because they said you can’t claim certain benefits that we really don’t know that that will occur. And so I, so part of this to me is how do we change the process of benefit cost analysis in a way that that helps promote some of the changes you’re talking about without of course sacrifice and safety or other types of, of risks that we, we look at.
00:15:11 Greg
I mean, part of the issue is, look, I’m a card carrying libertarian, you know, So I usually, I’m, I’m usually a kind of a choice kind of kind of person. I will even admit as a as, as, but I’m also an economist by background. Having a system where you have disparate payers is not efficient in particular in this particular topic, right? Because if you’re, if you’re CMS overlooking the Medicare population 65 and older, you know, there’s a reason why it took so long for Congress to allow preventative care as a benefit within the Medicare system. Because frankly, if you looked at it rationally, you would say, if I own life from, if I own healthcare costs from 65 or older, why would I invest in preventative care? Because at that point, the, you know, preventative care is probably not going to have the dramatic slope of the fact that it would if you invested in that in a 5 year old, 10 year old or a 30 year old. Thankfully, we have rational actor.
We have generally rational actors that realise that, you know, that beneficiaries need that and want that. And that’s an important, it’s an important item. But if you look at that economically, you can make a, a strong argument against it. And, and so I think that’s the implicit problem. Our system is there’s a little bit of what I described as, you know, passing the cost on to the next payer. So if you look at commercial payers, the average churn rate for, you know, for a beneficiary is 18 to 24 months of commercial insurance. So if you’re, you know, if you’re named your commercial insurer, why are you going to invest in something that has that’s a payoff in 10 years? And just like in the Medicare system when most of our budgets are scored on a one year cycle, why are you going to invest in something that’s got a 10 year payoff? And so this is where you start to make arguments of a more socialised model, actually economically probably would would ferret out better incentives. Now, again, this is coming from a card care and libertarian. They would say I want my choice. But the flip side, I also realised that choice causes an inefficient system. And so these are tough problems. We have to work out. I don’t think you can work it out politically.
You have to work it out more economically or kind of rational, you know, kind of rationalise. People don’t like the word rationalising, but rationalising how care is delivered in a way that’s efficient. And you know, I think you and I have talked about previously, this also gets them to date around when have we provided enough as a healthcare system. Like, and you can look at that in terms of, you know, at what point, I mean, we talked about a little bit earlier the two tier system, but at what point have we provided enough care As for government sponsored care and if you want more, you got to pay for it or you know, when is care, you know, when do we give enough care towards the end of life? I mean the majority of healthcare costs come to last last year of life and this is a 20.
00:17:51 Tony
5% of 25% of Medicare costs last year of life when when I was there at least that was the that was the number we used.
00:17:59 Greg
And, and people lose elections on an item. If, if I ran for office and I’m going to, I’m going to bend the cost of, of, of healthcare in the last year of life that I would never win an election or nor would you. But like, again, this is back to like the, this is back to we got to put the politics aside and, and realise that, you know, that we can’t keep spending at the rate that we are. Like it doesn’t, doesn’t work. I mean, there are projections by economist by 2035 that just paying the debt alone is going to make up the entire federal budget. And so then you look at then you look at you look at, you know, non discretionary spends. Non discretionary spends are like a drop in the bucket of the overall budget. And the only left is military, which, you know, I don’t I don’t foresee that that that politically we’re going to see big cuts in military and entitlements in there’s no free lunches. And so like, yeah, I’d, I’d love to have and I’d love for us to, you know, to have a system of choice and, you know, our current approach, but it’s not feasible going forward. And I think, you know, unfortunately in, in our political system, it’s designed in a way where, you know, when we have elections every two years to kick the can down the street and, you know, it’s going to break. It’s going to break here soon. And I think people have to step back and say, OK, how do we start to make more rational decisions that that will keep the system feasible? No one, I hope no one will take away Medicare. I hope not. You know, maybe they do. But I, I think the majority of Americans want to see Medicare there to keep it vibrant solvent that they’re, they’re, they’re big changes we have to make.
00:19:35 Tony
Yeah, I, I think we’re, we’re going to go down another route here and, and talking more about the government since you brought some of it up. I, I really, there’s, there’s several roles that the government plays in the healthcare system. One, of course is regulatory and there’s been some challenges with the, the regulatory side keeping up with the speed that innovation is, is going. There’s the. Initial development through grants giving out that the government does to help with the with the healthcare industry. Then there’s the work that CMS does from kind of a demand poor area where where what we would do would be to sponsor certain types of changes that we’d want to make and, and use the carrot and stick approach for that. And, and then finally, there’s the the whole role of, you know, clinical trials and, and things of that, sort of how, how quickly can you move things along. Like you mentioned the role of AI and, and, and I, and I guess I guess the final thing is, is, is really politically there’s challenges because there’s constituents that are using up most the healthcare in this country.
And that’s, that’s older Americans and as well as those who have chronic diseases, which in, in, in many cases is older Americans as well. And the industry’s you’re talking about really depend on all, all these different levers working in, in, in, In Sync, I guess. And it’s, that’s where the challenge becomes, particularly if you have start developing blockbuster drugs, blockbuster therapies, you know, better medical devices and you have to kind of push them through because they’re high cost and, and high reward, but maybe not high reward for the entire population, high reward for a, a smaller portion. So does the rest of the population does that? Do they subsidised everybody else to get to this certain level of care? I don’t know. We’re all, we all have to struggle with as economists and as citizens and, and as, as healthcare practitioners. So I don’t, I don’t know what the answer is, But you, I think you’ve, you’ve, you know, you’ve raised some pretty provocative questions.
00:22:04 Greg
But I think people have to realise that, that they’re really smart people at CMS. I’ve worked with many of them. And many of them like, you know, the, the, the downside of, of, of working with CMS is greatly influenced by the Congress. And, you know, in the current system, you know, the only you’re going to fix this is the soft money has to go away. Because I, I mean, I, I, I spent plenty of time in DC, you know, lobby on behalf of the companies. I, you know, that I’ve, I’ve worked for and, you know, as an insider, I’m kind of argue, you know, if you’re looking at this rationally, that kind of soft money makes it impossible to make the changes. And one of the examples is, look, I mean, CMS had the innovation office for a while. There was some pretty provocative changes in, you know, depending on what side of the field you’re on, it could be good, could be bad. And unfortunately, I think in that particular example, the innovation office kind of went away primarily because there were people that were threatened by some of those changes. And you know, they, they use the, you know, they use the, the political purse of sorts to, you know, to, to do, you know, to, to get rid of.
00:23:10 Tony
That it’s actually still there, the innovation office, it really it is still there. But so it hasn’t been taken away at least at this point. But I, I guess the, the challenge I think that we faced at CMS and I think Congress faces as well as it, things are changing so rapidly. The knowledge is actually with industry, certainly, certainly from a, from a technology and innovation standpoint, CMS can’t hire the people they need to keep up with it and neither, neither can Congress. So the, there’s this kind of bargain that you make where you have lobbyists come in who, who understand the, the information and what’s needed, But how do you kind of tie that to a way that’s best for the common good? That’s, that’s where, that’s where the challenges we face. Because I, I, I met a lot of people who were really good at advocating their positions and they, and then they were very intelligent and we worked well together. But it was it, it’s a challenge because you don’t have people who can. So that’s where where, you know, lobbying does influence CMS and it does influence Congress because that’s where the knowledge is. And with this changing, rapidly changing environment, it’s, it’s hard to get people who can keep up with that. So somebody who’s with the government 30 years may have been an industry leader when they started out, but you know, after you know, 5-5 years, you’ve, unless you really can keep up with it, it’s hard to stay abreast of it.
00:24:37 Greg
That’s it’s challenging because I think most of them don’t realise CMS is actually a very small organisation for as large of the Medicare programme is, CMS is actually a very, I mean for as much attention as we’re getting on efficiency in government right now, like if you look at, you look at the number of people there that, that run the CMS system, it’s very small.
00:24:53 Tony
And it’s only a few 1000 people. I mean, I could tell you.
00:24:57 Greg
And I think I mean you compare that against commercial payers. I mean, you know, there’s 5050 million plus beneficiaries in, in, in at least the Medicare, the fee for Medicare side. I mean that’s as large of any, any commercial large of any commercial payer in the United States. I mean and they have extra extraordinary more people than CMS has. So to your point, like you, even if you want to fix it, we don’t have the personnel to do it.
00:25:20 Tony
Right, right. So I, I think, you know, we’ve kind of touched on this whole issue of innovation and what do you, what do you think are the key elements for vote innovation besides the government? Obviously the government plays roles and we just talked about a few of them, but what else do you think? And have you seen it work better internationally at, at different countries than it has in the US? And if so, what’s the what do you see as the secret of of that success?
00:25:48 Greg
Yeah, so there’s one country in particular. I’ll still, maybe I’ll start there and then work my way backwards. So I’m a big fan of the model in Singapore, both the way the government runs and the way the women run the healthcare system. So in Singapore it’s, you know, they’ve been able to figure they’ve done two things. One is that it’s, it’s like a quasi HSA system. So health savings account where they have forced contributions. So every, every employed individual in Singapore has to mandatorily required to put contributions under their HSA. And then the Singaporean government price controls with, you know, with pharma and and Med device manufacturer. So they use the weight of the Singaporean government to, you know, the, the full weight and procurement power of the government pricing low. But ultimately people have choice and you know, on how they do and how they distribute their healthcare. I think that’s an interesting system in that, you know, because it goes back to your earlier point. Do you want to spend all your money the last 20, the last year of care? For some people the answer might be yes.
For others it might be no. You know, I think that’s the way where we start to incentivize people to be thoughtful around where they where they use their care. And it’s working in commercial insurance. I mean, HSA plans are very popular in the working population. And I can tell you I’ve been in HSA plans. Like it changes your way of like, should I go to the doctor or not? Like if I have a cold and I’m going to pay 150 bucks out of my HSA, I probably think twice about it versus I got to pay 20 bucks and a co-pay 20 bucks a co-pay not, you know, knock yourself out. And I think that’s an interesting for an economist point of view. That’s an interesting way to think of the second thing that Singapore does is, you know, they, so I just learned I was in Singapore a month ago and the president of Singapore, they pay. So I think the Prime Minister, they pay like $1.2 million isn’t so they pay the, the, the president 2 million.
I might have the exact numbers off, but essentially what they’ve done is they, they’ve taken away all the soft money. They, you know, they’ve taken away all the incentives for fraud and abuse by, you know, by their, you know, their, their members of Parliament and, and their, and their executive branch. They paid them well, you know, and they hired, they hired the best. Now it’s a small country in Singapore is a business like, you know, works on an island of 5 million people. But it like begs some real questions. You’re like, you know, if we paid, if we paid people in the government more and more and we, you know, we took away some of the incentives to leave and, you know, and, and maybe even paid more on performance indicators than we do presently. Maybe, you know, maybe we have a, a way to to drive some of the incentive structure in such a way that’s efficient. But I mean, these are, and these are kind of these are big change step changes for the way we think of the US. Maybe we’re too big as a country to do that. But yeah, certainly I like the, I like the healthcare model there where it’s price controlled on one hand. On the other hand, you know it’s it’s you have choice.
00:28:48 Tony
Right. Well, given the fact we’ve got a big complex country that’s already pretty far down the road on where we’re at today at, I think that would be difficult to to go in that direction. But One Direction the government has tried to go to in the last 15 years is value based payments. And do you think that supports innovation or do you think that that’s or well, let’s put it, let’s start first say, do you think that works? And then secondly, do you think it helps with innovation or not?
00:29:19 Greg
So I I definitely help with innovation. I mean, economically, I like the idea. The problem is when you when you have 330 million people in the country, the this kind of goes where you just went on the move into HS as is the, you know, the the operational changes and make it work is very difficult and painful. And, you know, I think what we’re going to find, like any change like this, there’ll be big winners and big losers and there and some of the big losers are the most outspoken people against the value based healthcare. If if you’re a or practising provider value based Healthcare is bad, or if you have a medical device or drug that’s that’s underperforming, it’s, it’s and they’re going to kick and scream as loud as they can versus if you’re innovative, they’ll let the free market drive, you know, drive SuccessFactors. I think that’s probably pretty good for the healthcare system, but it’s, it’s, it’s going to be a painful change.
And I think, you know, a lot of times, you know, we take these broad brush changes in our healthcare systems and, and we think they’re, I mean, you know, you don’t hear a lot. I’ll give you an example. You don’t hear a lot about people complain about Obamacare anymore. Like that. There was the whole, you know, the, the first five years Obamacare, the Republicans were in it. We’re going to shoot it. We don’t really hear that anymore. The reason why because people like having healthcare, you know, and that’s if you take away the politics, I think no one’s going to debate, I hope no one’s going to debate that, you know, people should have access to healthcare. And now how we actually doing the implementation implementation of Obamacare was was difficult and that’s happens at any stepwise change. I think that’s the same thing a value based healthcare. We’re going to go through 510 years of, of, you know, of challenges and we’re going to have to, we’re going to have to make tweaks just like way to make tweaks, you know, to the, you know, to the what’s, what’s the, the state and our Obamacare. We had. We had a, we had the.
00:31:03 Tony
Market, the marketplace changes, yeah.
00:31:05 Greg
Took us a couple of years to figure that out. That’s OK, That’s part. That’s part of implementation.
00:31:10 Tony
Yeah, I, I, I agree with you. I, I think obviously people do like having healthcare and, and, and reducing the number of uninsured is certainly something that helps because they end up costing the healthcare system one way or the other. Either they end up in, in ER where they end up with certain conditions that create a bigger strain on the healthcare system. So I, I think that the challenge that I’ve seen with, with, with, with Obamacare and certainly with the other changes to the healthcare system is they, they really haven’t bent the cost curve. They’ve certainly created more coverage. They’ve certainly provided a lot more opportunity for people to get a healthcare in different ways than they could in the past and even if they had pre-existing conditions. But as far as the cost curve, we haven’t done a job of bending that and value based payments. One of the things that was supposed to do was bend the cost curve, but to date it hasn’t. I don’t know if it’s because it hasn’t been implemented as completely as it is, it as it could be, or if there’s still things we need to to work out in terms of what constitutes quote unquote value in in certain areas.
00:32:21 Greg
I mean, some of that’s driven by the fee for service system is set up right where where you know, it’s a bit of a drug and forgive the cliche for that. Like I mean, providers and and manufacturer love fee for service, right. I mean, you, you, you keep clicking the taxi metre that’s, you know, we’re fighting an uphill battle. But I mean, if you’re kind of going back to, you know, your comment, I mean, remember in the early on the Obamacare proposal, there was a proposal at one point to have, I think the Republicans call it the with the death squads or whatever. There was going to be a group of individuals that, you know, that would start to make rational decisions on, on where dollars are spent in health care. And that didn’t make it because it was politically, you know, politically.
00:33:02 Tony
Charge politically. Charge point. Yeah.
00:33:04 Greg
But to your point, like you can’t to bend healthcare and not the same time take costs out of the system. So this is the, this is the implicit problem we have. Like we want to do all these things, but we don’t want to dress the, you know, the elephant in the rooms, which which is to your point, we got to bend the curve of cost. And maybe that means we we just take a whack. I mean, you know, there isn’t, there is an argument that says you just take a 10% whack at everything. I mean, you know, that that would go very be a very unpopular move, but you know, maybe that’s the easiest move to make.
00:33:31 Tony
The, the, the, the challenge in, in, in tweaking is it’s, it’s kind of like every action has a, has a reaction. So a lot of times you try to make changes and it, it comes up with an entirely different reaction than what you expected. So you can be pushed down the cost in one area increases cost in other areas. So that, that’s been part of the problem, but we’ve alluded to this in the conversation a few moments ago that one of the big potential saviours is, is AI. And whether AI in, in the biotech industry or even healthcare overall, there’s a lot of different ways. And you spoke about a couple minutes ago about with, with FDA and, and, and some of the issues around getting approvals there. What are some other thoughts you have around AI? And I know AI is a, a big amorphous term, but I think when we’re talk about, you know, more generative AI and, and going beyond some of the initial stuff we used to do with Watson at IBMI, think more, more pointed AI solutions in different areas could have major impacts.
00:34:45 Greg
One thing there’s a couple areas I think about wrapped up my mind. I mean, one is fraud, waste and abuse is still an area that we talked a lot about. And you know, while it’s a small percentage of the overall Medicare system, I mean, the Medicare system is mass like. And so if you take out, if we, if we presume that one, two, 3%, whatever the number is in fraud, waste and abuse, it’s still a massive savings. And so, you know, I, I, I wonder, I mean, but the flip side is we think of the number of claims that comes through. I mean, I, I don’t think the average American realises how many, how many millions and millions of claims that come through every single day. I mean, you, you, you ran the system to better anybody else, but the the sheer volume makes it impossible to screen at at the levels we need to provide a ways to view. So you wonder if AI would start to allow us to get broader screens, you know, you know, instead of doing one off rack audits, you know, maybe you can, maybe you can, you know, through the AI, you can screen all the claims going through. I mean, it’s too big of a step, but.
00:35:40 Tony
Well, they have done some of that. They, they have started, you know, they’ve, they’ve done pre screening for a number of years. Then they’ve had fraud, fraud prevention system that works on the back end and, and they have be have be on to use AI in at different parts along the way. I I think one of the one of the challenges there’s out and out fraud. You know, we say fraud, waste, abuse and errors. And so a lot of what goes on in the healthcare system is not necessarily out and out fraud, but it is, yeah, it’s errors and it’s also abuse and waste and, and is a is up coding abuse.
I mean, some people would say no, other people would say yes, use an AI to detect additional conditions that you can charge CMS or a commercial payer for the provider to do. Was I considered abuse or is it just smart business? I mean, so there’s there is out and out fraud. I mean, we know it was, you know, somewhere in the three to 5%, but there’s a lot of other costs in the healthcare system. That’s a question of whether is that something that AI can certainly detect a lot of that and even help shield to hide some of that. But is the overall effect going to be to save money or is it just going to be pitting one player against another, which is what we’ve seen? You know, it’s like like cyber, like cyber crime, you know, every time the the criminals get better than the people on the other side develop ways and and it goes bounces back and forth.
00:37:24 Greg
Well, I mean, you also wonder, I mean, you know, what doctors will say is they hate prior authorizations because it takes too much of their time. But then if you have AI working on both sides, on the side in the EMR, on the side of the doctor and, and that’s at the Medicare Max on the side of, you know, of, of doing math, you know, much more rapid and efficient prior authorizations. I mean, that’s another, you know, quick win and, and a Medicare fee for service system. Prior authorizations aren’t, aren’t a tool that’s available and on the commercial, that’s an expensive tool, you know, to, to implement. I mean, so that’s another way you can just kind of start to get more granular on where we’re where we’re putting money in a way that’s cost efficient.
00:38:03 Tony
And, and CMS did pass a regulation about a year and a half ago that is going to, you know, basically tighten up on prior authorization. And of course it applies to government programmes, but, but programmes like Medicare Advantage and others were prior authorization is used as a tool to basically save money. I mean, from the, from the healthcare insurance company and perspective. So I, I do think that there are ways to do that. And I do think AI will, will bring some of that out. And I think it will help in terms of drug discovery and, and, and the, and the approval process. But it’s, you know, it’s a question of like any other type of innovation, how quickly is it going to occur and what will be the impact once it does become more mainstream?
00:38:57 Greg
You also wonder and this, this, this will get very controversial, but like, you know, will the AI start to drive, help us drive better decision making in healthcare, particularly at the practitioner level? I mean, can we at minimum start to take out some of the redundant testing, you know, diagnostic testing that’s done primarily for tort, you know, tort reasons? I mean, one, I think there has to be tort reform, number one, but #2 does the AI allow, allow us to get to better decision flows So the doctor feels protected, you know, from, you know, you know, often, you know, we’ve gotten better this, but often we do. Physicians do extra testing simply, you know, to quote, to cover their hide of sorts. And, you know, there’s got to be a way where as we, as we have, you know, deep learning and deep intelligence, you know, that we can start to ferret some of that out.
00:39:46 Tony
I think some of it is probably related to to legal concerns, but I think a lot of it is the way doctors look trying to roll out a certain at least my own in my own life. I’ve seen that you know the the the order certain tests where I. I don’t think there will be an issue, but they order it, I think just to rule out certain potential conditions. So I, I, that’s where I could see AI looking at it and saying, well, you know, based on what we’ve seen and, and, and looking at some other indicators, we don’t need to go through with that MRI or ultrasound or whatever test we want to.
00:40:20 Greg
Or it could go into the, I mean, now we all have my chart like, and you sit back and you look at, I mean, I’d look at my, my chart all time, but the physician doesn’t have enough time to go through like the long history of, I mean, you wonder if the AI could say, well, you know, you know, Greg just had an MRI year ago, you know, from a different doctor. Here’s what the findings were. You’re recommending an MRI for this reason. But, you know, whatever it may be, but start to connect the dots for, for physicians, because we do have a system where, you know, care is very desperate and it’s very difficult for a physician to be able to spend the time to, you know, make all the connections because frankly, they’re not paid in a way where it’s lucrative or it makes sense for them. I mean, you know, we’re in a situation where they’re a high throughput business. And so, you know, can the AI start to help drive, you know, rational decision making by being able to, you know, look at the entire medical record and say in this medical record, you know, we, we have, we already have these items that answer the question. Or if you put the dots together, here’s the here’s the likely answer.
00:41:26 Tony
Well, I, I think you’re right. I think. And the more we can get the good longitudinal data, I’ve seen that with my own life that I’ve, I’ve kept old records and I’ve, I’ve talked to doctors and I said, well, you got, you got this kind of level here. I said, well, you have, it’s been the same level for the past 10 years. I mean, if I go back and look at my records. And so it’s one of the challenges is if you have these disparate systems, you don’t always have all the data that they need to make decisions. And even if you have AI, if you don’t want the access to that information, it’s not going to help. That combined with the with better ways to access data and, and looking at the some of the privacy challenges and security challenges, I think we can get there. So let me turn to a couple other things. Greg, you just sold a company and So what are your, what are your next? What do you, do you have any future plans at this point or what, what are you thinking of doing next? That’s sometimes people going to retirement after something like you did.
00:42:31 Greg
I, I, I don’t know what retirement is. I mean, I, I, I tried to retire for a day. I wouldn’t, I wouldn’t bought new Golf clubs and skis and you know that that didn’t go so well. So I, I, I, I’ve been trying to get back at it, but I mean, there are two areas of interest I have. I still have a, I, I love biotech because I think the speed of science right now in biotech is, and we’re at a crescendo right now and in, in diseases that can be solved.
I mean, so, you know, I see myself back in biotech, but I’m also very intellectually curious about AI. You know, I, I, she would have asked me two months ago, would I work in AI? The answer would have been no. But I, I have a close friend in Singapore who’s a retinal specialist who is developing a number of companies, you know, that that’s using AI to, you know, to do exactly what we just talked about. And it’s got me interested. Like, you know, I would have told you a year ago that I’m glad I’m ACEO because AI never replaced me. I’m convinced in 10 years AI is going to replace me. And so now it’s a question of do I fight the trend or do I jump on the train and, and, and use it, you know, as an advantage? And, and so I’m in that camp of AI has so much potential. We’re only in the early innings. That reminds me of when I was, I was probably 10 or 11 when we first start first start talking to the Internet. And I remember, you know, in my house, it was a religion that we’d watch 60 minutes as a family on on on Sunday night. And I remember a 60 minute special where they said one day you can tour the Louvre from the Internet. I thought that’s the most ridiculous thing I ever, ever heard of Today we, I mean, that’s like second nature. Like of course we do that. And I have a feeling in 20 years that that’s what we’re going to be saying about that AI. So that’s an area that I’m looking at. I don’t know, I’m not a computer guy. So I know nothing about it other than it’s disruptive and it has huge potential and I want to be a part of that.
00:44:16 Tony
Oh great, great. So what about on the personal side? What keeps you busy when you’re not thinking about the future of AI and and other things in the health space? You.
00:44:27 Greg
Know, look, I’ve got, you know, two daughters. I’ve got a 20 year old daughter and a 12 year old daughter. We, we like to, you know, we like to ski a lot, you know, you know, we try to spend a lot of time together. We live in the Seattle area, so you know, it’s beautiful here. So we, you know, we try to go outside and hike and so forth. But, you know, I’m kind of, you know, we live it. We live kind of in the forest away from the city. So we’re, you know, we’re, we’re kind of private people that just like to like to hang out as a family and, you know, get outside and, and, and enjoy life.
00:44:56 Tony
It’s great. Yeah, I was in out in Seattle a couple years ago. It’s beautiful out there. It really is nice.
00:45:01 Greg
Two months of the year, from from July 5th to, you know, to Labour days, usually when it’s sunny out, but you know, the rest of the year is not not so great.
00:45:08 Tony
Yeah, I went in September and the week I was out there it it only rained once so but people told me it was unusual.
00:45:15 Greg
When the sun’s at the most beautiful place in the world, unfortunately the sun’s out like 60 days of the year. It doesn’t rain a lot, just drizzly, and it’s really more the darkness in the winter time. That’s when it’s not the rain.
00:45:26 Tony
Yeah, I can understand that. So what kind of sites do you go to for to get more information, Greg? Do you have certain favourite websites or podcast publications? What? What? Where do you get your info?
00:45:42 Greg
So I spill, I mean, I’m a news junkie. So I look at all the normal news sites, both sides of the aisle. I’m, I’m always very intellectually curious about, you know, what both sides are saying. So you know, I look at, I do my pad everyday. I look at CNNNBC news, Fox News, and then I go and I, I have some, you know, I look at the LA Times, like the New York Times, the Wall Street Journal, you know, the local Seattle news. So I, I try to get a wide variety, whether it be an online or, you know, I, I watch, you know, a lot of news in, in the evening. That’s 1-2. I’m a geek. Like I start off in health policy, health economics. I actually like reading Medpac, you know, for the, for the, your readers or your listeners, I don’t know. Medpac is, that’s the, the Medicare advisory. It’s very, you know, health policy seen wonky, but I like that. I like the Cook report on the political side. I like Politico. You know, I read a lot of political reports as well. But again, both sides of the aisle, like, you know, I’m not a you know why I have my own political views. I like, I like understanding both issues and I actually like debating both both sides of the aisle.
00:46:44 Tony
What about the techno? From a technology standpoint, what do you look at now?
00:46:48 Greg
Yeah, I, I, I mean on the technology side, I, I, I rely a lot of my friends to, you know, to keep me up to date because I am not technology guy by background on like biotech stuff. Like I read a lot of the, you know, the medical journals. So I’ll, I’ll read, you know, I’ll read the Newland journal Medicine, I’ll read Nature or I’ll read Reed Lance and things like that. You know, but I rely a lot of, a lot of my venture capital friends or my friends that are in different parts of, of, of our economy, you know, keep me up, keep me up to date on technology because I’m not an engineer, I’m not a doctor, I’m not a scientist. I’m a, I’m a business guy. So I’m looking more at opportunities as opposed to trying to really have a deep understanding of, you know, the biology of, of, of ex disease or the how AI is going to supplant us. What I’m more interested in is, OK, there’s there’s an opportunity. How do you how do you extract value and?
00:47:37 Tony
The opportunity. Great, great. Well, I’m going to hit you with a couple quick questions, but I think I probably know the answer to both of them. So I’m going to ask you, but I’m sure we will have a probably a, a pretty similar answer to these. But what do you think will be the biggest transformation in healthcare in the next five years?
00:47:56 Greg
So certainly AI is going to is going to do that. You know, I think again, we’re scratching the surface where AI goes, but I also think the biggest change in Healthcare is the reality we’re going to have to face. I mean, we, we are, our healthcare system is broke. Most healthcare systems in the world are broke or nearing, nearing, you know, nearing forbearance. I mean, so, you know, we, we can keep kicking the can down the street, but like, it’s not going to go away. I mean, it, it, it’s, it’s coming at us. And, you know, I hope we start. And I had, I was optimistic or in, in the first few months, the Trump Organisation was going to try to make some changes there. I just haven’t seen it yet relative to, you know, to healthcare.
00:48:33 Tony
Yeah, it’s a, it’s a, it’s a challenge because like you said, there’s a lot of trade-offs both politically and otherwise. And you kick the can down the street, but we’re getting to the end of the street and we can’t kiss shit any further, unfortunately. And then if you’re going to start a company in, in the space, they, what would you get into? Would you stay in the same area as you’ve been into? I mean, obviously you would probably use AI as part of what you’re doing, but what’s your what you’re thinking?
00:48:58 Greg
So, you know, I’ve spent my whole career working on 1st and kind technologies and that’s what’s interesting to me, you know, so I if you came to me and said so Greg, I’d like to develop the 30th Staten, I’d probably yawn and say, you know, no thank you. But you know, where I spend my time is, is on things that are highly disruptive supplanted and that could be a drug device, you know, diagnostic computer system, like I’m agnostic to therapeutic approach or you know, business approach. What I’m interested in is things that are that are disruptive. And that’s what I’m looking for my next company or companies in the future is, is things that, you know, that will have big changes in healthcare. Now that has to be in healthcare because I know nothing about any other part of the economy. If you ask me about investment banking or making cars or whatever, I can’t tell you the thing about those. But Healthcare is where I spend my time on things that are highly disruptive.
00:49:49 Tony
Right, right. Well, Greg, thanks. It’s been a great conversation. Appreciate it and best of luck to you and your future ventures.
00:49:56 Greg
Thank you so much for the invite, Tony. Really nice to participate today.
