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a16zWhen Two Giants Intersect: Healthcare Meets Fintech
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CHAPTERS
- 0:00 – 2:54
Why Healthcare Feels Broken Compared to Fintech
Steph Smith contrasts the seamless experience of fintech with the confusing, clunky state of American healthcare. She introduces guests Julie Yoo and David Haber and the idea that regulation and technology may now let founders improve it.
- •Fintech is associated with seamless, easy experiences, while healthcare is seen as confusing and broken
- •Medical debt, unpaid claims and unprofitable hospitals are growing problems
- •Prices for services can vary up to thirty times
- •The episode looks at healthcare through a fintech lens
- 2:54 – 5:40
Guests' Backgrounds and the Intersection Thesis
Julie Yoo describes her healthcare entrepreneurial background at Kairos, sitting adjacent to the revenue cycle. David Haber describes founding Bond Street and his belief that opportunities live between fields of expertise.
- •Julie Yoo co-founded Kairos, a scheduling product sold to provider organizations, and wanted to expand into the revenue cycle
- •David Haber founded the small business lender Bond Street, sold to Goldman Sachs in 2017
- •Haber views fintech as a horizontal more than a vertical
- •Combining both lenses opens new business model opportunities
- 5:40 – 9:08
The Payer-Provider-Patient Trifecta and Misaligned Incentives
Julie Yoo explains the three stakeholders in healthcare and why the separation between who delivers care, who receives it and who pays creates misaligned incentives. This produces surprise bills, opaque prices and inconsistent reimbursement.
- •Providers, payers and patients are the core stakeholders
- •The people delivering and receiving service are not the ones paying for it
- •Providers often don't weigh cost in care decisions, leading to surprise bills
- •Until recently it was nearly impossible for consumers to find out what something cost
- •Reimbursement rules differ by plan, so the same service can get different prices
- 9:08 – 12:19
The Numbers: Spending, Administrative Waste and Medical Debt
Julie Yoo and David Haber share statistics on US healthcare spending, outcomes, administrative overhead and patient financial burden. The numbers show a system that costs a lot while yielding poor results.
- •$4.3 trillion is spent annually, roughly 20% of GDP, while outcomes are worsening
- •About a third of every hospital revenue dollar goes to administrative tasks to collect it
- •Patient responsibility has grown to about half of healthcare costs
- •Half of Americans carry medical debt, and 20% of them don't believe they'll pay it off
- 12:19 – 16:03
Where the Breakdown Comes From: Payer-Provider Tension
Steph Smith asks what underpins the dysfunction. Julie Yoo points to pandemic-era financial strain on providers versus cash-rich health plans, and to hostile contract negotiations that inflate prices year over year.
- •Provider revenue collapsed in 2020 while insurers kept collecting premiums as utilization dropped
- •Last year about fifty percent of hospitals were in the red
- •Providers inflate prices in contract negotiations expecting payers to negotiate them down
- •This contracting dynamic drives much of year-over-year price increases
- •Consumers get stuck in the middle paying more out of pocket
- 16:03 – 20:03
Regulatory Tailwinds: Price Transparency and Pushback
Julie Yoo argues that regulation can drive healthcare innovation, citing meaningful use for EHRs and the price transparency law requiring hospitals and insurers to publish contracted rates. She explains the incumbents' proprietary-data objections and the consumer-side counterargument.
- •Meaningful use paid doctors to adopt electronic records and drove digitization
- •Price transparency forced publication of contracted rates, though in hard-to-parse formats
- •Companies like Turquoise Health make the data actionable
- •Payers and providers object that the contracts are proprietary and a competitive advantage
- •Earlier upfront estimate laws were poorly implemented, according to Yoo's secret shopper experience
- 20:03 – 24:12
Value-Based Payment, the No Surprises Act and the Cures Act
Julie Yoo describes the shift from fee-for-service to bundled value-based payments, then clarifies two more laws. The No Surprises Act limits surprise out-of-network billing, and the Cures Act expands patient data access.
- •Fee-for-service models proved fragile when services weren't delivered during the pandemic
- •Bundled payments put providers at risk for the budget and align incentives with patients
- •Medicare Advantage is the most prominent value-based form, but adoption is early
- •The No Surprises Act limits surprise out-of-network bills
- •The Cures Act gives patients cheaper data access and brings data liquidity, though much of the system still runs on faxes
- 24:12 – 26:43
Fintech Infrastructure Comes to Healthcare
David Haber explains why the pandemic created urgency to adopt new technology and why every healthcare company is becoming a fintech company. He describes fintech as a third leg of the business model stool, alongside advertising and transactions or subscriptions.
- •The pandemic created urgency for slow-moving incumbents to adopt new technology
- •a16z's thesis is that every company becomes a fintech company
- •Alex Rampell has written about fintech as a third leg of the business model stool
- •Banking-as-a-service primitives let companies embed cards, lending and payments
- •Providers are small businesses that wait up to 90 days to be reimbursed
- 26:43 – 31:05
Juniper: Embedding Lending in Healthcare Billing
David Haber walks through Juniper, which builds billing software for highly recurring care such as autism clinics. Because it processes all of a practice's claims, it can understand cash flow and extend working capital without adverse selection.
- •Juniper submits claims programmatically and handles revenue cycle management and denials
- •It earns 3 to 5% for the billing technology
- •Seeing 100% of revenue and data lets it estimate repayment probability and advance cash
- •Seeing all the invoices avoids the negative selection of factoring
- •Founders started as passionate practitioners and didn't want to be CFOs
- 31:05 – 33:57
Thatch and Other Gaps for Healthcare Fintech
Steph Smith asks about other gaps across the three parties. Julie Yoo describes Thatch, which offers a card that understands healthcare benefits for employers, and highlights themes of capturing the full data flow and making existing products healthcare-aware.
- •Healthcare is typically an employer's number two P&L line item after payroll
- •Thatch's card encodes logic such as HSA funding and tax-advantaged spend
- •Being in the flow of spend gives a better underwriting chassis and utilization data
- •Last-mile benefit utilization data is a Holy Grail problem
- 33:57 – 38:21
Payvidors Unbundled and the Financial Operating System
Julie Yoo describes a16z's Payvidors Unbundled piece on vertically integrated insurer-providers and the startup opportunities, including neo-carriers like Devoted and Firefly. David Haber then outlines a financial operating system for healthcare that unites patient data with provider cash flow.
- •Payvidors are insurers vertically integrated with care delivery
- •Neo-carriers can focus on user experience, novel data use and more cooperative provider relationships
- •Practice management and EHR data are separate from provider cash flow
- •Large health systems also lack a source of truth for finances; some CFOs don't know if they can make payroll
- •Software plus fintech revenue streams can combine
- 38:21 – 42:30
Advice for Founders: Hybrid Teams and Capital Needs
Asked how founders from fintech or healthcare can approach the intersection, Julie Yoo and David Haber advise pairing expertise from both sides. Yoo adds that these businesses have unique capital requirements, such as state-level cash reserves for insurance companies.
- •Each field is hard on its own, so hybrid DNA on founding teams matters
- •Fintech and healthcare founders are often kindred spirits in regulated, mission-driven industries
- •Vertical software has layered in financial products, and the same playbook applies to healthcare
- •Insurtech has state-by-state cash reserve requirements, so investors must fund enough runway
- 42:30 – 46:46
Grand Challenge: Underwriting Costly Care Across Changing Health Plans
Julie Yoo describes an unsolved insurance problem: employees switch plans every few years, so carriers have little incentive to cover costly treatments with long-term ROI. She cites Ozempic-type drugs and one-time gene therapies, and says Medicare Advantage shows the promise of value-oriented preventative care.
- •Employer-sponsored coverage has high churn, so carriers may not see long-term ROI
- •Ozempic-type drugs and million-dollar gene therapies illustrate the problem
- •A solution could spread the financial burden across carriers as people move between plans
- •Yoo wants a consumer-centric solution, likely built with startups and incumbents together
- •Medicare Advantage can invest in preventative care because seniors stay on plans longer
- 46:46 – 51:20
Bridging Startups and Incumbents in a Window of Opportunity
David Haber says a16z can bridge startups and large incumbents, whose workflows remain human-driven. Julie Yoo and Haber give scale figures for Goldman and UnitedHealth Group and argue incumbents now recognize they need innovators, creating a special window of opportunity.
- •Fintech and incumbent institutions were long parallel universes, but incumbents are now more willing to adopt third-party tech
- •a16z aims to build non-transactional relationships with decision makers to speed go-to-market
- •Goldman has about forty-five thousand employees, while UnitedHealthcare has around 380,000
- •One national health plan has thirty thousand call center workers
- •Haber invites founders to connect at dinners in New York and San Francisco
