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    a16z Podcast

    Curing the Trust Problem with Mark Cuban

    Wed Jul 12 2023
    American healthcare systementrepreneurshippharmaceutical industrytransparency in healthcarecost control measurespersonal health practices

    Description

    The episode covers various aspects of the American healthcare system, entrepreneurship, disrupting the pharmaceutical industry, transparency and innovation in healthcare, controlling costs and improving transparency, and Mark Cuban's personal health practices.

    Insights

    Transparency is crucial for changing healthcare

    Transparency is highlighted as a key factor in changing the healthcare industry and reducing ancillary costs. It can also be an innovative element in an opaque industry.

    Mark Cuban's insights on entrepreneurship

    Mark Cuban emphasizes the importance of learning how to sell and identifying market inefficiencies as key skills for success. He also believes in aligning personal goals with the organization's vision and providing equity opportunities to motivate talented individuals.

    Disrupting the pharmaceutical industry

    CostPlusDrugs.com disrupts the pharmaceutical industry by providing transparent pricing for medications and offering significant discounts compared to traditional retailers. The company aims to work with PBMs that don't support rebates or ancillary cost additions.

    Improving transparency in healthcare

    Improving transparency in healthcare is seen as crucial for controlling costs and increasing trust. Open general ledgers and standardized pricing are proposed as solutions.

    Chapters

    1. The American healthcare system
    2. Mark Cuban's insights on entrepreneurship
    3. Geography and culture in business
    4. Disrupting the pharmaceutical industry
    5. Transparency and innovation in healthcare
    6. Controlling costs and improving transparency
    7. Mark Cuban's personal health practices
    Summary
    Transcript

    The American healthcare system

    00:01 - 06:44

    • The American healthcare system is inefficient and lacks transparency in pricing.
    • Pharmacy retailers charge high prices for medications, especially for those without insurance or with high deductibles.
    • Cost Plus Drugs offers medications at a much lower price range of $14 to $61 per month.
    • Pharmacists often don't know the final cost until they ring up the prescription due to complex billing systems designed to maximize revenue from insurance companies.

    Mark Cuban's insights on entrepreneurship

    00:01 - 06:44

    • Mark Cuban started his entrepreneurial journey at a young age by selling garbage bags and stamps, recognizing inefficiencies in these markets.
    • He emphasizes the importance of learning how to sell and identifying market inefficiencies as key skills for success.
    • Mark Cuban believes that aligning personal goals with the organization's vision and providing equity opportunities can motivate talented individuals to work together effectively in teams.

    Geography and culture in business

    06:20 - 13:03

    • When everyone is a participant and aligned with the organization's vision, it tends to work well.
    • Being in the middle of the country makes it easier to have a culture geared towards success.
    • Geography has a significant impact on culture and mindset.

    Disrupting the pharmaceutical industry

    12:38 - 19:30

    • Market forces in healthcare are hindered by a lack of transparency and price awareness.
    • The process of getting a prescription is convoluted, with inconsistent fees and opaque pricing.
    • CostPlusDrugs.com disrupts the industry by providing transparent pricing for medications.
    • They offer significant discounts on drugs like chemotherapy compared to traditional retailers.
    • Customers can see the cost, markup, pharmacy fee, and shipping charges for each medication.
    • This transparency builds trust and allows customers to compare prices with other sources.
    • Harvard and Vanderbilt have found that CostPlusDrugs.com could save taxpayers millions of dollars per year.
    • The company initially focused on generics but has recently signed deals for non-generics as well.
    • Pharmaceutical manufacturers face challenges, especially brand manufacturers who feel demonized for high prices.
    • Generic manufacturers are more open to working with CostPlusDrugs.com due to competition in the market.
    • Brand name manufacturers dislike the current system and its reliance on PBMs (pharmacy benefit managers).
    • Contracts with brand name manufacturers are difficult due to resistance from PBMs.
    • CostPlusDrugs.com aims to work with any PBM that doesn't support rebates or ancillary cost additions.
    • PBMs have numerous subsidies and use opaque pricing to maximize revenue at the expense of patients.

    Transparency and innovation in healthcare

    25:53 - 32:19

    • Transparency is crucial for changing healthcare and reducing ancillary costs.
    • Innovation in healthcare should be rewarded, not just the provision of services.
    • Hospitals and Medicare could negotiate with drug manufacturers for fair pricing based on patient population.
    • Data silos hinder innovation and learning in the healthcare industry.
    • Transparency can be an innovative element in an opaque industry.
    • Policy changes are necessary to improve the US healthcare system.
    • Politics often prioritize perception over actual results in healthcare policy.
    • Regulation impacts companies differently, but lobbying is common among those affected.
    • Complete transparency through open general ledgers would revolutionize the healthcare industry.

    Controlling costs and improving transparency

    32:01 - 38:20

    • Simplifying the administration of healthcare contracts between insurers and hospitals could save 1% on the market margin, which is significant considering healthcare's impact on GDP.
    • The 10% plan proposes a graduated payment system based on income levels, where those under 2X the federal poverty level pay nothing and the balance is paid by the federal government.
    • Implementing absolute pricing for medications and hospital services could help control costs and increase transparency.
    • Canada's healthcare system provides examples of cost control measures that could be implemented in the United States, such as standardized pricing and transparent cost reporting.
    • There is a lack of transparency in the United States regarding actual costs of healthcare services.
    • Guests are asked about their own health practices, including working out, supplements, and meditation.

    Mark Cuban's personal health practices

    38:06 - 41:53

    • Mark Cuban shares his personal health practices, including tracking his food intake and working out.
    • He takes magnesium for better sleep and an iron supplement due to being a vegetarian.
    • Mark does not use supplements to increase the size of his telomeres.
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