Annie Lamont on Healthcare, AI, Epic, Medicaid, and the Future of American Medicine

Jim Baer: M Before we begin, let me introduce my guest, Annie Lamont. She's the co founder and managing partner of Oak hcft, one of the preeminent venture and growth equity firms investing at the intersection of healthcare and financial technology. She's been doing this for over three decades. She had early bets on Athenahealth1, Medical Village MD M and devoted Health. And she's appeared on the Forbes Midas list seven different times. We're going to cover where American healthcare is headed, what AI actually changes and whether the capital that's flowed into the sector over the last decade has, has made things better or worse. Annie Lamont, welcome to the Puck.

Annie Lamont: Happy to be with you.

Jim Baer: So let's jump right in. You've said I might finally deliver on technology's long standing promise to transform health care. I mean that's a pretty bold claim given how many times we've heard that before. What do you think is actually different this time?

Annie Lamont: I think it is fundamentally different because every time we have introduced software into the process of healthcare, it's added burden. I mean it's been important to organize data and information and drive a uh, patient experience, but it is added burden for nurses, clinicians in general, doctors. So I think what's exciting is this is the first time in my entire healthcare career that we are, we are taking friction away. We are making the experience of delivering here more pleasant for the clinician, um, and reducing the amount of time they've got to spend on administrative burden. So I think it is, it is going to be really powerful. We're already seeing it, uh, and I'm super excited about like that's one of the initial reasons but there are so many in terms of actually like changing the game and taking cost out in healthcare which as you know is, we have not done a very good job

Jim Baer: of uh, the last 30 years that, that's for sure. So you also, I think flag something you call the revenge of the incumbents. Can you walk us through that? I mean who are the incumbents in this story and how do they use AI to protect turf rather than improve care?

Annie Lamont: Yeah, well, I think um, let's go to the number one offender, epic. Um, I think you know, EPIC has done some good work. You know, we were, we were investors. You know, full disclosure, we're the largest investor in Athena Health many years ago when it was started, um, and they were more ambulatory and, and EPIC was obviously sort of ended up owning and that's only accelerated owning the hospitals and that is they're literally going to be A complete monopolist. You know, I think in the not too distant future in terms of academic medical center, certainly in the country is like converted or converting to epic, it seems. And that gives them a lot of power as the incumbent and they're definitely, you know, investing in AI. But I think the trap is that innovation, 90% of innovation, is coming from the outside. And the reality is their ability to slow innovation by saying, hey, no, we're going to have that feature in a year or two years or three years. It rarely will be as good, it will come much later. But you know, they do have this captive base. And so the question is, does somebody really, you know, need or want that experience now? And what's the friction that that epic, uh, can create in terms of integrating into their ehr? And that's, yeah, that is not only a psychological as well as physical barrier for, for new companies that are entering, uh, hospitals.

Jim Baer: Let's circle back. You said that you think AI is going to be different this time, but there are skeptics who basically say, you know, every major technology in healthcare has essentially not come through and has promised cost reduction. I mean, again, why should AI be different this time?

Annie Lamont: It's not just for healthcare or hospital systems. I mean, it's every facet of our lives. I mean, I think we're, we're all experiencing it. I think, you know, one cool thing is consumers are experiencing healthcare in a different way, right? Just being able to diagnose things that, you know, they used to go to Google for. But the reality is, whether it's Gemini or Claude or OpenAI and ChatGPT, I mean they're experiencing that they can actually have much more knowledge about their own healthcare today. And I think this actually starts the ball rolling In a more D2C approach, friendlier approach, uh, and real enablement of consumers that I just really haven't seen yet. And I just think every, I mean we're spending in my own firm an amount of money that I never anticipated to automate all of our internal workflows. I mean, I think that it is undeniable in my point of view. I mean I lived through the 99, 2000 period where there was over investment in infrastructure and it took a while for usage, uh, on the Internet to actually catch up with the broadband infrastructure that was spent in creating. There were a number broadband companies that went bankrupt then because, you know, video didn't come till much later. And so in terms of, you know, clogging up the pipes and now you just look at the reality is the constraint is data centers. The reality is the demand for AI usage, uh, is going, growing so quickly in every aspect of our lives, every aspect of research and you know, enterprise that, you know, we can't build them fast enough, I'm afraid so. I think the, this sort of, I think it's a canard and that to say that it's AI hype. I think the reality is this infrastructure is going to be needed and we are all going to be using it and so many in every aspect of our life.

Jim Baer: And that makes sense. And uh, we at the Puck agree and we're trying to follow where things are going and it may take a little longer than people think, but I think it's here to stay. So when you look at the healthcare system today, and as an investor who's been in this space for a long time, do you think the space is fundamentally, fundamentally stable or under structural stress that hasn't fully surfaced yet?

Annie Lamont: I mean, I think it's under a ton of structural stress. I think we just have to start with the fact that the only reason we created net new jobs last year was because of healthcare.

Jim Baer: Right, Right.

Annie Lamont: I mean it's kind of amazing across America if you think about, you know, 18% of all workers are in working in healthcare in America it is the largest employer other than Walmart in a few towns. It's the largest employer in every state. It's the largest employer in almost every community. So it has a lot of entrenched interests, let's just say because we are employing so much of the economy in it and so it's very hard to reform something like we should have. I wish AI had come sooner. I wish we'd had more maybe pressure sooner on cost and quality because now it's just a little bit harder to reform the system because we are, is so much of our economy and our jobs and lives are, you know, like dedicated to it. So I think that, you know, that that's one aspect of it. You know, just think about the lobbying power in all the states across the country and the feds is, is enormous. So entrenched interests are, you know, difficult to get around. I think the payers are getting absolutely crushed. Right. They're the evil ones, you know, being portrayed and they are. But you know, like everybody, you know, I'm not going to demonize providers, I'm not going to demonize payers. I mean the reality is everybody's doing a job and there are a lot of good human beings in both of these industries that are trying to do a job. It's just that the payers are now considered the bad guys. And what they've been trying to do is control cost and, you know, but not that effectively. And so as we think about, like, reformation, I mean, I think we are having structural problems. There are healthcare systems that are doing incredibly well, very, very profitable. There's more profit in provider systems than there is in payer on the payer side right now. But then you have small hospitals, you have rural, you know, that are struggling and suffering. So it's really a tale of two cities there, uh, you know, like, depending on where you are. Um, so how do you, you know, like, how do you reconcile that? I, you know, like, honestly, I think, I do think I don't want to be Pollyanna, but I think virtualization and AI have come at the exact moment where we 100% need them, um, because we need to extend capabilities into rural environments, right, that are virtual, that are. You know, just think about oncology. You know, if you're within 100 miles of, uh, one of the great oncology centers like Memorial Sloan Kettering, M.D. anderson, your care is an order of magnitude better than if you are in a rural environment in Tennessee or Arkansas, Mississippi. Um, and we need to change that. And one way you change that is having access and information. And you can do that through platforms, you can do it through extending the research knowledge that's out there about all the trials, all the new drugs. There is no way an oncologist in, um, you know, outside of their, or a primary care doc who's treating patients, you know, in a community that's not directly related to one of these great systems can know all that information. But now we're going to have that information at people's fingertips and we're going to create new models, care models, as well as access, uh, that won't have to be, you know, living, having a structure, you know, within 30 minutes of, uh, an individual and, you know, rural

Jim Baer: Mississippi, which should obviously be huge. And I want to circle back to something you said about payor and pay for a second, which is. As someone who was very involved in billing and collecting for hospitals, as when I was a corporate lawyer and then now as a restructuring guy, when I get called in to fix companies that are struggling, one of the things I don't think everyone knows is what a black box insurance, billing and healthcare is meaning the coding and the thousands of pages back and forth and the games that insurance companies are able to play and the hospitals and they hold on to your Money as long as they can and then they finally come up with a percentage and they pay it out. Do you think AI may finally kind of put an end to the black box so that billing and collecting really becomes more mechanical and uh, enforces real change where again to put a pin on it. I mean I remember when, you know, a tube of Vaseline was $100 in the hospital because that's just how they build for things. Do you see AI finally changing this?

Annie Lamont: I do, I think in terms of claims or real time payments, I do think we're heading there this idea that pre op is done sort of at the end of a process as opposed to let's focus on the things that are egregious and let's focus on the actually, uh, having the right diagnosis in the first place, which leads to the right care, which leads to the right reimbursement. I mean those things, if we can get payers and providers more on the same page earlier, are going to reduce a lot of friction and cost in the system then um, I am encouraged by that.

Jim Baer: Again staying on this theme of kind of the financial part of the industry and AI coming in. But we all know because of, as you said, the big data and otherwise it's going to, it's going to take away time for these data centers to be built, the energy to be there to power them. If nothing quickly structurally changes, there's no major policy reform, no breakthrough in payment models. Where do you think the system cracks first and what's the most likely point of failure?

Annie Lamont: I think it's cracking already in Medicaid. It's absolutely crushing state budgets. The acceleration over the last two years has been extraordinary and obviously inflation in healthcare has been across the board high. But I would say in Medicaid budgets, you know, the issue is a couple of things. One, the expansion of the definition of autism. And then, and then there are games being played, I would say in terms of like accelerating, you know, there are some groups that are, you know, sending autism patients to other states where reimbursement's higher. I mean there are games being played. But I do think the expansion of the definition, the number of people that may or may not really, you know, should or shouldn't be on it. That's probably a third of the increase of the budgets in Medicaid. It's big drugs, 30 to 40%, uh, increase in expenses and some of that depending on states will be, uh, GLP1. So you know, as we bring down the cost of that, that will be better. I I am hopeful, actually. My, my own PCP said they were just at Disney World last week. And she's like, wow, noticeably thinner people at Disney World this year versus three years ago. I was like, well, that's encouraging because hopefully that leads to a healthier population. That's the goal. Right? So maybe, you know, like, maybe we're spending money to save money. And I, you know, we've said that a million times in health care and haven't proven that, and I sure hope that's true. But that's only part of it. I mean, I think the marketing. We had a spike in Connecticut after the super bowl. All the branded drugs that were marketing, and man, in Medicaid, Medicaid the next day, literally a, uh, massive spike in prescriptions as they were requesting, you know, all these different kinds of prescriptions and, you know, and branded. And they have to. And you know, we have a, like, you're more likely to get a branded drug sometimes in Medicaid than you are in your commercial plan. So, like focusing on generics and what the lowest cost drugs are that have the same effect. You know, these are, these are things we're, you know, like, I think the country's still working on in terms of, like, if we're gonna provide care, let's figure out how to provide it at the cheapest cost with the best outcomes. Specialty drugs, what a great innovation. I mean, so many things are amazingly powerful. I think if any innovation has really made an impact in the last 15 years, it's drugs. Starting with oncologies, there are a number of amazing drugs that have been usually helpful even in the orphan drug population. I mean, game changing, really expensive. You know, as a country, we've made that choice. And you, uh, know, on specialty drugs, maybe a fraction of drugs prescribed, but they are a vast majority of the spend right now. And I can't give you an answer to that. Like, how do we solve that problem? We don't want to discourage innovation. Right. Yet, you know, we say we can't afford it, but, you know, and other countries deal with it differently. They, they say, no, we're not going to cover it. You know, and Americans are not going to accept that. And I don't know if they should, but, uh, you know, like, there's a cost to that.

Jim Baer: Yeah, no, for sure. And look, at some point with the $39 trillion deficit, we're going to have to address it. And whether or not it's more and more inflation or making tough choices, which, which Congress has just not been willing

Annie Lamont: to do, not willing to do. And I think whether it's education or health care, thinking reform and making massive reform, it's really, it's really hard. Um, and unfortunately we just spend more money doing it as opposed to thinking about how to do it more cheaply, inexpensively. And I think we're just not incented to do that right now structurally.

Jim Baer: So speaking of incentives, let's talk about the engine underneath all this. Is the core problem in American healthcare fundamentally a misaligned incentives problem. And if so, where does that misalignment run deepest?

Annie Lamont: You know, if you think about the vast majority of spend, I mean again people like 10 years sit on top of the infrastructure, you know, the max they can get in most cases like 15%. So say they add 15% to the overall cost. The rest is in providing care and devices and drugs. Right. It's kind of that simple. So if most of the cost is in providers now, drugs have gone from 10 to 20% spend in the last decade. It's been, you know, like that is probably m much of the inflation. But on the provider, uh, side we, we pay people to do things right. We, we pay fee for service, drives the system 100% and we keep you know, talking about value based care, but there's very, very little of it. And as long as you're paying people to do things enough for outcomes, we don't measure outcomes at all in America. We, we say there's like on a hospital website or you're supposed to report, but nobody knows what the outcomes of their own providers are. It's all, it's 90% like word of mouth. And until we're paying for outcomes, you know, like we're going to get the same thing. Um, and until people are encouraged to sort of be more efficient, you know, it is my, it is my hope that we enable people to serve at the top of their license with AI and that you just naturally like we've invested in a NP nurse practitioner provider network that we're going to be expanding across the US and they can do so much and primary care is so challenged that if you can just that, you know, do that like have NPS more accessible, more available and empower them with AI and provide more information to them so they could do so much more and leverage them and leverage primary care docs, you know, to do more better, you know, then that should, instead of paying people more, I mean the reality is hopefully they can do a lot more with what they have.

Jim Baer: So as an investor and when you look at the Amount of money from private equity and venture that's gone into health care. Has the venture and PE investment improved the system or do you think it's distorted it?

Annie Lamont: Don't, you know, you're, I'm going to have a, you're going to, I'm going to show my bias here.

Jim Baer: That's okay.

Annie Lamont: I feel like the venture community has, you know they, there really, it really is about transformation. I mean what we're trying to do and you know like our mantra is if it, if something doesn't try to improve outcomes, access, lower costs, we're not investing in it. Like we just don't do that. And I think for most uh, VCs we are trying to tech enable things, we are trying to change things, we are trying to move to value based care. So I think there is uh, in general on the venture side a like improvement transformation. Now you could argue how much have we improved the last 20 years. But I do think with virtualization now we are, you know, there are consumer models now there are, there is virtualization expanding, you know, access for systems that does make it, you know, cheaper at the end of the day and creates more access. But pe, I don't know. I mean I think, you know, it depends. It's kind of like there are definitely cases where hospitals have not been run. I mean you could say HCA is a, like was a family owned business that had you know, multiple PE traction transactions going private, public, private. You know they're now a public company. They run the most efficient, they don't get 340B, you know, like drug benefit that most hospitals base their profit on. You know like they are incredibly efficient, well run system that provides good care and they do it responsibly. Um, so they're like I think an amazing example of you know, good care and they provide good, I think more Medicaid than not for profit systems in Texas for example. So uh, you know there are great examples, they're bad examples, I think autism, they're terrible examples of PE acquiring companies and then basically figuring out lots of different ways to charge more, to bring more people in and um, you know, move people one state to another because reimbursement's better. So um, they're good and bad examples everywhere and you know, not for profits on um, I can cite good and bad examples too.

Jim Baer: So when you look at, you're talking about things like autism, I mean when you look at that or you look at homelessness or you look at mental health in the country, you look at the whole Debate between using police to deal with people that have, you know, mental health issues. I mean, from a, from a societal perspective in terms of the, the care that's required to take care of these people. I mean, is the system got any strategy to deal with this onslaught of people that really have these, you know, illnesses that require actual, you know, either, you know, confinement or a hospital to go to or a nursing home to go to? I mean, there really needs to be hands on care for these people. Is the system even beginning to deal with that?

Annie Lamont: I think there, there are a number of models, uh, for hands on care. There's certainly more money than that forever. I mean, if you talk about an improvement, I mean, maybe there is more mental health and substance abuse than there's ever been. But if you went back 30 and 40 years and how we dealt with these people, that was a lot worse than it is now. I mean, you know, the institutionalization, um, the isolation, the lack of care was terrible. So I do think we've got lots of different models. We have some more virtual models even for some seriously ill that are supportive. Um, you know, there's inpatient psychare all over this country that's been invested in and some really good programs developed. So while it seems bleak, I actually think there's a lot, I mean, in the last, you know, 10 years, five years, I mean, obviously Covid brought, made us more, I think, more aware and able to talk to and certainly the younger, you know, like 20 year olds talking about why quite openly about seeing therapists and what their issues are and their friend who was suicidal and you know, that just didn't happen in an older generation. So I think we're making huge, uh, progress actually in terms of expanding models and increasing investment in mental health. And I will give a shout out, Dan Brillman is now running Medicaid and he ran a company, Unite Us, that combined looking at all the, it was all about social determinants of health. So I do think the administration understands the importance of homelessness, mental health, you know, food, uh, I don't want to say food insecurity because like the people that have food insecurity don't call it that. They just call it like starvation and lack of food. Um, and. But all of those things together impact, you know, individuals, healthcare and health. So it is, it is something that I do think systemically we're going to be looking at more and more as

Jim Baer: a society, but with an aging population and with people, for instance, whether or not it's dementia or other, you know, Alzheimer's. In terms of just the sheer number of people that need elder care, so to speak, we don't. It's not covered by insurance. And from a strategy perspective, from an investor perspective, do you see people thinking about how we're going to actually take care of these people that really do need personal care?

Annie Lamont: Again, I don't want to go back to technology because we're going to need humans. The reality is one of the reasons we hire more people in healthcare than any other industry last year was we need humans. And a lot of these people are caregivers. And, you know, a lot of those people are immigrants. So we should remember that. Um, and so I think that human touch is like, essential, but I also think it can be leveraged and will be leveraged by automation in the future. And I literally talked to a company this morning that is going into dementia units and, uh, in independent living and nursing homes and putting in technology to monitor patients so they know when they fall, they know when they're going to the bathroom too often at night that there's a problem. And having had both of my parents in dementia units and assisted living, you know, we had to get 24 by 7 care sitting with them because there's no way somebody can really monitor in one of those facilities that, uh, you know, care. And so I do think with the leverage of technology monitoring patients, then people know when somebody needs help as opposed to, you know, we are unintelligently having people monitor. Every three hours we're going to stop by that room, you know, like, that might be too late. You're also getting data on these individuals, like, oh, what is their, like what is the problem? They are, we, they are going to have a problem. And it could be, uh, you know, an orthopedic issue. It could be, you know, some other issue that we can get ahead of by actually in a blinded basis, um, like collecting data around their movement during the day.

Jim Baer: So now let's kind of talk about a subject that's near and dear to me, which is kind of this issue of, um, how do you deal with the financial stresses? So, for instance, if you're a big hospital chain and you have certain hospitals that are struggling, and you afford yourself a bankruptcy filing, for instance, and you spend three or four million dollars on administrative costs, you can theoretically afford that. But when you look at some of these regional hospitals that are really loaded up on a lot of debt and they're really, really struggling, do you see strategies, especially in these regulated industries, where, for instance, things, tools that we use in California, like assignments for the benefit of creditors, which are less expensive out of court ways of liquidating and restructuring a company. Do you see the need for kind of an out of court restructuring process where professionals come in and help these companies get their debt in a more manageable form? Because again, one of the changes we've seen over the last 15 years without a recession is that bankruptcy costs and administrative costs have just gone through the roof. There's a, there's a shortage of people doing restructuring because it hasn't been a sexy space for the last 15 years. And as an investor, you know, looking at these companies, what types of strategies or things are you seeing discussed that can actually help get some of these regional hospitals out of, you know, the, the debt spiral, so to speak?

Annie Lamont: Yeah, well, I think there, there are two sides to that. One, you're the lawyer, so you would know that's why better than I. But I do think from a regulatory point of view, we absolutely need it. Need to make it, uh, it's really judicial, regulatory, judicial. You know, we need to accelerate and make it easier and take it out of the court system and create a, you know, it should be mediated and negotiated, um, between the parties. It is, it is criminal what happens in terms of how long and the cost to reconcile these issues. So I, I do think that that absolutely could be, you know, should be changed. I think, you know, the other problem. It's also very hard to close a hospital system. And you can have in fairly dense areas, too many hospitals, but people are very attached to their local hospital and you, uh, know. So I, I think the problem is, unfortunately we, we do have too many hospitals. And you can't, you can't. It's like just politically, culturally, it's very hard to close systems. And so I, uh, you know, that's a political will question as to, you know, whether we, we can do it. And I do think the uh, you know, while I don't like. It's like, I like independent local hospitals, the reality is that there is a benefit to scale here and the right people have to own and scale. And there is a, there's a problem with being monopolists in a. But there is even more of a problem with an independent hospital that's not running efficiently. And the reality is there's so much that can be done in the next five years to run a hospital better and allocate resources. I have two hospitals locally that are both quite good. But why would they both compete in oncology? Why would they both Compete in cardiology. This is crazy. One should own one sector, one should own another. That we can't. It's really not probably great to have every capability in every hospital that are within 15 minutes of each other.

Jim Baer: Well, do you. And for instance, you talk about change from a regulatory or a judicial perspective. I mean one of the things I've seen successfully done is where you have sophisticated management, bring in consultants, where you actually negotiate with your creditors and you explain to them, look, we can file bankruptcy, but you're going to get zero and it's going to be incredibly expensive or we're worth more alive than dead. So let's stretch out your payments, take a discount or otherwise. Uh, are you seeing, you know, hospitals being sophisticated and bringing in people to actually help them negotiate down some of this debt that they're struggling with?

Annie Lamont: You know, I, that is again probably more your world. I mean we've never owned a hospital. I'm not inside the hospital. So I, I don't, I don't know from that aspect. I, I do know the state of Connecticut is, and now forgiving debt for especially paying off the debt that's been outstanding for, uh, individuals who can't afford to pay.

Jim Baer: So, and then, you know, when we look at the structural aspect of American healthcare today and if you look at kind of, you know, a wish list of things that you, if you could sit down with politicians and get done, I mean, what would you like to see? The one aspect that you really think could be done that would help the system the most?

Annie Lamont: Uh, there has to be a fundamental change in how we pay. I mean, reimbursement model is not working. How we think about paying people has to be based on outcomes and figuring out a structure for that and paying everyone, uh, in that way. Because right now we've tried to do value based care and uh, and then we have a fee for service system. You ask any CEO of any healthcare system, they've got to have, um, uh, a functional, profitable system. That's their responsibility. The Catholic nuns, uh, used to say, no money, no mission. So that's just the way it is. So I think the reality is if you moved everything to functioning in a different way and it was all based on outcomes, then people would behave differently and they get paid for that. And I think right now you, um, you know, like people are paid to do things and that's just a reality. And they're not bad people. It's just like the more, the more procedures you can drive, um, you know, the more profitable everybody is. So I do think we need to think about that. And then drugs, uh, is so complicated that I think the problem is I would take layers out of the drug system. I make it far more transparent. I think the reality is we've got, between the pharmaceutical firm and the individual that's getting the drug, you've got four or five layers of people that are taking cuts along the way and just figuring out a way to streamline that.

Jim Baer: From an insurance perspective, I mean, you've got insurance companies, you've got the government involved. You've, you've seen people talk about single pay systems. How do you actually structure where the payment system becomes consistent? I mean, what, what are the alternatives that actually get you there?

Annie Lamont: Well, I think. And we again don't. I mean, you gave me, I'm giving you the dream scenario. But from the government's perspective, you know, we don't have the political will to mandate, right. To fundamentally change, uh, how we, how we pay. CMMI has done some nice things in creating models. I think it is actually going to bubble up and I think it's beginning on the employer side in that what we're seeing in commercial is, um, paying for the alternative plans, uh, that are lowering cost. And they do that in different ways. But some call it narrow network, but it's really, there are many different ways to do it. Think about episodes of care. So a number of these firms have a version of this and these alternative health plans. And United has Surest and there's a company called Garner in New York that's working on this and Oxbridge and a number of other companies. But what they do is as an employee, if you opt in for one of these plans, you have an issue. You're going to be sent to a, a doctor and a network where they've already negotiated a rate. They know that this doctor has good outcomes and what it's going to cost. And so they got a specific rate for whatever issue you have or whatever procedure you're going to have. And I'll give you an example. I mean, hospital for special surgery, hss, you know, like unit cost high, but outcomes fantastic, uh, readmissions low. And so therefore. And they're least likely to say you need back surgery or surgery at all. So actually having them in your network can lower your costs. So they're actually in. And they're going to be in some of these narrow networks because they're so good. And the only problem there is, and they're trying to expand their capabilities and their approaches, you know, um, broadly, but the Reality is, if you can do that, that's lower. That's like, okay, you may be paying a surgeon more, but the outcomes are better at the end of the day because they've done all the right thing. They've said, no, you should go to PT or a physio. 70% of back surgeries don't work. Uh, they have fewer readmissions, and they do it right the first time. So, I mean, I think. And they're like other hospitals that do that. But it is thinking about, like, where are the best outcomes and ultimately where's the best, uh, the lowest cost because of outcomes and, and how people behave in terms of whether they're recommending surgery or not recommending, you know, something that's lower cost and just as effective.

Jim Baer: Well, and when you look at kind of all the discussions about rationing health care or incentives, I mean, one of the things that I've always noticed is whether or not it's car insurance or life insurance, they're actuarially based. I mean, there, there are, you know, there are. If you, if you have DUIs, you're going to pay more for car insurance. If you're a smoker, you're going to pay more for life insurance. How does this system work if we don't build those kind of incentives and actuarial, Actuarial models into health care?

Annie Lamont: I would like to incent people on the wellness side, that is just been proven to be extremely fraught. Right. Um, in terms of people's abilities to, um, you know, knowledge of what, how to exercise, you know, healthy eating, uh, all of those things. What is it, you know, like, genetics. Are we going to profile people for their genetic lottery? You know, like, I think, you know, you and I were probably given, like, good, healthy genetics, and not everybody's given that. So how do you punish somebody for that? You know, like. So I think it's very hard in healthcare to incent people. I do think, you know, look, employers incent people, you know, like, they, they do penalize people for smoking. Like, that has been allowed. Wait, has not been allowed. You can even send people to go on GLP1s if they've had a wage issue. I mean, the reality is, is it's working. So you maybe you haven't had to incent people. They're taking it. 25% of people that, uh, are eligible in terms of the categories of obesity, diabetes, et cetera for JLP1 are taking them right now. So we are, you know, we're making progress, I think, uh, on that Front, I would love, you know, I think the reality is, is what we're, you know, like the administration is trying to do, uh, in terms of food quality is great, but, you know, like, just taking dyes out of food is not going to happen. We have, you know, we have two problems. Lowest cost per consumers. They're struggling with affordability and food, and so they're going to go for the cheapest food. And the other problem is big business. Right. I mean, no, Trump's not going after big business that's producing a lot of processed food. It's just not happening. So you have the worried. Well, and those that can afford it, you know, eating well, you know, exercising well. Yeah. Then how do we expand that? Like, that would be a huge goal. How do we keep the population well, you know, we'd save so much money doing that. And I don't know. I hope Jill P. One's is a magic bullet.

Jim Baer: Well, and, and based on what you're saying in terms of Disneyland, it definitely seems like, I mean, people don't advertise it. They just, you know, a lot of people are using it silently and stuff. But. And it's so. It's hard to get the statistics, but it does seem like a lot of people are taking advantage of it.

Annie Lamont: Yeah, 100% it's effective. I guess one thing I'd like to talk about is the fda. Now, we don't invest directly in products, but we invest in all the services. We just invested in chai and drug design, AI and drug design, which I think is incredibly exciting and transformative. But I do think that we are in a deep crisis at this moment in this country that people don't even know yet. Because we need to be thinking differently about what we're doing in drug development. That has been one of our most innovative industries. We have owned the biotech, life science, pharmaceutical industry, drug development. And, uh, this country has been the last 20 years. There's a huge economic issue and a benefit to our population, even though expensive. And right now, the 60% of all R and D dollars from major firmware are going to China. They can do it more cheaply. Principally, they can do more cheaply. Um, and they're investing a lot of money in that. They've basically got cheap bodies. They're investing a lot in technology, their regulatory process. You can get into clinics a lot faster. And I do think the administration is aware, but it literally should be, you know, like a 91 1. We have got to figure out how to get clinicals to go faster. How to get preclinical processes to be faster to invest in drug design development in this country. Um, otherwise we are going to lose our industry. And it's, it is, I would say the one industry that we have, you know, one of the few industries we haven't had a major advantage of and have lost that or losing that.

Jim Baer: Which is interesting because I had not heard that. So in other words, even with the AI and ability, like what happened with warp speed and new vaccines and so forth, you're seeing a lot. I mean again we, we were leading the world right, in drug development and people come here for treatments. I have read about how people have gone to China, that there are these places where people can go and get special treatment in China. Now that, that's something I had not heard about. But the 911 is what's actually happening. I mean is it is what's changed that's made this shift?

Annie Lamont: I think what's changed is they've invested in R and D there, they've invested in services, they've opened up the clinical process, they've refined it. So I think it is, we are, we may still get the benefit of those drugs, but as an industry and an innovator, we're losing. You know, we are beginning to lose. And I would say, you know, so many of our major pharma companies are spending much more preclinical to go tonyman dollars in China. And so that's just something, it's hard. Uh, we're not gonna have the cheap bodies, but we do need to figure out how to do preclinicals, how to, how to foster and accelerate our clinical processes here in the US and that's something that the FDA does, does have a lot of influence on. And obviously NIH dollars, you know, if we focus on research, I mean we need to figure out how to accelerate um, research and innovation here and, and just do it in a more cost effective way. And I do think there's some great companies like Chai out there that are going to be transformative. It's just we, we need a uh, you know, sort of industrial focus and effort on that.

Jim Baer: It's interesting, you know, you're now making me think about this as a restructuring firm. We do a lot of work in biotech and I've noticed for instance, again, because a lot of the government reimbursement and just the venture capital, what I would call liquidity issues, there's no question that we have seen some, you know, 100, 200, $300 million of equity being washed out in some of these biotech firms in San Diego and Orange county, for instance, because the funding has just least in a sense in the last year, dried up. And, and, you know, there. It seems to me there's two aspects that there's the government black, you know, cutbacks, but there also is a unwillingness on the venture capital and private equity world to continue to invest. I. I've really seen a pullback. And we've been, like I said, we've been much busier in the healthcare biotech space than we were a year ago. Is that, I mean, again, is it. Is all these factors coming together at once?

Annie Lamont: I think all these factors are coming together at once. And I think there, there was obviously this is, you know, there's been a cycle for 30 years. There's sort of a mania. And when markets are up, uh, you know, these biotech companies get funded and, you know, probably half of them shouldn't have gotten funded. So. And then. And it's also a risky proposition, right? I mean, this is a, uh. You know, we did drug discovery and products and we founded Genzyme and Cephalon and Alexia and all those companies. You know, but the reality is just. It's binary, right? And, and so it's like the drug works or the drug doesn't work. Um, and so it is a, ah, it's, It's a frisky. It's a risky proposition. And money, I mean, from some of the same firms that are investing and these are also being invested in China. I have to say, it's, you know, there are alternatives.

Jim Baer: And, and do you think that some of that is just inevitable? Meaning, you know, we've got a pretty large economy, we've thrown a lot of money at healthcare, and we kind of own certain fields. And you know, again, it was like, you know, after World War II and when, when Europe was decimated and we, uh, were the only game in town. I mean, China is a, you know, huge country now with, with a large economy. Is some of this just inevitable in terms of our monopoly power is going to ultimately shift away?

Annie Lamont: Well, I think I, um. Look, nothing's. Nothing's inevitable, you know, I mean, I think through innovation. I mean, the reality is, I think it's just, you know, it's interesting you look at like, our GDP and where it's been, and everybody would assume as a percent of the, you know, world population, I mean, we're like, almost better than ever. So I would say we're. We're doing okay in terms of innovation in general in America and holding our own there. But, uh, it's not inevitable in terms of fda. What the things that we can do that we're not doing and need to do is really rethinking the whole FDA process, the whole approval process. Uh, and you know, obviously we can't have the nih like pull back on funding research. That would be

Jim Baer: Annie. This was terrific and really, really appreciated it.

Annie Lamont: Great. No fun doing it. You made it. You made it easy.

Jim Baer: Jim the Puck Venture Capital and Beyond is brought to you by CMEG Advisors. If you enjoyed the conversation today and haven't yet subscribed to our show, you can find us on YouTube, iTunes, Apple Podcasts and SoundCloud. Feel free to leave a review while you are there and maybe even a five star rating. You can also follow us on TikTok, Instagram, LinkedIn and YouTube for updates, highlights and more content from our team. Thanks for listening. We'll be back soon with a new episode.