Transcript of Healthcare Fixed: No Insurance Needed, Same Doctors, 60% Less - David Goldhill

Welcome to The Proven Podcast, where we don't care what you think, only what you can prove. America pays 40% of the world's healthcare bill. We're 3% of the population. Today, David Goldhill, founder and CEO of Sesame, joins the show to break down why that happens, why the system is broken, and what he's building to fix it. The show starts now. Hey everybody, welcome back. I'm excited for this one. David, thank you for joining us.

Great to be here.

So for the 4 or 5 people out there who don't know who you are, could you kind of explain who you are, a little bit about your background, and then go from there?

Please don't tell me that's 100% of your audience.

That's it. That's it.

I know it isn't. But for the many people who don't know who I am, I'm David Goldhill. I'm the founder and CEO of Sesame, sesamecare.com, which is a marketplace for healthcare services. There you go.

So what have you done before you got to Sesame? So people are like, all right, what are we walking into? What are your claims to fame?

Well, I don't know I have any claims to fame, but I did have a long career as an entertainment executive, mostly in television. I ran television at Universal Studios. I ran the Game Show Network. I built a television network in Russia, which is now a very popular place, and made a bunch, distributed a bunch of television shows. Also helped run a movie theater chain. So your classic entertainment executive goes to healthcare.

Yeah, I've heard it so many times because our healthcare system works oh so well right now. It's one of the things that you and I are completely aligned on, is that healthcare is just a show. And it's my own show and I should be able to curse. But yeah, sure. So I should.

Yeah.

So in this situation, healthcare is ridiculously broken. And I wanted to talk about that because we pay more than anyone else and we subsidize the entire world. And you and I have had this conversation before we start recording. Let's get the audience kind of caught up on that. When we talk about that, we're subsidizing the rest of the world. Let's walk through that.

Well, it's a little complex because it's not what we first see, right? What we first see is people around the world seem to get healthcare for a lot less money than we do. And many of those systems, particularly in Western Europe, feel more universal and easier to access than ours. That's terrible. Underneath it is something much more complicated, which is the United States has the only free enterprise healthcare system on earth where we don't control prices and we don't have Hospitals and doctors as either employees of the state or owned by the state. And a lot of people think that's bad, but the interesting thing is that's why almost all of the innovation in healthcare on Earth is designed for the American market. Every innovator, no matter where they are, makes the bulk of their money selling to Americans in the American healthcare system, whether it's new drugs, which gets a lot of attention, or new devices or new software. Even new treatment protocols tend to come from people practicing first in America. Why? Because you're free to do so. You have an incentive to do so. Even your local doctor is probably competing against somebody, so she's more likely to buy the latest equipment and get a start to that manufacturer trying to sell something.

As a result of this, and again, not easy, not intuitive, basically the quality of healthcare everywhere else on Earth depends on the United States. The example I like to use from my own industry is you can go to a movie theater in Brussels and you can see the latest Marvel superhero film in a fantastic screen and a comfortable chair and great concessions and priced the same. And you can say, if you've been to a crappy movie theater in the United States, boy, the movie industry in Brussels is much better than the movie industry in the United States. And you'd be wrong. Because all of the capital investment, all of the risk, all of the complexity is American there, and it's even more so in healthcare.

So when we have that, the audience is going to say, because we hear this all the time, and for those of you catching up, I spent 8 years in hospice watching people die. So regrettably, I'm very familiar with this world. They're going to say, hey, the same treatment in another country costs fractions of this. Where do we dispel that? How do we face that and face that argument?

Yeah. So it's very difficult. I mean, I sort of compare it a little bit to NATO, which is we're defending Europe in NATO. The European countries spend almost nothing knowing the United States is going to fundamentally be the force defending them. So what do we do? We can say, we're not going to defend you, but that's not in our interests. We can say, defend yourselves, but they're all relatively small. And we've never been able to figure that out in NATO. Healthcare, strangely enough, is a bit like NATO. The quality of care on Earth depends primarily on the American market. Just to put some numbers on it, the United States is 40% of world healthcare spending. We're 3% of world population, 40% of world healthcare spend. No other country matters. Systems we talk about as being equivalent of 3, 4% of world healthcare spend, they're almost insignificant. So the US is driving the most important thing in healthcare, which is the quality and level of care innovation. And innovation, finding new treatments, new cures is what healthcare is about. We drive that, but we do it by bearing very, very high prices and all of the risk and reward of investment.

It's been a tough nut to crack. The one thing that I'm sorry, let me just stop there.

Yeah, you are. So I think, you know, what we talked about it before, you know, one of the great things about having the off-record calls is we go back and forth and we say things that we probably shouldn't say, but makes it fun. But it's not recorded. One of the things, you know, we talked about is like, yeah, we can reverse this. You know, we can sit there and say, you know what, we're not going to be 40%. We're not going to spend all that money. Not a problem. We're just going to let all of our people die. And we're like, well, we're not going to do that because no one else is going to kind of step up and take that role. If we stop cutting the funding collectively across the world, it just drops because we're so used to this. I think it's a byproduct of what we did after World War II, where we said, listen, I don't care who you are, where you are in the world, we're going to make sure that you can ship anything from one side of the planet to the other side of the planet, and we're going to protect the oceans.

We're going to make sure you can do that. That was the idea of us. Be a part of us. We're going to protect that. We're going to go against communism.

We're going to— here we are, America.

We're going to do this. And we changed that for the entire world. But we've done that, at your point, is to NATO or to medicine, that we've stepped into the role of like, hey, we're going to take the hit here. We're going to pay all of this and we're going to do all this because we want this certain level thing. But we are at a point where the market doesn't fit that anymore because going in and going and getting a pill somewhere else costs $1. Here it costs $1,200. That system is trying— is creating this headbunny. And there's a specific reason about that. I'd love for you to talk about how that— why the system is completely and utterly broken and kind of how you're trying to fix it.

Yeah. So On the one hand, it's a great thing that America benefits more from medical innovation than anyone else. So therefore, it pays more than anyone else. Not a great thing we're paying 70, 80% of the cost of innovation and getting, you know, 3, 4, or 5% of the benefit, maybe 10% of the benefit.

Right.

That's an imbalance. The question is, can you solve for one problem, which is Americans are paying way too much for healthcare, without undermining this other great thing, which is we're the engine of world healthcare progress. And just to be clear, because some people often confuse this, it's not that everything is invented in America, far from it. It's that everything is invented for America. So researchers all over the world, their business model is we'll sell to the Americans because that's where we'll get 60, 70% of our profit from. And if we can then sell to the British and all the rest. So the issue becomes exactly as you frame it, which is can we get at this one thing, which is as People were paying too high a price. And the impact on healthcare, on our finances, on people's affordability, on the choices they have to make in their lives has become enormous, as you would expect when something went from 4 to 5% of GDP to almost 20% of GDP in 3 generations. It's extraordinary.

Absolutely.

So this is a problem we have to solve without destroying the engine of innovation. If we just go to a sort of socialist system, a British-style system, a Canadian system, we'll simply destroy the engine of innovation. There'll be no profits, then innovation, and without American profits and innovation, there won't be any. So we can't do that. What can we do? And so the argument that I think I and others have made is that we can bring market forces into a lot of things in healthcare that bring competition, around buying and selling and can drive price down. I mean, you know, there may be an argument that that pill should be $1,200 that first year when it's saving lives. Kind of hard to make that argument if you're out 10 years and there should be competitors. And that's something where—

Yeah, we talked about this before and, you know, it's like the first pill cost $9 million. The second pill cost a penny. The problem is the first one to get it right costs 9 because it took all the research and the studies and doing all that. I think where we'll get pushback is the idea that, well, yeah, it should cost everyone. They should also burden a great deal of this. They should pay for some of those costs. And how do we shift that? Because I don't think it's just— again, I don't think it's just a medical issue. It's across the board. To your point with NATO, we have this redynamic.

Yeah, I mean, you're exactly right. Interestingly, the point you made is usually this is a tough business model because if I've got a business where the first one costs $900 million because I had to do all the regulatory testing and all of the applications for approval and developing the drug and all the ones that failed, and the second pill is a penny to produce, that's usually a terrible business model. Right? In lots of other industries, that's a horrible business model. In healthcare, it works. Why does it work? Well, the reason it works is because instead of having people compete for customer business, we have third-party payers pay for everything. And what do they do? They walk in and say, what's a fair price? You don't want a fair price. That's not how capitalism works. What I want is a competitive price.

Correct.

And there's almost no corner of healthcare in which we let good old-fashioned competition drive people's prices down to marginal cost. And so what should be a bad business model winds up being too good a business model. They're protected on price.

And I think this is where people are like, oh, are you a Republican or a Democrat or a liberal or conservative? Are you a capitalist or are you a socialist? And whenever I get asked that, because I get asked it all the time, my answer is always yes. Well, I'm sorry, what? I'm like, it depends on the topic. It depends on where we are. There's different structure, different folks. And we as Americans are capitalist or communist or socialist or liberals or conservatives. We're all of it. It just depends on what we're talking about. And I think there's a time and a place for everything. And I think the medical environment has gotten way out of control. I've taken lots of clients who are doctors. We've scaled them. They're like, I can't afford this. I just, I cannot survive anymore. I've got to go to a concierge-based environment or forget it. I'm just going to do a roll-up and we're going to take all these practices together. I'm going to exit. I'm going to go buy a bunch of Turos and I'm going to go flood the fleet because it's just a broken model on every level.

So I think your approach to it, this idea of bringing more capitalist competition-based, is viable, but I don't think the audience would fully understand that. So I have the benefit of talking to you. Can you explain what that model is and then in turn why we don't think the government can do it on their own anymore?

Yeah. And I think, you know, your, your point about being ideologically promiscuous— I hope it's okay if I call you promiscuous.

Okay. Don't say it too loud.

It works really well in healthcare. Because what a lot of healthcare experts talk about is what's the one perfect way to pay for healthcare? Well, healthcare's 20% of GDP. It includes things from drugs that have been in existence for 80, 90 years to miracle personalized cures that are going to be designed just for you. It includes things from the most complex surgeries to a regular checkup that involves sitting with someone for 10 minutes and talking. The range of human activities and goods and services in that 20% of GDP are gigantic. And the idea that they should all be paid for the same way, should we use third-party insurance, should we use— is absurd on its face.

Yes.

Some of those things you're going to get relatively little benefit from competition. Some of those things should be fully competitive. And the same way about the safety net aspect of it. We certainly don't want people starving in America, and we have all sorts of ways to make sure that people who don't have food get food. We have food banks, we have food stamps, we have explicit subsidies, but we don't say because of that, Michelin-starred restaurants should be paid for the same way. We're okay with a broad variety of ways of paying from barbecues and picnics and school lunches and luxury meals and That's fine. And we understand that complexity everywhere in the economy except for healthcare, where our experts sit around and say, what's the one best way to pay for everything?

Right.

The biggest thing I'm saying is everything shouldn't be done the same way. There are some things insurance does really, really well, which is cover you against unusual risk, something major, something rare, something— but before you say, well, every healthcare condition I have is unusual and rare, I had open-heart surgery a couple years ago, and the price of it was something like $120,000, $130,000, which is a gigantic amount of money for everybody, right?

Right.

Except my family insurance policy costs $35,000 a year. So roughly every 4 years I pay for an open-heart surgery, and I guarantee you we're not using one every 4 years. So here's someone who had a major thing that the insurance system is designed to protect, and insurance is still a terrible deal for me. And we don't like to think about those numbers. We don't like to do that math. It's uncomfortable to think about it, but it is why healthcare's so expensive.

I think those are the numbers that are going to get the audience the most excited. You and I talked about these numbers, how it's radically changed, not only in the last year, but in the last decade, in the last The few decades running up to it. You deep dive into this pretty intensely. Can you talk about those numbers more about how things are changing and the numbers that a single family is trying to deal with if they're employed versus unemployed and how it's astronomically bad?

It is astronomical. I mean, when I wrote a book on healthcare, Catastrophic Care, in 2012, I looked at what an employee starting at my company would put into the healthcare system over her lifetime. And I just included everything, her share of premiums, our share of premiums. Our share of premiums just come out of what we would pay her. So it's like that. But Medicare taxes, Medicare premiums, just everything out-of-pocket, just estimated over a lifetime. And I assumed she didn't get really sick and I assumed she had a couple kids and had a partner, but that the partner didn't work. And In 2012, the amount she would put into the healthcare system over her lifetime was $1.2 million into the healthcare system. There are very, very, very few treatments that can absorb anywhere near that type of spend. Well, where does it go? Well, a very large part of it, a shocking large part of it goes to administer the payment system, which costs somewhere between 10% and 15% directly of the cost of care, which is Astonishing. Several thousand dollars a year. And at over 80 years of life, you're paying hundreds of thousands of dollars for the benefit of a third-party payment system just for its operations.

But even beyond that, the distortion that third-party payment creates is enormous because it encourages people to consume things they otherwise would not. We've all been through this. You have an auto accident, the first thing that guy asks you is, is this an insurance job or not? Are you paying for it out of pocket? Because that's a completely different price. The biggest thing you have, and when I say this, people say, but, but, and then they think about it and they realize it's right. Nobody in the healthcare system can make more money, can be more profitable by lowering their prices. So that's not true in any other business. And the reason for that isn't because people wouldn't be happy to have lower prices and competition. It's because third-party payment keeps up the level of prices and determines how many customers you have. And so there's no Costco of healthcare yet, right? There's no Walmart of healthcare. There's no, you know, none of the competition we see in anything else. And for a lot of services, there could be, not for all of them, but for a lot.

And I think this is, that goes back to your point. Things are changing. I don't think they're changing fast enough, but, you know, I, I get— I've had, because I grew up in Florida and we have tons of mold, I get sinus infections. So to get whatever spray or whatever it is that I would need to offset that, it used to be extremely expensive. Now, and I'm not plugging Walmart in any way, shape, or form, I was like, hey Walmart, I need this. Like, oh yeah, it's $4. I'm like, I'm sorry, what just happened? So there are, there is movement. There are, there are things that are changing. But I also noticed that when you work, because I've worked with a lot of doctors, there is a lot of downtime. There is a lot of doing their patients, they're trying to run them through and they're trying to do all this. But there are pockets depending on what type they do with practicing, not a GP normally. But when they're doing this, there is these pockets of downtime where they could monetize that and they could go into it and you could do it. And it was something that you brought up and I think is a core part of your business is we have these things where you have an audience that desperately needs fulfillment and you have someone who's literally just sitting there at his desk like, I can fulfill because when I get sinus infections now, I don't go see my doctor.

Yeah.

I'm very blessed with the insurance I have. I just do Teladoc and I get on there like, hey, I'm like, just pull up my records. Like, oh, you have a sinus infection. I'm like, oh, they're like, okay, have fun. We're going to send it over. And that doesn't cost me much. I don't have to do that. But there are doctors who are extremely elite. And I want to talk about how AI is going to change medical because that's the thing that I'm the most excited to talk about for our call. But walk me through that into what Sesame does that does really well.

Yeah. So I think that's the foundation of Sesame, which is there's a lot more spare capacity in the healthcare system than we often see. And so what Sesame does is we list mostly consultations and appointments with doctors, but some other services, some procedures, labs, diagnostics, et cetera, at cash prices. And the physicians themselves or the clinics, or some cases hospitals, just put services on our marketplace at a cash price with a specific time. And the patient buys it. And the interesting thing about Sesame is that those prices are much, much lower than the prices that insurers pay. And one of the theories in healthcare is, oh, these big insurers can drive prices down and Medicare and Medicaid drive— we don't tell providers what to charge, but they have this basic principle we all know, which is, if I want to get patients, I got to lead with price. Right.

Because that's bringing the capitalism in.

It's bringing the capitalism, but it's also just bringing in normalcy, right? Which is, look, we just saw this with GLP-1s, with weight loss drugs. The price of weight loss drugs had declined in the last 3 years because insurers didn't cover them. And so if you were Novo and Lilly, you wanted to sell them, I had to sell them direct to a consumer. A couple of other companies sold compound versions of their drugs directly to consumers. Guess what happened to prices? And if you listen to the way politicians and experts talked about weight loss drugs 3 years ago, it was, these guys are going to keep their prices up. If we don't cover it with insurance, people won't be able to afford it. People won't get the benefit of these new drugs. What happened? The insurers didn't cover them and the prices came down. There's an important lesson to that. It's a lesson we refuse to learn, which is that healthcare may not be so different from everything else because it's healthcare. Healthcare may be so different from everything else because we've structured it in such a crazy and bizarre way.

I think we are having to be forced to listen to it, though, at this point, because we're in a situation where it's so much of GDP and it's so unaffordable that things are starting to reverse. Because there's many people I know who are just like, I'm just not going to have insurance. I'll just deal with it and we'll figure it out. And that's not a healthy model either, because we know how much that costs above and beyond if you're not getting the overall treatment. And we also don't reward it properly. We talk about AI, and for those of you playing at home, AI does not mean artificial intelligence. AI does mean always incorrect. There's this fear that AI is going to wipe out everything, that it is a— that AI is to humanity as the meteor was to dinosaurs, and that one of the things it's going to go after specifically is healthcare. And it's one of those things that you and I, even on our pre-call, I had an opinion. You were like, no, I don't see how it's going to go with that. And we had this little disagreement because I think AI is going to be this little thing in that you walk in, you put your finger down, it takes your blood test, and then, all right, congratulations, you have Ebola and your head's going to explode in 20 minutes.

I'm like, oh, okay. And then Amazon drops a package in and I eat it and I'm not dead. So that's the view of where it's going to go. And there was this idea of medicine is now no longer geo-locked. It was once something that you and I were talking about. I'd love to bring the audience into that conversation. So walk me through what you think AI is going to do, and then what we're talking about with geolocked?

Well, I don't think AI is going to destroy and eliminate humanity, but obviously if it did, that would solve the problem of healthcare costs.

We fixed it.

Beyond that, yeah, done. Next.

Done.

Beyond that, I think AI is a great example of how healthcare is structured in such a strange way, right? There's a vision of AI that says we can meaningfully improve Diagnostic results. We can meaningfully improve how doctors practice, how patients' records are kept, and how automatic our ability to treat them for the variety of conditions and define things are. You can paint an AI-driven paradise in which costs decline, data improves, and ultimately outcomes improve. New drugs are created, new treatments are created, and they're more personalized. That's very possible. And we can all see that. We can all see that vision. And doctors who look at AI as something other than as Luddites say, this could really improve the way I practice medicine and help patients. To date, the biggest impact on AI on healthcare has been in revenue management, period, full stop, because you can't get away. So the revenue management is the negotiation between providers and insurers over to what a provider should get paid. That's where it's been used, And what we see at CMS is AI providers saying, hey, we need a layer of skim added because we're bringing AI to this.

In other words, the exact opposite of what's happening in the rest of the economy.

Right.

And it's a reminder that economic incentives are what rule how new technologies get incorporated. You need to make a case of, here's how AI is going to create a new type of healthcare company that could win customer dollars. And then remember who the customers are. They're insurers and governments. They're not you and me.

And that's important. And that's really important. And I think it's a differentiation between what Sesame does and what everybody else does, where Sesame's customer is the consumer, where most health insurance and most health providers, the customer is the provider. It's like, oh, you're Blue Cross Blue Shield, we know how to deal with you. You're Aetna or whatever the heck it is. We view it as that. And that's a huge differentiation because when we talk about innovation and to bring the audience along with this story. Walmart did not decide to bring organic foods into their stores until they saw that there was a profit to do so. When their consumers were doing it with their wallets, saying, I want to buy organic, you don't have organic, then Walmart decided, oh, we're going to be organic and we're going to protect the environment. They're not protecting the environment. They're not— they're driven by profit, period, full stop. And I think people don't understand that because you have to identify who the consumer is.

It's such a great metaphor because so many people, I go to lots of healthcare conferences. They're certainly a lot more fun than the old entertainment conferences I used to go to. The parties are better, the celebrities are better. But no, I've given up so much to do this. I want you to know that.

Yeah.

But, you know—

I mean, I'm in LA right now, so I'm like, what are you talking about? I was just out in LA. I'm like, what are you, mad?

Anyway. I may well have been mad to do this, but Yes. But your point is exactly right, which is that people at healthcare conferences say, okay, we're having cost-saving technologies exist, so prices will come down. And you're sitting there going, yeah, that's not what happens. That's not what happens. Right? It's the business that causes us to do that. Sesame has 3 types of customers. We have people who don't have insurance at all, might have no coverage. We have people who have very high deductibles or high deductibles and are managing the deductible part of their spend, which for most families now, is pretty much all of their annual spend.

Yes.

And then we have a third type of customer, which is somebody, and this sounds kind of crazy, who's basically indifferent as to the price of routine services and wants it easy and fast and says, I don't care about not using my insurance. This is what I pay for a haircut.

And I can speak to that because that's me. Like, I have very good insurance with Blue Cross Blue Shield. I've had it for a very long time. It costs me an astronomical amount of money. I just, it's, it's, more than a damn mortgage payment sometimes. I'm just like, whatever, it is what it is. But when I want to get something done, I want to get it now. I don't want to wait. I want to click a button.

And so one of the remarkable things for us, and I'd love to take more credit for it, but I think it says more about normalcy than anything else. Sesame has 95% patient satisfaction rates. We have NPSs in the 80s, Trustpilots in the high 4s. Why? It's our providers. We're not the ones providing care. We're a marketplace for providers to list. But if you're a provider listing on Sesame, you know that you've got to satisfy a patient as to ease of use, convenience, showing up on time, price, doing what you said you were going to do, and follow-up, and the data kept. You're just driven by normal things. And compare it to the rest of the healthcare experience that most of us have, and it's an extraordinary difference. And it's extraordinary just by being normal.

Yeah, there's a— and I think this normalcy is important to exercise this. So there's a, there's a place in Miami, it's called Joe's, and it is the most profitable restaurant in the world. It's called Joe's Crab House. And my family goes there. We've gone there for years. I mean, my family's from South Florida. In order to get a table, you have to walk into concierge and you hand them $100. That's before you even get to sit down. That's just the game. It's how the game's played. And then the prices of the crabs are Astronomically more than they should be and all that, but you're doing it. But that's the game. And as long as you know that those are the rules in the game, you don't show up to a football game wearing ice skates. You don't go to Joe's without having to ice your way in. And regrettably, in the healthcare system, we haven't had this ability to pay to play. We haven't had the ability to cut out our insurance companies without it just destroying us. And it's one of the things, and it's probably the main reason I wanted to bring you on, and the fact that we hate each other.

We wanted to come in and we wanted to talk about what that looks like. Because if I want to have a certain level of treatment, whatever it is, I want to be able to go to a website and click, click, and then it's there. And it's ironically not costing me as much as if I went through my health provider, which is just mind-blowing for most people.

So the real reason you had me on is because the year I lived in Miami, I lived one block from Joe's. And I can actually extend your analogy because it's really good. Joe's realized at some point, 10, 15, 20 years ago, that there was a limit to their business model. Very high price, sit-down. There was only so many diners they could accept. So what'd they do? They built Joe's Takeaway next door.

Yep. That takeaway.

Yep. I have not been to Joe's the restaurant in 15 years. Like most people who are there regularly and not looking for a big night out, I go to Joe's Takeaway. What happens at Joe's Takeaway? I can get the really expensive stone crabs. At a really expensive price, but they're not limited by how many people they could serve.

Right.

It doesn't have to be tablecloth service and all the rest. And you look at that and you say, well, could we have that in healthcare? And then you remember healthcare's tens of thousands of SKUs. What we've been lacking in healthcare is the competitive urge to serve different types of customers because there's been 3 customers. Insurers, Medicare, and state Medicaid agencies. And those 3 customers actually don't demand the level of innovation that 330 million customers demand. But interestingly, those 3 customers also don't really well match what human beings need, the diversity of what works for us. I've made the argument that healthcare is too complex to be served by government.

Me too.

And the traditional expert argument is it's too complex to be a normal market. Now, I do think government's got a big role to play in healthcare, but I actually think markets will drive innovation around service. Let me use another example you just used, and Sesame's taken enormous advantage of this. Telemedicine and remote medicine generally are going to be extraordinarily disruptive to healthcare if we allow, because—

Yes.

The number of things a doctor needs to physically be in a room Or even lay hands on a patient to diagnose, look, or monitor is shrinking.

Yes.

And we're even getting to the point where we can see robotics. There's robotic surgeries being done across different continents. Now, when you think about what remote really means in terms of bringing the cost of care down, the resource cost of care down, it's gigantic. The need to see a doctor By the way, it doesn't just create difficulty for having to maintain offices and having to— but the patient's got to lose half a day at work and take care of childcare or parent care. It's enormous amounts of costs being taken out of the system. What I've argued is we need a healthcare economy that incents those costs to be taken out and to have it reflected in price.

Yes.

When you have cost plus payers, whether it's insurers who get 15% of the amount spent or Medicare that has no actual budget and can spend whatever it wants, you're not going to drive that type of innovation. So places like Sesame does. So on Sesame, you know, if you don't need to be in person, the doctor's happy to see you by video. You are happier to be seen by video. Costs have been taken out of the system and it's reflected in the price.

It's very much like this podcast. You don't know if I'm wearing pants or not because I didn't have to go to the studio. No, I think this is where we talked about before regarding the geolocation.

We were allowed to wear pants to this? You didn't tell me that.

See, for everyone who's not watching this, we're both naked. So this is where we talked about geolocked. And I mean this in the nicest way possible. You're talking about your travels. I love Switzerland more than I could possibly tell you. There are great doctors in Switzerland. There really are. There are great doctors, I'm sure, all over the world, but predominantly the best doctors out there are here. And now those doctors can literally turn on a webcam and service and be in support to anybody, anywhere, ever. And that changes how we look at healthcare completely. Because in the past it was, well, I know you've got a great doctor in New York, but I'm down here in South Florida. I can't get to your doctor, so I'm going to have to deal with this schmuck that lives down here. That's going away. We're getting ourselves in an environment where that's no longer a problem. where I can simply connect to you and we can do it remotely. And now I don't have to be under your plan or with your provider or anything else. That's going to change the market. It's going to make things easier to do because God knows we know the government can't do this.

Yeah. I mean, I think so. I share that radical vision. I mean, I think you're right that changes are going to be far beyond what people think. All of these national health systems, are based on helping people pay for care, but the way they work is that they've been able to geofence who could provide care. And I think that's going to change. I think no matter where you are in the world, you don't want to see the best oncologist in your neighborhood. You want to see the best oncologist you can possibly see for your condition. And we'll have to figure out ways for those people, instead of having a patient panel of a few hundred or a few thousand, to have tens and hundreds of thousands in different pyramid structures under them and probably involving AI and technology. But the most important thing I think about that is that these are business models where you've got declining marginal cost of care.

Yes.

And the question we should be asking, because I think we've had declining marginal cost of care for 20 years, is how do we make sure that as the marginal cost of care declines, it's reflected in the price we pay. My belief is if we're going to rely on governments to pay the price, it won't work because they will simply out—

I don't think that's a belief, David. That's not a belief. We've seen it. We've already seen for 20-plus years, for decades now, that that hasn't been the case, that it's only increased and it's getting worse and worse and worse. And it's not that it's just getting worse because, like, oh, it's going up, therefore the doctors are making all this money.

Doctors are broke.

And I mean this in the nicest way possible. I've been working with them for 2 decades. Doctors don't make what they used to make. They're, they're nickeled and dimed and their insurance is astronomical. So most of the doctors I know who have been doing it for a long time come to me and they're like, hey, how do you exit me out? Because I'm done. I can't do this anymore. I would make more money if I went and bought, you know, 3 apartment complexes and I'd make more rev. So it's not just an opinion. We know it's not working anymore.

So everyone, so if you're in the audience, you are used to hearing the cost of healthcare invariably And the more— the better we get at treatment, the better we get at science, the more we bring in advanced technologies, the more personalized we get, it's going to get more and more and more expensive and eventually run out of money. And then think about what you just said, Charles, which is if you look at doctors' incomes, and it's really for the last generation, they've been flat, in some cases down with inflation. If you look at what's happened with hospitals, the average number of days a patient spends in the hospital have been declining. finding meaningfully almost no matter what they're diagnosed with. If you look at the commanding heights of care, they've moved from things that were surgical and labor-intensive almost entirely to pharmaceuticals, which have a very low, in some cases zero marginal cost of production. Your, you know, the first pill is $900 million, the second pill costs a penny is true. So all of those things have happened in the last 20 years. And yet the price of care keeps going up.

Correct.

And it shouldn't. I mean, what you and I are saying is that wasn't necessary. That's not about healthcare. That's about how healthcare is paid for. Because the reality is in any other industry where we see those things happening, prices decline. And they didn't decline in healthcare, I would argue, because the payment system prevented it from. And what we're doing in Sesame is saying, okay, for this corner of healthcare, Cash-paying customers. Let's look what normal looks like and what happens. Prices decline.

Yeah.

And service is fantastic and quality is regarded as very good. And patients are helped because most of the people on Sesame are very price sensitive and are making tough decisions about affordability and what they're going to be able to pay for their family. And the idea that healthcare treatment should invariably go up and up and up and up, Is a disastrous one. Yeah.

And people shouldn't have to make that choice. Do I eat or do I get my kid his meds? We shouldn't live in a world that that even exists. And what we're trying to do is we're trying to pivot that. I remember when I was working at hospice, the average stay, the break-even point was, I think, 6.5 days for a patient to come in when they were doing inpatient care. It was 6.5 days. You get them there, we get them to 2 weeks. Hey, muzzle where everyone's making money. The person has better quality, not quantity of life, but better quality of life. Well, then VITAS came in and I was working for a not-for-profit and VITAS came in and the doctors started realizing, hey, you know, we could squeeze a little bit more out of this because again, they're just trying to make their nut and survive. And the patients went from being there for 2 weeks to being there for 47 hours. That was the average intake that we would have when we would get a patient. The person would be down to 47 hours and we left. It was less than 16 hours because people were holding on to them to that point.

So they were transferring and taking every dollar out. That's a broken system. That's an absolutely broken system and it's not, there's no humanity to it.

And while that has absolutely no humanity to it and just gives you the chills to think about, it's interesting that hospice, when Medicare first started covering it, had the opposite problem. They were paying per day and people were taking hospice patients who weren't really dying. And Medicare had to extend a maximum number of days in hospice. And some of the hospice companies were keeping patients for the maximum number of days and then discharging them. Because they were still alive. And neither of it is a good human response. And this is something, again, for people at home who think there's a fundamental difference between capitalism and serving people well, and that's why it's scary to think of more capitalism or more markets is probably a better way to put it in healthcare. These results are not great results. Unfortunately, when you have governments run these things, they have to have relatively simple one-size-fits-all rules. And here's the thing about healthcare. When we invented these systems in the mid-20th century, one size fits all, probably okay. There wasn't a lot healthcare could do. One size fits all, good.

Right.

Now it's catastrophic for a lot of families because it means that patients' specific needs are not being addressed. They're being driven by a rule. That's not good. And interestingly, as we get better at What used to be intelligence is now artificial intelligence. We have the ability to serve people in a much more personalized way if we give the economic incentives to do so.

And I would love to sit there and completely bash, okay, it's the government and how horrible the government's done it. And it's these healthcare providers and the insurance providers and look how bad they are and yada, yada. I will give an example that I will take no credit for. I was at an event and this individual, and I'm going to clear all the names and the nouns off of this, but basically said, okay, the average number of people that were on welfare in this specific environment, that kids with 5 kids was— that was the average that they had. The people who were on the system, they had 5 kids. And then they saw this radical change in less than 24 months that it rocked up to 6. And they're like, what the hell happened? How did we go from the average of 5 kids to 6 kids? And what happened was the plan said, oh, we'll cover 6 kids. Like, oh, well, that's the case. Mazel. So they went and had another kid because they drop out another 40 to $60K in a year or whatever the numbers are. And I think that speaks to humanity as a whole.

It's not always the system. It isn't always government. Sometimes we as humans kind of suck and we kind of abuse the system as well. So being able to face that as well, because it's not a single pill solution, it isn't a binary solution. It's not black or white. It's like, hey, we've got to get some gray in here.

Yeah. And I think that's I mean, I think that tone is so important because I'm personally, I'm someone who doesn't believe in villains, which is why I've made terrible films and televisions. But I don't just— but no, I just, that's not what, you know, the government's not evil, right? People who work in the government are trying to do well. People who work at insurance companies overwhelmingly are trying to do well. It's the problem is Incentives always win. And we made a mistake in thinking that mid-20th century healthcare is what healthcare would always be like, right? When there were only a handful of things healthcare could do well, most of the stuff that costs money was sort of urgent and pretty rare. And so we said, you know what, we'll fund everything and we'll fund it like insurance because that covers the bulk of anything anyway. Well, guess what? We're coming up on a world where the bulk of healthcare spend would've been seen in previous generations as preventive. It's managing chronic conditions and metrics you have that suggest you're going to have health issues down the road. My heart surgery was preventive in a sense.

I had a valve that was going to fail. Didn't fail, was going to fail some period of time, right? That's what the bulk of it is now. It's far more personalized. We are We each have far more information than we ever did about our health, far greater ability to deal with it, and a top-down insurance-based system no longer matches healthcare need.

Correct.

And so you've got all of these people trying the best they can, and I do believe that, to fit this system in something that's 80 years old and out of date. And that's the problem. It's not the evil this guy and the evil that guy. I know it's fun and easy to talk about that, But everyone's trying to do their best. You just cannot get a square peg to fit in a round hole. And that's our healthcare and payment systems today.

It's outdated and it's broken. And I want to speak to what you said about people are trying to do the best. I've been in DC a lot, a lot. It doesn't matter what side has been in office. The lonely intern, the low level is running around with duct tape holding this thing together. You would be shocked For you to see how the sausage is made. They're like, wait, if it wasn't for Susie, who's literally an intern, that wouldn't have happened. What? Because it just— that's just how the system's built. It's held together with duct tape. And that's just been humanity since the dawn of time.

We're just—

people are trying to do their best. You might ideologically disagree with one thing about them, but trust me, at the end of the day, they're trying to do their best. And it is a big ship to turn. And I think until we put in different factors into the market, until we bring in different providers or different solutions, it's never going to change. And what we have right now is all of us are sitting in a bus driving 1,000 miles an hour straight into a wall. And we've got to sit there and say, hey, maybe we should turn to the left a little bit. And I think bringing in those different— because if not, we're all going to die. This isn't going to work. We've proven this hasn't worked for over a generation.

Yeah.

We need to pivot. And it's, and it's once we get away from, oh, it's this political party or that political party, or it's this evil empire, this one. Yeah, there's There is, that's just humanity. But until we sit down collectively and say, we need to have other options, then those options, much like the Walmart example I gave, it just won't do it. So what are the biggest changes you've seen for your patients or for the market now that, because you've been doing this for a while now, what are the biggest changes you've seen?

Well, I think there's, on the demand side, patients are getting much more sophisticated about managing their own money, right? Deductibles had a lot to do with that, just the growth of deductibles. But recognizing that I wind up paying for a lot more of this than I expected to, I need to think a bit more as a, as a customer, um, uh, I think is one thing financially. I think a second thing is that people are willing to pay for convenience.

Yes.

Because convenience is— well, but I mean, but a lot of people of a variety of economic circumstances say, this thing is so opaque that even if someone's paying for it, I'm not sure I got what I needed.

Yeah.

And so the simple, and this has helped Sesame enormously, the simple English language communication of a bill, of your data is something that people are willing to pay for. And then I think the third thing of course is people are becoming far more proactive about their health. The healthcare system in the mid-20th century, was entirely reactive because that's all we could do. The healthcare of the second half of the 21st century is going to be entirely proactive.

Yeah.

Which is another reason this architecture won't work. On the provider side, one change is exactly what you mentioned, which is more and more doctors are no longer independently practicing, that being part of an institution is essential just for their sanity and often for their economics. I think another thing that's happening though is the big hospital chains, which have gobbled up a lot of these practices and they're trying to do integrated care and all the rest, are not going to work.

No.

I do want to be a nerd. Let me be a nerd. Be a nerd. Outside of reimbursement rates, hospitals don't really have economies of scale or of scope. They're kind of a senseless institution. So they charge a ton of money, They get way too big a share of the healthcare pie, a share that hasn't gone down in 60 years, even though hospitals play much less of a role. They're all about their political power and their ability to drive reimbursements, but they can't be well run because they don't have economies of scale and economies of scope. And so over time, they're unlikely to win. And seeing how that plays out is really interesting. The general hospital I'm referring to, specialty hospitals are somewhat different and actually might be winners. But general hospitals increasingly just have a bad business model.

They do.

And then the last thing I'd point out is that particularly ironic when people hate their insurance company, the big insurance companies now are basically wards of the government.

Yes.

Their economics go up and down based on Medicare policy and Medicaid policy because a huge amount of their revenues come from running those programs for the government. And the government is in fact private insurance companies, because Medicare and Medicaid are now run almost exclusively— Medicare is only 60%, but Medicaid now entirely through private insurance companies. So this thing all of us believe about how the healthcare system works is changing right in front of our eyes, and most people haven't noticed it.

And I think one of the things we missed out on is that the consumer is now becoming significantly more sophisticated. You take something like True Diagnostics or anything like that where you get your blood work. I know what's in my blood. I do it routinely. Every 30 days we're doing blood work. We're checking things because I'm a hypochondriac. So we just keep an eye on this. It's like, hey, what is this doing? What is that doing? And for those of you who aren't paying that much money when it comes to all these things, just be racist when it comes to putting anything in your mouth. If it's white, don't put it in your mouth. Sugar is bad for you. Don't put it in your mouth. White flour, bad for you. Don't put it in your mouth. It doesn't work. I think that's the basic. But you have this more sophisticated environment where consumers are coming in. It's just a matter of how long can the specialist doctors hold on versus these juggernauts. Because when I go see a specialized doctor for, like, I have a torn labrum, I'm not going to a hospital to have that conversation.

I'm going to go to the person who helps Major League pitchers. I'm like, hey, what do we do? And we have that. We also are, you know, stem cells is a thing. And I can't tell you how much I love stems. They're just absolutely amazing. My insurance won't touch them. But stem cells completely changed my ballgame.

When you go in— Sorry, I was just going to say, I think that's really right, which is we're seeing that, which is The boundaries of what's healthcare and what's personal responsibility are changing very, very rapidly. And a lot of the more important things in healthcare are things like you mentioned, where the patient's going to do it on their own with or without medical advice. In part because there's a ton of medical advice they can get from being online. But that's wrong.

But just remember, AI does mean always incorrect because my AI is completely convinced that I need to have my uterus fixed and I'm very confused by that. So I think there is this idea—

It's a different term.

It's a different term.

Hey, you know what?

Whatever you want to identify as. I think as we come into this and we have a more sophisticated— because that's happening, I would love to see the market have a more responsible consumer as well, to take that ownership, that self-ownership. But that's never happened in humanity. So I'll hold my breath on that one.

Well, I want to actually comment on that because I think that's a really interesting thing. So one of the things you hear all the time in healthcare is you can't have consumer-directed economies because consumers don't know enough. They're not sophisticated enough.

I don't think they're responsible enough. Not that they're not sophisticated enough.

But here's the thing. Consumer-driven economies aren't driven by consumers. They're driven by sellers chasing consumers.

Correct.

I don't walk into Walmart or Costco and get a tube of toothpaste and say, I got to make sure this is the cheapest. Let me look at the ingredients and compare it to its costs.

Right.

They just say, I'm pricing at the lowest possible price and you know I will, and that's why you're buying it. And what we forget is that consumers have to do a ton of work in our current healthcare economy. Third-party payment doesn't take the work out of your hands. If anything, it makes it even harder. Consumer-driven economies, I mean, if I look at sesame, I don't have to look for the price on sesame. Because every provider on Sesame knows I can't get a penny of business without posting my fixed price. Period, full stop. There's no requirement, there's no law, but who can sell anything without a price, right? And we think that, oh, that requires consumers to do a ton of work. It's less work. Yeah.

And it's also, it's right there in front of you, but I do think there is a sense of responsibility. For example, if you're gonna sit there and you're gonna kvetch, or sorry for the goyims, you're gonna complain about you know, your health being so bad and you being obese or whatever it is, maybe, just maybe don't stop at McDonald's. Just saying, maybe, just maybe don't eat food that, you know, is just not healthy for you. Make better choices and don't just blame healthcare. So I think that level of responsibility hasn't stepped into it yet. Just get off the couch and go for a walk every once in a while. I don't think that's stepped in yet because there's so many people who, as I travel the world and I know our food system is completely broken here in the United States and, you know, you've got some travel coming up, I can eat gluten outside the United States, no reaction whatsoever. Here in the United States, it's not good. So we know that things are changing. We're becoming more aware, and awareness is great, but awareness without action creates problems. And I wanted to kind of circle that back into what you're doing because you're taking action and you're raising the level of awareness against some pretty intense juggernauts.

As a founder, as someone who is a CEO that's running into this, this is working. You're proving this is working. What are some of the things that you've run into, these walls of, okay, you're going to run, they're going to, you know, have some pushback that the market's given you?

Yeah. I mean, I don't think the market's given us pushbacks, but I think some of the conventional wisdom in healthcare gives you pushback, right? Which is, I'll give you an example, which is, well, doctors aren't going to price less than insurance. Of course they do. Because insurance imposes an enormous amount of cost on a medical practice. Yes. And we take that cost away. The first one I heard is doctors are never going to be willing to post an actual price because they may be on the services they need to do. And it's like, you know what? Tons of other professionals have figured this out. Doctors will figure it out too.

Yeah.

Then there were things like, well, good doctors are not going to list discount prices. But the interesting thing is more and more of the best doctors in the country say, how do I get out of the third-party payment system? Because I didn't go to medical school to spend 20% of my time as an insurance clerk. And if you take insurance in your practice, your physicians, your nurses are spending meaningful amounts of time managing insurance. Not a great use of that education. And so what Sesame's benefited from is some doctors aren't— try to diminish the amount of third-party pay or just go cash pay. And for some patients, they're willing to offer discounts. For other patients, they have high-priced concierge treatments. Uh, uh, uh, uh, structures. And, you know, others are in between. The point being, like we see in most markets, you price for different types of customers and different service, but you have no trouble saying, I'm happy to bring in a good customer who pays. One of the things Sesame solved day one is we have our customers pay upfront. Reducing the cost of collections for doctors is a giant—

Huge.

—gigantic administrative save for them. And causes them to give the best price. And, you know, a Sesame customer is a desirable customer. They've already paid before you started your appointment. And I say that again, reminding you we've got 95% satisfaction ratings. So it's, you know, a lot of the conventional wisdom when you've got a little marketplace out there proves wrong pretty quickly.

Yeah, it does. And I think one of the things that proves correctly all the time is you are rewarded for how much pain you eliminate in the market, period, full stop. That's what you're selling. You're selling for the elimination of pain. So if I'm a doctor and it's a Friday night and I don't have any patients, I flick on an app like yours, I flick on Sesame, like, hey, let's— here, I'm going to do it for XYZ bucks. You're good to go. Because at the end of the day, they don't have to deal with the insurance and the collections and all of that. It's just— it's a different mindset. And I think the more that people see this, that this could be a way to help fix the system. And is it the way? No, I don't think there is a magic pill. I don't think there is that $900 million pill that's going to save us all. I think there's going to be lots of these very specific actions where we take that ownership back from a very broken system. And what's great about it, and I think Churchill said it really well, he goes, Americans always do the best thing after doing everything else.

And I think that's the process we're in right now. We've got to start trying these other things because we'll get there. Because I don't think Americans are willing to have crappy insurance, not crappy healthcare. I don't think they're willing to do that. I don't see the costs. I see the costs coming down, but I don't see the demand of standard coming down. Like, I'm not going to go to a doctor and have him, instead of giving me a cast, is going to wrap me in duct tape. I'm like, nope, no princess, that's not happening. I want the cast. So I think we still have that demand. We just have to get the spending under control. If not, we're going to lose it all because it will sink the ship.

I think that's definitely right. And I think, you know, I would take what you said one step further, which is not only is there not a magic pill to solve the problem?

Yeah.

There shouldn't be, right? Healthcare is a massive industry that all of us are consumers of at different stages of our life, different elements of health, different needs, different preferences. Those industries are supposed to be complex if the service is going to match the broad range of consumer need. The attempt to do one-size-fits-all doesn't just make it expensive and distortive and all the things that economists would hate, It makes it less human. It makes it less tied to the individual demand. The reality is healthcare looks nothing like it did in the mid-20th century. It's already far more personalized and it's going to be even more personalized. It's going to be even more targeted, recognizing the enormous differences in the way people live, in their preferences as to how they live, in the relationship between what they choose to do during that. You said McDonald's. I mean, there are going to be people who eat at McDonald's. They deserve healthcare. There are going to be people who pay a lot of attention to their health. They deserve healthcare. Probably different structures, right? Probably different relationships to the system. We got to be able to serve all of those people.

There is no one top-down way to do so. The only way we've ever figured out how to do so in complicated businesses is by having markets and letting people get paid for finding a consumer, a patient they treat well.

And I think that's what we're doing here. And I think having the ability to change the ballgame that easily and that quickly, this is just going to speed up for great because people want to be able to control this. So if someone's going around, David, and they want to track you down, they want to ask more questions because I have access to you, so you and I get to have great conversations. But if people want access to you or they want to learn more about Sesame, how do they do this? What's the best way to get a hold of you?

Well, I mean, the best way to get ahold of me is just david.goldhill@sesamecare.com, or you can just drop by my house. And yeah, that's how most people do it.

1600 Pennsylvania Avenue.

Not quite. But obviously the best way to use Sesame is to use Sesame. You don't need to be a member of Sesame. You don't need to be a subscriber to Sesame. We have both depending on what your needs are. Next time something comes up and you think, you know what, I'd love to talk to a doctor in the next 5 minutes and find out what this is, come use us, come try us. I think you'll be surprised how easy it is, how great the doctors are and how good the value is. We have a lot of patients who come to us through Costco with whom we're partners, and it's a terrific relationship. And I know a lot of people think that maybe we should let Costco restructure the healthcare system. I would vote for that, but we'd be a part of it, which is great.

As long as they stop moving things around when I'm shopping there, because it was here and then they move it somewhere else. I got to run around the store. I get the psychology, but stop moving my stuff, Costco. Sorry. Moving on.

Next time I meet with them, I will pass. Would you give me the particular item? And I will. Yeah.

They're never going to do it. The buyer psychology is brilliant. You move it and I got to run around the store and find other stuff. I know why they do it. It just pisses me off that they do it. I would do the same thing. But I think, you know, Your model of it makes so much sense because it isn't, trust me, give us a shot. It's, we already have all these proof. We already have these things. These are, this is already working. You can already see the reviews here. Give it a shot.

This is a different model. I think, I think people will be surprised, not just the price, but, but just how great the service is and how motivated the providers are and what way the doctors and nurses and clinics are to be great at what they do for our patients.

Thank you for taking the time out and trying to fix this, this, that, this massive issue that's going on in our country and, you know, the whole, the entire world. I really appreciate it.

Great to see you, Charles. Thank you.

That's David Goldhill, founder of Sesame. If you want to talk to a doctor without the insurance mess, check out Sesame Care. Thanks for listening, and we'll see you next time.