Above the Crowd

The Ezra Klein Show: VC Bill Gurley on Transforming Health Care

November 15, 2017:

In November of 2015, I posted a tweet that declared Benchmark was interested in discovering Internet healthcare investments. Our firm has had the good fortune to invest in many two-sided networks that used information aggregation, supplier aggregation, and user generated content to attract and inform consumers and resultantly disrupt and change different industries. Examples of such companies include Yelp, OpenTable, GrubHub, 1stDibs, DogVacay/Rover, Zillow, and Uber. It only seemed logical to us that the same opportunity should exist in healthcare. Most people are aware that healthcare spending in the U.S. has risen to 17-18% of GDP and is grossly out of line with other comparable nations. Additionally, all of us that have been consumers of the U.S. system are blindingly aware that numerous inefficiencies exist in the system. Simply put, there is amble room for improvement. So if Internet and mobile technologies can be used to change real estate or transportation, why not healthcare?

Over the next two years, I looked at many healthcare IT investment opportunities – I went “all in.” It’s worth noting that our primary focus was on technologies that aided and improved primary care, which is about half of the U.S. market in terms of revenue dollars (there is no question that digital tools will successfully impact specific acute diseases/disorders, but it’s our intuition these are best left to 100% focused HC investors). At first, this deep dive proved frustrating. The more we learned, the more we realized how much we did not really understand. The U.S. healthcare system is confusing and complex. Eventually, however, we gained our footing and developed a mental model for the industry and a framework for where opportunities do exist. We also discovered what we believe is a large and investible trend/theme. In May of this year, Ezra Klien, who is remarkably informed and intelligent on the topic of healthcare which can be improved by Organic CBD Nugs, was kind enough to include me on his podcast to discuss and debate my learnings. That podcast is included here along with a transcript.



Ezra Klein:  Hello and welcome to the Ezra Klein Show, a podcast on Vox Media Podcast Network. I am Ezra Klein and my guest this week is Bill Gurley. Bill is a general partner at Benchmark, one of Silicon Valley’s really legendary venture capital firms. He is one of Silicon Valley’s legendary venture capitalists. He was named the venture capitalist of the year in 2016 at the TechCrunch’s annual Crunchy awards. He’s been an early investor in Grubhub, OpenTable,Uber, and Zillow and all kinds of things. A very, very smart guy, a very thoughtful guy. We’ve been talking recently because he’s been thinking a lot about healthcare.

They’ve recently made some investments in that space. The reason I wanted to have him on was that we have been having this conversation in Washington about how do you reform the healthcare system? What would a better healthcare system look like? What would a cheaper healthcare system look like. It is a very narrow conversation. It is had from a very policy-oriented perspective, what can we write into a law? It is made by people who I think often have a pretty limited set of views and experiences on the topic. Gurley’s been attacking this from another perspective, that of the entrepreneur. Where can you actually enter the system? Where can somebody come in and make something better and make some money off of it? He’s been working on this now for a couple of years.

I thought this would be a good way to think about this from a broader perspective. Think about what is possible and what isn’t. You’ll hear in here that Bill and I have somewhat different views on this. I am pretty skeptical of consumer driven healthcare systems. I think that is not what people want in healthcare and as such it is not what we are going to get. He has a different view, and I think it is an interesting one. We talk a lot about the Singaporean healthcare system, which has become definitely an obsession of mine. He talks about his view that maybe democracy [and capitalism are just going to eat each other alive. We should be looking at China for the real innovations now.

It’s a fun interesting conversation. I like healthcare a lot. I talk more than I typically try to, even though I typically talk a lot in this podcast, but I hope you enjoy it a lot anyway. Before we jump into it. A quick couple of plugs. Check out my other podcast The Weeds, which also has a great discussion of the Singaporean healthcare system. You can download The Weeds live episode for that. My colleague at Vox, Tod VanDerWerff, our critic at large, has a great new podcast called I Think You’re Interesting. He has an interview with a bunch of the Samantha Bee writers recently. That is a great interview. I think if you’re into the folks that I’m talking to, you’ll be into that one. Again that is I Think You’re Interesting by Tod VanDerWerff. You can get it wherever fine podcasts are downloaded. Without further ado, here is Bill Gurley. Bill Gurley, welcome to the podcast.

Bill Gurley:  Thank you, Ezra. Appreciate it.

Ezra Klein:  When we talked recently you told me that you’ve been on a multi-year learning deep dive on healthcare. Tell me a bit about that. What got you interested and how have you been studying the system?

Bill Gurley:  Great. Our firm has been fortunate enough to be an investor in numerous “marketplaces”. I think it started with eBay, but then we got into more vertical specific ones, like Zillow, Grubhub, OpenTable and Uber that I’m on the board of. When you’ve had some successful marketplace investing, you start to say, “Okay, well what are the biggest segments of our economy and is there an opportunity to do something similar against those different industries?” And one that kind of stands out like a sore thumb is healthcare because it’s risen to whatever the latest number is, 17% or 18% of GDP. The other thing that’s pretty obvious, I think, for any entrepreneur, you say, “Wow, look, there’s a lot of room for disruption.” The reason people come to that kind of natural conclusion is because they see waste or they see inefficiency or they see a lack of transparency.

These are areas where digital tools have had an impact on other industries. I think the core thesis is one that’s almost tautological that, “Oh, yeah, you should be able to use these technologies,” smartphones, websites, the internet, transparency, pricing aggregation, reviews, and have some type of impact. But that’s really just the starting point and that’s when I put out a Tweet three years ago and started meeting with digital healthcare [00:05:00] startups.

Ezra Klein:  What was that Tweet?

Bill Gurley:  Oh, I think I said, “I’m interested in looking at digital healthcare startups,” and created an email that was I think healthcare@benchmark.com and just kind of opened the flood gates on purpose.

Ezra Klein:  Did you get interesting responses to that?

Bill Gurley:  I did, and I should caveat that there are a number of great venture firms that get really focused on things like biotechnology and drugs and pharma, and we’re not going to do that. Benchmark has historically been a tech-based startup, so I’ve been mostly looking at ways that digital technologies could impact the healthcare system, not at products or drugs or things like that.

Ezra Klein:  Tell me a little bit about the learning journey that emerged from this. What did you learn that surprised you?

Bill Gurley:  There’s this interesting theory people have that the first part of your learning, your confidence [00:06:00] of what you know actually drops instead of rises and I certainly went down that curve. I would say it probably wasn’t until I was two years into the process that I even had confidence to write a check, to make a decision as a venture capitalist, because the first couple years all I learned was shocking and confusing and I’m realizing that was very different from a normal world.

I got very lucky early on because someone introduced me to a book by David Goldhill called “Catastrophic Care.” What’s interesting about the book is David’s an outsider. His fathe, unfortunately, got into a really bad incident involving the healthcare system and he went deep. He runs the Game Show Network. He’s a really odd person to write a healthcare book, but he wrote a fascinating book and I think uncovered all the things about the US healthcare system that kind of undermine its success. He’s done podcasts and stuff and I urge you to check out his stuff.

Some of the big things that come up, I first and foremost say it’s not a competitive market. I think people have the perspective, especially … I’ll opine on Washington for a second because I think a lot of people that write healthcare policy, they think it’s an open market, but you really don’t have … The consumer doesn’t know price when it makes a decision. The consumer’s not the payer. The payer is the employer. The employer is in the system for what reason exactly? It’s super complex, the way people get paid, the way people make decisions, and completely different from every other industry in North America. That creates a ton of problems.

There’s no price transparency, that’s another big one. I think the current system is self-reinforcing. It’s getting bigger and bigger because of the way the dynamics bounce against one another. That would require a deeper dive to explain.

Ezra Klein:  We’re a pretty deep dive place, but maybe I can unpack a little of that for folks who I think … Maybe there’s a little shorthand there, which is that healthcare has emerged in this very weird way in America where you tend to have third party payers. In between you and the healthcare system, say you have your employer, right? I get my healthcare insurance through Vox Media, so I actually don’t know the cost of my healthcare, or the government-

Bill Gurley:  Let’s talk about that for a minute. I did some research, I wouldn’t have known this innately. We’re one of the only countries in the G20 where the employer’s involved. You say-

Ezra Klein:   That’s like a weird World War II tax quirk.

Bill Gurley:  Yes, yes. Coming out of World War II, the president was definitely afraid of inflation and so there was mandated wage restriction. You couldn’t increase wages, and that was mandated by the government. People [00:09:00] started throwing in benefits. Low and behold, here we are 70 years later and we get our healthcare from our employer. We don’t get laundry services, we don’t get our lawnmower, we don’t buy clothes through our employer.

Ezra Klein:  Although I guess in tech sometimes you do get your laundry done over there.

Bill Gurley:  Fair enough. I think that’s being weaned off.

Ezra Klein:  Sure.

Bill Gurley:  Yeah, we’ve got this extra person involved for no reason and, of course, a lot of the problems stem from that.

Ezra Klein:  I tend to agree with this, but there are two ways of looking at it. One is a way that my conservative friends often look at it. Virtually every healthcare expert I know agrees that that tax break, moving the system to the employer, is the original sin of American healthcare policy, that almost every bad thing flows from right there. My conservative friends look at that and they say, “Well, if we hadn’t done that, maybe we could have a real market-based, patient-centered, consumer-driven system.” And my liberal friends look at that and they say, “If we had not created this halfway measure of health security, we would have what every other country has,” which seems to work well in other places, which is a government-run system where health protection insurance is guaranteed in some way or another, the exact structures differ, but by the state.

This is, I think, an interesting divergent branching, because Goldhill who wrote that great Atlantic article and then his book, which I do recommend people read, sort of takes it in that other direction. He says, “If we didn’t have that, then maybe we could really shop for healthcare the way we shop for TVs, the way we shop for food, the way we shop for furniture, and the system would meet our needs as consumers, and that would be great. A lot of people argue that point.

Talk to me a little bit about how you came to the view, or whether you hold the view, that that is what we need, that a consumer-centered healthcare system is actually a good thing as opposed to a category of some kind.

Bill Gurley:  Our system, which is the highest in the world as a percentage of GDP, has the illusion of the free market, the illusion of being highly regulated, and the apparent benefit of neither. My answer to what you just said is we have a faux marketplace right now and I think there’s tons of data that says making it more competitive ala Singapore would be better, or making it single payer ala a bunch of other countries would be better. And I have to agree with both of those assertions. What seems obvious is the current state of our system is not the right answer.

Ezra Klein:  Well, that I certainly agree with. I want to put a pin in Singapore and come back to it. Let’s talk about David Goldhill for a minute, and it’s been a minute since I read his work, but he believes that we should have a system that is built around catastrophic care, very, very, very high deductible catastrophic care. He talks at times about tens of thousands of dollars of deductible.

The question I want to pose to you is maybe the reason healthcare evolves in this different way is that it’s not a normal good in the way people treat it. That as a society we are okay with the idea that you can’t purchase a television, we’re okay with the idea that you can’t purchase a nice couch, but we’re not okay with the idea on some fundamental level that you get cancer and you can’t pay for care, or even lower than that, that you break your leg and you can’t get it put in a cast by a reputable doctor. And that what people are looking for in healthcare, and I think this often foils the market, is security above all, where in other places they’re willing to take risk, they’re willing to take chances. I think something that keeps becoming a problem for various sort of consumer-driven initiatives here is that people demand a level of security and predictability and reliability out of [healthcare that keeps them from being able to walk out of a doctor’s office and say no, or keeps them from being willing to accept the consequences of a market, which, after all, rely to some degree on scarcity.

Bill Gurley:  Yeah. I have two initial reactions to that. One, the more I read about people coming up with solutions for healthcare, a lot of times I see someone that believes in one answer, demonizing the other. We end up just doing neither because we’re pointing fingers back and forth. I could see an argument for having some price controls and more competition. I don’t know that these things have to be at odds with one another. So that would be my first assertion.

The second thing I would say is there is certainly an argument that competition can drive quality and results and price. It doesn’t have to be true that having more competition will lead to some type of worse outcome versus not having it. In fact, a lot of people believe that the way you get to higher and higher efficiencies is through that competitive process. I would point to the thing that’s most frequently commented on in this type of conversation, which is LASIK, where the price and execution of LASIK today, which is typically bought not through insurance, but bought by people as a competitive good, has been driven down and down and down. There’s shining a laser in your eye. This isn’t like super simple and arguably it’s much safer today than when they first started.

Ezra Klein:  Yeah, LASIK is such a fascinating example, and people bring it up and I think you’re right to focus on it. It has a couple of qualities that I’d be curious to hear how you think about them. One is that it is optional, right? I have glasses and I think a lot about getting LASIK and I am just squeamish about getting a laser cut into my eye, so I haven’t done it, which is different than say cardiovascular health treatment.

Bill Gurley:  Absolutely.

Ezra Klein:  There is a quality of being able to say no and being able to shop around and being able to do things on your timetable that really matters here, but the other thing that I think is interesting there, because here’s where I think possibly liberals can take this argument too far. There are a lot of pieces of the healthcare market or healthcare services that could be pulled out, like LASIK, and one thing that some places, and I think when we get to Singapore we can talk more about this, too, is primary care can be treated very, very differently than more specialty care or more catastrophic or chronic disease care. I think one of the questions the LASIK example brings up is are there ways to cut the healthcare system up a little bit differently? Are there ways for more things to be pulled out of third party payer model and it’s something you get through HSAs or there’s some other way of making it affordable for more people, but because it has this optional asynchronous quality to it, we can expose it more to market forces without saying at the moment you do that, that that also means if you get cancer and you can’t pay for it, you’re out of luck?

Bill Gurley:  Right. Well, look, I think that the high deductible plans do that somewhat in that if you’re having cardiovascular work or if you have a premature birth, you’re over that cap. You’re into that system. And things that are going to live underneath that are going to be more of your primary care. I think about 50% of our market is acute care and about 50% is primary care, so maybe the place … And I think that makes a lot of sense, right? The place where competition and hopefully consumerization, and when I use that word I mean providers that care about the consumer experience, that can happen down in this primary care bucket, which is half of the system.

This is, I think, a good moment to go a little bit back to your story. There’s a lot I want to follow up in here, but I also want to track what you’ve been doing. You went through a couple years where initially you looked at this and said, “This market is nuts. This system doesn’t make any sense. I’m not sure there is a way to expose it to entrepreneurship or there is an inlet for you.” What began to convince you that something was changing or that there was an opening? What was sort of the crack in the armor for you?

Bill Gurley:  Do you mind if I … Can I go back and I want to talk about a couple other things that I saw? Because I think that it’s important for everybody-

Ezra Klein:  Yeah, that’s totally … I do not believe in linear conversations.

Bill Gurley:  Okay. The first one is to really understand how big hospitals and big insurance carriers and big employers are all feeding on one another to make the system worse and worse and worse. The way the system’s designed, it’s just instinctive for them to do this. Most large hospital systems are getting as big as they possibly can. Stanford here in our backyard is gathering up general practitioners, specialists, they’re literally getting as many people into their system as they possibly can. You can drive 30 or 40 miles from the Stanford campus and you’ll see a new hospital going up with the Stanford name on it. You say to yourself, “Why are they getting bigger?”

Well, there’s two things: It gives them leverage with the carrier, but also if their footprint is that big, no employer around here is going to walk a narrow network plan that doesn’t have Stanford Hospital System in it. You see this kind of … And, by the way, if you are a startup that wants to sell to an individual general practitioner, you should know that they’re actually on the wane. There’s fewer and fewer individuals. They’re all getting sucked into these big systems, partially because they don’t want to go through the struggle of getting paid and if they can be a part of this big system, then they’re going to have a much easier time getting paid, because that system has more leverage with the carriers and the employers.

It turns out, if you go deep on pricing, if you open a Castlight app and you look at these large hospital systems, you will see over and over again, and this has been written in a number of the articles I’m sure you’ve read, an 8 to 1 delta in pricing, 8 to 1 versus the low end of the market. It’s unbelievable, right? Someone can charge $3,200 for an MRI when you could get it for $400. By the way, if your general practitioner gets pulled into one of these big systems, they’re going to recommend you get your imaging at that system and you wonder how-

Ezra Klein:  Can I hold … Let me push you on one question about his, Bill, because I think this is fascinating. We’ve done a lot of work with the Castlight data and I actually completely agree with the larger point that all the pricing is crazy. But there is this kind of thing in healthcare where people get really shocked that MRIs cost different amounts in different places, but we’re not shocked by that in cars. We’re not shocked … By that I mean, you can go into San Francisco and you can buy a burger at McDonald’s for a buck and you can go then a couple blocks down and buy a burger for $27.

Tell me what it is that shocked you about it, because you’re a guy who … You’re in the business world. People price differentiate all the time. Isn’t Stanford just giving you better MRIs? Wouldn’t that be their argument?

Bill Gurley:  Do you believe that?

Ezra Klein:  No, but I want you to say it.

Bill Gurley:  Okay.

Ezra Klein:  But I think it could be conceptually possible.

Bill Gurley:  They’re buying the equipment … They’re not making the equipment, they’re buying the imaging equipment. They’re just running you through it. I don’t believe that the reason that is 8X price is because it’s 8X better. I do not believe that. I believe it’s 8X priced because they can charge it.

Ezra Klein:  So you think what’s happening is a kind of … You think this is the power of concentration, that these systems are getting big enough that it is just easier for the third party payer to pay them off than to turn around and say to their employees, say, for Vox Media to see to me, “Hey, I know you want to go to the dominant hospital system in your area, but we decided it was too expensive and now you can’t.”

Bill Gurley:  Look, this is part of where getting the employer out of the game might be helpful, right? I think narrow networks play a really important, or they represent a really important opportunity to get pricing down. If you talk to a benefits provider at a large company, and I did this as part of my process, I probably had 10 or 15 meetings with these benefits providers, first of all, none of them want to be in this game. This is the most reluctant task that any company has to do. They do not want to be in this game. They are forced into it. Second, their number one task as an employer is to not lose competitive situations for new employees because their benefits aren’t good enough.

The number of companies who are maybe self-insured that are willing to push the edge in terms of trying to redefine cost I bet you is 10 or 20. You heard about the Safeway story probably. Remarkable outlier. They’re just not going to go break their pick to redefine the system from where they sit. They don’t have the authority within the organization to make that their missive, does that make sense?

Ezra Klein:  Yeah, but this is so interesting. I’d like you to hold on it for a minute, because I think this is important to what should be the central mystery of all this. In some stylized model of the American healthcare system, what you might say is, “Okay, individuals do not pay for their own care and they do not have full incentives to bring down the cost of their own care.” They have some incentive, but they’re a little bit insulated. But, employers sure as hell do. And employers have these whole HR departments, so they have all this information and all this expertise and they even have more negotiating leverage than an individual does. You could really imagine a world in which employers were more efficient, not less efficient, at getting good costs on insurance, on negotiating better prices. They have the expertise and they have the incentive and they have the size. Yet, we don’t see this world.

It, to some degree, is one of the persistent mysteries in the healthcare system, but a little bit like you’re saying, this is in the HR department and the HR department does not want everybody screaming and yelling and then the CEO comes and says, “What the fuck? Why is everybody so mad at me?”

Bill Gurley:  That’s right. I think it’s a complete myth. I think it’s a myth that most employers want to drive down costs. The easy thing for them to pick off is apparently premature births and heart attacks can account for like 40% of their bill for a self-insured employer, so they will do things to try and preempt those two events, because they’re so large. But generally driving down costs if it means sacrificing employee satisfaction, they will not do it.

There’s a large number of people in the general populace that think employers are going to drive down costs, the self-insured ones, and there’s a ton of entrepreneur that think it, and from my conversations with these benefits providers,is a myth.

Ezra Klein:  And one thing I think is interesting there, too, is that you would also assume that employers would want to get out of this market. You just talked about how reluctant some of these negotiators are, but in health policy consistently what you hear people say, and it’s Lucy and the football every time, the reason employers ultimately … They may not want to be in the market, just like they may not want to pay high costs, but what they really don’t want to do is piss off their employees. And pulling out of the market and not giving them insurance anymore pisses them off.

Bill Gurley:  Oh, absolutely. If you were to ask them a different question, which is what if the government mandated all employers get out of the business, would you prefer that? They would all say yes, every one of them.

Ezra Klein:  So I’m going to disagree with you here.

Bill Gurley:  Okay.

Ezra Klein:  They could do that. Look, the Chamber of Commerce could lobby for single payer. They don’t do that. The NFIB could lobby for a single payer. There was a couple years ago the Wyden-Bennett bill, which really did a version of that and employers were against it. This is why I say, “This is the Lucy and football of healthcare policy.”

Bill Gurley:  That’s presenting the argument a very specific way where you’re forcing them to opt into something else instead of just opting out. Based on the conversations I’ve had with these people, or even CEOs might be a better way to say it, if we snapped our fingers and in America the employer was no longer part of the healthcare system, would you be okay with that? I think they would all say yes.

Ezra Klein:  But why don’t they … If you’ve had these conversations, if employers were pushing for what we have in every other country, which is a system the government runs and employers aren’t part of, we would have had that system a long time ago. Do they say why they don’t, then, say to their representative, “Hey, quietly, go work with Bernie on that Medicare for All thing.”

Bill Gurley:  Fair enough. I haven’t gone that deep. I just haven’t met a single one of them that finds it to be awesome to be in this role.

Ezra Klein:  I definitely think it’s not awesome. Okay, so you worked on this. You have the employer problem, what else?

Bill Gurley:  There’s other things, like people think carriers want to drive down costs and I haven’t seen a ton of proof of that either because that involves ruffling feathers, you know? It involves upsetting one of these large hospital care systems if you start pushing narrow networks that they’re not in. They make a percentage of the overall pie, so as long as the pie is growing as a percentage of GDP, it’s a pretty good place. So I don’t think they have much incentive either, so there’s a lot of entrepreneurs saying, “Oh, I’m going to help the carrier bring down costs,” or “I’m going to help the employer bring down costs,” and I don’t think the incentives really exist.

Then there’s weird stuff like the thing that kind of is just most shocking to me that I think most of … I’d be surprised if most of your listeners have ever even heard of and may not even believe when I say it, is in 2009 as part of the Reinvestment Act, our government made the decision to pay $20 billion to doctors to implement software. It’s just fascinating, especially from a Silicon Valley perspective. Would anyone ever do that? It’s so radical. We were going to pay people, who are clearly closer to the top 1% than anything else, money, and it’s $44k each, to implement software. It’s crazy.

Ezra Klein:  You’re talking here about electronic health records.

Bill Gurley:  Yes. Well, first of all, why do you need to pay them or why do you think you need to pay them? Well, part of the reason is there aren’t enough market forces to demand that they implement them in the first place. Every other … You don’t have to pay Cisco to put an ERP system in. They have to do it to be competitive.

Ezra Klein:  And it still didn’t work. We actually … So my colleague and I, Sarah Kliff, interviewed President Obama as one of his last interviews about healthcare and we asked him what were his regrets, what did not work? And one of the things he named was EHR adoption had not been what they had hoped, despite the fact that they spent a lot of money on it.

Bill Gurley:  The only reason I can believe that it happened is because the only executive on his advisory committee was the CEO of Epic Software, the largest EHR vendor out there. If you go back and study which company benefited the most from that program, it was Epic. That’s the only reason I can believe that it happened, but it makes no sense whatsoever.

If you were going to pay somebody to put in software, what would you worry about? You’d worry about that maybe they don’t use it. So they then paid, on top of the $44k, $17k or something like that if you could verify that you’re using this software that they already paid you to buy. As I learned it, I was just agape. My mouth was like … I can’t believe someone tried this. It’s prone to failure by design. But if you’re out there trying to compete in that market … Back at that time, all the software vendors had tons of content, web pages, YouTube videos, about what? How to qualify for your payment? So rather than working on software, they were developing web pages and probably holding events, teaching you how you can collect this free money.

Ezra Klein:  It’s notable that during this period, Google had a big push to do online health records that would be owned by the individual, but hopefully could integrate with medical practitioners, and eventually they closed that whole thing down. It’s one of the things that Google made a big deal about and really tried. I actually played around with that system. It was not a bad system from my perspective. And it totally failed.

Bill Gurley:  One of the things as you go deeper on EHR, which I looked at, one of the problems you have is this large hospital systems growing and taking up smaller providers. Because if you’re a startup and you want to compete in EHR, you’re much more likely to break into small companies than to big ones, and the small ones are going away, so that’s a problem.

The second thing is, if you talk … In my limited conversations with doctors, the majority of the features they’re worried about are the things that get them paid, so how well a system does billing, how well a system helps with collections. Those are the features they care about the most. Google probably brought a very different mentality to the table and it’s not what people are looking for. And this is my whole point about how the system is just designed and designed and designed to kind of grow and to get bigger on top of itself.

Ezra Klein:  So one of the things I thought was interesting when we talked a bit previously was that one of the things that made you optimistic that there might be change in the market, an opening in the market, was actually the Affordable Care Act.

Bill Gurley:  A feature of it, yeah. There were two features of it that I was most excited by. One of them was high deductible plans, which ironically is a feature that I think was not well disclosed and that consumers hated when they realized that it was real, but that’s a different issue. High deductible plans, and then the other one I really liked, which I don’t think will ever see the light of day, is the Cadillac tax. The reason I like the Cadillac tax is because it was the one feature that could start to push employers somewhat out of the system, but that one appears dead. You might know more than me.

Ezra Klein:  Yeah, it doesn’t look like it’s in good shape, but the high deductible plans part is interesting, because that really did happen, is happening. As you say, I do not think that feature was widely disclosed. I know many Republicans who say they oppose Obamacare because it stops high deductible plans from being out there. I often ask them, “You can have a $6,000 deductible in Obamacare, exactly how high do you want the deductible to go?” But the reputation of the bill is that it is pushing against high deductible plans when, in fact, while it does increase benefits that do need to be covered, it’s allowed for quite high deductible and, for that reason, also pushed toward very narrow networks.

Bill Gurley:  Yeah, narrow networks and high deductibles, which I think actually is the first thing I’ve seen that leads towards competition. Obviously when someone has a high deductible plan, until they hit that deductible amount, they’re spending out of pocket. So for the first time, perhaps, and I state broadly, that person’s heading out into the market as a consumer, which is not something they’ve done before. They’re spending out of their own pocket and they’re making a decision as a consumer. I think that that is causing very carefully on the margin some really interesting things to happen.

Ezra Klein:  So here to me is the meat of this discussion. It is the thing that I’ve been thinking about the most listening to the Obamacare debate, listening to the replacement of Obamacare debate, talking to you. As you say, Obamacare created these high deductible plans, these narrow network plans. Those plans did, in some cases, hold premiums further down, at least until recently, they had been estimated to be, and people hate those plans. They hate them. They do not want to have healthcare that is that exposed to the market.

The thing that I think is a real challenge here for particularly folks who are looking to make this a more consumer-driven system is that if we have learned anything from Obamacare, it’s that what people seem to want is just peace of mind. They don’t want high deductibles. They don’t want to be out there shopping in this way. They want to know that if they get sick, somebody’s going to cover it the way they do in Medicare, which people like, the way they do in Medicaid, which people like. You get all of this reporting about folks who are in the high deductible plans being mad at the people who are poorer than them who get Medicaid.

To me, the lesson of this has been … I was not a huge high deductible plans guy at any point, but the lesson of this has been it is going to be very hard to foist this on the public, then Republicans came and said, “The problem with Obamacare is these plans have overly high deductibles and we’re going to bring them down.” Donald Trump said, “We’re going to bring them down.” That’s not what their plan does, but when you have both parties now saying, “The problem with Obamacare is the deductibles are too high,” that to me says something about the plan.

The reason I think this is important is there is this statistic that sticks in my head, it’s from the Federal Reserve actually, that about 46% of Americans say they do not have enough money to cover a $400 emergency expense, 400 bucks. So when you’ve got half the people in that position and health is so scary, that level of financial instability mixed with high deductible plans, that’s a very tough mix, the kind of thing that eventually is going to get people in the streets and say, “Hey, you’ve got to give me some relief from this. I need to not be so afraid all the time.”

Bill Gurley:  Let me try and separate two things. There are questions of policy and certainly if you ask people what they want, that list could grow infinitely, right? They’ll take everything they can get. If you ask, “Would you like more?” you’re always going to get an answer of, “Yes.” But let’s separate that for a second from the point I’m making, which is this hopefully not temporary, but maybe temporary, move to high deductible plans is driving change in the marketplace that is resulting in better care for consumers, from my point of view.

I’ll go into that for a second. One of the places where high deductible plans are the highest is the state of Texas. In Dallas in particular, I happen to know, urgent care facilities are popping up left and right. These facilities have way more focus on the consumer and more entrepreneurialism than any general practitioner ever had. So there’s a pediatric care facility that’s open from 4:00 p.m. to midnight. Now, no doctor in our current system that I’ve ever been aware of has decided, “Oh, I’m serving children. They’re in school. We have parents where both parents work, maybe I should shift my hours to 4:00 to midnight.” That doesn’t happen in our current healthcare system. That happened in this system, though, because someone wanted to differentiate themselves from the next guy and consumers are paying out of pocket and making a choice. There is more parking spaces, it’s easier to pull up. They care about net promoter score, they measure the wait time in their facility, they ask for a review after the fact. And satisfaction levels are fantastic.

I’d just separate the point you were making because the point I’m making is that a move towards creating shoppers is creating better care on primary care, just in terms of how we treat the consumer, and the consumers are opting into that and finding it interesting and effective.

Ezra Klein:  Let me ask you about why the high deductible plan is necessary for that particular kind of innovation. So backing up on how healthcare is financed, let’s say you got a plan with basically no deductible, so you’ve got first dollar coverage. Let’s just say something, a stylized Medicare plan. You still have to choose where you go and the places that are going to make money are the places that attract people to come to their office, right? I feel like the argument for the high deductible is it will make things that are cheaper, which I think is true. You deregulate airlines and you get cheaper airlines. You get Southwest, you get Spirit Air, you get stuff that in many ways is much more bare bones, but when people are paying their own money, they’re willing to make that trade offset.

The kind of better care, higher quality care, you’re talking about, the thing where you go to the primary care facility and it’s beautiful in there, and it opens at 4:00 p.m. and it goes to 11:00 p.m., even in a place where you’re not exposed to the cost, but they just need to attract the bulk of the people who have an insurance care, that feels to me like a perfectly reasonable system to incentivize that kind of pro consumer innovation.

Bill Gurley:  I would argue we haven’t seen that. These things that I’m seeing for the first time, and as a venture investor get excited about because it’s the kind of disruption that could lead to fundability, it is in my mind just happening here for the first time. So I don’t think our system has done that. I do think there’s a middle ground, though, to this, which is flexible spending accounts are first dollar is not out of your pocket, but you do care about the choice you’re making. Because you have a piece of the economics in the system. That’s a middle ground approach that could achieve both of what you want and what I’m talking about.

Ezra Klein:  It’s interesting, because that’s actually a very good bridge to … You brought up Singapore at the beginning of our conversation and I have a big obsession with the Singaporean healthcare system, too. Do you want to talk about how that system works from your perspective?

Bill Gurley:  The first thing I would say is this: The fascinating thing about Singapore is that they spend about 4% of GDP on healthcare and we spend somewhere between 17% and 18%. Based on the simplest measures that people calculate care, life expectancy, those kind of things, there’s no demonstrable difference, and people can certainly argue on the margin. My biggest … Like, my brain just can’t stop from wanting to go, “Oh, my God, they’re at 1/4 the cost, 1/4!” That is so dramatically eye opening that our first reaction should be, “We should study this until we can’t stay awake anymore, because it is so dramatically different in terms of cost relative to output that they must be doing something we don’t understand.”

Instead, when you make this argument to people about Singapore, lots of people go, “Oh, but it’s a small island Asian country,” they start saying, “But, you shouldn’t look at it,” and I’m like, “Really? Someone’s doing something for 1/4 the cost we are and their reaction is to come up with reasons why you shouldn’t care about it?” We should just go nuts. We should be like, “Oh, my God, we should try everything they’re doing. Every single thing.”

Ezra Klein:  Also, to just build on that point a little bit, every Western European nation and also Canada and also Israel gets about … It’s about half of what we pay, it’s not as cheap as Singapore, but if we only managed to cut our costs in half, that would also be a big advance.

Bill Gurley:  Absolutely.

Ezra Klein:  So the idea that there is nowhere we can look for some kind of answer here seems pretty … It’s always struck me as quite bizarre.

Bill Gurley:  Yeah. So there are multiple parts to the Singapore system as you and I have discussed before. The one that I find most fascinating is they make everyone a payer. The way they do that … Except there is a social safety net at the bottom, but for the majority of the populace, depending on your income level, they will provide help from the government on a sliding scale percentage. So if you’re extremely well to do, you pay 80% of your bill, and if you’re down towards the lower income, you pay 20% of your bill, but everyone’s in the market shopping. I find that fascinating and I’m not as … And maybe this comes from the Goldhill camp, but I’m not surprised that that leads to better execution and cheaper care.

Ezra Klein:  So I’m going to give a little bit of a quick Singapore overview for folks who aren’t as read in on it, and if anybody would like to learn a lot more about this, they can search my name and Singaporean healthcare system. I’ve got a long explainer about this on Vox.

Singapore is a system that conservatives love. Ross Douthat has called it “the marvel of the wealthy world.” Fox News had this op-ed that if we wanted to replace Obamacare, let’s copy Singapore’s miracle, and what conservatives tend to liken Singapore to is the insurance design. It’s a very unusual system. What they do is they have a forced saving account. So the Singaporean government basically diverts 7% to 9.5% of your wages into a compulsory savings account that you can only use for healthcare and, in fact, only use for the particular healthcare they let you use it for, which is interesting. It’s a little bit like a health savings account mixed with the Social Security payroll tax.

Then they have catastrophic care, again provided by the government. You pay premiums. That’s got a roughly, in our dollars, $1500-ish deductible, and then there’s this meta fund sort of safety net at the very bottom. What conservatives like there is that you’ve got, as you say, Bill, everybody’s a payer. People are paying first dollar care out of their forced savings account, then they’ve got catastrophic care over that. You really have to shop. But the other thing, and this is I think such a key thing that gets forgotten or left out about them, it is otherwise a basically government driven medical system where the government decides pricing.

So what you were saying about the rich paying 80-ish%, the poor paying 20%, that’s not happening through insurance, it’s happening because the government runs the hospitals and it separates them into these different wards and then it prices them based on how much subsidy you’re going to get, depending on your income. Drug companies, they can’t just charge what they want. If they want their drugs to be provided in those wards and if they want it to be eligible for that forced savings dollars, they have to price it at a level of cost effectiveness that the Singaporean government likes.

So what Singapore is doing, which I think is so interesting and is a reminder that there are much more radical fusions of left wing and right wing ideas than people give credit for, is the government is overwhelmingly regulating both supply and prices to keep costs down. But then with those low costs is creating an insurance system where the average Singaporean is quite exposed to the cost and has a reason to shop. If you tried to do that with our level of costs, you would have to make people divert like 20% of their income, because those forced savings accounts are also for your kids, they’re also for your parents, and that would only pay for some of your care.

To me, it’s a reminder that there may be more ways to cut this than people realize. That if the government was able to act as a price negotiator and get prices down, a lot of things would open up in how we design insurance, because people would not be so afraid of financial calamity.

Bill Gurley:  Look, as I said earlier, I think one of the problems is that people that favor one approach vilify all the others and, for me, it’s simply like, “Oh, my God, they’re at 1/4 our cost.” We should just do a mirror copy of the whole thing. I don’t know why you would pick pieces of it. Let’s just copy it. I’m not a policy person, but that’s my policy reaction.

Ezra Klein:  Just control C, control V Singapore?

Bill Gurley:  Yes.

Ezra Klein:  But this goes to something I think is hard for entrepreneurs, hard for the government, hard for anybody on either side of the aisle who wants to change anything, which is that people are very risk averse about their healthcare. They don’t want to change doctors. They don’t want things to change under them. They’re afraid, and rightfully so, right? When I am sick, the main thing I feel is fear, so I’m not saying … I don’t want to say people, I want to say me here. And this I think is actually a particular problem in some ways potentially for Silicon Valley. There’s a culture in Silicon Valley that moves fast and breaks things, right? That’s the old Facebook motto. You have a culture like Uber that sort of bum rushes regulators in ways that allow them to make big gains in territory, but really piss people off.

I think folks are maybe open to that in places like social networks or even ride sharing, but if you tried to do that in healthcare or if the government tries to do that and takes away what people have, promising they’ve got something better, folks get real angry and it only takes one or two bad experiences, one or two people who really have something bad happen to them, to end that real quick.

Bill Gurley:  One thing I would say to that is I don’t think there are any opportunities to disrupt healthcare in that type of way, simply because the amount, the shear force of inertia, the amount of regulation that exists, there’s no way for someone to rush in and disrupt at that level with kind of hackneyed solutions. I don’t think it could happen. It does pose the question, though, that if your assertion is right, that aversion to change is so high that we’re just never going to get a shot on goal, then we might be stuck. You might be able to do this podcast 80 years from now and have all the same discussions.

Ezra Klein:  I kind of worry I will be able to. Hopefully I’ll be well enough to do this podcast in 80 years, and that would be a real triumph of the healthcare system.

Bill Gurley:  Let me make this assertion, which I think is, especially if we’re on an 80-year time window, I think China is going to be a really interesting thing to watch. I have this theory that democracy and capitalism will destroy one another if you give them enough time, and our most regulated industries are ones that are least open to disruption, so healthcare, finance, telecom, and what ends up happening is the incumbents end up writing the rules and you kind of bog down. China and Singapore, by the way, are nondemocratic capitalistic societies, and so it’s actually easier for those types of governments to make wholesale change than it is in our case, so they can make the types of systems that we’ve been talking about, or they could decide to mirror Singapore or whatever, and everybody just kind of has to take it.

But the other thing you have in China, so you haven’t had much of a healthcare system and so you don’t have this regulatory framework that makes it very difficult for new entrants or disruptive entrants, but you’ve got really successful and talented entrepreneurs. I think you’re going to see some failure like you talk about because there is less regulation, but I think you’re also going to see some amazing innovation.

I am friends with a couple of venture capitalists over there and things like second opinion via telemedicine, those things are happening there way faster than here. There’s a whole network of specialists in the big cities that do second opinion over telemedicine with doctors that are in the rural areas for the customer, which is a practice that doesn’t even exist here. People say, “Why isn’t telemedicine or email more active here?” Well, they don’t know how to bill for it and so it doesn’t happen. Doctors don’t do it because they can’t bill for it. Eventually figure out how to bill for it, and then you’ll have a telemedicine with your doctor and 80% of the time, you won’t need to go into their building anymore. But that’s going to happen slower here than there, precisely because of where we find ourselves. So that will be interesting to watch.

Ezra Klein:  Tell me more about your theory that democracy and capitalism will eat each other. Why will that happen?

Bill Gurley:  Well, industries get more regulated and incumbents write the regulation. Let’s take one of the healthcare things, let’s take HIPAA. Every single consumer thinks HIPAA was written to protect them, from my perspective. HIPAA is an extremely dangerous policy in a day and age where we have the communication tools that we do. I’ve got a friend who’s an ER doctor and if he’s in the middle of an emergency situation and he’s got a friend that has the answer and he texts him and asks for help, that’s a HIPAA violation, like $50,000 fine. Now my friend does it anyway and if your mother were on that table, you’d want him to do it anyway. But you’re not supposed to do it … And, by the way, they have HIPAA audits. So there are people that are paid to provide HIPAA audits where they come around and test your systems, so all this HIPAA this and HIPAA that and, by the way, when Britney Spears’ data got disclosed, HIPAA audits tripled at this guy’s hospital, so it’s nice to know that Britney caused such care.

When you want to build a new system that heightens communication so maybe you can get the better answers faster, you run into HIPAA front, left, and center. Epic, who’s the largest healthcare system tool, EMR company out there, is notorious for not integrating with people. I’m certain one of the reasons they claim they don’t have to is because they hold up HIPAA and say, “No, can’t do it.” These regulations people think are written to protect themselves are written to protect the system. This isn’t an argument that all regulation is bad, it’s just how it matures over time.

Ezra Klein:  Yeah, I certainly think there’s something to that.

Bill Gurley:  I’ll give you a non-healthcare version real quick.

Ezra Klein:  Yeah, please.

Bill Gurley:  I was a backer of a company called Tropos that we sold, but they provided tools to let a city bathe their city in Wi-Fi. Obviously you think about why a mayor might find that to be interesting, to bathe the city in Wi-Fi. We found tons of mayors that were interested in doing this, and I think it’s simple to make the argument that a mayor or city might choose to build a port or a railroad or a highway, why wouldn’t they also build a digital highway if they wanted to for their constituency? But, over the years, the telco companies and the cable companies have written law after law after law to make it illegal for that mayor to do that.

If those laws didn’t exist when we would get a mayor excited about it, an AT&T lobbyist would show up in the smallest of places and start lobbying against this from the government. Our ability to provide competitive Wi-Fi services through a city, which seems to be, based on that narrative I just used, seems to be something they should be able to do, is blocked by the broader government through rules that were written by the incumbents.

Ezra Klein:  So then given these facts, and I agree with you, that healthcare is a place of many, many, many rules and many of them at this point outdated or not helpful to new entrants, and I think we said earlier that this is not an area ripe for overwhelming disruption. What are the layers of healthcare that you think are open to entrepreneurs? What are the spaces in the sector that you think people listening or who are already out there could profitably begin to hack away at in a useful way?

Bill Gurley:  Well one thing that happens, and I want to talk about it because we’ve actually made some bets, so I’m not 100% a pessimist here. I do believe that there are opportunities. One of the things that happens is a lot of startups get pulled into the system and that’s unfortunate, because it turns out that when you’ve got this thing that’s 18% of GDP and you start following the money flows, you enter a market in one place with a very altruistic notion that I’m going to change things, and ask things morph, it turns out you’re actually just helping the system get bigger and helping people collect, if you will, as a leach against the system.

There was a startup that I met with that was in the messaging space and I’m fascinated by messaging just because I think if there were more communication among everybody, it should lead to a more efficient world. I started asking, “What is it you’re providing? What type of messaging and how much do you get paid for it?” And they said, “We get paid $50 a message.” I’m like, “$50 a message? are like a penny. How could you get paid for that? What are you doing?” And he was connecting these rehabilitation centers with hospitals and it turns out the way our insurance has evolved, a hospital can move someone to a rehabilitation center and keep charging. And I said, “Well, what do you tell them?” And he goes, “When 30 days are up.” And I said, “Why 30 days?” And he said, “Well, that’s the limit to which you can get reimbursement against this type of facility.” This entrepreneur I’m sure started out thinking I’m going to make the system better, but all they were doing was helping the hospital maximize what they could charge. And I think that kind of stuff happens all the time.

Anne from 23andMe told me that she went through a similar journey when she decided to go into healthcare and she just noticed startup after startup that entered the system hoping to help, but when you follow the money flows and start trying to get paid, you find you’re actually making things worse. I don’t want to fund anything like that, just because … And it’s not like I have some kind of moral high ground, that’s not interesting to me, to make it worse. I want to hopefully be part of something that makes it better.

Ezra Klein:  So then to go back to the question, what are the layers of this that you think are open to being made better?

Bill Gurley:  This notion that I brought up, which we used the phrase “the consumerization of healthcare,” I think that’s starting to happen. I think consumers have lived through this transformation in other industries. Banks were notoriously open from 9:00 to 3:00. Banker hours is a metaphor that young kids probably won’t even know what it means anymore, right? But it’s because banks used to not have to be competitive with one another and they had rules that didn’t really think about the customer the way a normal business would. I think that trend is starting to change. We’ve made a few bets that relate to that.

One of them is a company called One Medical, which we’ve been an investor in for probably four or five years now, and One Medical is a premises-based healthcare provider. This isn’t a software company, although they have software tools. It is literally like Starbucks. They have to put one of these up. They focused on urban areas, so they’re downtown near your place of work rather than being near your home, they have a 24-hour appointment policy and I think a one-hour email response policy, and people love it. It turns out that it doesn’t take that much convenience to stand out like a sore thumb versus what people have grown to expect.

Ezra Klein:  Let me ask you something about that model really quickly, because I know One Medical well and I actually think they are a fascinating company. That seems to me to be almost the opposite of the high deductible consumerization of medical care. One Medical is you pay more on top of your insurance. They have a lot of people who have employer insurance, including a lot of people I know, you pay more on top of what you’re already paying for insurance to get better service, which is great, right? One should be able to pay more to get more, that’s all fine. But it does not seem to be the folks with the very high deductibles in Obamacare. That doesn’t seem to be where that’s going to lead.

Bill Gurley:  Yeah, and as I said, we made this investment three or four years ago and that was purely a bet that a number of consumers want something more than what they’ve been getting from their healthcare system. So last week we announced an investment in a company called Solve, which is very new. They just kind of took the covers off for the first time, so it’s early, but they’re fitting more to what you’re talking about. They’ve built a network, a marketplace, on top of these urgent care facilities and so this is more like OpenTable or Grubhub or Zillow, and it’s a curated set of these people that are operating with full price transparency and have this desire to kind of be competitive from a consumerization standpoint.

Like I said, they measure wait times, they want you to be able to come in right away. I think of all the bookings that we’ve taken, 80% of them have been within a two-hour window. So no one thinks about seeing their general practitioner unless it’s a complete emergency within a two-hour window, but the majority of people that book through Solve are doing it within two hours. So it is, trying to put this network layer, you can do things like check in ahead of time as opposed to show up and get handed the large clipboard full of papers to fill out because they know you’re going to wait anyway. In this case, you can get that all done up front. So you walk in and get seen and, by the way, after you’re done, you get a communication asking you to review that the actual practitioner wants to see, because they measure NPS scores, which I had talked about in the past.

This is early. That’s operating just in Dallas right now, but I anticipate that there’s going to be enough competitive providers who are willing to operate with that type of expectation that we’ll be able to build this nationwide.

Ezra Klein:  Let me ask you something about the broader thinking around both of these, which we were talking about a little bit earlier around the Houston primary care example, too, which is I don’t understand really why any of these were not viable businesses in a non-high deductible care model. These are all adding convenience by, I assume, taking a little bit of cut, so in some way like raising price at least a little bit, which is not necessarily a bad thing in this case, but adding convenience onto the system we already have. I think it opens this question of why the system just hasn’t had at least more of a demand around quality than it’s had.

I expect what’s going to happen with the high deductible world is people are going to accept less convenience and less quality. Again, it’s going to go in this direction of, if the regulators allow it and this is certainly what Republicans want to do by accelerating the deregulation of very, very narrow network, very, very high deductible plans that don’t cover that much and so on and so forth because they’re just too expensive. But this stuff, people have always had the ability to pay a bit more to get something a little bit better and it’s been a system resistant to it in large part because people seem very resistant to change and very set in their habits. They go to the same doctor for a long time, etc. What do you think here is changing? It feels like it may be something different than what we’re talking about.

Bill Gurley:  It’s totally plausible that they’re disconnected, that the time has come and these tools, by the way, because if you look forward, this telemedicine piece for these type of providers is going to become a big piece of it, because there’s just more convenience for the consumer that’s possible. Maybe it was just the time is right. I happen to believe that having high deductible plans out there or even people that opt out that are paying the penalty, they’re shoppers, too, put more people into the frame of mind where they’re making those choices.

Look, there’s also narrow networks and there’s many Kaiser clones popping up. There’s one called Scott & White in Texas that’s really impressive. It’s their own narrow network and they’re actually literally listing plans on the exchange. So they’re a wholesale carrier provider all in one package, and they are competitive from a convenience perspective, too. Maybe we’re just seeing a whole bunch of alternatives pop up, some of which are driven by this consumerization piece and that’s causing choice, and people are opting into it.

Ezra Klein:  Let me give you my theory. I think that some of this, and I think One Medical is a good example of it, is we are getting a culture into a different kind of convenience. You used Open Table and Grubhub, which I know are different than the new thing you funded, but I do think are beginning to habituate consumers to that kind of experience, so people are beginning to both expect it and feel more familiar with it when it comes around.

But the place that I’m curious if you looked into when you were doing your research is you’ve had the Apple Watch and Jawbone and all these different things that are essentially bioinformatics that you wear on you and right now, they’re sort of fun things for the fitness set, right? They’re for people who are pretty healthy already and enjoy tracking their sleep and quantifying their life and all of that. But it’s not too hard to imagine some of these things that are much better at helping folks remember to take their medications, for instance, right? A huge issue is drug adherence, particularly for people who are forgetful or who have mental health issues. Something on the wrist that was really good and simple at making sure they took their medicines, or at least reminding them to do it, could make a big difference.

You could imagine things that, I don’t know the science of this that well, but there are early markers of things like heart attacks and possibly there are things people could wear that would help alert them very early. If you had a very at-risk population, maybe that would help. That feels to me like where the technology might really make a big difference and both drive down costs and drive up quality pretty dramatically. Did you see stuff?

Bill Gurley:  Yeah, there’s a lot of stuff like that. Most of it’s targeted at acute care, so you’ll see startups like that targeted at cardiovascular issues or diabetes or things like that. They all struggle with how do you lean against the American healthcare system? Some of them end up trying to sell these solutions through the self-insured employer, which we already talked about is a kind of really non-optimal way to get out there. Some of them are trying to create the right to bill for a digital solution. It’s very new ground, so if I build an app and a wearable device that if I use, I’ll monitor my diet better and, therefore, I’ll reduce my carbohydrate intake and diabetes will improve, getting our insurance carriers to accept paying for that app or service as a billable thing is non-trivial. And there are startups trying to do that right now.

It’s not the type of bet we’ve made historically, because it’s dependent on your ability to get that acceptance, and I don’t know if that will happen or not. It may happen. We may see digital solutions become billable prescriptions. There are a number of startups trying to make that happen. Even if that technology can be helpful in that way, you still have to figure out a way to get charged in the US healthcare system, which is non-trivial.

Ezra Klein:  Let me then ask you, I’ve taken up enough of your time here, the question we use to close out this podcast, which is what are a couple books on healthcare or anything else that you’ve read that have influenced you that you would recommend to the audience?

Bill Gurley:  As I mentioned, the Catastrophic Care by Goldhill I would read on healthcare. Most of the other books I’ve read recently you’ve already had podcasts with the authors, like Sapiens I read recently, which I really enjoyed. In healthcare, there’s a whole book on the Singapore system you’ve probably read. I haven’t read yet, but I’m interested to read.

Ezra Klein:  Jeremy Lim’s

Bill Gurley:  Is it good?

Ezra Klein:  I think it’s Singapore Myth or Miracle? Yeah, I think it’s excellent.

Bill Gurley:  Yeah.

Ezra Klein:  It’s actually just a good book on healthcare straight up and from a non-American perspective I think really works. I highly recommend that book.

Bill Gurley:  Cool, I’ll read that. And I listen to all of your podcasts on the subject.

Ezra Klein:  Well, thank you. Alright, come on, one book on technology.

Bill Gurley:  There’s a set of books that I recommend startups read and some of them are basic, but there’s a book called Startup by Jerry Kaplan where he had a startup that was in like the tablet space, but it was called Go. It was before all the tablets actually were successful and they had the best investors, the best executives, and it was a colossal failure. What’s most interesting is on the way home every day, he recorded into a microphone and so he had a log of the story that was particular high fidelity and then after it was all over, he wrote a book about it.

To me, it’s the most real startup journey that’s ever been written, and it’s actually more real because it didn’t work. Most of the people in the book have gone on to do other things very successfully, but it was just super eye opening. So that’s one.

Crossing the Chasm for enterprise plays you have to read. Innovator’s Dilemma is probably the most efficient analysis of why startups are able to disrupt. These are books people know about, but entrepreneur should read these things like bibles.

One last one, which a lot of people have been recommending, Phil Knight’s Nike book that he just came out with about a year ago is just fantastic. Unbelievable.

Ezra Klein:  Bill Gurley. Thank you very much.

Bill Gurley:  All right. Take care.

Ezra Klein:  Thank you to Bill for being on the podcast. Thank you to all of you for listening to the podcast. Thank you to my producers, Byrd Pinkerton and Peter Leonard.



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