Profitability in Healthcare: Akhilesh Pathipati - MVM Partners

I am grateful for Akhilesh Pathipati, MD, MBA to share his journey, experience and knowledge. He is a partner at MVM, a healthcare focused growth equity firm.

We talk about:

1. His journey in venture capital

2. AI in Healthcare

3. Profitability in Healthcare

4. Health system design

5. Future of medical education

6. His investment criteria

7. And more!

Transcript

Akhilesh: [00:00:00] AI and software in general doesn't have hard barriers to entry the way something like a medical device would. And so there are a lot of vast followers for any given AI application in healthcare. Certainly that's the case in something like Radiology, uh, A. I.

Rishad: Hi, everyone. Welcome to learning with Rashad on this podcast.

Rishad: I speak with clinicians, investors and health care founders. Today. I'm very excited to bring you accumulation is a partner at MVM, which is a healthcare growth equity firm. We talk about his journey from a physician to venture capitalist. His views on AI in healthcare, profitability in healthcare, health system design, the future of medical education, his investment criteria, and much more.

Rishad: I hope you guys enjoy this conversation. Our childhood defines us to an extent. There are things we learn in our childhood that help us, [00:01:00] and there are things we have to unlearn from our childhood to make us be successful. What are some things from your childhood that you learned that helped you? What are some things you had to unlearn?

Rishad: Just talk to me a bit more about your childhood.

Akhilesh: Yeah, yeah, happy to do that. And, and, you know, thanks for having me. I'm, uh, I'm happy to be here. I'd say my childhood, um, was in a lot of ways pretty idyllic. Um, you know, my parents migrated from India. Uh, you know, worked hard, uh, to take care of the family and...

Akhilesh: Um, you know, in some ways it was sort of a representative American dream kind of childhood. Um, and probably one of the more interesting things about it was that I did move around a lot growing up. So, lived in a whole bunch of different cities across the U. S. Uh, spent a bit of time in India as well. And, I think that contributed to various lessons that I, I was able to...

Akhilesh: Learn and unlearn. Um, [00:02:00] you know, probably the biggest was learning how to adjust to new environments and, and get along, uh, with people in those environments. Um, and I, I'd say the way, or one of the ways that I got comfortable with doing that was by learning to focus on the similarities in, in these different contexts rather than the differences.

Akhilesh: Um, so part of that was superficial. You know, we could always find an olive garden wherever I went, and that, uh, that gave me this deep and abiding love of chain restaurants that I still have, but some of it was also deeper, and by that I mean, you know, being able to focus on the similarities between people, you know, people are kind of the same in a lot of ways, want the same things, want, you know, security for themselves and their families, want to be surrounded by it.

Akhilesh: people that they care about, respected in their community. And, um, you know, it's not necessarily a very profound insight, but I think as a lesson to [00:03:00] internalize as a kid, it was a good way to help relate to people and helped shape the way I think about the world.

Rishad: I find that a commonality in a lot of people I speak with as they moved around a lot when they were children, people define home as a location.

Rishad: They ground themselves with their child at home for someone like yourself. And I'm the similar way. I think I moved 12 times before I graduated high school. How do you define home? Yeah,

Akhilesh: I'd, I'd say that, um, you know, home for me, there is an element of the, the geography of it. You know, the various places I've lived, I consider to be hometowns.

Akhilesh: Um, but a lot of it is defined by where where people are that, uh, that I care about. So, um, you know, my family, my parents, I still sort of, even though I've been away from home a while, I still associate where they are as [00:04:00] home. Um, so it's very, that's very people driven for for me. Okay, perfect.

Rishad: Let's move on to investing and let's move on to the tension between an idea meritocracy and an idea democracy.

Rishad: A true democracy, I would argue, is mob bro. Do you agree or not? And when you're thinking of specifically board composition in a startup, how do you ensure the best ideas when not the most popular ones?

Akhilesh: Yeah, I think that There's a couple of pieces to that to unpack. Um, you know, one is giving deference to, uh, to the people who may have the most experience with the problem.

Akhilesh: Um, and, you know, allowing them to have a little bit more say and what the, what the solution should be. Um, and I think there's a rationale for that where I think it can get [00:05:00] tricky in general is that it's not always obvious who has the most expertise. Thank you. On a given topic and certainly good ideas can come from anyone.

Akhilesh: Um, so I think I think it ends up being a bit of a balancing act. I'm not sure that I have a clear or clean answer to how you strike that balance other than going on a on a case by case basis. And, you know, for example, a boardroom. I think there is another component to it, which is maybe not, um, sort of the idea meritocracy necessarily, but You know, there is an element of different members of a board, for example, may have different levels of skin in the game, so to speak, in terms of investment into a company and the amount of and that's both sort of financial investment, as well as, um, you know, time spent with the company.[00:06:00]

Akhilesh: And I think that, you know, there is a, there is an argument to make that, you know, those who are involved in really in the weeds will often, even if they're not sort of on paper, the ones who have the most. Uh, experience in a given topic, the ones who have the greatest insights. Okay,

Rishad: let's talk about what you look for in a startup in a founding team.

Rishad: I feel like we accept that innovation happens at the edges. It happens from outsiders of industry. But in healthcare, we reject this notion. Are we right to reject this notion? Are we right to look for industry experts, key opinion leaders, subject matter experts on startup teams? Um, or should we look for other things that grant and perseverance and value those higher than industry expertise?

Rishad: Do you invest in startups without a clinical leader on the team in some executive capacity? [00:07:00] Yeah, so it's another

Akhilesh: interesting question. Maybe maybe to start with some context of the sort of investing I do. So I'm with M. V. M. We're a health care growth equity firm. Um, what that translates to is we do make later stage investments.

Akhilesh: Um, so the companies we invest in their revenue generating have a product in the market are focused on scaling commercially. So the needs of the companies we invest in are in some ways different than the needs of Earlier stage ones. With that said, I think that, you know, there are certain commonalities and ways to think about the, the management team.

Akhilesh: Um, in our case, sometimes it's founders, sometimes it's, you know, founders have stepped aside to, um, to, to elevate professional managers. Um, in healthcare, I think that expertise is very important. Um, again, [00:08:00] good ideas can come from anywhere. Um, but having having had experience working through certain types of problems in health care, you, you can't replicate unless you've been through them, you know, understanding what a regulatory pathway looks like.

Akhilesh: It's important to have experienced that in some way before to really know the nitty gritty of it and what sorts of problems will arise. Understanding what obtaining reimbursement looks like again. It's uh, it's a complicated thing and health care. And as you alluded to just understanding the clinical side of the business.

Akhilesh: Um, you know, having having expertise around that, I think is pretty important. Now, all of these things are things that people can learn. Um, but, you know, having having gone through an iteration of it does tend to make that learning a lot faster. Okay, perfect.

Rishad: Let's talk a bit more about your criteria in investing.

Rishad: Apart from the [00:09:00] financial criteria, what do you look for? And some of your investments, you know, they seem like ideas that make sense and are very obvious, like AccuVein. Um, and it's almost like, why has, has this not been done until now? Um, what is your criteria? Do you look for these ideas that are obvious and there is some technology or IP mode?

Rishad: That, um, pushes them into existence. So what is your framework?

Akhilesh: Yeah. Yeah. So it varies by situation, but I'd say there's certain things that were that we're generally looking for. Um, so the first one is a meaningful unmet need. Um, so market need clinical need, and that can take various forms. You brought up acuvene.

Akhilesh: That's a good example. You know, it's, uh, it helps solve the problem of IV placements, the [00:10:00] single most ubiquitous procedure, uh, that happens. And yet people are not very good at it. You know, they take multiple times sticking someone to be able to put an idea. And, uh, you know, it really affects the patient experience.

Akhilesh: I mean, you'll hear, you'll hear patients who went into the hospital to get an organ transplant. And then the thing that they complain about when they walk out is the bruise that they had from their I. V. Um, so it's something that, you know, that that makes a lot of sense. Um, so there's that side, the unmet need, and we want it to be a large market.

Akhilesh: So, uh, It's important to solve small niche problems and certain certain companies we invest and do focus on that. But in general, you want to have a large enough market for the. The technology to be interesting. Um, third thing that we're thinking about is what their commercial experience has been because we're [00:11:00] investing in companies that have product market fit, have a bit of a commercial track record.

Akhilesh: We can look at the numbers, look at the sales, uh, generate metrics that help us project out what that will look like going forward, um, which is helpful. And then we, we plug that into our own models and decision making. And I guess the last big thing I would emphasize is we do think a lot about the team.

Akhilesh: Um, you know, to the discussion we were having. Is it a group that understands this market and understands this technology? Um, is there a track record with them? If there's not a track record, how do we get confidence about their their ability to keep solving the problems that could arise going forward?

Akhilesh: And so that that ends up being a big part of our our thesis as well.

Rishad: Okay. Are you testing the team members to tease out internal team dynamics and also to see if they would be open to being [00:12:00] replaced by an external CEO if needed as often as the case? At later stages.

Akhilesh: I wouldn't say it's something we're explicitly testing.

Akhilesh: Um, I mean, it's the sort of thing that you see as you see how a team interacts and how they answer questions. Um, in general, you know, because we're, we're often betting on a team where we're not thinking about. Replacing them. Um, but if we are, then, you know, we will. We will want to be up front and understand where their head is that and, uh, you know, that's something that they think would be would be beneficial for the business or how they think the company should address potential gaps in the in the personnel.

Akhilesh: It has

Rishad: Um, do you guys buy out previous investors? This is something I've been thinking about when I think about portfolio construction is went to exit. And internally, at times, I would like to exit [00:13:00] around, say, 100 million startups I've invested in, um, so I can invest in more because I really enjoy the initial path in helping startups and investing pre product market fit, pre growth stage, um, what advice do you have for investors like myself who are looking to exit into secondaries?

Rishad: Um, if we see an investor like you, um, Investing in a startup we're invested in. Should we approach you directly? Um, as something I haven't done before. It's something I'm planning in the future. Possibly. Um, so just what is your frank advice for me?

Akhilesh: I'd say You know, we we do, uh, buy out existing shareholders through secondaries.

Akhilesh: In some cases, I think that for an existing shareholder for whom that's of interest, um, you often the best way to communicate that interest is through the management team. So, you know, let them know you'd be interested as part of the financing and, [00:14:00] uh, getting a bit of liquidity and then. The team can convey that on that there would be an opportunity for that to a new investor.

Akhilesh: Um, and that could be through the management team. If that's who's guiding the conversations, if there's any other form of. Intermediary that's helping with fundraising, then that's another, that's another good person to communicate it through. How

Rishad: do you look at consultants and people who help startups fundraisers and take a cut?

Rishad: Is this something I have been approached with? And I've said, no, um, cause it just inherently doesn't feel right to me. And I feel like a, the startup founders that should be one of their skill sets because early on at sales and product. And you need to be able to do both. Is that how you look at it? And what is your, what is your thought on because there is an industry of people who help startups fundraise and take a percent cut of what they raise?

Rishad: Um, what is your, what is your thought on that?

Akhilesh: [00:15:00] From my perspective, I don't, you know, I don't have a problem with that. You know, I think for us, we're always looking for interesting investment opportunities. And sometimes a given, you know, founder or manager isn't going to Know us or have access to us and the people who can help them fundraise, whether it's a, you know, consultant broker in the case of a lot of our investments, and it ends up being an investment bank has a network that that can, uh, bring in additional potential investors.

Akhilesh: And I think it's, uh, you know, very reasonable for someone for that work to, um, You know, to take a fee for it. Now, what you don't want to someone who does not actually contribute much value who then, um, still expects a cut. Uh, so it comes down a little bit to who the person is and what kind of value they can [00:16:00] actually create.

Akhilesh: But but if they are, um, really bringing in investors that are that are good potential leads done. I think it's very fair to, um, you know, have that role in the ecosystem.

Rishad: Would you invest in startups raising funds publicly on one of these platforms? Or is that, is that a, no, when you

Akhilesh: say publicly on one of these platforms, what's

Rishad: your list allocations card?

Rishad: Republic.

Akhilesh: Yeah. So, so for us, that's not really, you know, the right fit for us generally. Um, you know, I think that. For someone, uh, interested in the earlier stage businesses, which is often where you'll find us. Um, you know, there's nothing wrong with those, but for us as a sort of later stage institutional investor, um, it just doesn't tend to align with the types of [00:17:00] companies that we're thinking about.

Akhilesh: So,

Rishad: um, let's talk about yourself and your path from physician to principal to now partner. Um, talk to me about the decision to pursue medicine, to pursue an MBA, and then your path from there to where you are now, and I'd like for you to focus on the why, why did you make those decisions, and at times, I find myself making decisions because of status, because of clout, um, and I'm really trying not to, so I'd love to hear your why and how you made decisions to pursue certain paths that you did, and what other options Were you battling with when you pursued medicine MBA?

Rishad: Um, and, and the various roles you've had post till partner at MBM.

Akhilesh: Yeah. Yeah, no, absolutely. So I guess starting at the beginning, the, uh, the interest in medicine came first and, you know, [00:18:00] we, we talked about childhood. It kind of started there with just an interest in science. You know, I used to watch sort of Bill Nye and the magic school bus and, uh, you know, read Seymour Simon books.

Akhilesh: Hopefully these are relevant references. Um, but you really, really felt curious about it. How the body works, and then I retained that as I as I grew up and got a bit older and started thinking about career choices. And then the other piece that came in, um, you know, as as cliched as it sounds, is that I like the idea of doing something that helped people.

Akhilesh: So you're putting those together. Medicine felt like a very obvious, um, fit for me. And, you know, that was what motivated, um, applying to med school and going down that path. I'd say the decision to do an MBA was a little bit more of a winding evolution in terms of how my thinking went. [00:19:00] Um, so a bit of context there.

Akhilesh: When I was in college was when the debate around the Affordable Care Act was happening. And so that got me quite interested in healthcare systems and care delivery models and how to, how to structure systems to Make the, uh, provision of medical care more effective. Um, so then I started to try to explore that through a bunch of different angles.

Akhilesh: Um, so the, the 1st 1 was through, uh, policy ones. Um, so I did an internship with. California health and human services that was actually focused on implementation and, um, you know, how to how to respond to the changes happening at the national level, uh, looked at it through a sort of health system.

Akhilesh: Hospital lens did another internship with, uh. With the chief medical officer of a large, um, health system and thought it was a really interesting set of problems around, you know, resource allocation within a [00:20:00] system, how to deal with personnel, um, things like that. And then there was a sort of technology entrepreneurship lens.

Akhilesh: Um, so started doing a bit of work with. Organizations that were coming up with with new types of care delivery. So this was this was stuff in the sort of early iterations of telemedicine platforms, devices for remote patient monitoring, uh, stuff like that. And I really enjoyed that. And I felt like An NBA, uh, would be a way to really bring a lot of these interests together.

Akhilesh: Um, you understand how organizations work and and help me better articulate how I could see myself pursuing these interests, along with also just helping me be a better doctor, because I felt like understanding these things would, uh, help me provide better patient care. Um, so that was that was what led to me doing the NBA.[00:21:00]

Akhilesh: Once I was in the NBA, I'd say sort of got a lot of things out of it. Um, if I were to just summarize sort of what I saw as the main the main things I got, you know, one was I think there was some hard skills. And what I mean by that is sort of accounting finance, how to work a spreadsheet. It's helpful stuff to just be able to process what a business is doing.

Akhilesh: A lot of it was soft skills, uh, thinking about interpersonal dynamics. Um, so I went to business school at Stanford. There's a class called interpersonal dynamics, which is more popularly referred to as touchy feely, but it's about, you know, understanding people and sort of dynamics of influence within a group.

Akhilesh: And I think that is a big part of what business school was about. Um, third thing was certainly building the network, meeting a lot of people and that ended up becoming important and sort of later parts of this path. And then fourth thing was the [00:22:00] credential of it. You know, I think people do when a doctor also has an MBA.

Akhilesh: It thinks that, uh, it lends a certain credibility whether or not that that is merited. Um, so anyways, I was going through the NBA. It felt like I was acquiring these skills. Went through a bit of a decision making process around what I wanted to do and actually decided that you know what the future held for me post MD MBA was residency and practicing medicine.

Akhilesh: So that, um, that was what I, uh, decided to go forward with. And, um, you know, matched into an ophthalmology residency was sort of the path I was on. I figured I would incorporate the business interest through maybe working with companies, maybe trying to do Technology development, maybe doing healthcare administration.

Akhilesh: Um, during residency, um, somewhat serendipitously, I happened to meet, uh, a person, uh, one of the team members at MBM, who is [00:23:00] also an MD MBA. And so the meeting came about just as a way to connect with someone with a similar background. And fortunately, I was able to start doing a bit of work with the firm, because I was going to ophthalmology First couple projects were around I care, but then it broadened out and it was a it was a nice way to get exposure to, um, the type of investing that MVM does, uh, you know, got to interact with the people.

Akhilesh: Um, really, really good set of, uh, colleagues. And so. You know, after a bit of time decided that it made sense for me to transition over. Um, so left residency and, uh, joined the team at MVM full time. And so that's now, uh, where I've been for a little over four years. Um, would say that for me, it was, it was very much the right decision.

Akhilesh: I wrestled with it a lot at the time, but, um, it's really interesting work. Get to meet a lot [00:24:00] of interesting companies and, uh, the people that are in a lot of ways pushing medicine forward. So that's that's sort of the overarching path. Let's talk about

Rishad: clinical medicine wrote a paper in 2015, talking about our technology will not replace the doctor patient relationship.

Rishad: Let's dig a bit deeper. Let's talk about AI. And if we break clinical medicine to the art and science of medicine, it's fairly easy to say. AI will replace the science and usually there's not much pushback because we think of AI as intelligent, but we do not think of AI as conscious, as possessing empathy, as being able to love, feel jealousy, feel envy, feel sadness, feel happiness.

Rishad: But we see AI can produce beautiful art with DALI. AI chatbots can provide companionship. We can see a future where our friends, [00:25:00] our partners to an extent, our counselors. In this future, do you still hold true that technology will not replace the doctor patient relationship?

Akhilesh: I would, yeah. And... I guess there's a few pieces of that to unpack.

Akhilesh: Um, so even on the science side, certainly AI has made tremendous progress and being able to manage that side of medicine, even then, you know, I think when I look at the systems that are out there right now, it is more of an adjunct to A doctor's clinical decision making than a replacement. You know, maybe that'll change.

Akhilesh: But in general, medicine is slow to change, especially with, um, sort of handing over that kind of decision making, uh, trust. So, you know, I think there's a ways to go even on that front to A. I really sort of changing [00:26:00] how. Medical care is is provided on the on the art side. Certainly, I is starting to make inroads.

Akhilesh: And as you said, I think that, uh, the intelligence of it is starting to pick up on a lot of the, uh, relationship part of an interaction. That being said, it's hard for me to imagine a replacement. Um, and I think that there's some good examples of this. So, you know, if you look at the sort of explosion of care provided by telemedicine during COVID, you know, people thought that that was a permanent paradigm shift.

Akhilesh: Why would people drive to a clinic and spend time in a waiting room when they could just. Do all their medical care via zoom. Um, and that has not really borne out. People do still go to the office. They do still wait in the waiting room. Um, [00:27:00] and it's because there's something to the in person interaction, not even whether it's with a human or with an A.

Akhilesh: I. But just physically being with a human that seems to be Uh, important to people. Um, all of which is to say, I think, you know, there's there's more to the doctor patient relationship than, um, than what technology, at least, at least at this point, can, uh, can replace. Let's talk

Rishad: about medical education.

Rishad: We've seen this with software engineering, where the value of a computer science degree, it's still valuable, but not as much. And we're open to looking and valuing people as a society and as investors. who have not gone to Harvard or Stanford or MIT for computer science. It's okay if you learn to code on your own or with coding camps or code academy.

Rishad: Do you see that happening in other industries in, um, in medicine first and foremost, [00:28:00] but also in accounting and legal services? Um, and I would say those two are probably more amenable to an LLM or a child GPT, and maybe this is because I don't know them intimately like I do medicine. Um, But do you see the, the pathway of education changing to more a decentralized system of certification and the ability to practice medicine in different ways?

Rishad: And I will caveat this with, as from my perspective, the opportunity cost of med school, residency, financial and time wise is too much, um, for future physicians. And I think we will see a shift in either physicians. For going that path to more, to paths that are shorter in time frame, but also less costly, like NP or PA or just doing something else altogether.

Rishad: Yeah. So,

Akhilesh: you know, again, I think a bit to unpack there, um, you know, like you, I'm [00:29:00] not an accountant or a lawyer. So hard for me to really say if, if those are professions that are going to have. Um, significant changes to, uh, the education path as well as, you know, what credentialing looks like. I would suspect that they are more, uh, accessible to LLMs as a, as a, as an area of expertise.

Akhilesh: Um, you know, to focus on medicine and medical education, I do think that the. Existing credentialing pathways are going to remain in place, um, you know, for medicine and sort of being able to, uh, treat people. I think there's, there's just too much, um, pressure to have that done right to. Sort of, at least in the near term, [00:30:00]

Rishad: change.

Rishad: Do you think that's, uh, that's because of accuracy or because of liability or accountability?

Akhilesh: I'd say it's a mix of all the above. I do think there's an accuracy component. Um, you got to be really sure. Um, not that, not that people are always accurate, but the standard for Changing the decision making is higher.

Akhilesh: Um, and yeah, I think that, you know, sort of liability, the whole, um, yeah, the whole, the whole ordeal of it is more challenging. So what I guess what that means for medical education, I think that the existing pathways will continue to be the pathways to train doctors. I don't really see. Or foresee significant decentralization of, uh, of how that works.

Akhilesh: Um, but in terms of what the existing pathway looks like, I think that can and should evolve. Um, and I guess to take a step back [00:31:00] as far as medical education goes, it is something that I've sort of been interested in. I think education is a an interesting subject in general. Um, and when I was in med school, did a bit of Sort of research and writing on on the education side.

Akhilesh: Um, started out as a parochial interest. Basically, how can I make my experience better but but evolved into some of this discussion around, you know, what is the right way to to really train doctors for for the future? Um, and I'd say there's a There's a few things that I think will probably change over time.

Akhilesh: Um, one is, I think the path to becoming, uh, a doctor will be or should be shorter. There's a lot of inefficiency and the education path. I mean, if you take Medical school alone. You've got the standard path set, you know, 100 plus years ago of sort of two years of [00:32:00] preclinical preclinical education to use a clinical education and within that preclinical part is heavily redundant with what people learn in college.

Akhilesh: You know, people are doing pre med requirements might as well make those useful and pull in a lot of the stuff that that's covered during the preclinical years.

Rishad: I'm still waiting to use the Krebs cycle in my clinical practice.

Akhilesh: Yeah, yeah, and you will, right? You'll just continue to wait indefinitely. Um, and then even the clinical years, I mean, I think that a lot of people, uh, you know, they decide their specialty at some point in their first clinical year.

Akhilesh: And then the 2nd, 1, they're either wrapped up with their rotations and not doing much clinically, or they're doing sort of peripherally relevant elective rotations. Um, and, you know, maybe some people do want to. [00:33:00] Do more and take more time. But for a lot of people, I think that ends up being unnecessary. So that's 1 thing where I think there can be curricular compression and that will happen over time.

Akhilesh: Um, the 2nd thing that I think, uh, there's a bit of a sort of, uh, cause of mine. You could say is, I think the culture around research and medical education is something that should change. Um, and there is valid. Thank you. Historical roots for that. You know, once upon a time, doctors were the main scientists who were, uh, the force behind most discoveries.

Akhilesh: Um, and for people who are interested in research, I think it's important for them to have Resources to be able to pursue that. Obviously, it's very important in terms of pushing medicine forward. But I think in today's, uh You know, medic med ed culture, it's turned into this currency [00:34:00] of achievement that is not linked to actually useful things.

Akhilesh: So routinely for people applying into competitive specialties, you know, they'll have dozens of publications. That's the norm. And yet, if you look at there's a study a few years ago that looked at. medical student publications and found that the majority are never cited, not even once. So you have this explosion of, uh, low quality research just because there's this expectation that everyone needs to be doing research.

Akhilesh: And that's time and money that could be better spent. You know, for people who are not interested in research, they could be doing things like policy or entrepreneurship or just becoming better clinicians. And what that does is it opens up more research resources for the people who are genuinely interested in pursuing research.

Akhilesh: And, you know, it's it's true in med school, [00:35:00] where, you know, sort of rates of people taking research years are at all times, all time highs. And it's certainly true in residency as well, where many programs will have built in research years that just extends the pathway. And then the third thing that I think is important in medical education is making space for, uh, teaching some other skills.

Akhilesh: And the two that I would have in mind. One is, uh, some of the stuff that you do learn in an MBA or things around understanding how health systems work. I think that when you hear about Physician frustration and burnout. Some of that is because of just not understanding how, um, how health care delivery works.

Akhilesh: Um, and I don't mean that in the sense that, you know, doctors don't understand health care delivery. It's that they weren't prepared to Encounter these challenges. And I think that some of that can be addressed. And the second thing is, I think [00:36:00] teaching should be more emphasized in the process of medical education, because In going through it, inevitably, people have to teach others, but they're just kind of thrown into it and told to figure it out, as opposed to there being any formal muscle behind that.

Akhilesh: So that, that's sort of my, you know, let's call it three point plan for fixing American medical education. And, and to the point you raised about, you know, maybe there is a shift to more NPS, PAs, other, uh, sort of mid level practitioners. I do think that, you know, there is likely to be a, uh, increase in, in that type of thing over time.

Akhilesh: Um, just because, you know, it is one, uh, a shorter pathway and two, there continues to be a need for more clinicians and that's a way to get more people, uh, into the field. When you

Rishad: were talking about achievements and how our research is looked at as achievements. by physicians and med students. And [00:37:00] it's almost this pedestal you need to reach by publishing in nature.

Rishad: It reminded me of the book I'm reading right now. It's called Start With Why by Simon Sinek. And he talks about achievement versus success. Something I've seen in myself as well. Oftentimes I am conflating achievements to success and thinking when I reach those milestones, I'll feel successful. I'll be happy.

Rishad: And this arrival fallacy is a massive issue in medicine, where we are told once we become staff, once you become attending, things will be better. You are successful now. You have achieved what you set out to achieve. Um, and then we almost feel, you know, okay, I have achieved what I set out to achieve. I'm attending.

Rishad: Why am I not happy? And it's because of this conflation between achievement, success, and happiness. And I would love to hear your thoughts about [00:38:00] what is achievement? What is happiness? What is success for you? And do you differentiate between the three? Um, or not?

Akhilesh: Yeah, no, I think, I think you're absolutely right.

Akhilesh: Those are not, uh, not all the same things. Um, I think that, as you said, there is this chase of, uh, of the next step. And it's true in medicine. It's true, you know, across professions. I wouldn't, I wouldn't limit that to medicine. And finding these signals of achievement that are sort of externally driven, I think, and it can create sort of transient satisfaction.

Akhilesh: But 1, it does not, I think, create internal feelings of success and happiness. And 2, I think, even externally, it doesn't necessarily accomplish anything if it's, uh, you know, in the example of sort of publishing something that never ends up really [00:39:00] good. Being used for for driving the field forward. Um, so I think that can be a little bit artificial.

Akhilesh: A lot of the signals of achievement. I think that what people feel proud about and feel like when people feel like they have accomplished something, you know that that is a barometer of success for an individual, right? Um, and, you know, that can be, I think, in the context of something That is also regarded as an achievement, but it doesn't have to be.

Akhilesh: Um, that can, that can take many forms. And similarly, you know, what ends up making people feel happy, I think, could be something else entirely. And, and I don't, I don't think there's a one size fits all answer to that. I mean, some people are very driven by achievements and. Success. And that does, I think, genuinely [00:40:00] contribute to them feeling happy.

Akhilesh: But for a lot of people, I think, you know, it does not. And what, what contributes to happiness can be something else entirely. I think for a lot of people, it's You know, time spent with family, for example, or time spent on hobbies, um, or, or other things like that. So everyone's got to find their own balance of, uh, of chasing those things.

Akhilesh: But, you know, as you said, it's worth, it's worth disaggregating what each of them are. When you look at

Rishad: how to design your life, I find there are two paths. One is a balanced path where every day, every week, every month is balanced. You're working nine to five, or you're working 40 hour weeks, and you have balance in life, you have weekends off.

Rishad: The other path, and this is borrowed from Naval Ravikant, who's the founder of AngelList, is the path of what he calls the lion's path, and, you know, he's, he's, [00:41:00] clearly he supports that path, because that's the lion's path, whereas the other one is the, is the, is the sheep's path, but I don't agree with that statement, but the other path is...

Rishad: You sprint and you work 100 hour weeks for six months, a year, two years, and then take a year off. So you have these, these times in your life, but all you're doing is devoting completely to one thing and being a startup founder. I think most founders will resonate with that. Um, and most VCs to an extent as well.

Rishad: Um, although I do believe as, as investors, we are backing the people doing the hard thing, which is founding the company. Um, what is your. What is your intuition there? And what are your thoughts on which path is the best path? And how do you look at balance in life, um, from day to day, month to month, and then also year to year, decade to decade, and in life as a whole?

Akhilesh: Yeah. Well, again, I think there's no one size fits all answer. [00:42:00] And as you said, I'm not sure sheep and lion is the, is the right way to characterize the two paths. The other thing that, you know, occurs to me as you laid that out is It's, uh, both of those paths fall along the spectrum, right? That's not a binary find the balance sheets path or a binary, you know, really sprint.

Akhilesh: Um, you know, I think that for any given person, they'll sort of flicker between the paths, uh, over time to differing magnitudes. Um, you know, certainly, I think a lot of the way high powered professions are set up is is on what you can call the lion's cup. Um, certainly medicine fits that mold and going through training.

Akhilesh: And then there's sort of this promised land of Of being an attending at the end of it. Um, but I'm not sure that that's [00:43:00] actually borne out for people who who set themselves up to follow the lines path. I think a lot of people go through a sprint to get to some point. And then what they find is that they're still sprinting and they they can't get off that treadmill.

Akhilesh: And I'd say that that's much more common than sort of going through it and then and then finding later balance. Um, so I think for any given individual, you know, again, some people want to be sprinting and that's fine. But if someone wants to have balance, they, you know, they, I think it's important to be conscious about finding that and, um, you know, being intentional about finding it.

Akhilesh: And I'd say, you know, that, you know, certainly I have plenty of sprinting that I do, but I certainly value having balance

Rishad: as well. I'll ask a question which may be thought of as crude [00:44:00] or pragmatic, depending on the lens through which you view the world. Would you make more money staying in medicine or being a VC?

Rishad: And then I would like you to balance this with the money in medicine is almost 100% risk free. Whereas the money in VC does involve some risk, which could be looked at as luck, and you can divide luck into dumb luck or luck is where opportunity meets preparation. Um, but do let's let's go with a crude question.

Rishad: Would you make more money as a physician or as a VC? Well,

Akhilesh: I think, um. Maybe a couple of dimensions to this, right? So as you alluded to, I think, you know, different paths have have sort of different trade offs. Um, I think when people leave medicine, you know, let's say to go into investing, there is the potential to make a lot of [00:45:00] money and could be a lot more money than, uh, than a career in medicine.

Akhilesh: Um, certainly, I think that's one goal of, uh, In in leaving medicine, among others, certainly not the sort of only or even necessarily driving goal. Um, however, it's at risk, right? Um, you need to be in a situation where you make good investments need to have access to those investments and put enough money in them to generate returns that, um, that are, uh And that's not by any means guaranteed.

Akhilesh: Um, so you then balance that against in medicine, particularly for someone who wants to make a lot of money in medicine, you can have a very high floor of income and just a very high expected [00:46:00] value, um, professionally. So. I don't know, uh, sort of what what ends up being the higher expected value. But, um, you know, there's different trade offs.

Akhilesh: I think the other thing with medicine that varies from some non clinical paths is, um. You do have certain choices you can make that are not necessarily available in other careers. So for example, a doctor can choose to live wherever they want, right? They can go to a very low cost of living place, in such a place they can Make even more money and have even higher purchasing power.

Akhilesh: Um, for a lot of other things, you have to be concentrated and certain cities, maybe less so now and sort of a remote working world, but still very much. There's a density of people and investing or, um, you know, other other [00:47:00] professions like that and sort of Boston, San Francisco, New York, these types of places.

Akhilesh: And so, you know, that's another what ends up being another sort of financial trade off to think through,

Rishad: you think founders are unnecessarily playing the game on hard mode. They're not in Boston, San Francisco or New York.

Akhilesh: Not necessarily. I think it depends on what they're trying to accomplish. Um, certainly if someone is building a business where they need it. A lot of very high caliber software engineers, they're going to be able to find those in certain cities, much more cinema than others. If they're building something that is, you know, uh, a technology, um, that requires a few people dedicating a lot of effort and those few people, uh, are interested in living [00:48:00] somewhere else, then there's no reason they have to have to be concentrated and in those places.

Akhilesh: Um, So I think it depends on on the circumstance, but I think there's a lot of great companies that are not in those cities. And, um, and I think there's increasing recognition of that in the in the investing world.

Rishad: What are some applications of AI and healthcare you're excited about?

Akhilesh: It's an interesting question. Um, I think that AI and healthcare, it's an area that's very much evolving. Um, and that's happening rapidly. Thank you. Um,

Akhilesh: there are tools around decision support that I think are pretty interesting. You know, you hear about sort of a standard examples and [00:49:00] radiology, let's say, to help clinicians make decisions. Um, there are tools around workflow management that I think are pretty interesting. There are tech enabled tools around things like clinical trial recruiting, um, and commercialization of new technology that are, that are certainly interesting.

Akhilesh: And while there's a, there are a lot of things that are interesting, I, I think that there is also a lot of reason for caution. When evaluating a I and health care on making sure you don't sort of put the cart before the horse on and sort of run ahead of what, uh, improvements it's actually able to deliver.

Akhilesh: Um, and I think there's a little bit of that happening now. So I'd say that that's sort of an important thing to keep in mind. The other thing that I think for people in general who [00:50:00] are working on AI and health care should bear in mind is that AI and software in general doesn't have hard barriers to entry the way something like a medical device would.

Akhilesh: And so there are a lot of fast followers for any given AI application and healthcare. Certainly that's the case in something like radiology, uh, AI and. If there isn't a sustainable way to stay ahead of that competition, what it translates to is a race to the bottom on pricing, maybe something like that's okay.

Akhilesh: When you're doing something consumer facing with really massive markets, if you're targeting one niche application in healthcare, you know, that market may not be large [00:51:00] enough to make that an interesting, uh, An interesting business case once once you start to get a crowded market. Um, so I think that's something that, you know, founders and and startups need to keep in mind when they when they decide on what aspect of A.

Akhilesh: I. And health care. They may be working on

Rishad: one question. I try not to ask founders as I don't think it's a fair question is What if incumbent X does this? What if they copy? What if, you know, we've seen examples of Instagram and Facebook or Zoom and Microsoft Teams, where the startup has achieved distribution before the incumbent has achieve production.

Rishad: Do you think it's different in healthcare? And specifically, I'm referring to Epic and their, you know, somewhat famous mantra that [00:52:00] they do not acquire companies, they copy them. Um, do you think it's a, it's a realistic fear for startups in healthcare? And if so, what is a good answer to that question? If they're building something.

Rishad: That epic could potentially copy. Um, how do they navigate

Akhilesh: that? I think it's a realistic fear. And, you know, certainly investors have to weigh that risk when they're considering investing in a company. That being said, I don't think, you know, someone can just throw their hands up and not try to solve a problem because someone else might try to solve it.

Akhilesh: Right. And I guess there's two things that are sort of worth saying in response to that question. One is that large incumbents, uh, they can only focus on so many things, you know, they're not going to go and reinvent [00:53:00] every single solution. That's out there. There's just not the ability to do that. And, you know, they tend not to be set up to do things like that.

Akhilesh: Most incumbents are set up to innovate. By the, uh, the products and services that they want to expand into. Um, so that's that's the first one. And the second one is exactly that, that, you know, ultimately, the large incumbents are going to have a buy versus build decision, you know, maybe epic is one example where they say they won't buy things, but in most cases, someone else might.

Akhilesh: Um, and so, you know, that's, that's something that I think startup managers need to believe, and that's something that investors and making their investment decisions have to come to a view on. If

Rishad: you could go back in 10 years and give yourself one piece of advice, what would you

Akhilesh: tell yourself? [00:54:00] That's a good question.

Akhilesh: I think for me, you know, 10 years ago, I was, I was very much in the midst of figuring out what I was going to do in life. And so what I would advise is get exposure to as many things as possible. I think that. You know, having very broad exposure is the best way to make informed decisions, and I often talk to people who are roughly at that stage and, um, you know, they're, they're sort of asking, well, how do I get into investing?

Akhilesh: Um, and, you know, there, there are answers to that, but I think a lot of times the, uh, the most important thing for them is to decide. What they want to do and the best way to figure that out is is exposure.

Rishad: Last question. If Elon Musk gave you a one way to get to Mars. To help him build a health system there, [00:55:00] would you go?

Rishad: And you could take as many people, friends, family you want.

Akhilesh: Well, building the Martian health system. Very intriguing. Uh, I, I would not go to Mars. I think, uh, you know, I like it on Earth and got, got more stuff to see here. But, um, you know, I'd be happy to advise him from Earth on, uh, on how to set up that health system.

Rishad: One thing I struggle with. is profitability in healthcare and specifically designing a healthcare system of profitability which has equity of access but also if profitability is the motive the first the easiest way to trim the system of excess Um, expenditure is to fire physicians. I feel we're a very expensive way to deliver care.

Rishad: Um, [00:56:00] so I'd love to hear your thoughts about profitability in health care, um, equity, and then, you know, how do you look at the future of physicians in a profitable system? And also, where should the profits lie? Should they lie in the delivery of health care, in the delivery of primary care, tertiary care, secondary care?

Rishad: Or in innovation or R. N. D. or the pharma biotech side of health care. Yeah, that's an

Akhilesh: interesting question. Um, I guess for me, and this will reveal some of my own biases. I don't have a problem with the profit motive in health care. Um, you know, I'm sort of a, uh, capitalist in that regard. And, uh, I think Private enterprise tends to deliver efficiency and innovation and, uh, in a way that, um, you know, the public sector often can't.

Akhilesh: That being said, I think what you need for it to work is [00:57:00] appropriate guardrails and regulation to, um, to keep the system doing what it's supposed to be doing. Um, and so what does that look like? I think that can take various forms. You know, one is you make sure that. Health insurance is available to everyone, um, in some form or fashion.

Akhilesh: You make sure those plans that are offered have some level of minimum, uh, requirements, uh, minimum standards. Uh, if that's too expensive for people, you know, you can have subsidies to make sure that it's available. So, you know, I think different countries have... Sort of looked at different ways of solving that problem, but I, I think those are, uh, tractable problems.

Akhilesh: Um, you know, another thing that I think is sort of a good example of where, um, you know, regulation can. Bring down costs and then by [00:58:00] extension, increase access is this issue of. Administrative waste and health care. Um, there's there's just a lot of administration and U. S. Health care, right? And you referenced where the expenses in terms of personnel and arguably doctors are expensive, but, um, there's this popular chart you may have seen that shows over time, just this total explosion of non clinical staff and health care Relative to a very stable, um, number of clinicians that are actually providing care.

Akhilesh: And, you know, I think when you look at why that explosion has happened, it's because there is a lot of poorly thought out regulation that creates more bureaucracy. But there's also things that are just unnecessary. So, for example, Every insurance company having a different set of mechanics for billing and [00:59:00] coding, which requires lots of people to be able to work through those mechanics.

Akhilesh: It's because of a lack of interoperability of medical record systems, and people are working on that, but, you know, health systems want non interoperable systems so that it's harder for patients to move and. There's no need for that to be the case. That is something that could be acted on by the government to create standardization around those sorts of things.

Akhilesh: And when you do that, I think you take out a lot of the expenditure, a lot more, in fact, than what is spent on physicians. And, you know, that then contributes to lower costs and being able to dedicate more resources to increasing access. So that's that's sort of a, I guess, set of general thoughts. Um, and I guess 2 other things I might mention just about where I think the profit motive is a little bit underappreciated and, uh.

Akhilesh: In U. S. Health care. Um, you know, [01:00:00] one is around new technology. So you mentioned, you know, should should new technology be an area that's profitable? I think that it should be. I mean, that's why that's why people develop new things and because the strongest profit motive is in the U. S. This tends to be where that technology is developed, validated and ultimately paid for.

Akhilesh: And then it spreads to other countries. often at lower cost for two reasons. One is that companies have made their profit in the U. S. so they're able to offer it elsewhere at lower cost. And two is they go to other countries once they're at a scale where their cost of production can come down. Um, and so what that translates to is it's not actually that other systems Have eliminated the profit motive and have therefore been able to offer more equitable care at lower cost.

Akhilesh: It's that the U. S. system where [01:01:00] there is that profit motive has subsidized care in those systems. I'm not sure that's, uh, talked about enough. And then the second thing that I'd say about the profit motive is that it's a way it's something that enables more patient choice. So again, if you look at the U.

Akhilesh: S. versus other countries, People here do have an inclination to spend more on health care. Um, even when something is cash pay, not covered by insurance, it's much more likely to be taken up here than than elsewhere. Um, and that translates to heavy spending in some areas. I think a couple of good examples.

Akhilesh: One would be end of life care. Another would be on things like cancer care. Um, and You know, I'm not saying that's the right priority, that there should be a lot of spending on those things, but there is an argument that, you know, if a rich society is going to choose to [01:02:00] excessively spend on something, extending life might be that thing.

Akhilesh: Um, and, and I think, uh, it's something that's at least worth, worth thinking about and, and how these systems are constructed.

Rishad: Yeah, I think, um, so I don't know if we talked about this, but I used to do quite a bit of palliative care, um, and end of life care and medical assistance in dying as well, which would be called euthanasia in the States.

Rishad: I think the, the, the quality and quantity of life and patient choice and autonomy comes into play there. And different cultures look at this differently. Um, and some cultures, life on earth is not our life in totality. And death is but a passageway into her future life. Um, in most cultures, I think that is the case.

Rishad: [01:03:00] Um, and in some it's more, this is the life that we know. And even though there might be a life in the, in the future. Um, and I think this is where most atheists and, uh, agnostic individuals stand, um, since we don't know, there's no point in designing this life based on that life, um, and there are people who say life of suffering, and Mother Teresa is a good example here who thought this, a life worth of suffering is a life still worth living, um, whereas there are people who say it's not, um, yeah, I, I agree, depending on where you stand, you should have the choice.

Rishad: To make either decision. Um, and U. S. Most definitely subsidizes innovation for the entire world. I don't think there's a good argument to be made against that. Um, I'd love to talk to you about health system design. I took a course 10 years ago about primary care [01:04:00] design. Um, it's one of these online courses from Hopkins.

Rishad: I believe that one was, um, and essentially the, the takeaway was people don't like traveling for healthcare. So instead of. building these behemoth centers of innovation, we should build a decentralized system, which brings patient care to the home. So I'm a big proponent of the hospital at home model. Um, you know, MassGen is doing this, Mayo has been doing this, Medically Home has been around for 20 years now, although they've recently taken off from a investor or valuation perspective.

Rishad: Um, I, I'd love your thoughts on healthcare system design. Do you agree with that? Do you agree that these, these, these massive centers, I like them, physicians love them because everyone's there, it feels nice, you know, kind of a nice environment to work in, all the specialists right there. Um, but I, I think it's hard to argue against patients, [01:05:00] you know, the traveling component.

Rishad: Now, if, if the decentralized system means that they don't have access to these subspecialists or they don't exist, then I think there's a good argument to be made against a decentralized system, but I'd love to see where you stand on healthcare system design. And, you know, if you were given a clean slate, say you you ended up in Mars, even though you don't want to be there, and you're designing the health system.

Rishad: How would you design it? How would you design in terms of primary tertiary care services offered? Um, and then also, let's talk about the model of payment. Would you design it in a pay writer model? Would you separate insurance from the delivery of care to an extent, at least in terms of ownership?

Akhilesh: Yeah, no, it's a it's a super interesting question.

Akhilesh: Um, yeah, I guess for me, there's a I'll give you sort of a couple of principles that I think are worth having in a, in a health system design and then what I think it would be nice to [01:06:00] translate that to. So, in terms of the principles, I think. Having broad access to care is important. Um, you know, I think everyone should have access to care.

Akhilesh: I do also think everyone should contribute to payment for care and I don't feel that should be. Employer. Sponsored. I think it's better if it's if it's done at the individual level.

Rishad: Can I pause you there? I'm going to forget this question. Why is it employer sponsored? Who came up with that? And, you know, to be blunt, who thought it was a good idea?

Akhilesh: I think the history of that is in the US, there were wage controls around World War Two. And so employers. Got around that by offering health insurance as a, as a way to essentially pay people more. Um, and then that model has just stuck around ever since. So it's just a historical quirk. Um, I think I, and I think a lot of people would [01:07:00] think if employers just paid people more and then individuals made, uh, made their health care decisions that would be a little bit cleaner than the whole employer driven model we have today.

Akhilesh: So anyways, that was one. And then the second thing is, I do think, as I alluded to earlier, that private, um, provision and coverage of care makes a lot of sense. I think you just get more sort of innovative, uh, and efficient thinking that way in terms of what I think it would be nice to translate those lessons to.

Akhilesh: Um, I do like the payvider model. I think that, you know, again, it breeds efficiency. And I think if you look at some of the most Naguchi Effective health systems. They do follow that model. I mean, Kaiser is is the sort of obvious example. Um, huge system keeps cost down. Very high performance on quality metrics.

Akhilesh: Um, the [01:08:00] challenge is that it's difficult to create that model and and, uh, the current environment and. You know, even they themselves have struggled to replicate the model and new geographies. Um, but if you were able to design something from scratch, I think if you could set up a system with multiple competing pay viters.

Akhilesh: Um, you would get that for me would be the optimal system in terms of the site of care. I do think that it should be more and more outside of the hospital. Um, I think decentralizing care, getting the people at home, or if not at home and some sort of more convenient and. Patient centered setting is, uh, ideal and that's playing out in our existing health care system in various ways.

Akhilesh: You know, [01:09:00] there are more at home models. There's a lot more direct primary care with sort of storefront based clinics. Um, you see a lot more retail clinics, things happening in pharmacies. You know, CVS obviously is making a A big push and that kind of model. Um, and I think it's good to see that continue.

Akhilesh: And I think part of what's exciting is seeing how technology is now enabling that through, you know, better patient monitoring, being able to keep track of vitals. Um, we have a we have a company that is in that space. And, um, you know, I think that will only that will only continue to, uh, to accelerate.

Rishad: Perfect. Yeah, I, I think I agree with all the points you made there. Um, the, I like the Swiss model where healthcare is [01:10:00] mandatory, uh, but it's subsidized if needed. Yeah, but it seems like the, the first step is to decouple healthcare from employers and it seems like it's just passing the buck, uh, and so to say, yeah, yeah.

Rishad: Well, this has been a lot of fun. Anything else you want to tell our listeners? Thank you.

Akhilesh: No, no, really appreciate you. Uh, you having me on and, uh, really enjoyed the discussion.