🎧🍌 Making Healthcare a Product, Not a Service | Adrian Aoun (Founder and CEO, Forward)
Discussing the poor incentives of health insurance, why tech has a negative ROI in healthcare, being Larry Page's right-hand man at Google, and building an operating system for healthcare
Adrian Aoun is the CEO and Founder of Forward. Forward is rebuilding healthcare as a product, not a service. Forward has publicly announced raising over $220 million to date, and is supported by investors like Founders Fund, Khosla Ventures, Softbank, Expa, Marc Beinoff, Ashton Kutcher, The Weeknd, Lee Linden, Josh Kushner, First Round Capital, Eric Schmidt, DCVC, and more,
Before starting Forward, Adrian worked as Larry Page “right-hand man” at Google to setup and launch new companies inside of Alphabet. He joined Google through the acquisition of his AI startup Wavii, and spent his first year at Google helping create and build its AI division. He was on the President's Council of Advisors on Science and Technology, and invested in many breakout companies including Stripe, Uber and Anduril.
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In this episode, we discuss:
How health insurance leads to poor incentives
Why technology has a negative ROI in healthcare
The founding story of Forward
Why healthcare should be a product, not a service
Building doctor's offices like Tesla builds cars
Being Larry Page’s right-hand man at Google
Building a “healthcare operating system” like Apple builds the app store
Adrian’s contrarian views on the food industry
Why animal farming is a bigger climate issue than you might think
Why Adrian’s so impressed with Zuck
Thanks to Zac and Xavier at Supermix for the help with production and distribution!
Find transcripts of all prior episodes here.
Turner Novak: Adrian, how's it going? Thanks for joining today.
Adrian Aoun: Thanks for having me, man. Glad to be here.
Turner Novak: To kick things off, can you talk about how the healthcare industry in the US works?
Adrian Aoun: Yeah. Oh God. “Works” is a big word. Let's go with “Not works.” I'm going to give you maybe a little like of a history lesson, and I think I'll probably get this 80% right. So basically the way that it worked is back in the day – think back to like World War I or World War II – what happened is we didn't have this national healthcare system that we have today.
Instead, what happened was, there were employers, like you've heard of Kaiser. Kaiser was this pretty successful entrepreneur not even having to do with healthcare. And they were creating these local health care systems that people were either paying monthly into and it was good to go, or they were not paying monthly and rather paying for services, fee-for-service.
Turner Novak: So this was pre-insurance?
Adrian Aoun: Yeah, way before insurance. And then something really interesting happened. Basically in World War II, we lost an enormous amount of people in this country so when everybody was coming back and businesses were trying to get going again, they were like, “Well, shit, we gotta compete for talent.”
Because there wasn’t an enormous amount of talent, they were just hiking up the wages and being like, “I'll pay you more.” “No, I'll pay you more.” And all of a sudden the government was like, “Uh oh, this is going to cause a problem.” So then the Fed or Congress, somebody I don't know, was like, “Nope, we're putting a salary freeze across the entire country.” I know it's kind of wild.
Turner Novak: It’s like a salary cap in sports.
Adrian Aoun: Yeah, totally. Exactly. But I think the way it worked was whatever salary you're paying today, that is now your max salary. Every good entrepreneur, every company out there was like, “Fuck this. I'm going to come up with other ideas.”
And so they said, “Okay, well what else can we do? We could start giving these things called benefits or perks. You’re paying for healthcare? We'll pay for that healthcare.” So basically they’re side-loading comp to the employees. Each step of this along the way, it’s totally fine.
But here's where it starts to take a turn for the worse. The government looks around and sees that a lot of companies are giving their employees healthcare. We like our citizens having healthcare. So then they actually said, “That thing that you were doing voluntarily? Let's go ahead and let's make that mandatory.”
Now it becomes the law that you have to have healthcare via your employer as long as the employers of above a certain size. But now you're living in a country where basically your employer, no matter who you are, is probably paying for your healthcare – that's the vast majority of healthcare. In some ways, that kind of sounds awesome, right? Each step along the way, this was a good decision.
But now let's take a step back and let's think a little about like the world we've ended up in. My girlfriend, she comes up to me sometimes, and she's like, “I didn't get a checkup this year.” I don't sit there and go, “Oh, fuck, you're going to die!”. I look at her and I go, “Nah, you should go to the doctor.” But let's be serious – I'm not sure it makes that much of a difference.
And you're like, “Well, wait a minute. Why have we intuitively learned that maybe healthcare isn't doing that much?”. You see how many of our friends are out there being like, “Don't worry. I'm really healthy. I drink organic smoothies and I use Method soap.” And I'm just sitting here like, are you fucking kidding me right now? Organic smoothies are a cure to cancer? Method soap is our cured cancer? What's going on?
And it all comes back to this funny thing, which is that your employer's paying for your healthcare. And you go, “But wait a minute, why does that even matter?”
The average tenure of an employee with their employer in the US is shockingly short. It's like two and a quarter years. So if you think about it, if that employer is paying for your healthcare, what they're focused on is things that are going to happen in that two-year period.
(2023 US Tenure Distribution per Zippia.)
So when I was at Google as an example, they came around every year and they were like, “Time to get your flu shot, Adrian. Time to get your flu shot!”. Everybody's talking to me about these goddamn flu shots. Is there some huge rash of flu deaths going on that I don't know about? No. So what the hell are they doing?
Well, really what they're saying is, “If you get the flu, you're going to miss some work. We're out a couple bucks. Maybe you get somebody else sick. That's causing us problems.”
But how many people do you know who are dying of cancer or heart disease? Literally everyone, right? These are the biggest killers in the world. But Google never came up to me to be like, “Adrian, let's talk about your blood pressure. Let's talk about your cholesterol.” Or, “Hey, we're Google, we're advanced. Let's go ahead and sequence your DNA, maybe understand the cancers you're going to develop over time, or other illnesses.”
They didn't want to talk about that. Why? Because that's not going to happen in that two-year period. That's 10 years, 20 years, 30 years out. And they're like, “I'm not going to fucking spend money now to help the next guy, the next employer, save some dollars. That makes no sense.”
And so what we've done is we've created an entire healthcare system that's focused on keeping you at work, not keeping you alive. It's just too short-term oriented. And you kind of know this, right? Because just ask yourself: the last five times you went to the doctor what did you go for? Usually it's like, “I went for my rash, I went for my, my flu, I went for my cold.”
Okay, awesome. Except you just spent the last 20 minutes with a doctor talking about a rash instead of talking about the thing that's going to kill you. This is insane. In fact, you know this.
Go to a doctor and get your checkup. And I promise you, nine out of ten times, they’re going to look you in the eyes and say, “Turner, you're good to go. You're healthy.”
And you’re just sitting there like “What do you mean I'm healthy? What’s my probability of death? A hundred percent. So what does that even mean to tell me I'm healthy? I’m gonna die so tell me what I can start doing to kind of prevent those issues.”
What you realize is the only time they'll deal with those issues is that the last minute. So what they're really saying is, “It's not that you're healthy, you're just not sick enough for me to care yet, but if your shit gets really bad, that's when I'll start focusing on it because it starts to enter into that two-year window that the employer pays for and thinks about.”
And that's the problem of healthcare in America. In some ways, the incentives that we've created have caused massive amount of misalignment.
Turner Novak: How did we get caught in that rut? Like are there any ways we've messed up?
Adrian Aoun: Yeah, so I always start with “Why did the world not develop in the right way?”. I always ask myself “What was the incentive? And then when did the technology follow?” And tech doesn't have to be Silicon Valley tech. It could be the printing press or the cotton gin. We've had an insane amount of technology over time.
The first thing is we've created this really odd structure where innovating in healthcare is ROI negative. Let me give you an example. I was over at Google and I was doing a bunch of the Alphabet stuff, starting Alphabet companies.
I remember at one point I was like, “Healthcare is huge problem. Let's go after healthcare. You know what I'm going to do? I'm going to go buy One Medical.” These are the decisions you can make on a moment's notice at Google.
And so I met up with their founders, a really nice guy, Tom Lee. I sat with Tom and I was like, “Here's the deal, Tom. I want to buy you and I want to give you billions of dollars. Tell me how you're going to go take over healthcare.” They were the preeminent tech-y healthcare company.
And Tom looks at me straight in the eyes and he goes, “Adrian, in healthcare, technology investment is ROI-negative.” And I was confused, like, “What? In fucking gardening, it's ROI positive. How the hell in healthcare, the biggest industry on this planet, 20% of GDP, one in five dollars in this country goes to healthcare – you're telling me technology doesn't help that?”
But what he was saying was actually incredibly insightful. What he was saying is, “When I bill, I see a patient and I bill based on these things called billing codes.” Let's double-click on this because you'll quickly realize why this all breaks down.
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