Andrew Walker

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On December 20, 2015, Andrew Walker commented on Iora Health: Redefining Primary Care :

Great review! Very interesting to see this very innovative approach in a high risk, high reward start-up that could potentially change how care is delivered across the country.

Your segment on the health coach left me with several questions. How do patients trust the health coach; are they credentialed professionals in the health care space or are they solely facilitators who have patients follow best practiced outlined in a 3-ring binder? It would be interesting their data on how people respond to the coaches. Is the patient/heath coach contact initiated primarily by the health coach? Is the health coach on call? Operationally I see the creation of the health coach as a smart strategic move to manage the care of the patient, but see it as a potentially life threatening issue if the person has no health care background and is unable to see major issues that only a trained individual could see. That seems like it would be a litigiously ripe situation. Moreover, with potentially 300 people per coach, and if the coach reached out to 5 people per day, then you’re looking at about 3-4 points of contact per person per year if you use 262 annual work days. For the “invincible” population of 18-35 year olds, what incentive do we have to want to keep such a high level of contact with that person if I am using health care services on average once every few years? That seems to detract from the level of satisfaction rather than increase it. However, if this service is primarily geared for the older population, that can make sense particularly if it is skewed towards the older demographics (50+ yrs of age) where screenings are key to minimizing long-term cost and to ensure that medications are being accurately and routinely filled and consumed. Operationally and business wise, this seems to make a lot of sense.

I do see tremendous value in the “non-billable” activities that Iora prioritizes, like getting a doctor or health coach routinely on the phone with an ailing patient to walk through taking medications and resolving barriers to successful adherence. I think this is one of the biggest failings of the current health care system, because it financially incentivizes parties not to act on the best interest of the patient but rather to expand the income base through more robust billing for individual services.

It is extremely interesting to see that their operating model included creating their own EHR system; it makes sense strategically but extremely risky as such a small organization. I would be very interested in seeing if they could operationalize connections to large EHR systems like Epic or Cerner given that not all patients with Iora will be prevented from hospitalization. They will need to integrate with these systems to get information regarding their patient’s care at those organizations. I could also see not a scaling issue, but a major competitive threat from these software systems as well as organizations like Cleveland Clinic and Kaiser Permanente who excel at creating independent subsidiaries in the start-up mold. These startups would have the full financial backing of such organizations, have access to their contracting systems and contacts, and have access to the full process of care from PCP to hospice and everything in between.

Great write-up!

On December 20, 2015, Andrew Walker commented on Amazon: Taking over the (Retail) World :

Amy, thanks for the write-up. I’ve been following Amazon closely for years and its interesting to see your analysis.

Personally I find it suspect that Jeff Bezos can one day flip a switch and make Amazon terrifically profitable instantly without fundamentally undermining the company’s culture. Because Bezos essentially wants to penetrate and dominate every possible market available to him AND create new markets, a vast amount of Amazon’s capital and manpower is tied up in long-term projects that may or may not pay dividends for years, if not decades. To me, if the company’s strategic outcome is to own the channel for nearly every product or service for nearly every human being, I think their business and operating models are incredibly synergistic and complementary.

However, if the operating and business models are to make a very profitable company that can grow remarkably fast in perpetuity, I become concerned. The only way to instantly or near instantly become very profitable would be to reduce customer service, increase prices, and/or reduce many long-term high risk projects. There are serious risks to do any of these, as it creates strategic openings for new or existing competitors to exploit. If Amazon has grown so big that it truly owns the retail market for a vast amount of needs and wants for the global product, raising prices could trigger antitrust proceedings. Amazon could become the AT&T and Bell of yesteryear.

I would also like to get your take on how the new regulations being proposed on government internet intervention could sway their business model. Would the new requirements to treat everyone equally retrench Amazon’s competitive advantage, making them even more potent of a competitor? Or could public push back from these regulations reverse them and create paid speedways within internet traffic; how would this affect their operating model?

Great post!

On December 20, 2015, Andrew Walker commented on Allergan: The M&A Machine :

Very well written and very compelling. A few thoughts on your post:

– It appears that Allergen primarily focuses on the growth by acquisition with little thought of producing products through its own R&D. With acquisitions at a red hot pace, what is the future of Allergen/Pfizer when there are no large acquisitions to be had? Can they sustain the same level of growth by purchasing each year large quantities of small pharmaceutical companies that have 1-2 promising drugs which the small company has bet the farm on? Or will the growth start to plateau as these targets become either too rare or too expensive as Allergen concurrently does not have a significant pipeline of potential drugs?
– Is this position defensible if the United States and other first world economies pass legislation or regulations penalizing companies that do a vast majority of their business in the United States but are headquartered in an economic safe haven? How would the operational and the business models need to change to adapt to this threat?
– How does Allergen so successfully combine the merged businesses? M&A is an inherently difficult and messy process with failures littered across the competitive horizon. Would it make more sense to qualify Allergen’s primary competitive competency as a company that excels not as a pharma company but as an organization that has mastered the M&A process? From your write-up, I would be interested to learn more about how they do so well combining companies and whether their acquired companies are largely shaved of their HR expenditures in favor of keeping the intellectual property. Do they fold the new IP into their current production capabilities and shutter the purchased company’s plants, decreasing the expenses of merging? Or do they keep the full company largely in tact with only redundancies removed? Great post!