#118 A Better Future for Healthcare - Andy Schoonover on Crowdfunding for Healthcare, Search Funds, Buying A Company, Work-Life Balance, Bitcoin & Problems With Healthcare

[00:59] Paul: Welcome to The Pathless Path. I'm Paul Millerd, and in this podcast, we examine the invisible scripts that run our lives and dare to imagine new stories for work and life. Welcome to this edition of The Pathless Path podcast. Today I am talking to Andy Schoonover. He is the founder of CrowdHealth, and as you might have noticed, a sponsor of this podcast and really appreciate him and his company sponsoring me. But I am talking to him today because I am curious about his personal story, how he got to founding CrowdHealth, some of the steps along the way.

We're going to dive into healthcare, how to think about healthcare for the US and solopreneurs and self-employed people like me and you, the listener, what the future of that looks like. And all of that. Welcome to the podcast, Andy.

[01:53] Andy Schoonover: Man, thanks for having me. Appreciate it.

[01:55] Paul: Yeah, excited to dive in today. We're definitely going to get into the state of the healthcare system, which has sort of emerged as a recurring topic for this podcast, but want to dive into your story first. Maybe bring us back to Andy growing up. What were some of the stories and scripts you had about what you were supposed to be doing, Once you arrived in adulthood, what did success look like for you in your mind growing up?

[02:24] Andy Schoonover: Yeah, it's a great question. So I grew up one of 5 kids, the second youngest. So I don't know, you know, what, what that makes me or what I'm supposed to be. Second youngest of 5 kids. It's actually even more complicated because me and my older brother, my, my next sibling are 10 years apart. So there's 10, 11, 12 years between my older siblings and then 4 years between me and my younger siblings.

So my mom mom and dad had kids over a 17 or 18-year period. So I'm kind of maybe screwed up if you were to look at the order in your family analysis that I know a lot of people, you know, look at. But, you know, funny is, I know I remember very vividly mentioning to my mom, who has a brother, so my uncle and his family are all just super, super successful people, you know, a bunch of doctors and entrepreneurs. And, and I remember saying to her, I want to be successful like them. And, you know, her response was, well, I guess it really depends upon how you measure success. And, you know, we've got a family of 5.

Nobody's in jail. You have a mom and dad who love you. And, you know, so how do you define that success? Actually, my, my My uncle had, you know, a great family too, but I was totally measuring success in the status of doctor entrepreneur, you know, and ultimately that was money, right? It's how many zeros in your bank account. And so as a young kid, I was always trying to be entrepreneurial, trying to make, you know, the next, the next buck, whether it be mowing lawns or, you know, back in the day, I really found that umpiring baseball games, you know, for $35 for 2 hours was like pretty awesome money for somebody like me.

And so I did lots of umpiring baseball games, and ultimately I had to pay for my car. I had to pay for my car insurance. I had to pay for college. I had to pay for all of those things. And so there was just kind of this thing that was ingrained in me that you would have to take care of yourself. Nobody else is going to take care of you.

And so go out and work. And so I was, I was working pretty consistently from, you know, sophomore year of high school all the way through college doing, you know, like I said, first lawn mowing and then umpiring baseball games. And in college, I was flipping burgers at the local, you know, college joint on campus. So it was always kind of a work-based culture for me.

[05:01] Paul: Yeah, it's interesting to compare those two sort of scripts, right? Like make as much money as possible, be successful. It's hard to escape that, right? Our culture puts so much attention on that, even if you're hearing different messages. Were your parents telling you explicitly, like, you need to make your own way as early as possible? It's all on you.

[05:24] Andy Schoonover: It really kind of was. I mean, my parents said it's on you. Like, if you want something, you have to go figure out how to buy it. And I came from a lower middle class family too. So You know, it wasn't because they were heartless or, you know, or even maybe even didn't do it because of— they wanted me to be kind of motivated to do that later in life. It was really just out of necessity.

It was a, hey, listen, you know, if you want to buy a car, we don't have enough money to buy you a car when you're 16. So you have to go and buy it if you really want it. If you want to go to a great college, you're going to have to pay for it. So go figure out how to pay for it. And so it was kind of just like a figure it out, a problem solving as, as, as I went, you know, especially in my high school and college years. But I think ultimately looking back at that, I was like, man, well, that was the, that was the best upbringing I could have, I could have ever gotten.

I mean, you look at some of these entrepreneurs today, some of the most successful ones, and a lot of them came from not a lot. Like they just had to, to, to, to make it right. I had an interesting conversation the other day with a good friend of mine who I went to Stanford with, and I said, I wonder if there's any correlation between intelligence and entrepreneurship, almost as if the higher intelligence you are, the more times you have to get that A on the test, like you strive for the A, right? And if there's ever a B or a C, it totally breaks your identity, you know, whereas, you know, an entrepreneur is one where like, I'm looking for those Bs and those Cs so that I can learn from them. So ultimately I can get that A, right?

But a lot of people, who go to Ivy League schools and go to like, you know, grow up really wealthy and always have to live up to that standard, I think it's generally harder for them to take that leap off the, off the cliff and try to fly knowing that you might hit the ground a couple of times before you figure out how to flap your wings. So I don't know, I'd be interested if there was a study or correlation there, but it just seems to to, you know, the smarter the people I meet, the more they're likely to go into private equity or, you know, other types of finance or things where it's like you are going to make a lot of money. You know, there is the probability of failure is much lower. So I don't know if there's a correlation there, but it's an interesting theory.

[07:45] Paul: Yeah, I think it's— I mean, you're also framing it on this very narrow idea of intelligence is like an analytical sort of IQ testability when, I mean, from my experience, I was always good at school, so I kept going along those paths and sort of like fell into those paths. But when I became self-employed, I realized like the real skill is not like being good at math or like doing good on the test. It's like learning to manage the emotions of like extreme uncertainty or not knowing what you're doing. Which is a whole nother type of intelligence. And I think it can be developed, but it can be terrifying if you're good at other things, right? If you're good at other things, it's kind of crazy to blow up your life and take a different path.

So I'd be interested. You went to Virginia, which is a great school, and it's also a state school, which is amazing for people that grew up in Virginia. I don't know if you grew up there, but I'd love to hear what that experience is like, because that's definitely a world that's like a state school but also has access to some of these more prestigious paths. What was that like for you?

[09:01] Andy Schoonover: Yeah, sure. I mean, I, you know, funny enough, I went through high school and I wasn't a great student. And so I actually went to James Madison University my first year. So it's kind of a second tier school in Virginia, you know, in the state of Virginia. And I had to go to Virginia, into a Virginia school because I was paying for it. I had to get in-state tuition.

Like, that was my only choice. And so my guidance counselor said, don't even apply to UVA because you're not going to get in. And so I was like, okay, I won't. And so I went to JMU my first year and did really, really well there and then transferred in after my second year. And so, you know, again, like trying to, to, to pave a path of, to prosperity, right, in any way that I could. And if it meant going to, you know, a different school before I ultimately went to the one that I, that I, you know, went to is the path that I chose.

And so, you know, UVA, yeah, it was a totally different, different animal, you know, super highly competitive, very kind of finance driven. I went to undergrad B-school there, McIntyre School of Commerce there. I thought I was going to do hedge fund stuff. UVA is a very hedge fund-focused finance undergraduate program. And so I thought I was going to go do the hedge fund thing. I actually did a hedge fund, worked for Blue Ridge Capital, which is one of the Tiger Cubs, between my junior and senior year of undergrad.

And that was in 2000. So for those of you who can remember back to 2000, it was a whirlwind. It was, you know, in March of 2000, everything came tumbling down. I worked in New York June, July, August of 2000. So just a couple of months later, you know, it was a fiasco, you know, there. I was like, man, I just can't emotionally take the up and down swings of the market.

You know, my stock pick would be up 10% one day and the portfolio manager would come and say, why is it up 10%? I was like, I have no idea. You know, it's down 10% the next day. Why is it down 10%? I have no idea. So I decided not to do that and instead went into real estate, which is like the exact opposite, right?

It's like still finance, but it's like, you know, stable. And so I thought I was going into a stable organization, but I joined Host Hotels and Resorts. In July of 2001. We all know in September of 2001, the World Trade Center came down and we owned the— the company I worked for owned that Marriott Hotel that sat at the base of the World Trade Center and got destroyed in September 11th. And so I spent the next year and a half working with the Port Authority and all the stakeholders of that, trying to figure out what was next. And so I just one of those crazy, you know, moments in time where I got to do something really, really interesting and, you know, never had expected to be in that place just a couple of months out of undergrad.

[12:16] Paul: What did you learn from that? What, like, what, what was that like? I don't know exactly what you were doing, but I imagine you were facing all, like, new scenarios. It wasn't like, go run this hotel and increase OpEx 10%.

[12:30] Andy Schoonover: Yeah, it was, yeah, it was crazy. I mean, because I remember vividly that I was, I'm 43, so, you know, like I said, I, I was graduating college right as this was happening. And, um, you know, I was, I was working in, in Maryland, um, and I could see the smoke from the Pentagon from my office. And so it was, you know, it was real. It was, it was a real thing where, and we were right across the street from I think it was Lockheed Martin or something like that. And so they thought, you know, for a period of time they thought they were going to target every, you know, military type of company.

And so there was— that was surrounded. It was, it was crazy. But in terms of the work, it was, it was, it was interesting because ultimately what I was doing was we had a lease on that space. So the Port Authority of, of New York, New Jersey owns that entire piece of land down there, and then we had a long-term lease. But with that lease, we couldn't use the lease. And so there was something in our lease that says, hey, it was unusable, then we can get out of the lease.

And then we were also working with an insurance company where, you know, we had this building that was worth hundreds of millions of dollars getting destroyed. And so, you know, working with the insurance company on how to do that. And so it doesn't sound like that much fun, but it was just such an interesting thing because nobody had ever done something at that scale with leases and insurance. And so, you know, and ultimately there was going to be lawsuits. Fortunately, it got worked out before, you know, lawsuits happened. But as somebody who was 20, I guess 22 at the time, it was an incredible experience to kind of be in the middle of basically a, you know, multibillion-dollar deal and doing all the analysis, back-end analysis of that.

So it was a lot of fun. You know, the only thing I would say that was a big learning and I look back and as people ask me like, what do I— what should I do after college? You know, I tell them, I was like, get into a job where you can be in the middle of the decision-making, you know, and that at Host Hotels and Resorts was a $12 billion REIT. But I was reporting, I was only 2 steps down from the CEO. And so I was in the middle of these sitting in the conference room with the head of M&A, the CEO of the company, the CFO of the company. And I got to see how the decisions were being made as a 22-year-old.

I was like, man, that's a great place to be. So have more thoughts on kind of, you know, on that route path. But I was just very, very fortunate to get into this company where I got to see the decisions happening for very large deals.

[15:09] Paul: When you decided to go to business school, were you thinking to continue on in real estate or what was driving you at the time?

[15:16] Andy Schoonover: Yeah, it really was. I thought I was going to go do real estate. I mean, you put in my application to Stanford that I was going to do a real estate investment fund after I got out. And then I got there and, and, you know, most people who listen to this know Stanford's a super entrepreneurial place. You know, Andy Grove, who started Intel, you know, taught one of the classes. Like, you know, it's that type of situation.

You, you know, you saw Steve Jobs once in a while around Palo Alto. Like, it was a crazy place to be. And we— and here's a really crazy story. Have you seen the movie The Social Network about Facebook? Yeah. Yeah.

So there's a subplot in that movie where Zuckerberg moves from Boston to Silicon Valley with a bunch of his buddies, and Eduardo has to go to his dad to get a check for— I can't remember exactly what it was in the movie, but like $16,000 or $18,000 to pay for this house for the summer as they moved. Well, that house was my house. Like, so Zuckerberg actually showed up at my house with a check to rent out our house for the summer because we were all doing internships. So we had put our house, I think it was up on Craigslist, funny enough, and Zuckerberg saw it. And so he stayed in our house and that was the house in the movie. So kind of a fun, funny kind of time, right, in Silicon Valley.

And a bunch of my friends went and did Facebook and Google and all of those things. And I decided to take the path less traveled and do a search fund, which is basically, you know, we would raise a little bit of funds to go out and find a company to buy. And then when we found the company to buy, we'd go back out to those investors and say, hey, now I need more money for the equity investment in that. So we did that in 2000, 2006, right before the financial crisis. It's like I'm perfect in my timing for huge crises around the world. Yeah.

[17:19] Paul: What, what was the energy at Stanford at the time? Because it's definitely an entrepreneurial place, but it was not— I mean, I went to business school in 2010, and even then it was not obvious that like this whole tech boom that is now literally transformed our global world was going to happen. Like, was there a sense there because it was Stanford or like what was the general consensus?

[17:46] Andy Schoonover: I think people had a sense. I didn't because I did not come from technology. Yeah. No. And back to that Zuckerberg story, it was kind of funny because I went back to my house and there was a receipt for the Ritz-Carlton in New York with Mark Zuckerberg's name on it. And so I went into school and, and there was a guy who was at Accel when Accel did the first institutional investment into Facebook.

And I go up to him, I was like, can you believe they're spending your money this way? And he just looked at me and he's like, it's going to be okay. You know, like he knew, you know, but back in that time you had to have like a.edu email address to be on Facebook. And so I was just ignorant probably of how big this was going to be. And maybe if I wasn't so ignorant, I would have stayed out there and participated in the, the upside. You know, I had classmates who were the chief revenue officer and the head of HR when Facebook went public, you know, and those, those folks made tens, if not hundreds of millions of dollars as a result of that.

But I decided to go to Dayton, Ohio, of all places, and buy a search fund, you know, a little healthcare business in Ohio. So all my, my Silicon Valley friends were like, Are you kidding me? You're going to Ohio from Silicon Valley?

[18:59] Paul: Yeah. And it seems so obvious now, but at the time, the general consensus was how do you actually make money with a social network? Yeah, right. Even MySpace was sort of failing, so it wasn't obvious that Facebook was going to do it. And then even then, they— until they pivoted to mobile, they didn't really have a long-term sustainable moat. But yeah, that's, that's fascinating.

So yeah, shared this, worked in the same house as Mark Zuckerberg. Yeah, right. You— so you end up doing the search fund and you find a, I believe, is a telehealth company.

[19:41] Andy Schoonover: Yeah.

[19:41] Paul: So maybe for the listeners, like, tell us a little bit about what a search fund is and how you embark on that process. I'm familiar with it, but I don't know if a lot of people will be familiar with that?

[19:55] Andy Schoonover: Yeah. So search fund, it's been around for a while. I think the first one was like in the '80s, you know, like '80s or early '90s or something like that. And in essence, what this is, is you're going to go to a group of people and you're going to raise, you know, $300,000 or $400,000. Maybe it's $500,000 or $600,000 now from a group of 10 or 20 people. And they're each going to give you— if it's 20 people, which is, say, $20,000 each.

So you have $400,000 to go and find a company to buy. So that will pay for your salary, which was, you know, next to nothing. You know, I think I made like $70 grand or something like that coming out of Stanford as a search funder. It'll pay for attorneys and, you know, due diligence and accountants, all those kinds of things to find a company to buy. And then you would go back to those 20 investors and you say, hey, I now need, you know, $4 million to buy the company for the equity in the company. So will each one of you write me a check for $200,000?

And so you raise that money and then you buy the company. And then the way that the search funders are compensated is typically what happens is you get somewhere between 50% and 30% of the upside. So if you buy a company for 10 and it goes to 110, $100 million, then you created $100 million of value, and then the search funder gets, you know, somewhere between $50 and $30 million of that. So that's how the economics work. It's a little bit like a, a one-investment private equity fund where the one investment is actually run by the fund manager. Right.

So it's a little bit different like that, but the economics are somewhat similar. So that's how the first one. And I think it's been done 400 or 500 times now over the last, you know, 40 or 50, 40, 30 or 40 years and been fairly successful. So it gives people with very little management skill experience to actually go and run a company. So, you know, I was 28 years old when I got out of business school and ended up buying a company that was, you had, you know, 20 people in it. And so that's a pretty cool thing to do as a 28-year-old.

[22:17] Paul: Yeah. And how did you find the company? And when— once you found the company, what does that look like? Do you move to the place and just show up and start working in an office or— Yeah.

[22:29] Andy Schoonover: Yeah. So we, you know, one of those—

[22:32] Paul: those—

[22:32] Andy Schoonover: I think it was a pretty late night where I came back home after going to the bar, if we're being totally honest with each other. And I'm watching TV and I see one of these commercials of I've fallen and I can't get up. I don't know if you've ever seen it. It's, you know, the old lady sitting on the ground, she presses the button and she's like, I've fallen and I can't get up, you know? And so I'm sitting there and I'm kind of giggling. I'm like, this is one of the dumbest commercials I've ever seen, right?

Like, what a stupid industry that is. And then as I started thinking about it, I was like, okay, what are the type of businesses that I want? I want a growing market, right? The baby boomers are getting older. They're, you know, there's an aging of the population trend that's happening. I want a business with recurring revenue, which means somebody pays me every single month.

And so I don't have to go out and, you know, repeat my revenue generation every single month. And, you know, I want something with a decent margin. And so I kind of looked at those three characteristics. I was like, I bet you actually this company fits those three characteristics. So actually, let's go and look and see if there are any other companies like this. So I put up a list of like, I think it was 30 or 40 of those medical alert system companies.

I started at the bottom and called the person at the very bottom for like the person that I like, I was least interested in buying because I don't know nothing about this industry. So if you start with the person that you're least interested in, you can look like an idiot in front of that person so that when you make it up the list to companies that you actually would want to buy, you're way smarter about the industry. And so, yeah, we, we did that and then found a guy in, in Dayton, Ohio. And we, you know, got— we went there, I think, 2 or 3 days later and talked to him and ended up buying that company. And we ultimately turned it in from like a medical alert company, which is if you fall, you press a button. We kind of looked at that and said, we're being very reactive to this.

And so what if we put a Bluetooth module in there and started monitoring blood pressure cuffs and weight scales and and the— in glucometers and things like that so that we can actually keep people from having, you know, acute events. Right. And so we turned that into a more of a remote patient monitoring company. We were grabbing a bunch of different pieces of data out of the home to try to get people to, you know, get— stay, stay, stay, keep from falling and keep them out of the hospital. So that's what we did. So we grew that company by like 20 people to, I think when I left about 7 years later, we were at about 300 FTEs.

So it was a huge, huge win and a ton of fun. Yeah.

[25:04] Paul: And I mean, did you literally like, I mean, what is that like coming in as an outsider? Like how do people in a company like that, 20 people, react to a 28-year-old coming in and be like, hey, I bought your company. I am now also the CEO. What is that? What is that experience like?

[25:22] Andy Schoonover: Yeah, freaked out. They were totally freaked out. You know, I mean, there's a bunch of funny stories. One is like we were— the previous owner had already scheduled like redoing all the floors in the, in the office. And so he had everybody put everything that they owned, you know, in the box on their desk. So you, you find out that you put every— you need to put everything from your desk into a box.

And then new guys show up on Monday and they're like, oh my gosh, they're going to fire us all. You know, like that was their— we were like, no, no, we're not going to fire you, please. You know? And then we said, hey, we're not going to do anything for 90 days. We're just going to sit and listen and learn. Right?

And we did. We took a kind of a humble approach and was like, we got on, you know, we learned how to do the call center stuff. We learned how to do all the accounting stuff. We learned all the components and sat next to the people. But On day 91, everybody thought— and the company thought— that we were learning all this stuff so that we could replace them. So they all thought they were going to be getting, you know, pink slips on day 91, right?

So it's, man, it's just, you know, managing people is really, really hard. Managing those emotions and, and, you know, trying to prove yourself to them and have them get to know your heart and not just assume that you're coming in as like corporate raiders that are going to, you know, slash and burn everything. And so it was, it was a challenge, especially as a 28-year-old who was immature and didn't know which way was up, you know, for the most part.

[26:56] Paul: Yeah. And what about that industry? I mean, it seems like— I'm guessing that company did pretty well during COVID if they're still around. I don't know what the status of the company is, but yeah, I mean, it seems like this is going to be a continued huge area of healthcare just in terms of like remote monitoring. Because, I mean, it seems the answer to a lot of healthcare is just like not actually doing doctor's visits and like preemptively planning for these things. So how were you seeing it at the time?

Is that still where the company's headed?

[27:33] Andy Schoonover: Yeah, very similar. And it's now, you know, got sold again for 3 times what we sold it for. And so, you know, a part of me is like, oh man, we should have stuck around. But a part of me too is like, man, it's good to have done something that continues on after you leave. You know, it's not built upon one person. It's built upon a really solid foundation of growth.

So it's, you know, it's taken off, you know, since we, since we sold it. And I forget what your other question was. Yeah, just is the way, is the path to healthcare, you know, some of these preventative things or getting rid of some of the preventative things or not going to the doctors. I think it's actually the hospitals. You know, it's, if you, what we are trying to do is keep people from going into the hospital. 'Cause once you walk into the hospital, you know, if you're admitted, you're 10 grand down, you know, like that, right?

There's no question about it. And so we were trying to keep people, you know, from going to the hospital as much as possible. And, and even to this day with CrowdHealth, I mean, that's what we're trying to do is like, hey, don't go to the hospital, you know, unless you're about to die. Like, you know, there's, there's— we had people go to the hospital for the flu and for COVID and for, you know, a broken finger and all these kinds of things. It's like you don't want to be in the ER with a bunch of sick people, you know, if you can go to urgent care or some other location to get yourself taken care of. And, you know, urgent care is 1/10 the cost of, of, you know, an ER visit.

So we're really trying to keep people from, from going to, to the ER that aren't absolutely required.

[29:13] Paul: When you left VRI, what was that transition like? Did you go straight into doing your investment fund? Were you doing that full time? Was there a period of like contemplation of what do I do next?

[29:26] Andy Schoonover: Yeah. So Yeah, it's a strange thing when you sell your company and then I transitioned out over a couple of years and, you know, then not having anything to do. I mean, you go through a super intense period of time where you're running and growing an entrepreneurial company and then you are sat— you sit there with nothing and it's, it's, it's strange. And every bone in your body is like, go do something else, go do something else, go find something. You need to find something. And I actually did find something and that, that next thing didn't go very well because I didn't do the diligence that I should have done.

I didn't prepare for it the way I should have. And, and I wanted to just jump into something as opposed to being patient and just being thoughtful about what is next as opposed to just having a next. I love golfing. I love fishing. You know, I love doing those types of things. And there's only so much of that you can do before, like, this ambition to, like, build something, create something, create some value gets to you.

And so it was a very strange time. And a lot of guys I talked to who sell their companies, whether it be a startup or a search fund or whatever, they go through the same thing. They're like, what the hell do I do now? You know, everybody thinks it's like a cool thing where you get that big chunk of, of cash in your bank account. For me, it was super anticlimactic. It was like, okay, so what do I do now?

You know, in many ways our identities are wrapped up in our companies. And I think that's a really challenging thing that people have to watch out for. And one of the things is now an entrepreneur in my 40s looks at this differently than an entrepreneur in my 20s. You know, my family, my, my wife, my kids, my faith is way more important to me than, you know, the business. Whereas the business was way more important to me than anything you know, a decade ago. And so it's just that change of perspective in terms of where I get my identity.

And, and that makes it easier, I think, with dealing with the highs and the lows. It's like, look, the highs are awesome, the lows are terrible, but it's— if I lose this company, I still have the foundation of who I am intact. And so that is, is really, really satisfying and comforting.

[31:46] Paul: Yeah, I talked to a lot of people who have had exits or left their company and had some sort of financial windfall, and they often reach out to me because they're just totally confused. Why? Why do I feel so terrible? And it's the added pressure of you can't really talk about this in public. Like if you've had some sort of like $20 million exit, nobody wants to hear that you're like struggling with like your relationship.

[32:16] Andy Schoonover: Prime year, you just sold your company for tens of millions of dollars or you just came off an awesome job where you made a bunch of money and you're super successful, it's like, cry me a river that you're having a hard time. You know, it's like, but I get it. There's almost like an addiction to that, that, that adrenaline that comes with, you know, running a company and doing something entrepreneurial that you almost have to wean yourself off of.

[32:43] Paul: How did you get from my company is my identity to all these other things— family, spouse, kids, spirituality— are more important than my business.

[32:55] Andy Schoonover: Yeah, you know what, like, my, my story is a little bit different than most, but I sold my company, I transitioned out, my wife got pregnant, and we actually ended up losing our daughter right after she was born. And so she lived for 10 and a half hours and passed away. And so whether it was God or the universe or whatever your listeners believe in, like saying, hey, like reorient yourself to like your family and not so much focused on your business. I don't know what, but it forced me to. It forced me to focus on my wife at that point. That was our first child.

And so losing your first, we were a year into marriage, we had just moved, like all these kind of things happening at once. And it just like, man, you know, I need to be refocused on my family. And, and so I spent the next couple of years just focusing on, you know, keeping my marriage together, candidly. Um, and so, you know, thank God we have come out of that, you know, stronger than before. But it was, you know, it was a forcing function to really relook at family and how important family is to, to who we are as human beings. And, and man, the, the value I get, the feelings I get from, you know, from family is way better than that of, you know, making the big win at work.

So it's— it was kind of a blessing, you know, looking back on it.

[34:21] Paul: Do you think you had to have the big win to appreciate that?

[34:28] Andy Schoonover: Yeah, it's a good question. I think, you know, especially I'm a guy, so I must speak from a guy's perspective. And I hang out with a lot of guys and, you know, I think there's something, right? Like once you hit the ball hard, there's a lot less pressure, you know, to do it again, you know? And I don't know if it's me proving it to myself or proving it to others. I haven't really kind of figured that out yet, but I'd like to think it's just me proving to myself that I could do it.

And so you don't have to prove anything anymore. Like, hey, I did it. I hit it hard. I don't have to prove anything anymore. And so it makes what I'm doing now just a lot more fun because if it doesn't work out, it's like, okay, you know, it doesn't work out, you know, it's okay. It's not the end of the world.

Again, it's not my identity. My identity is not in my work. And so could I have gotten there without that first big win? I think there probably would have always been something in my soul to be like, I've got to hit one hard. And, you know, maybe that's, that's not healthier or what, but I think it's just as, as males in this society, like, I think we all want to hit one hard.

[35:37] Paul: But yeah, I think, I think there is something inescapable about especially like early 20s men. I mean, that's my only experience I can speak from, but just the deep insecurity is probably the opposite side of wanting to prove yourself. So I think for me, like wanting to achieve all these impressive things was really just me trying to channel that insecurity into something impressive that could be proved to other people. But it does seem like the deeper value of some of those things is proving it to yourself, right? Proving to yourself, I am capable of things such that it sets you up to make those deeper commitments later in life.

[36:20] Andy Schoonover: I think it's real.

[36:21] Paul: Yeah. Yeah. Which brings us— let's finally talk about CrowdHealth. Sure. Would love to dive in. CrowdHealth is a health sharing service and These have sort of existed.

I actually looked into these a few years back and it seemed like most of them were religiously oriented. So maybe you can give a little bit of a history of what health sharing services are. And then let's dive into the, as I've been calling it, the dumpster fire that is the modern US healthcare system.

[36:57] Andy Schoonover: Yeah, you know, so just to clarify, we are not health sharing. We are a little bit different mechanically than health shares. And so our I can kind of define why that's different, you know, but health, health, the health sharing has been around for a while and actually got, you know, put into law over the last 25 or 30 years in different states that basically said, hey, if you're part of a faith-based health share, they, they, you have to follow the health share, has to follow 6 different criteria to be considered a health share, one of which is you have to be founded before you know, in 1999. Another is you have to have a faith component. And, you know, and then there's a bunch of others that are more administrative, like you have to be a nonprofit to be a health share. You have to have an audit.

You can't kick people out for, you know, getting sick. And there was one more that I can't remember exactly what it was, but it doesn't really matter for the conversation. So there's these 6 things that says if you are going to call yourself a health share, you have to fulfill all of these 6. And so, you know, what, what, what, what I— and so, you know, there's probably 30 or 40 of them out there. Most of them are Christian faith-based ones. I think there's a Jewish one that I've seen recently.

But, you know, for me, it was— I actually— so I sold my company, I sold VRI a couple of years, and I didn't have health insurance. I was like, okay, I'll go on COBRA. Like, you know, COBRA sucks. Like, it's— super expensive, but it was thought I was all that I had. And then I ran out of COBRA and then I said, okay, well, I guess I'm going to have to go to healthcare.gov, right, and get a plan off healthcare.gov. And so I got that.

It was $1,200 for me, my wife, and my two girls. And so I did have two more girls after we lost our first daughter. So $1,200. And I joke it like it worked until I had to use it. My little one was having a recurring ear infection. She actually had a hole in her ear.

And so I went to the, to the ear, nose, and throat doc who said she needs to get tubes in her ears. So we go to the local hospital, get tubes in her ears. It was a 15-minute procedure. Got the bill in the mail and it was $8,000 for 15 minutes. And I'm like, holy crap, $8,000 for 15 minutes? It's crazy.

And I was like, well, this is why I have health insurance. Like, this is the whole point of having health insurance. Like, something big like this happens. So I didn't really care. And then I got another note in the mail that said it was medically unnecessary and so they weren't going to pay for it. And so I had to stroke an $8,000 check to the local hospital and I was pissed, right?

And so I called my health insurance plan. I was like, I'm out. Like, I'm not doing this anymore. And, you know, for me, like, I had been fortunate. I could pay $8,000. But for 95% of the American public, like, you don't have $8,000 sitting around in your bank account, right?

And so And in fact, 250,000 families last year who had health insurance went bankrupt due to a health event. Like, the whole point of having health insurance is if you have a big health event, you don't go into financial distress. And now we have 250,000 families every year going bankrupt because of, you know, really crappy health insurance. And so I say, I've got to do something about this. Looked at the health shares, realized that I couldn't do a health share because of these rules. I wanted to open it up to everybody and not just members, you know, people of faith.

And so I started a company where we have healthcare crowdfunding is actually the core component of how we help people, you know, pay for their bills. And so the mechanics of this is pretty interesting, right? So if Paul were to start with us, you know, you would it was— it's $175 per person per month. You would put money into an account that we open for you when you start. So $175 goes into that account. We take $30 of it for our subscription fee.

The remaining money stays in that account until somebody in the community has a health event. And if they do, then we will go to the community and we'll say, you know, you know, Andy's daughter had a broken arm and it was $6,000. I will pay the first— Andy will pay the first $500 of it. Will 55 of you contribute $100 from that account that you have, the crowdfunding account, to help Andy with his, his, his broken arm, his daughter's broken arm? And if you say yes, then money goes from your account to Andy's account. If you say no, then CrowdHealth will just ask the next person.

And so, you know, ultimately we can get this crowdfunded from this, from this community of now thousands of people. And so we've done, I think it's 1,200 or 1,300 bills over the last year. We've crowdfunded every one of them. And so it's a really kind of cool alternative to health insurance and health shares that's really, really working. You know, the really cool part of it is that account is your account. So if you were to leave, you get the money out of that account, you take it with you.

Oh, wow. So it's totally different than than anything else out there. So it's, it's cool. It's been, it's been a lot of fun. Like I said, we have, you know, thousands of people who have signed up now.

[42:15] Paul: And why would or wouldn't you say yes to crowdfunding that?

[42:20] Andy Schoonover: Yeah. So when I submit a bill to the community, you will also see my history of giving to others, right? So if I said, you know, no, no, no, no, no, no, no to everybody, Everybody, you can see that. And you would say probably no to me because I'm a crappy member of the community, right? If I said yes, yes, yes, yes, yes, then you would see that. You would be like, oh yeah, he's a great member of community.

And so there's this reciprocity kind of engine that drives the crowdfunding that's like, look, if you're a good member of the community, I'm going to help you out. If you're a bad member of the community, I'm not. So what's— it's all incentives. Everybody incentivizes everybody to be really good members of the community. And that voluntary nature of it and the fact that CrowdHealth doesn't touch your money keeps us away from, you know, kind of the regulatory issues around, you know, health insurance because, you know, there's no pooling of funds, there's none of that stuff happening. And so we can really operate at a much, much lower cost than health insurance plans.

[43:25] Paul: Yeah. And how do you— are there adverse selection effects in terms of like who's going to join the pool and Do you benefit from being outside the healthcare system now? And the fact that like some of the worst— probably I'd imagine if you had really bad health issues, you'd probably want to be on insurance. And if you're a little more healthy, you might want to be on something like this. Is, is that mapped to the pool you're dealing with?

[43:53] Andy Schoonover: Yeah, it's, it's interesting, right? So this is new. It's different. People have been, you know, psyoped to think that, you know, health insurance is like the way, the only way, it's the, it's the safe way, right? And so a lot of our people, I think it's why we do so well with, you know, with, you know, sponsoring you. It's like you've got a group of people who are like, I want to do something different.

Like, I want to try something, you know, different. And so inevitably we get younger people right? Our average age is like 36. It's 60% male, 40% female. It's 60% single, 40% families. And so we are just getting younger people because they are selecting into, you know, what we are doing.

And so, you know, it's not adverse selection. It's actually really, you know, on the opposite side of that, right? We get, we get people who are, who are self-selecting in, are just generally healthier than the population. The BMI is 4 or 5 points, you know, lower than the national average. So we're just getting healthy, healthy people, which is a great foundation from which we can build.

[45:07] Paul: Yeah. So I've, I've gone without health insurance several times in the US over the last 5 years. And the interest— like, the thing that fascinated me was that there are all these sorts of programs for uninsured people, the first of which, which was crazy, was, was I've been taking this thyroid medicine for 10 years and I didn't have insurance. So I went to them. I said, I don't have insurance. Can I use this coupon card?

Sure, you can use this coupon card. It's cheaper. It was cheaper than my previous insured price. Not only that, they were like, how much do you want? I'm like, what do you mean? They're like, you can have unlimited supply.

[45:54] Andy Schoonover: Deal.

[45:54] Paul: They were like, you can have a year's worth because only insurance limits the number of days. I was like, wait, so I can just get this once for the year and it's cheaper? This was like mind-blowing to me. And then recently last year, I didn't have insurance for a couple of months and then I'm exploring these online services. Like there's these virtual care doctors that don't take— you don't need to take insurance now and it's a lot cheaper. You can do like a 5-minute appointment if you have like the flu or something.

So maybe talk a little bit about some of these things that exist because I don't even know if it— I wouldn't even call it like a psyop. It's just like people are unaware that this entire ecosystem has emerged around like the edges of like the underinsured or uninsured, that it's not as extreme as people think because a lot of the prices people are paying through insurance are imaginary. They're imaginary in the sense that like basically hospitals invent them because they know they'll never get them unless they like find a rich person coming in from the Middle East and like paying that top dollar or something. Yeah.

[47:09] Andy Schoonover: Well, look, all the things that you said are right on. We actually provide our members at CrowdHealth as a part of your membership access to virtual urgent care, access to virtual primary care. We're going to have virtual specialty care here next, access to low, really low-cost prescription drugs. So, you know, I, for just for example, like I scheduled an appointment virtually with a primary care doctor. I talked to him for 5 minutes. He said, let's get you some labs.

He sent me labs within 5 minutes. I went to the local lab and I just clicked my phone and it automatically knew all my data and information, what labs I needed. 24 hours later, the lab showed up on my phone so I could see them. 24 hours later, I was having another conversation with my doctor around the output of those labs. And, you know, there's a couple of things that were going on with the labs that I needed a specialist. So 24 hours after that, I was talking to a specialist on my phone and without even having to leave my, you know, my couch, basically, you know, I had to get the labs and that's the only thing that I had to do.

And all of that cost me nothing as a member of CrowdHealth because we're providing that as a part of your subscription service where, you know, if you were going to go pay for a doctor online, you probably have to pay $49, $59, $79, $99 depending upon what it is like for a quick virtual visit. Whereas, you know, that's a part of your membership with us and we have virtual therapy too. So if these are like counselors that you can talk to So we're providing this whole bundle of services for you for, well, just say the little stuff, right? So what happens if you have something big? Well, the benefit of what we do is we allow you to pay those doctors in cash. And because of that, the doctors will give us 30%, 40%, 50% discounts on the versus what the health plan is paying, not just what the hospital charges, it's what the health plans pay.

And so it's like, Why would the doctors do that? Well, it's such a pain in the ass to bill health insurance that the doctors like want cash pay patients. And so they will give a significant discount to cash pay patients. So we had a, you know, a member in Austin who had a torn ACL or to repair your ACL in Austin, a health plan would pay somewhere between $20,000 and $22,000. We pay— we we found a doctor and a facility that would do it for, I think it was $12,000, $12,000 or $13,000. So that, that, that member saved $8,000, you know, off $8,000 to $10,000 off of that procedure just by paying in cash.

And by the way, she only paid $500 and we crowdfunded the rest of it from the community to help her pay that so that she had enough money to pay it on the day of the procedure. And it worked out great. You know, it's like if you can pay doctors in cash, they love you for that because they don't want to— they don't want to build a health insurance company. So we're ripping out all that administration, billing administration component that can get us a lot better prices than, than, than, you know, your health plan. And we do all that negotiating. So we don't ask our members to negotiate at all.

We just— we say, hey, just let us know if you have a big event coming up and we'll, we'll take care of it.

[50:38] Paul: And what, what sort of telemedicine is this? So I've had some telemedicine when they're limited on the number of prescriptions they can give you or limited on the length they can give you. What, what sort of primary care are we talking with CrowdHealth?

[50:57] Andy Schoonover: Yeah, I mean, they can, they can order any lab for, you know, and they can give you prescriptions for any period of time within the local government regulations. But, you know, that's— yeah, I mean, there's no— there's no restrictions for them to, to, to give, you know, a little or a lot. It's just, you know, we take the approach is like, let the doctor and the patient decide what's best for them and let's stay out of the middle of it, right?

[51:25] Paul: Yeah.

[51:26] Andy Schoonover: It is your bill, right? We'll help you crowdfund it, but it is your bill. So you are ultimately responsible for it.

[51:31] Paul: Aren't there Certain restrictions for virtual care, though, of like what you can prescribe. I'm not sure. I think they were relaxed a little during COVID Yeah. What's the current state of those and do they vary by state?

[51:45] Andy Schoonover: Only restrictions that I know of and are some of the psychiatric, psychiatric and pain related.

[51:52] Paul: That makes sense.

[51:54] Andy Schoonover: Those are the only ones I know. There might be others and it might be You know, a lot of these, you know, regulations are state-based regulations. I just don't know what all the 50 state regulations are, but I have not heard once of a member not being able to get the prescription that they wanted outside of pain and psychiatric meds.

[52:15] Paul: Yeah. And you posted this screenshot of a bunch of labs and the prices. Is this the actual thing you were just talking about, the actual one. So the, the prices, like, how are the prices that low? Like, I was impressed.

[52:33] Andy Schoonover: I mean, like, that's a receipt, I think, that I posted up there. The electronic receipt. Yeah. So it's a, it's a really funny story, right? And this is one of the cool things I think about CrowdHealth is so, look, I'm the CEO of CrowdHealth, so I should be behaving in a way that I want my customers to behave, right? So I go to my direct primary care doc and he says, you need to get labs.

I'm like, great, I need labs. They give me the order for the labs and I'm like, you know what, there's this lab right across the street from where I live. Like, maybe I should just go there, right? It's just easy. And I won't go to CrowdHealth's lab, the one that they have a relationship with. I'm just going to go there.

And so I priced it out as $431. I was like, ooh, that seems like a lot. Maybe I should check out like what CrowdHealth says. And so I send it to my care advocate internally at CrowdHealth. Everybody who is a member has a care advocate that they can text, they can call, they an email and mine is Jasmine. I said, hey Jasmine, I'm just wondering how much these tests would be.

And so she's like, let me check for you and came back and was like, that will be $44. I was like, hold on a second. Like, I can walk across the street and get it for $4.31, or I can go 2 miles down the street and get it for $44. You know, that's pretty incredible. And so, yeah, we've got a relationship with a nationwide network of labs that allow us to get labs at just ridiculously low prices. And for the same labs, if the— or an insurance plan were to do it within a hospital system, it would have been $731, I think.

And so, you know, it's, it's incredible that we're getting it for basically, you know, my math is not great, 5%-ish of, you know, what the health plan would pay for a similar set of labs. And by the way, you see them on my Twitter, right? It's everything. It's metabolic, it's lipids, it's liver, it's kidney, it's you know, your urinalysis. It's everything, right, that you'd want for your, you know, direct primary care annual lab.

[54:30] Paul: Yeah, I'm actually going to just pull it up for the video. So I have it on the screen now. It's, yeah, it's like $4,288. What, tell me though, like, why do we not know how much anything costs? Like, why are prices so all over the place?

[54:49] Andy Schoonover: Yeah, because we've been trained to just put down our insurance card and not worry about how much it costs, right? Like typically what we do is we go to the doctor and we, we throw down our insurance card and we don't know if it's covered or not covered because we have this kind of, you know, high time preference mentality where it's like, I want to deal with it now and not worry, you know, worry about the consequences of it later. And so then you get a mail, something in the mail from your health plan that says, oh, by the way, that was $8,000 for your daughter's, you know, ear tubes and now you have to pay for it. Right? And so we have just been, you know, it's just been ingrained in us to put down the insurance card and then and not deal with it. Let the insurance company deal with it.

And therefore, there's really no consumerism in health care, you know? And the thing I tell people is I like, why is— why are health care costs so high? And, you know, you'd be shocked to know this, right? Maybe you wouldn't because, you know, health care well. But like, you know, if the buyer and the seller of health care want the prices to go up, prices are going to go up. So who are the buyers and the sellers of healthcare?

The buyer is the health plan. The health plan makes money by the difference between the premiums and the claims. So they actually have an incentive for the premiums to go up and the claims to go down. Or in essence, they want to charge you more and they want to decline more of your health events, you know. So we have a, we have a, you know, an agent that is working for us that's actually working against us. So we have a principal-agent problem here, right?

Like, we need to take agency over our own, our own health care costs. And who's the seller of health care? It's the hospital systems. Like, they clearly want the price to go up. So you have the buyer and the seller of health care both wanting the price to go up. The price is going to go up.

You know, it's the consumer, it's us that are getting screwed because we're paying these ridiculous prices for, for health care. And so, you know, for, for, for CrowdHealth, we take a subscription fee. It's $30 a month, right? We, we actually have every incentive in the world to crowdfund your bill because if we don't crowdfund your bill, Paul is going to go tell his, you know, 10,000 people on his newsletter that, you know, CrowdHealth didn't pay the bill and it would totally blow up my— our business model. Right. And so we don't help you get that funded.

That's bad for us. And the only way we make more money is we get more people in the community. And the more people in the community, the more people that can crowdfund your health bill. So it's better for the community. So our incentives are totally aligned.

[57:15] Paul: Yeah. And just for the record, for the listeners, I am not a member yet, but I'm currently—

[57:21] Andy Schoonover: I'm working on you, man. I'm working on it.

[57:23] Paul: No, I am likely going to join. I basically just wanted to, like, bring you on to answer all my questions, which—

[57:30] Andy Schoonover: there you go.

[57:32] Paul: You sort of have. I like, in my conception, like, the way I would think about it is like, so I've explored these uninsured avenues and there are a lot of, like, things I can tap into. But there are certain things I can't really access. I can do direct primary care, but I can't, I can't really access a lab, right? I can sign up for something like One Medical and get access to primary care, and I can do that on my own without insurance. And it's a pretty decent cost.

But if I then need to go do a lab, I need to go to like Quest and I need to pay like market rates, which aren't really a market at all. They're just like a screw you rate. But you have kind of gone and like directly negotiated and say, we have this pool of members, this pool of members is growing, and you can have a little more market pressure than me as an individual. So in some ways, like you're creating a pool of like underinsured people who are gaining market power the more people you add.

[58:39] Andy Schoonover: That's absolutely what we're doing. And we're doing something— we're buying things as a group that we can buy as a group way cheaper than you can go buy on your, your own. And so for that $30 that we bring in, I can do— I can get you unlimited virtual primary care and unlimited urgent care, right? So instead of going to the urgent care doc, you can get an urgent care doc on for 15 minutes on your phone, in 15 minutes on your phone, right? All those kind of virtual services you have access to with us, you don't have to pay for them one by one. And we can do it a lot cheaper than, than you can do it as an individual.

And then if there's something big that happens, like a biggie, right, then you have a community of people who have proven that they are willing to help you fund your, your bills. And we have, you know, 1,200 or 1,300 bills to prove it, that, that these members are willing to help.

[59:31] Paul: And how does, how does direct specialty care work, especially virtually? Because I know traditionally, and even in the last couple of years, like direct primary care has definitely become a thing. It's growing. But direct specialty care has been increasingly purchased by hospital systems and put behind gates and harder to access. So talk to me about some of the evolution there.

[59:55] Andy Schoonover: Yeah. And you need a referral from your direct primary care doctor and all this kind of stuff. Like, no, like if you have a concern, then You know, for example, I'll just be, you know, be candid with you is, you know, I had these, these labs and I have like, I'm 43, I'm 185 pounds, I'm 6'2" and I have super high cholesterol. My, my LDL cholesterol, for all the nutrition people out there, was like twice what it should be. And so I was like, okay, I know what I want to talk to somebody about this. Like, I want to talk to somebody who knows, who understands lipids, which is cholesterol.

And so I used a crowd health service where I can talk to a specialist at any time within typically 24 to 48 hours and talk to them about my lipids, you know, or my colon cancer or my gout or, you know, you know, clearly colon cancer would be an oncologist and gout would be a rheumatologist. But like, there are a host of, of people that I can talk to through this virtual specialty care, and I can do it either on the phone or virtually, you know, all through my CrowdHealth app. The virtual specialty care is going to go live in about 30 to 60 days. So that's almost here. But I was basically testing it out for me and it worked brilliantly. It's like I'm talking to somebody at, you know, an academic health center that knows what they're talking about.

And they were the leading— one of the leading, you know, the thought leaders in lipids. And it's like, man, that's cool. Like, I would not have access to that if I had the regular healthcare.

[01:01:33] Paul: And what, what is the like, where are things headed? Do you see 100 times more options like yours branded to different micro-communities or different topic areas? I mean, can you only exist because of how much of a dumpster fire the default system is?

[01:01:54] Andy Schoonover: Yeah. I mean, I think so. We've had people ask us, you know, why don't you do, you know, pet insurance and, and and long-term care insurance, you know, alternatives to those things. I was like, look, there's just not as much, you know, crap in that dumpster to put on fire. And those kind of pieces of the insurance landscape, you know, we can go to a doctor and get 40% better pricing in healthcare. And so let's focus on that.

And so I think, You know, I, we have a goal of 400,000 people by, you know, 2030, which we think we're going to be able to hit. And, you know, hopefully it's way, way more than that. But, you know, it takes a little bit of time to get people to have behavior change around this. So there's this kind of an apathy. It's like the devil you know versus the devil you don't. Right.

And everybody's not really sure about something new, especially when it comes to their health care. So it's, it takes us a while to get people, you know, bought in. But, but I think that's why we're getting a lot of people in their, you know, 20s, 30s and early 40s to do this because they're like, man, I'm not— I haven't been indoctrinated into the health insurance space yet. So, and, you know, the other thing we have, too, is this health insurance that's connected to your, your employer, which I think is awful. You know, the Rand Corporation had a study that came out of the original sin of the U.S.

[01:03:17] Paul: health care.

[01:03:18] Andy Schoonover: Yeah, exactly. And so there's 4 million people out there that would go and do something entrepreneurial if it wasn't for them having to get their health insurance through their employer. Right. And so it's anti-American that your, your health care is tied to your employer. So, you know, and people are like, oh, well, my employer is paying for it. I was like, well, actually, you're paying for it.

You know, the money that your employer is paying for your health insurance, they could be paying you, you know, a higher salary. Right. And then, yeah, that's one—

[01:03:48] Paul: that's one people have such a hard time understanding. There's pretty good economic research behind showing that people are basically just getting paid lower salaries in the US.

[01:03:58] Andy Schoonover: Oh yeah.

[01:03:58] Paul: Problem— the problem is we have some of the highest labor share of income in the world. So like our salaries are pretty good, especially for like knowledge workers in the US, but it's pretty substantial. Russ Roberts had a great guest on where he highlighted this research paper. I'll link it in the notes, but he was saying like it's basically just a pay cut for people. That is why they're getting health insurance. But like it's just people's default.

So they're, they're used to it. But if you offered people, would you take the pay rise and figure things out on your own? Like a lot of people would start thinking very different.

[01:04:38] Andy Schoonover: We have a lot of customers who, who, who do that, who actually go to their HR people and be like, hey, instead of paying $5,000 for my health insurance, will you give me $3,000? Like, increase my salary by $3,000 and you save $2,000. I get my $3,000. I can then go do whatever I want with it. You know, for an individual at CrowdHealth, it's about $2,000 a year. And so, you know, you're basically on the same place.

but you don't have massive huge deductibles with, with CrowdHealth. You own your own healthcare. You don't have doctor networks that you have to go to. Like, you get some freedom from, you know, the health insurance system. And so, you know, we have people who do that. About 30% of our members come to us from health insurance, like, you know, legitimate health insurance they've said no to, they've opted out of, and come over to us.

About 60 to 65% of people are uninsured. So they could come to us from being uninsured and then the rest are like health shares and things like that. So we got a decent chunk of people who, who are willing to make that call to HR to see, and a lot of them, you know, get funds to do it.

[01:05:48] Paul: What are the risks of your approach? Are there metrics or things you watch that are Hey, if this hit a certain threshold, this is an existential risk for this kind of model. Like, how do you think about the business?

[01:06:06] Andy Schoonover: Yeah, it's, it's, it's, it's fewer kind of financial metrics, although we do pay attention to those. So for, for example, you know, for every $100 that our members have put in, about $30 or about $70, $65 to $70 are still in their account. Right, which means that we've only asked them to crowdfund somewhere between 30% and 35% of their funds thus far. So like I said, if you leave, you get to take those funds with you. They're yours. And so, you know, we do look at that just because we want our members to be, you know, cognizant of that.

And they actually now have an incentive not to, you know, be dumb when buying their healthcare. You know, I give the example of me where I was like, I could have done 435% or I did for $44 or $48 or whatever that was, you know. But I think that the biggest risk to our business is, look, we've got these insurance departments across the country. You know, each, each state has one. Each state wants to, you know, regulate everything and anything that looks like health insurance. And so we've actually, you know, just raised our A round about a month ago.

To, to, to, to battle some of these, you know, insurance departments that, you know, under consumer protection, right, they want to regulate, you know, us. And so I was like, look, we're not insurance. We don't take on any risk. We don't pool any resources. We don't touch the money. We don't do any of these things.

And so we think it's going to be hard, hard for them to do that. But that's the number one risk of the, of the business.

[01:07:42] Paul: Yeah. And I mean, I think one of the biggest shifts I wish people would make about healthcare, and especially like older generations. They just think the US healthcare system is like this sacred thing and it does a lot of great things, right? We're inventing like the best in the world vaccines and things like that. But it's not capitalism. No, it's not.

Hospitals can veto any other thing that looks like a hospital from being built in most states, I believe. And all sorts of crazy things like that. So it's not actually a free market.

[01:08:20] Andy Schoonover: You want to build an ambulatory surgery center, which is a surgery center, an outpatient surgery center generally. And in— I think it's something like 30 states. I don't know what it is, but it's something like 30 states. The local hospital has to approve that before you can build it. Now, like these ambulatory surgery centers, their cost structure is about half of what a hospital is. Right.

And so, like, it's these crazy lobbyists that we have in all these states that are creating these rules to build moats around hospital systems and health insurance companies. And so, you know, that's why I say that's our number one risk is like we've got a healthcare industry, you know, I call it a medical industrial complex that basically is funding legislators to then pass laws to restrict any kind of competition that they have in their, in their local markets. And so it is an uphill battle. That is, it feels like 1984 kind of stuff, right? I mean, it's kind of crazy that it can happen in this country, but it does.

[01:09:25] Paul: Well, and I think it's so big, like my background, system dynamics and the scale and scope of the system is such that it's sort of self self-sustaining and self-growing, like it's just going to absorb things everywhere around it. And like there's no actual person in charge anymore. And that's like hard for people to understand. It's not like one person can just like fix the system. Like, sure, they tried that with Obamacare and the system just absorbed all sorts of attempts and turned it into its own profits. Do you have, do you have other plans with healthcare?

Like what other bets are you trying to make to support this more broadly?

[01:10:10] Andy Schoonover: Yeah, I mean, I think that we're trying to create as much virtual first as we can to really streamline the healthcare system, especially for people who don't want to go into hospitals and clinics. Right. So, you know, the only piece of that scenario in which I described earlier about me getting my labs from my virtual primary care is I actually had to go to a lab to do it. You know, eventually what we'd like to do is have, you know, your phlebotomist come to you. So, you know, I can sit here doing a podcast with you while I'm getting my blood drawn for my lab. So you, you literally don't have to walk outside of your house to get all this stuff done, you know.

And, and, you know, ultimately what healthcare has been built upon is a business-to-business relationship, right? It's the hospitals and the insurance plans that are driving the vast majority of the decisions within healthcare. And so the consumer has been left out of that equation. And so what we're trying to do is build a direct-to-consumer healthcare company and, and really put the consumer in the middle of it to provide you just a wicked great experience with your healthcare. And I think we're getting close. I had a buddy that I saw at church a couple of weeks ago and he's like, man, I, I had the worst sore throat the other day.

And he's a, he's a member of CrowdHealth. I had the worst sore throat. I got on CrowdHealth. I did the urgent care. I talked to a doctor in 15 minutes. He told me that I probably have strep.

He ordered me prescriptions at the pharmacy down the street. I went to the pharmacy. I got my prescription within 15 minutes. It cost me $6 because I paid in cash. And within 24 hours my throat was feeling better. I was like, yeah, that's a hell of a lot better than going to urgent care or you're waiting for your direct primary care to open up on Monday.

Like, we're trying to build a parallel health system that is just super convenient for people who are willing to do most of their, their health care virtually, you know, talking to a doc like, like you and I are talking.

[01:12:13] Paul: Yeah. And have— how do you deal with extremely expensive prescriptions.

[01:12:19] Andy Schoonover: Yeah.

[01:12:19] Paul: I mean, especially for like certain cancers, these drug companies have monopoly. Sometimes they do let people negotiate. Are you able to negotiate?

[01:12:30] Andy Schoonover: Yeah. Here's the beauty of this. And this freaks some people out. I kind of love it because I'm a contrarian, but we're all uninsured, you know, like I've been uninsured for 2.5 years. You know, I kind of say I'm delightfully uninsured because it's so freeing. But if you're uninsured, then these pharmaceutical companies will negotiate with you for the price of these, these, these drugs.

So we're getting, you know, drug prices that are significantly lower than what UnitedHealthcare is paying because we're negotiating for our members to pay it directly. But they are uninsured. And so we're getting, you know, way better prices. And in the cases where they— the pharmaceutical company won't, like, I still think we have a big enough community so that if I have a $10,000 a month drug, and, you know, and I have several thousand people, then it's, you know, a buck, 2 bucks, 3 bucks or whatever per person, you know, per month to help you out with a drug. And, and we've seen our community step up and do that. So, you know, for big— these— some of these big events.

And so I'm, I'm very, very comfortable that if I got sick and needed one of these really expensive drugs, that the CrowdHealth community would step up and help me. You know, funny enough, we had a member who got her her hand caught in the prop of a boat. Uh, this is like 2 or 3 months ago, and it severed 4 of her fingers, you know. So we, we sent this CrowdHealth request, our crowdfunding request, out to our members. We had members come back and say, can I give more than you asked? Like, because they're like, they're, they're a part of the community, they, they want to help.

Like, we had another member who had a miscarriage, they're like, is there any way we can send her flowers or like, you know, help her out? But and we have thousands of people in our community, but people still feel like they're a part of something that's mission-driven and trying to change healthcare, which is you would never see anybody in insurance being like, insurance plan, can I pay more this month for my premium? Like, it's just not going to happen, right? So we have this pretty cool kind of community component going on. But look, I think there's something innate in us because we've been doing this for thousands of years. Like, it's just our natural born desire to like help our neighbor, right?

Like back in the day when there wasn't insurance companies and somebody got sick, like the neighbors in the community would gather around them and help, you know, and then in the '70s primarily, the insurance companies are now like wedging themselves in between us and our community, right? So let's take that back out, bring community back into being, you know, the source of our healthcare, you know, you know, funding. And I think there's some really cool kind of impacts to that.

[01:15:05] Paul: That's— yeah. And that's actually— I mean, that's how insurance got started, right? Insurance was local communities and usually through local churches. And it was people that knew each other. Like, we were never meant to be in these insured pools of strangers.

[01:15:22] Andy Schoonover: Yeah. Blue Cross Blue Shield started back in, I think, the '20s or early '30s. And it was a way just to pay your hospital. I think you paid your hospital like, I don't know what it was, a dollar a month or something like that. And they would take care of you for anything that you got sick. And that was like the start of insurance, but it was your community hospital that was taking care of you.

Right. And now it's, you know, UnitedHealthcare is, I think, the 6th or 7th largest company on the planet by revenue. You're right. That's— yeah, that's how insurance companies have taken over.

[01:15:53] Paul: The world.

[01:15:54] Andy Schoonover: And now UnitedHealthcare is also the number one owner of doctors in the country. So you could have UnitedHealthcare insurance who's supposed to be negotiating with your doctor to get a good rate, but they also own the doctor. So there are some conflicts there.

[01:16:10] Paul: Well, I'm looking this up. Yeah, the former CEO of UnitedHealth took home $142 million last year. So it's, it's a lot of money he's making from insurance.

[01:16:25] Andy Schoonover: Yeah.

[01:16:26] Paul: But I'm, I'm a big fan of like making profits, but I don't know, that just seems off for me.

[01:16:32] Andy Schoonover: Yeah. Well, I mean, when it comes at the expense of other people, I don't think, you know, there aren't very many of us that are like, hey, yeah, I want to profit off the expense of others, you know? And that's ultimately what, what is happening here, you know, and, and we're going into open enrollment. So I think all of your— or 80% of the country, something like that— is making health care decisions like in the next 2 or 3 months. And so, you know, all I ask your listeners, like, hey, you know, reconsider like what your, you know, your brain kind of tells you is the way to go. Like, consider other, other options because these healthcare.gov plans, they deny almost 1 in 5 claims.

Like, yeah. So, you know, you have a 1 in 5 chance to be me, right? Which is $8,000 for my daughter's ear tubes, you know. And so, and they're being regulated by people in which they're paying, you know, you know, via political contributions and lobbying and all this kind of stuff to, to be on their side. So, you know, it's just like I said, it's a medical industrial complex.

[01:17:36] Paul: Awesome. And what I know you're doing some experiments with crypto and Bitcoin as well. How does, how does that parallel with this? I mean, it looks like right now you're using, you're allowing people to pay in Bitcoin, but it's still pretty much the same business model. How are you thinking about like crypto investments and things like that down the road?

[01:17:59] Andy Schoonover: It's the same business model. I mean, we I'm a Bitcoin fan. And, you know, a part of this is, you know, health insurance companies. One of the reasons why healthcare costs keep going up is health insurance hold their money in this big pool of, you know, dollars, which is melting, you know, right now. It was 8.5% or something like that last month. And so the value of that is going down.

And so they have to charge you more to replace the, you know, the value decline of that pool. And so, you know, I have offered our members to be able to actually hold their dollars in that account in Bitcoin. And it's actually not held in that account. We have a partnership with Swan Bitcoin where it's held in the member's account at Swan. And then, you know, if we, you know, have a crowdfunding event that requires you to, you can either sell your Bitcoin or you can put some more dollars into your account to to cover that. And then, you know, Bitcoin goes from— I don't know, we're at $18,000 or $19,000 right now and it goes to $100,000.

All that appreciation of that Bitcoin is yours. Like, that's not ours. It's not the community's. It's yours. It's your account, right? So you can take that with you.

So in essence, what you're doing is you're, you're investing in addition to, you know, helping other people in the community. And we think that's a pretty cool thing, you know, as opposed to sending it to UnitedHealthcare and it goes into this black hole of, health insurance land that you never get to see again. So we think it's a pretty cool component.

[01:19:33] Paul: Awesome. This has been super helpful. Probably the most in-depth healthcare deep dive I've done on here. But where else can people learn about what you're up to with CrowdHealth? I think if they use the code Boundless, they'll get a discount. But yeah, any, any other things you want to leave people with?

[01:19:56] Andy Schoonover: Yeah, no, definitely use Boundless. You get it for $99 a month as opposed to $175 for a while. And so that's kind of cool. And then if you were probably most active on Twitter, which is Join CrowdHealth, I'm— my Twitter handle is Schoonover, S-C-H-O-O-N-O-V-E-R, Andy. But that's where we're— but you can find us on, on, on any of them, Facebook, TikTok. Instagram, just most active on Twitter.

[01:20:25] Paul: Awesome.

[01:20:26] Andy Schoonover: Or join, joincrowdhealth.com, which is our website.