In this episode, we are joined by Eric Kinariwala, Founder & CEO of Capsule, a technology business rebuilding the pharmacy industry from the inside out. Eric is here to talk with us about the future of healthcare post-COVID.
Highlights of this episode include:
- What Capsule is
- Post-COVID healthcare
- Change in healthcare delivery
- Amazon’s entry into healthcare
- What’s coming next in healthcare
Mike Passanante: Hi, this is Mike Passanante and welcome back to the award-winning Hospital Finance podcast. Today, I’m joined by Eric Kinariwala, Founder and CEO of Capsule, a technology business rebuilding the pharmacy industry from the inside out. Eric is here to talk with us about the future of healthcare post-COVID. Eric welcome to the show.
Eric Kinariwala: Hey, Mike. Thanks for having me on.
Mike: Happy to have you, Eric. And for those who may not be familiar with Capsule, can you tell us a bit about the company and how you came to found it?
Eric: Sure. I started Capsule in 2015, coming out of what I thought at the time was the world’s worst trip to the drugstore. And as I started to just unpack my own experience where everything you could think about going wrong went wrong for me, from the fact that I couldn’t even find the pharmacy part of the drugstore, to waiting in line for an hour only to find out my medication was out of stock and not able to get a hold of my doctor to be able to prescribe it somewhere else. And then, coming out of that experience, I learned a handful of things that have really been the foundation of what we’ve built over the last six or seven years. One was that, unfortunately, my own experience wasn’t all that uncommon. It was actually pretty par for the course. And for the 70% of American adults that go to the pharmacy at least once a month, they face a multitude of friction points, everything from, “Gosh, I don’t know the price of my medication,” to, “It’s really hard to get expert advice from a pharmacist in a place and time that I want,” to, “Now, like two out of five times I go to the pharmacy, my medications out of stock,” to a whole bunch of other things.
And so that was sort of one big learning. Gosh, this is a part of healthcare that touches everybody. It’s the most frequent interaction point in healthcare, and it hasn’t changed in 50 or 100 years since the pharmacies really first started going. That was the first insight coming out of my own experience. And then, what I started doing was– after talking to a number of consumers to validate, “Is my experience unique, or is my experience actually the kind of common experience?” I started talking to other folks across the healthcare spectrum, so doctors, people that run health systems, people that run insurance companies, drug companies. And everyone started echoing the same sentiment, which is, “The way the pharmacy is set up today doesn’t help me take care of the people that I need to take care of in the way that I want to take care of them.” And so coming out of that really developed the mission of the business, which remains and is to build a pharmacy that works for everyone. And what that means is to build a pharmacy experience that serves the 70% of American adults that go to the pharmacy at least once a month but really the pharmacy as a partner to consumers, to doctors, to hospitals, to insurance companies, to drug companies to help them take care of the people that they need to take care of.
And so that’s where we got started. And so what Capsule is– Capsule is the simplest and easiest way to get and manage your medications. And we’ve built and tend all of the technology that powers the pharmacy. We’ve built out a network of our own pharmacies. We’re in dozens of markets. And then, we built out a series of tools to make physicians and their staff lives easier. And we’ve built out a series of tools that partners with insurance companies and helps them drive better adherence outcomes. And we can talk more about any of those things.
Mike: Fantastic. Thanks for that explanation, Eric. And clearly, there’s a lot of disruption going on in healthcare, and you’re part of that initiative, so glad to get your perspectives on this. Let me start out with sort of the 50,000-foot view question. And that is, what do you think healthcare will look like post-COVID?
Eric: I think Post-COVID, what I’m seeing increasingly, and where Capsule’s investing aggressively, is a couple of things. I think, one, you’re going to see– and you’re already seeing the early days of this, but one is the healthcare system started to really overnight digitize by necessity. I mean, you went from a world where everyone was interacting with the healthcare system in person and on paper. And overnight, because of the pandemic, that had to change. And so one thing is that the healthcare system is going to be definitively more digital going forward. And that’s not just telemedicine. That’s digitizing the physical brick-and-mortar experiences that happened. And I think we’re going to continue to see that happen. The second piece is that we’re seeing a significantly more intense focus on the consumer experience and the consumer journey. And I’m really excited about that. I think that healthcare has always gotten a pass a little bit where you would accept as a consumer an experience that was so far off of what you expect at Costco or Starbucks or any other retailer that is known for great experience. And I think people are starting to say, “Why does the most important thing in my life, mine and my family’s health– why am I accepting subpar experiences that I don’t experience in the rest of my life?” So that’s the second theme.
And then, the third thing is I think it’s taken some time to get steam, but the transition from volume-based healthcare to value-based healthcare is accelerating, and we’re really excited about that. We’ve built a number of things to partner with physicians and other entities that are taking risk on the insurance company side to be able to help drive better outcomes where they’re economically aligned to do that. But those are the three things that we see and is at the intersection of pushing all of those things forward.
Mike: Yeah, and you’re right. And expectations are changing, and COVID certainly changed the patient’s experience significantly. For example, telehealth use expanded dramatically. Right? Do you think patients are ready to accept new modes of healthcare delivery as a permanent fixture?
Eric: One of the things that we see in our own business–and I think that there’s a good track record across 50 years of technology innovation that things have an adoption curve. And so I think you’re going to see, like a lot of other new technologies, whether that was the automobile, whether that was radio, the color television, the cell phone, that there’ll be an adoption curve for things. And so there’s a set of folks who are going to be more likely to be the first-triers and users of a different way of doing something. And as that gains traction and those people have good experiences, that spreads out to the broader population set. And one of the things that I think is really important, and that is really important, I think, for people innovating in healthcare, and we’ve taken a lot of time and money to do is I think you have to get the experience right the first time. Healthcare is so high-trust, and you can’t screw up the first experience just because you’re doing something new and different. It has to be incredibly high quality. It has to be really, really high-trust. And I think that’s really hard to do to get that experience consistently excellent over time. And I think that’s one of the things that is really, really important as people continue to be on the digital healthcare side of things.
Mike: And Eric, as you alluded to, healthcare is a bit of a different animal from other industries. And we’ve seen a lot of companies that haven’t traditionally been in healthcare or healthcare delivery trying to disrupt the industry. Why do you think it’s been so difficult for them to get traction?
Eric: I think it ties back to what I was just saying. I think, healthcare, you’re– the conventional advice for folks innovating in technology is to build an MVP and take the smallest slice of something. “It’s okay if your product has bugs in it. It’s okay if it doesn’t work perfectly. Just get started and build.” And I think that in healthcare you just can’t do that because you’re dealing with people’s lives and you’re dealing with their health. And I think the barrier or the bar for what’s good enough to start with is high. So that’s one thing is that I think to get started you need to have a better product that you enter the market with, and that takes capital to do, and it takes the ability to build a really great cross-functional team to be able to do that out of the gate. And then, I think the second is that healthcare, by and large, is incredibly complex. It’s regulated. There are a number of large entities that you generally need to interact with. And so having the ability to understand how to navigate the complexity of healthcare and to be able to build something new. And to do that quickly in the early days is also really important. So I’d say it’s three things. It’s having the right team that’s cross-functional that knows healthcare, but it can also bring a new perspective so you’re doing something new and different. It’s the ability to attract capital to be able to build a more complete offering. And then, the third is to be able to find alternative ways of getting the word out to get your early customer base going. And I think some of the traditional tactics of consumer [internet?] companies don’t always apply to the world of healthcare.
Mike: Yeah, no doubt. And speaking of companies that sort of come from that more traditional consumer space, Amazon, what do you think Amazon’s entry into healthcare means for the industry?
Eric: I think it’s great. I mean, we are incredibly excited that Amazon is entering the healthcare space. I think that competition and companies that are excellent at innovating makes everyone better and pushes the bar higher ultimately for consumers and for doctors and the rest of the healthcare system. So I’m really excited to see what they do and if they’re able to build a set of products and services and a team that’s able to innovate on behalf of the consumer the way they’ve done in a lot of other categories. I think in terms of the overall category of where we are in healthcare and the digitization of healthcare and the consumerization of healthcare and the transition to value-based care if there was something earlier than the top of the first inning, I’d say we’re there. I think we are very early in 20% of the economy changing the way that it interacts. But I think it’s generally a very good thing that companies like Amazon are focused on healthcare because it, ultimately, just raises the bar for what all of us as consumers get to consume in healthcare.
Mike: Eric, there’s so many things changing around healthcare, from payments to delivery, etc. What do you think is coming next for healthcare that we haven’t seen yet?
Eric: I think a couple of things. I think the biggest thing that we’re focused on is that one of the flipsides of having a lot of innovation in healthcare, which you’ve had over the last 5 or 10 years, is– one of the things that we’ve really seen is that there is an increasing amount of fragmentation around point solutions that are solving narrow slices of problems for the consumer. And I think that over time you’re going to have a handful of companies that are able to, in a very seamless way, integrate the disparate point solutions such as the consumer has a single, simple, easy, holistic place to access the breadth of things that they need to do to manage their healthcare lives digitally. And so when I think about what companies and what categories are really well-positioned to do that, that’s what gets really exciting for us because the pharmacy is the most frequent interaction point in healthcare. The average person engages with the pharmacy 8 to 10 times more often than they do with their doctor. The pharmacy is a very natural place for the consumer to kick off a wide variety of other things they need to do beyond pharmacy in their healthcare journey. And so I think Capsule, as a place that integrates with best-in-class partners across a number of different verticals to bring that simple, holistic place in the consumer’s hand, is something that we’re going to see over the next 5 or 10 years.
Mike: Great viewpoints today, Eric. If someone wanted to find out more about Capsule or you, where can they go?
Eric: Capsule.com is the best place to learn more about what we’re up to.
Mike: Eric Kinariwala, thank you so much for joining us today on The Hospital Finance Podcast.
Eric: Thanks for having me.
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