Fred argues the core fix for US healthcare would be breaking up negotiating power into smaller units, since consolidated payers and hospital systems reach 'loggerheads' where everyone overpays and nothing improves. ✦ AI generated
Fred Turner · 20VC · 2026-07-18 · original ↗
starts at this moment · 39:19
“If you could do one thing to change the structure of the US healthcare system today, magic wand, what would you do?”
When all of the players are small, when you have smaller payers and smaller hospitals, you end up kind of getting to reasonable negotiations. What's happened is you have these massive payers... you basically have like four large players that control the entire market on the payer side and then you get these ultra consolidated hospital systems... they just reach these loggerheads where nothing gets done and everybody's overpaying for everything.
verbatim transcript · starts at 39:19
38:59ultra special surgery center that you need like we need to have that capacity in our network because some people need to be hospitalized, some people need those services that if you want to get access to that, you got to pay me double for my primary care doctors. And so when all of the players are small, when you have smaller payers and smaller hospitals, you end up kind of
39:19getting to reasonable negotiations. What's happened is you have these massive payers like the market is ultra consolidated. You basically have like four large players that control the entire market on the payer side and then you get these ultra consolidated hospital systems because that's the only way for them to survive if they want to, you know, fight with Blue Cross. The only way to survive is to get really big
39:39so they have the negotiating power and then they just reach these loggerheads where nothing gets done and everybody's overpaying for everything and everything's inefficient. And when you have more competition in the market, more smaller payers entering more, you know, smaller health systems, you start to get like an actual efficient market. When you're just negotiating for like, hey, I have a third of healthcare in the state and I have a third of all of the
40:04employees in the state. It's not an efficient market anymore because there's no alternative. You h you must reach a deal. >> If I am sick, is the best place to be treated in the US? >> Yes, definitely. >> Seriously. Yeah. Yeah. We have the US has the access to by far the most cutting edge techniques and facilities and drugs than the rest of the world and they're willing to
40:32spend a lot more. >> What do you know now, sorry, that you wish you'd known when you made the pivot into insurance? I think I wish that I knew AI was coming because I think like the way we designed the business in 2022 when we first started, we had no idea that this wave of AI and LLM was coming. Like we were building a health insurance business
40:54because we thought it was a good business to build and we thought it needed to be built. We needed a better alternatives in the market for health insurance. And then in the last like 18 months, how we do pretty much everything is now a completely different workflow. And we there's so much I mean all health insurance does is like moving bits around, right? Like we don't have a
41:14physical product. We give you a little plastic card, but apart from that our product is that we move bits around in a database that means care is paid for. >> That's it, right? And we do a lot of managing kind of managing a marketplace. We work with the providers to negotiate prices. We work with employers to negotiate how much they pay and then we try to work with employees to keep them