Sell the Bullets

Trinidad ,Colorado, located in the Southern part of the state on the Colorado side of Raton Pass, was, until recently, the "sex change capital of the world". More sex reassignment surgeries were done there than any other city, until the surgeon left to take a job in San Francisco. Here is the story about Dr. Biber.

Trinidad , pop 7300, has a long, illustrious history. It grew up as a trading post along the Santa Fe Trail, one of the 3 primary "trails" in early 1800 America, that connected ST. Louis to Independence and Westport, Missouri with Sante Fe, then part of Mexico and was a major trade route. It came into its own after Mexico won its independence from Spain in 1821 and ended when the railroads made it obsolete (are you getting the lesson here?)

The Trail provided entrepreneurs with two ways to make money. The first was by providing a way for people to do business or mine coal. The second was to sell things to the people who were doing the business or mining coal.

Colorado recently legalized the sale of recreational marijuana. People is the cannabusiness fall into two categories-those that touch the leaves and those that don't.?

The?traffic along the trail attracted Jewish merchants from the East Coast and Europe who saw a business opportunity providing goods, tools and supplies to Sante Fe Trail users. In 1889, they built Temple Aaron, now the oldest synagogue in continuous use in the state .?The geneological connection to prominent Denverites exists to this day.

The architects, the Rapp Brothers, created the Sante Fe style and designed La Fonda in Sante Fe. Colorado Preservation Inc has declared it an endangered building there is a major effort to save this cultural heritage and architectural gem.

Different people define business models different ways and it has evolved over the years. Fundamentally, a business model is a set of hypotheses that describes how a firm intends to do what they do at a profit. In other words, it describes how a firm creates, deploys, and harvests value.?It is different from a business strategy which describes where and how a firm plans to play and win in the competitive marketplace.

If you are looking for an opportunity, consider selling the tools to make the product, not the product itself. For example, there is tremendous interest in companies producing high speed automated DNA sequencers that will be able to deliver the $1 genome and provide an important tool to drive the personalized medicine revolution. Another company, Sharklet(https://www.sharklet.com)?is using a shark-skin like material that is bacterial resistent to coat medical devices, and, interestingly, the bottom of US Navy ships to prevent the accumulation of barnacles and other organisms that create drag on the hull. Ironically, the pick and shovel business has returned to the old Sante Fe trail in the form of marijuana.

There are two kinds of businesses: the distinction is simple – either the company “touches the leaf” or it doesn’t. Companies that directly deal with marijuana or its byproducts face legal and regulatory risks that ancillary businesses do not. We define ancillary businesses as those that serve or support the cannabis industry, but don’t directly deal in cannabis products.

For all the hype, we are in the early days of artificial intelligence. It’s still hard to know what the most valuable applications will be, or what will come first. But while everyone’s trying to find those answers, those companies that provide the shovels for this gold rush are likely to profit. Nvidia is the latest example.

A recent paper analyzed possible shifts in sick care profit pools and proposed three scenarios:

Supply-driven.?The “supply-driven” scenario assumes that providers have the biggest impact in reshaping the healthcare system, through more integrated and coordinated care. Payors and providers continue to consolidate in order to manage populations and offer more coordinated, integrated care while also capturing scale efficiencies. A smaller number of players increase their market share and retain greater pricing power. Risk shifts from payors to providers, the pharmaceuticals industry gains (primarily due to better adherence driven by coordinated care), and payor margins shrink. In our analysis, the supply-driven scenario creates roughly $360 billion in value, primarily by reducing costs from today’s levels. More than 90 percent of current profits will accrue to a few integrated players.

Demand-driven.?The “demand-driven” scenario assumes that changes on the patient side will dominate. As consumerization prevails, patients take a more direct role in their own care, and pay a larger share of costs out of pocket. As a result, they increasingly seek out efficient new solutions, and they rely on technology to manage their care more directly, along with alternative care settings and other tools. The solutions with the biggest impact come from areas outside the traditional healthcare industry, such as software, telecom, retail, and apparel companies. Utilization improves, but intense competition leads to lower prices and reduced margins among incumbent providers. Those incumbents also lose ground to startups that can create better consumer experiences and incentives for consumers to manage their own health. Non-acute care moves out of traditional settings and into retail environments. And an increased government share of health spending puts downward pressure on pharma prices. The demand-driven scenario unlocks roughly $480 billion in new value by 2025 — again by reducing costs from current spending levels. Notably, the demand-driven scenario creates roughly 35 percent more value than the supply-driven scenario.

Equilibrium.?Both the supply- and demand-driven scenarios are hypotheticals that assume one model will dominate. And both are ultimately unsustainable, because neither would lead to a stable, end-state market. The supply-driven scenario would fail to slow increases in healthcare costs — because a smaller number of players would retain greater control over access and pricing — and would likely trigger the next revolution of reform and restructuring to make healthcare more sustainable. And the demand-driven scenario would erode profit margins for providers beyond sustainable levels, likely causing key participants to exit the market.

In any of these scenarios, entrepreneurs can touch the patients, providing face to face care, or not touch the patients, providing the eCare tools, business processes and systems required to streamline workflow and create value. To identify who does what, start with a clinical care pathway for a patient with a given disease.

Biomedical and clinical business models are constantly changing in medtech, biopharma, clinical care, care organization and business processes.?

The growing influence of nonclinical actors in healthcare has sparked concerns among physicians, as many feel that their autonomy has been significantly eroded over the past few decades.?

Wars create fortunes. Be the guy who sells bullets, not the soldier fighting the war. Of course, a little prayer at Temple Aaron can't hurt either. In fact, maybe Divine guidance had something to do with the legalization of marijuana in Colorado. Las Animas county sells the most ganja per capita in the state.

Arlen Meyers, MD, MBA is the President and CEO of the Society of Physician Entrepreneurs on Substack and Editor of Digital Health Entrepreneurship