Pod Insights The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch 20 VC 074: The Future of Healthcare with Bob Kocher, Partner @ Venrock About this episode Bob Kocher is a Partner at Venrock and focuses on healthcare IT and services investments. He currently serves on the Boards of Aledade and Jiff, and is a Board Observer at Grand Rounds and Doctor on Demand. Prior to Venrock, Bob served in the Obama Administration as Special Assistant to the President for Healthcare and Economic Policy on the National Economic Council. In the Obama Administration, Bob was one of the shapers of the Affordable Care Act. Before the White House, Bob was a Partner at McKinsey & Company where he led McKinsey Global Institute’s healthcare economics work and Center for United States Health System Reform. In Today's Episode You Will Learn: 1.) How Bob made his way from The White House to Venrock as a VC? 2.) How did working at The White House prepare Bob for his career as a VC, where does Bob have the biggest opportunity to change the healthcare system? 3.) What are the barriers to entry that a preventing full scale innovation and business growth in the healthcare IT space? 4.) Why have we seen a large increase in healthcare startups? What more would you Bob like to see in the healthcare space, either from the side of the startups or VC’s? 5.) How does Bob perceive the integration of software and healthcare in the future? 6.) As a healthcare professional, what would Bob recommend an individual with a high powered, demanding job in order to lead a healthy lifestyle? Items Mentioned In Todays Episode: Bob's Fave Book: The System Bob's Most Recent Investment: Lyra Health As always you can follow Harry, The Twenty Minute VC and Bob on Twitter here! If you would like to see a more colourful side to Harry with many a mojito night, you can follow him on Instagram here!
Transcript Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:00 Harry Stebbings? It's the 20 Minute VC with your host, Harry Stebbings, and today celebrates the first for us, as we celebrate a hat-trick of Venrock VCs. We had the incredible David Pakman and Nick Byham on the show, and today we welcome Bob Kocher. Bob is a partner at Venrock, and he focuses on healthcare IT. He currently serves on the boards of Alleredade and Jif, and is a board observer at Grand Rounds and Doctor On Demand. Additionally, he is a consulting professor at Stanford University School of Medicine, and serves on the advisory boards of Harvard Medical School Healthcare Policy Department. Prior to Venrock, Bob served in the Obama administration as Special Assistant to the President for Healthcare and Economic Policy on the National Economic Council.
0:44 Harry Stebbings? In the Obama administration, Bob was one of the shapers of the Affordable Care Act. And before the White House, Bob was a partner at McKinsey & Company, where he led McKinsey's Global Institute Healthcare Economics work and Center for United States Health System Reform. But first, let me tell you about Vidar Law. Does your startup have intellectual property that needs to be protected no matter what? That is where Vidar can help. With their decades of experience, they have expert handling of copyrighting, trademarking, and patenting intellectual property that is core to your business. You wouldn't leave the house with your door wide open, so why would you do it with your intellectual property?
1:23 Harry Stebbings? Head on over to www.vidarlaw.com, or email chris@cverner, that's C-W-E-R-N-E-R, at vidarlaw.com. However, it is now time for me to shut up and for us to welcome our third partner at Venrock to the show. It is, of course, the fantastic Bob Kocher.
1:43 Speaker 01 You have now arrived at your destination.
1:52 Harry Stebbings? Well, Bob, welcome to the 20 Minute VC. I'm so happy to have you on the show. My pleasure. Now, can you kick us off by telling us how you got started in the investing industry, and what you did pre-investment career?
2:05 Speaker 02 Sure. So my path into venture capital is serendipitous. So prior to being at Venrock, I was at the White House where I worked on healthcare and economic policy. And I worked closely with a guy named Todd Park, who was Chief Technology Officer at HHS. And went on to fix healthcare.gov. But before the White House, he founded a company called Caspide Health and Athena Health. And his first investor was a colleague of mine now here named Brian Roberts. When I was leaving the White House, Todd had the great idea that I should go do investing because my passion is making healthcare change more quickly. And my theory of the case was that the way to make healthcare change in America more was to make more companies that show people the way. And so Todd's suggestion was to be a venture capitalist and heater's feet of Brian Roberts,
2:49 Speaker 02 who ran Venrock, who runs Venrock. And Brian and I clicked and he hired me.
2:55 Harry Stebbings? And how do you feel that working in politics and at the White House prepared you for a career in venture?
3:03 Speaker 02 Oh, great question. I think they're both actually, you know, great chances to do problem solving. When you're at the White House, you're trying to think through how can I get sixty senators to agree on something? And what are the things you have to give and take and to make that happen as well as to, you know, make the rest of America accept an idea? With a little company, you're, you have to imagine, you know, how can I invent a product or a service? That somebody wants to use, that will make sense, that will have, you know, all right of them today that I can make. And that over time can grow into an interesting business that has, you know, things like network effects and economics around it that, that make it interesting. And, you know, it's, it's the same type of creative problem solving.
3:45 Speaker 02 I think that you have to use to imagine how a, a policy can become a law and change America.
3:50 Harry Stebbings? And what were your biggest takeaways then from your political career?
3:54 Speaker 02 It's all about incentives. So. You know, the way the US healthcare ecosystem works and the entire, you know, twenty percent of that economy, of our economy, which is healthcare, is driven by how we pay for it and how we measure performance. And honest to God, in a little company, you know, the way you make a product work is how you measure it, you know, and how you incentivize people to use it. And so it's much more micro, but it's the same idea, which is, you know, aligning incentives and then putting great people around something to make it happen.
4:23 Harry Stebbings? And there have been a number of significant changes in healthcare IT in terms of measurements and incentives. So what do you think the most significant changes have been in this sector? And why do you think we should pay attention to them?
4:38 Speaker 02 So I think that there's been two enormous changes, which are byproducts of the Affordable Care Act, the High Tech Act, and the recession, quite frankly, which engaged a lot of companies who pay for a lot of healthcare on how they should manage their costs. The first one is an amazing liberation of information. The second one is changes to incentives. They go together. On information, healthcare's been, you know, classically, you know, the textbook example of information asymmetry leading to inefficient markets. And for the first time, beginning with really the High Tech Act, which was a byproduct of the recession, we decided that it was time to wire American healthcare. And so we gave roughly thirty billion dollars to doctors
5:21 Speaker 02 to buy meaningful-use computers into hospitals. And today, we have about ninety percent of hospitals and, you know, eighty percent of doctors using computers, and those computers create data. And that data allows patients now to begin to ascertain quality and value. It allows doctors to begin to understand, you know, the quality of the referrals they make, the quality of the devices that they're using. But as importantly, it allows us to have new payment models. And so most of the payment models that we're putting forward as we're calling Affordable Care Act rely on, you know, data to make sure that doctors aren't stinting on care and rely on data to help doctors do the accounting and coordination to start to make money in payment structures where they have to actually be more efficient. And so those to me are the Sentinel changes and they're being rolled out over, you know,
6:05 Speaker 02 this next decade. And so Medicare announced recently that their goal is to have eighty percent of payments in risk models by twenty eighteen. And that they're moving forward with these types of payment models like bundled payments. And employers now are beginning to take advantage of that too by saying to their workers that we want to use reference prices and have you pick networks of care that are more productive. And so that tremendous externality, which is changes in information, changes in incentive, you know, created tremendous need for software and tools and technologies and imagination for how you reorganize the delivery system to make it, you know, more productive in a future that pays differently.
6:42 Harry Stebbings? And have we seen enough of an increase in the businesses produced in the healthcare IT sector to supplement this demand?
6:52 Speaker 02 I think so. I mean, we've seen amazing amount of talent in the form of entrepreneurs coming into healthcare over the last five years and a commensurate amount of increases in venture capital funding and a broadening of those people that invest in this space to include many technology investors to support the creation of new companies. I think we've also seen enough successes that people will say, you know, healthcare's not Siberia anymore. I could come here and build a high-growth, interesting company, whether that's Athena Health, who, you know, was one of the early examples of a healthcare technology company that, you know, was SaaS, that did really well, or recently Casta Health or Fitbit, or some of our newer ones, Zephyr's and Neural Health. But you're seeing people build high-growth companies that are very interesting, and that's drawing more talent to the sector.
7:37 Speaker 02 The other great thing is that it used to be, you know, equally Siberia, like to sell products to hospitals and insurance companies. And they've been jolted enough by the changes in the US healthcare economy that they're willing to take risks of trying products from earlier-stage companies that, you know, may not pass the SOX two compliance, you know, tests that they used to put you through.
7:57 Harry Stebbings? And what would you say then are the barriers that remain in preventing kind of full-scale innovation and business growth in the healthcare IT sector?
8:07 Speaker 02 For the last couple of years, quite frankly, the incumbents have done pretty well. And so with the expansion of coverage, there's been a nice uptick in volume of paying customers and the bad debt that used to plague hospitals and doctors has gone down. And so margins have actually gotten better for hospitals and insurance companies, which allows them to change less quickly. The other issue is we've had a lot of consolidation on the provider side, which allows those systems to raise prices and therefore feel less pressure on productivity. And so that's modulating the rate at which we're having full-scale adoption of new payment models and then the tools that they need.
8:43 Harry Stebbings? And if we were to go by Mark Andreessen's belief that software is eating the world, where do you see the integration of tech and healthcare on the consumer side? How can consumers benefit from the integration?
8:56 Speaker 02 Well, sure. So one of our profile companies is called Doctor On Demand. And what Doctor On Demand does is it allows you to use your phone or tablet to do a video meeting with a doctor within about a minute for 40 bucks. And it so happens that about a third of all healthcare visits can be handled over video from your home with a one-minute waiting time for 40 bucks, which is about 30% of what it costs to go to a doctor's office and about three hours faster. And so there's a lot of productivity you can unleash by shifting visits from brick-and-mortar places to video and a lot of satisfaction that you can create. The net promoter score for patients when they use video telemedicine are in the 70s and 80s. When they go to a doctor's office, it's like 17. And so it's a much better way and it's much cheaper.
9:38 Speaker 02 And for most Americans who are recently having $1,000, $2,000, maybe $5,000 deductibles, saving 150 bucks when they see a doctor is a really great thing for the patient, too.
9:48 Harry Stebbings? And which areas do you think are going to be impacted most by the integration of software into healthcare and what are you most excited about?
9:56 Speaker 02 Well, I think first, the way in which care is delivered is going to improve substantially. One of the biggest challenges is getting the right patient to the right doctor and the right treatment.
10:10 Speaker 02 Prior to going into policy, I was a physician. And I did internal medicine, healthcare, and broadly took care of adults with all kinds of problems. And I was very good at some and less experienced at others. And for the ones I was less experienced at, I'd go and read between patients. This connection, doing it right. But those patients probably weren't getting, you know, the world's best care from me since they were, you know, one of three people I took care of with that condition. And so I think that we'll use technology first to help match patients to the right doctors. And because there's no question that matching a patient to a person that's very expert at their exact problem and their exact procedure leads to better outcomes and lower costs because there's fewer complications. So software can help us do that.
10:51 Speaker 02 The second thing software can do is no matter how expert a doctor is, you cannot read and remember everything. And so software will help us actually curate the literature and give us the right information to tailor care. So we know that we're giving you exactly the right medication. We have exactly the right clinical goal. We know exactly how fast you should achieve it and we can exactly know if you're actually meeting that goal. And then we can intervene sooner instead of having you come back in three months and have me ask you, how are you doing?
11:16 Harry Stebbings? Are there any areas of the healthcare sector which are largely ignored, do you think, or underserved?
11:23 Speaker 02 Well, one of them is administrative costs. So one of the amazing statistics about US healthcare is that for every doctor, there are 16 FTEs walking around behind that doctor doing stuff. And of that 16, nine of them are administrators. That ratio has gone from one to 10 to one to 16 in the last 20 years. So we've gotten actually less productive. Every other sector of the economy has figured out how to squeeze administrative labor down to as close to zero as you can because that's not productive. And then have all your labor be the productive stuff that's making the, you know, the product work. Healthcare has to get rid of, hopefully, you know, seven of those nine people on admin as fast as it can if it ever wants to have lower prices and higher margins.
12:02 Speaker 02 And so I think that there's a lot of opportunity to create software that, you know, that digitizes a lot of what those people do. That includes things like billing, coding and collections. It takes half a FT per bed bill and collect for patients in the hospital. It's crazy. Things like compliance reporting and credentialing. There's a whole bunch of admin that we should get rid of.
12:22 Harry Stebbings? And talking of compliance, are there any sectors of the industry which are incredibly hard to disrupt due to strenuous regulation?
12:30 Speaker 02 No. Most investors and entrepreneurs at first think that regulatory risk is a big problem and really complicated. Regulators, since I was one of them, are seeking to make the healthcare system be more productive and lower cost. And so technologies and approaches that do that, I think have a good shot and aren't going to be encumbered by, you know, regulations that make it hard.
12:52 Harry Stebbings? And what more would you like to see from startups and VCs to encourage this growth in the healthcare sector?
12:59 Speaker 02 Imagination about scoping your products and solutions to be big. Healthcare has a lot of incremental things, and the US healthcare system has thirty percent waste, highly erratic outcomes, and unnecessary complexity. And so I prefer ideas that go after bigger parts of the pie and aren't sort of working on just one type of patient with one type of disease for, you know, one type of thing. And so I prefer more horizontal thinking than, you know, narrow and nichey things.
13:32 Harry Stebbings? Now, I've got a question here from one of your partners at Venrock, David Patman, and David asks you, as a healthcare expert, how do you recommend managing stress and living a healthy life when you do lead a difficult or a strenuous work life?
13:52 Speaker 02 I think the first thing is find joy in what you do each day. People that, you know, do a job in the hopes of getting another job later that makes them happy, I think are missing out. Because stress is diminished when you love what you do and when you're, you know, doing something that makes you happy and when you're burning. And so that will be the first thing I'd say is don't, you know, it's not about meditation before work and then having a sad day. It's about finding joy in your work and in the people you work with.
14:19 Harry Stebbings? And what is it then that you love about your work? What's your favorite aspect of being a VC?
14:24 Speaker 02 Oh, I love making healthcare a little bit better each day. You know, I wake up and say, can we make healthcare suck a little less today? I'm not trying to make it perfect. I'm trying to make it better. And making it better means that patients get to the doctors that take better care of them, that do the right treatment and avoids patient suffering and unnecessary costs. Making it better is getting rid of stupid processes that require faxing. Making it better is getting rid of the waiting time to go get a simple problem solved. Making it better is helping an insurance company design a benefit design that actually is understandable. And so to me, that's what makes it makes, you know, life rewarding. I also love it because I can show people the way. I mean, there's no question that Castlight Health, a company that I joined the board of when I left the White House,
15:08 Speaker 02 that helps give out price and quality information, has had an amazing effect on everybody in the healthcare system. Every insurance company in the country in America today will tell patients, you know, what the cost is of a procedure that they're about to pay and something about the quality. And that wasn't true before they were attacked by Castlight. And so I'm grateful for the fact that we can pull people forward.
15:27 Harry Stebbings? And which opportunity in terms of job allows you to have the most impact in improving the healthcare sector, would you say? Would you say it was your previous job working in the political side of life? Or would you say it was in Venrock? Where do you have the most kind of opportunity to improve healthcare?
15:46 Speaker 02 I think today it's in the private sector, places like Venrock or the companies that we and others fund, showing people the way forward and showing people you can build new businesses that have better margins and better growth by embracing new incentives. And then that will be, you know, that will lead to big companies and will lead to lots of emulation and copying by incumbents, which makes the whole healthcare system better for people. And so I think today the game is being played in the private sector and that we're the ones leading the way. And that over time, you know, there'll be future regulatory changes too that probably cement some of these changes and push us further forward. But I bet for the next decade, the disruption comes from the private sector. And so I feel happy to be here.
16:25 Harry Stebbings? And I'd love to delve into a quick fire round now to end the show.
16:30 Harry Stebbings? So your favorite book and why?
16:33 Speaker 02 My favorite book, I think, is a book called The System by David Broder. He wrote a, I think, the classic on the Hillary Clinton healthcare reforms from 1993 and how they unraveled. It's a book that we all read before marking up on the Obamacare reforms so we would not repeat all the mistakes and the lessons. And then we repeated all the mistakes.
16:54 Harry Stebbings? And then, what's the most memorable quote for you that you have or you live your life by?
17:00 Speaker 02 Um, there's a quote by Camus, uh, which says, "In the midst of winter, I find within myself an invincible summer."
17:06 Harry Stebbings? The transformative moment in your life?
17:10 Speaker 02 Oh, man, um. I think when I was an undergraduate, I began to follow up with protein trafficking and microtubules. And that led me to do, um, several years of research at the NIH studying actinase and motor proteins, working with a brilliant scientist named John Hammer, who taught me how to problem solve.
17:29 Harry Stebbings? And then your favourite newsletter or blog?
17:32 Speaker 02 Wow, um, I like, I like Political Pulse, so I can keep up on healthcare policy.
17:37 Harry Stebbings? Okay, and then finally, your most recent investment and why you said yes?
17:42 Speaker 02 My most recent investment is a company called Lyra Health. And Lyra Health is seeking to, um, reimagine how behavioural healthcare works. Behavioural healthcare today, so things like depression, anxiety and mental illness, is a totally separate healthcare ecosystem from the medical system. And it so happens that most patients who have many chronic diseases have a bunch of needs to have their stress and anxiety and depression managed. And so we're trying to connect those two and use data to identify the better practitioners there and use data to, use technology to share information across those and treat patients' anxiety so they can therefore treat their medical conditions, uh, and get better care. Um, the CEO is a company named David Ebersmann, who's a long time friend and, you know, amazing guy. And so that's why we did it.
18:25 Harry Stebbings? Well, Bob, thank you so much for coming on the show. I've hugely enjoyed chatting with you. Thank you.
18:30 Speaker 02 Thank you, Harry.
18:31 Harry Stebbings? What a fantastic deep dive into the healthcare IT space that was with the fantastic Bob Kocher. And as always, all the resources and items mentioned in today's show can be found on the blog at www.the20minetc.com. And I'd love it if you'd follow us on Twitter by following the handle at 20minetc, all in letters. But before we leave the show today, remember, lock the doors on your intellectual property, the foundations of your business and check out www.vedarlaw.com. And you know what? If you're not sure whether your business is vulnerable to IP problems, give Chris a call on 312 895 4993. He will answer all your questions, assess your situation, and you can progress from there.
19:16 Harry Stebbings? In the knowledge that you have some of the best startup lawyers with decades of experience behind you. Thank you so much as always for your continued support and we look forward to seeing you in the next episode.
Previous 20 VC 073: Life Inside Accel Partners with Michael Treskow @ Accel Next FF 014: Making Great Founders, Idea Creation and The First 100 Days Of A Startup with Alice Bentinck, Co-Founder @ Entrepreneur First Page updated October 26, 2026 · transcript and summary are machine-generated
