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“Accelerationalism”: Is Your Money on Altman or Musk?

By MIKE MAGEE

Has America turned into an “Island of Musk?” He seems to be everywhere and nowhere at the same time. As Trump’s new best friend, he’s opened up the gates of Twitter-hell, morphed into a steady stream of crypto-cash, and demonstrated his dance moves alongside Trump at featured venues.

He’s also launched “a robot for every citizen” as part of a cover for sagging expectations for the Tesla Cybertruck, and issued a new round of hollow promises on his Robotaxi scheme. In short, Musk’s ADHD aside, he seems a bit more unhinged than usual.

In contrast, his arch foe, 38-year old OpenAI CEO, Sam Altman, is (if you’re to believe him) almost professorial. In his own words, “Technology brought us from the Stone Age to the Agricultural Age and then to the Industrial Age. From here, the path to the Intelligence Age is paved with compute, energy, and human will.”

Part of the clash revolves around a single word, accelerationalism. Destined to become the 2025 “word of the year,” this label is increasingly assigned to thought leaders in AI who have convinced themselves that AI will soon rule the world, our politics, and the battle field, and therefore “faster is better” is now the mantra when it comes to world-dominating generative AI.

This was not always the case. Back in 2015, when Elon Musk and a young Sam Altman teamed up to launch a non-profit called OpenAI “to benefit humanity,” they both realized that the leased offices were not big enough for two alpha males. But in launching their decade long battle for dominance, they agreed that slow, transparent, and deliberative was better than fast and reckless. Altman wrote at the time, “In an ideal world, regulation would slow down the bad guys and speed up the good guys.”

Back then, Musk famously warned, “Mark my words, AI is far more dangerous than nukes. I am really quite close to the cutting edge in AI, and it scares the hell out of me.” Where Musk was ”in your face,” Altman was “extremely nice and accommodating” which masked a startlingly aggressive underbelly according to those who knew him well. As his former partner in the 2011 start-up “Y combinator”, Paul Graham said, “You could parachute him into an island full of cannibals and come back in five years and he’d be the king.” Sam was 23 at the time.

In February, 2018, Musk jumped ship, apparently disagreeing on strategy with Altman. And then Altman’s board, in an all-out coup, fired him on November 17, 2023. Twelve days later, they were forced to rehire him when major stakeholder, Microsoft, threatened to pull their considerable support. Altman, for his part, displayed a conciliatory tone on Musk’s own X-platform, tweeting on his return “For my part, it is incredibly important to learn from this experience and apply those learnings as we move forward as a company. I welcome the board’s independent review of all recent events.”

On June 7, 2023,  38-year old Sam told his Congressional questioners that money wasn’t his motivator. Rather “I’m doing this because I love it.” Sen Richard Blumenthal swooned, “It’s so refreshing. He was willing, able, and eager.” Altman, playing to the cameras, said, “We think that regulatory intervention by governments will be critical to mitigate the risks of increasingly powerful models.”

Just 9 months later, his Senate supporters were no doubt confused to open the Wall Street Journal and discover the headline, “Sam Altman Seeks Trillions of Dollars to Reshape Business of Chips and AI. Open AI chief pursues investors including the U.A.E for a project requiring up to $7 trillion.”

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You’re Not Going to Automate MY Job

By KIM BELLARD

Earlier this month U.S. dockworkers struck, for the first time in decades. Their union, the International Longshoremen’s Association (ILW), was demanding a 77% pay increase, rejecting an offer of a 50% pay increase from the shipping companies. People worried about the impact on the economy, how it might impact the upcoming election, even if Christmas would be ruined. Some panic hoarding ensued.

Then, just three days later, the strike was over, with an agreement for a 60% wage increase over six years. Work resumed. Everyone’s happy right? Well, no. The agreement is only a truce until January 15, 2025. While money was certainly an issue – it always is – the real issue is automation, and the two sides are far apart on that.

Most of us aren’t dockworkers, of course, but their union’s attitude towards automation has lessons for our jobs nonetheless.

The advent of shipping containers in the 1960’s (if you haven’t read The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger, by Marc Levinson, I highly recommend it) made increased use of automation in the shipping industry not only possible but inevitable. The ports, the shipping companies, and the unions all knew this, and have been fighting about it ever since. Add better robots and, now, AI to the mix, and one wonders when the whole process will be automated.

Curiously, the U.S. is not a leader in this automation. Margaret Kidd, program director and associate professor of supply chain logistics at the University of Houston, told The Hill: “What most Americans don’t realize is that American exceptionalism does not exist in our port system. Our infrastructure is antiquated. Our use of automation and technology is antiquated.”

Eric Boehm of Reason agrees:

The problem is that American ports need more automation just to catch up with what’s considered normal in the rest of the world. For example, automated cranes in use at the port of Rotterdam in the Netherlands since the 1990s are 80 percent faster than the human-operated cranes used at the port in Oakland, California, according to an estimate by one trade publication.

The top rated U.S. port in the World Bank’s annual performance index is only 53rd.  

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The big guys can’t do HLTH right

By MATTHEW HOLT

This is the week where the digital health landscape debunks to the HLTH Conference in Vegas to meet, do deals, listen to superannuated rappers and generally have a great time. Speaking as the guy who ran the digital health conference before HLTH emerged, I remain extremely jealous of how Jonathan Weiner, Rich Scarfo, Jody Tropeano and team have managed to pull 10,000 people together when Health 2.0 never got past 25% of that size! (And I won’t even mention the premium price they charge!).

I have written pretty extensively about how digital health has failed to develop an alternate to the incumbent hospital, specialty & procedure-based system. 90%+ of digital health companies are now desperately trying to get the incumbents to buy their stuff. It’s as if Jeff Bezos in 1998 was going cap in hand to Barnes & Noble asking them to put in his new online ordering system.

But there is something else that HLTH has not been shy in doing, and that is giving a place on the stage for big companies to explain what they intend to do to change the health system. Amazon, Walmart. Walgreens, CVS, Optum and many more have used that premium real estate to explain what they are going to do. And much like the digital health upstarts, the reality has been very different.

Almost all of those companies’ new strategies are in deep trouble.

Amazon was going to build a hybrid telehealth/home based delivery platform. It got up and running and had some sizable employer clients. It also had a strong relationship with Crossover Health which had great worksite clinics. Not hard at all to imagine that becoming a nationwide primary care platform that could take risk and really cut into the business of the incumbent non-profit systems. After all Dave Chase at Rosetta Stone has been preaching this forever. But at the first hint of trouble, Amazon cut & run and bought One Medical. It’s as if their play in grocery was to go mass market but then they decided that they could make more money from the high end Lululemon crowd that shops at Whole Foods. Oh yeah, that was their play in grocery too.

Walmart, Walgreens and CVS were all going to create mass-market primary care, and move to accepting risk primarily from Medicare Advantage. I interviewed Walmart’s then head honcho of health care, Cheryl Pegus, on stage at HLTH two years ago when she waxed lyrical about how Walmart was the answer to the lack of primary care all over the deep South and rural America. The joke was that by the time of that panel she had already quit and was moving to fresher pastures at JP Morgan! Around a year later Walmart declared that it couldn’t staff its clinics, was losing a fortune on each one, and it tossed the whole business.

Walgreens paid a fortune for VillageMD, then even more for Summit Medical (which included CityMD in NYC). At one point in late 2021, VillageMD CEO Tim Barry told me that their main issue was the execution risk of having to open more clinics per week then Starbucks did at the height of its expansion. Walgreens made a minority investment then kept doubling down on its bet. But three years later it has written off the whole amount ($8bn or so) and its stock price is in the toilet. It’s worth less now than doctor network Doximity!

Both of these companies and CVS have shown that it’s really hard just to get the basics right opening clinics in retail stores. That’s despite the fact that most Americans have no primary care doc and can’t get an appointment with a regular one, and that there’s a captive audience walking into their stores every day picking up their meds.

CVS has the added issue of trying to integrate a decent sized insurer into its operations just at the time when the Medicare Advantage gravy train looks like it is running out of steam. CVS’ CEO Karen Lynch took over Aetna recently and then this past week was dispatched to the cheap seats herself. (Don’t feel too bad for her, she’s getting $4m a year to “consult” with the board). Two things have hit Medicare Advantage. First the government is starting to look into risk adjustment upcoding. CVS, you may recall, bought Signify Health, a company specializing in sending nurses into seniors’ homes to perform said upcoding. Secondly, Medicare Advantage plans had surprisingly little information about and control over their members who were being cared for by their non-risk bearing delivery system (which is to say, most of it). They appeared to be totally surprised that post pandemic procedure numbers ratcheted up and were powerless to stop it. Well, Wall Street noticed.

Similar problems have hit Optum, the engine behind United HealthGroup’s profitable growth for the past decade or so. It’s not just the biggest health tech company in America, it’s also the biggest medical group owner—even if CEO and bumbling Englishman Andrew Witty doesn’t seem to know how many doctors it controls. They are being exposed in Stat on a weekly basis for basically semi-frequently causing their doctors to lie about their patients’ health status, just as the Wall Street Journal accuses their associated health plan of inventing diseases and procedures—all to bill the government more. You can argue back and forth but it does appear that the strategy of buying every medical group it can see and provider fracking appears to have hit a bumpy road.

So if the venture-funded digital health upstarts are no longer changing the world, and the big retailers and Optum aren’t setting the world alight, who is taking the upper hand? Well, I expect that intermingled with the ex-pop stars and amazingly beautiful actresses on stage this week (sorry, but I love Halle Berry!), we’ll see a rash of big incumbent non- & for-profit systems. Look at their numbers. Procedures are heading up. ERs are filling up. Operations are profitable or in some cases, very profitable, corporate jets are being bought, and “reserves” –AKA hedge funds–are growing well due to being stuffed full of Nvidia stock.

All of which leads me to believe that sadly HLTH isn’t about the future of health as much as it’s a retread of its past. Still, I’ll catch you at the parties if you’re there….

Matthew Holt is the founder and publisher of THCB

Kamala will Win The Popular Vote And No One Is Pointing Out That Absolute Certainty In The Popular Media 

By GEORGE HALVORSON

I have been railing against the Electoral College (and the Senate) as anti-democratic forever, and no one much cares. Turns out George Halvorson noticed–Matthew Holt

We all need to remember that Joe Biden got 11,110,258 California votes in the last election and we need to know and remember that Donald Trump got 6,006,409 votes in that state.    

Kamala Harris is on the same track as Biden in every survey and that means she will beat Trump by at least five million votes in that state and she will win the national vote total by at least that many votes because the other vote counts are basically tied and have many fewer voters than California.  

The vote differences in other states like Arizona and Georgia are a few thousands votes but only California and New York have million vote differences and she is clearly winning by millions of votes in each of those states.  

That means that Trump is guaranteed to lose the popular vote total again by millions of votes. 

It’s not clear yet if they can somehow create an electoral college win from those vote totals but it is very clear and absolutely guaranteed for him to be millions of votes behind to start that process.   

Large numbers of Americans will be extremely angry and upset if he loses the popular vote by almost ten million votes and somehow manages to get into the White House with that huge loss and pretends that he actually earned that victory with real votes. He will obviously be the biggest loser on the popular vote  because there’s no way to make up the California and New York numbers.   

That loss is absolutely guaranteed because those two states are doing for Harris exactly what they did for Biden and they are both even less supportive of Trump than they were against Biden. 

The people who see him lose by ten million or more votes and then somehow claim and win the White House will probably protest that result with very visible descriptions of their unhappiness and anger and his ability to lead credibly in the face of that anger will probably be badly damaged and clearly labeled with brand damaging and clear description of what happened.  

It would probably be better for the country if the electoral college results followed the actual popular vote.  

Election night is going to be interesting.  

The huge popular vote win will be visible very early because both California and New York numbers are so inevitable and so overwhelmingly against him that we won’t have to wonder or guess about those numbers at any point in the process. 

The news media should be ready for that massive popular vote difference because we know now that those numbers are absolutely going to happen.

George Halvorson is Chair and CEO of the Institute for InterGroup Understanding and was CEO of Kaiser Permanente from 2002-14

The Clinical Enterprise is the Beating Heart of Health Systems

By JEFF GOLDSMITH

As health systems struggle to emerge from the post-COVID financial crisis, the importance of the clinical enterprise to these systems has dramatically increased.  Healthcare organizations are getting larger, as failing enterprises are absorbed into growing systems. 

Yet clinicians of all stripes but particularly physicians feel a deepening sense of alienation from the expanding care systems in which they work.   In many “wanna-be” health systems, the clinical “enterprise”  is a loosely connected roll-up of independent practices held together by RVU-based compensation plans and a common corporate logo on the door. 

A roll-up is not a credible foundation for a system, but merely a holding action.  If you have lost your clinicians, you do not have a franchise!    

In an age when clinician burnout and moral injury threaten the well-being of care givers, how care systems foster caregivers’ commitment to their enterprise has become the central strategic challenge.  When one looks at the leading enterprises in healthcare- from the Mayo Clinic to Johns Hopkins Medicine – they have one thing in common.  They are not only led by clinicians, but the clinicians there work together both to maintain high clinical standards and develop and propagate clinical innovation.  

This commitment has a direct financial consequence for health systems.  In an environment where an increase percentage of health care revenues are “risk” revenues, having affirmative control over the cost of delivering care is the key to the organization having a future. Ultimately, that control comes not from clever compensation schemes, but from how clinicians behave in working together to manage their patients. 

To be clear, the clinical enterprise does not mean that all clinicians are salaried employees.  In some organizations like Kaiser Permanente, for example, clinicians are employees of the Permanente Medical Groups, a closed panel entity which provides most of Kaiser’s clinical care.   

But in many organizations, clinicians may be independent practitioners or members of affiliated medical groups, but are still actively involved in the governance of the clinical enterprise.  In academic institutions, not all members of the clinical enterprise are full time faculty.  And not all of them have MDs after their names, but are advance practice nurses and other clinicians with post-graduate degrees.  

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Pete Hudson, Alta Partners & Transcarent Investor (Part 2)

Pete Hudson is one of the OGs of digital health. As an emergency room doc he was fed up with his friends bothering him with their medical problems and he created a tool called iTriage, which helped patients figure out what condition they had, and where to go to deal with it. This was fifteen years ago and we’re now starting to see the evolution of that. Pete is now a venture capitalist and an investor in Transcarent–the sponsor of a new video series on THCB. This is part 2 of our conversation (part 1 is here) and we dive much more into AI and what Transcarent’s Wayfinding tool and other AI like it could do to change health care and the patient experience–Matthew Holt

Chris Darland, Peerbridge Health

Chris Darland is CEO of Peerbridge Health, which is the maker of a “3 lead to 12 lead” EKG patch that can give a better view of overall cardiac health than what’s on the market now–which tend to specialize in AFIB. Chris thinks that the Peerbridge Cor product will lead to a new world where for a much lower price we can have much better data on many more people who are at potential risk for heart disease and much more. I talked with him to discover what’s coming and what the impact might be on the overall health care system. Will we have fewer bypasses and stents? Maybe…Matthew Holt

Pete Hudson, Alta Partners & Transcarent Investor (Part 1)

Pete Hudson is one of the OGs of digital health. As an emergency room doc he was fed up with his friends bothering him with their medical problems and he created a tool called iTriage, which helped patients figure out what condition they had, and where to go to deal with it. This was fifteen years ago and we’re now starting to see the evolution of that. Pete is now a venture capitalist and an investor in Transcarent–the sponsor of a new video series on THCB. We had a long conversation about the evolution of digital health, what went right, what opportunities got missed, and what to expect next. This is part one of our conversation, and allows two guys who were there close to the start of this world to survey what’s happened since–Matthew Holt

Can Someone Actually Be Responsible?

By MATTHEW HOLT

I was having a fight on Twitter this week and it hit me. America 2024 is Japan 1989. 

The topic of the fight was right-wing VC Peter Thiel. In 2001 he put a ton of Paypal stock allegedly worth less than $2,000 into a Roth IRA. The Roth IRA was designed so that working stiffs could put post tax cash into an IRA, grow it slowly and take out money tax-free. (For traditional IRAs you put in pre-tax money and get taxed when you take it out). You may have read the story in ProPublica. Magically Thiel earned less that year than the max allowable income limit (around $100K) to contribute to a Roth IRA, and magically that stock was within weeks worth much more and then, later, hundreds of millions more. Since then Thiel has invested those Paypal returns in Facebook, Palantir and much more, and that Roth IRA has billions of dollars in it that can never be taxed.

My twitter adversary was saying that Thiel obeyed the law. I doubt it, but that’s not really the point. When the Roth was introduced it wasn’t meant to be a loophole that Silicon Valley types could use to hide billions from tax. But neither my twitter “friend” nor Peter Thiel want to take responsibility or pay their fair share.

Japan in 1989 was wealthy and successful and heading off a speculative cliff which it’s since taken 3 decades to dig out of. There were numerous academics pointing this out, but the most interesting analysis was The Enigma of Japanese Power written by a Dutch journalist named Karel van Wolferen. Here’s a summary from wikipedia with my emphasis added

Van Wolferen creates an image of a state where a complicated political-corporate relationship retards progress, and where the citizens forgo the social rights enjoyed in other developed countries out of a collective fear of foreign domination….Japanese power is described as being held by a loose group of unaccountable elites who operate behind the scenes. Because this power is loosely held, those who wield it escape responsibility for the consequences when things go wrong as there is no one who can be held accountable.

In Thiel’s case a collective network of tax accountants, junk philosophers, and purchased politicians like JD Vance ensure that no one has to be accountable. Ultimately Thiel doesn’t feel responsible for paying what he owes. Of course the exposure of Trump’s tax cheating shows that he doesn’t either. And many people find this OK.

Meanwhile I got into it a little with Jeff Goldsmith on last week’s THCB Gang about why hospitals are still paid per transaction when it would be much better for them to be paid some kind of global budget for the services they provide and for doctors to be paid a salary to exercise their best judgment rather than be tempted into providing care just because they get paid for it. Both COVID and the recent Change Healthcare outage put health care providers in a terrible situation financially because they depend on being paid fee-for-service via claims for individual transactions. Did the leadership of America’s hospitals and doctors come out asking for a change to the system? No, they just got a government hand out and begged for a return to standard operating procedure. No one can rationally look at how we pay for health care in America and say “give us more of the same” but there’s no leadership to change it at all.

Talking about lack of leadership, Amber Thurman died in Piedmont Henry Hospital because no-one on the medical team was prepared to give her the D&C that she desperately needed. They were scared of going to jail under Georgia’s draconian anti-abortion law. There are many, many guilty parties here.

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THCB Gang Episode 140, Thursday October 3

OK we are really back.! Following last weeks special with the Women Healthcare Leaders for Progress, the “regular” THCBGang is coming back for the Fall, mostly but not always at the 1pm PT 4pm ET timeslot on Thursdays.

Joining Matthew Holt (@boltyboy) on #THCBGang on Thursday October 3 at 1pm PST 4pm EST are futurist Jeff Goldsmith: delivery & platform expert Vince Kuraitis (@VinceKuraitis); author & ponderer of odd juxtapositions Kim Bellard (@kimbbellard);

You can see the video below & if you’d rather listen than watch, the audio is preserved as a weekly podcast available on our iTunes & Spotify channels

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