Paul-Henri Ferrand, Chief Business Officer of Babylon, discusses the U.K.-based healthcare company's goals to promote value-based care in the U.S.
Editor's note: This conversation is a transcript from an episode of the HealthLeaders Finance Podcast. Audio of the interview can be found here.
Even prior to the pandemic, health systems and hospitals were keeping their eyes on non-traditional players entering the American healthcare system.
In addition to major companies like Google, Apple, and Amazon making in-roads in various aspects of the industry, there is another technology company eyeing opportunities in the U.S.: Babylon Health.
In late February, the London-based health technology company announced three U.S.-based leaders will be added to its C-suite, including Paul-Henri (PH) Ferrand, who formerly served as president of Google Cloud.
The company has already rolled out its Babylon 360 app to establish a value-based care model in both California and Missouri, while also offering app-based services in New York, Nevada, and Iowa, with plans to build a nationwide network.
Two weeks ago, Babylon announced that it will go public as part of a $4.2 billion special purpose acquisition company (SPAC) deal with Alkuri Global Acquisition Corp.
In an interview with HealthLeaders, Ferrand discusses Babylon's goals to promote value-based care in the U.S.
This transcript has been edited for clarity and brevity.
HealthLeaders: PH, can you give our audience a high-level overview of Babylon Health and explain its goals as it relates to the U.S. healthcare system?
Ferrand: Babylon is the leading digital-first, value-based care provider that was founded in 2013 by Dr. Ali Parsa. Our mission is to deliver accessible healthcare to every person on Earth; we work with providers across the globe to offer people what we call ‘around the clock access to all-in-one, personalized healthcare.’
We do this by bringing together our AI-powered, highly scalable platform and modern quality clinical expertise to help our members lead healthier and longer lives at a lower cost.
Today we're serving 24 million lives globally with a range of digital health services. We launched in the U.S. last year, [which] now represents about 70% of revenue, and we offer Babylon 360, our digital-first, value-based care tens of thousands of Medicaid lives in California and Missouri, and we have plans to widely expand over the next couple of years.
HL: What are some of the most pressing challenges facing the U.S. healthcare system? How is a U.K.-based technology company like Babylon best positioned to offer solutions to these issues?
Ferrand: The U.S. healthcare system is one that has been suffering from the focus on fee-for-service (FFS), which we think is not really working. By having FFS in place, the healthcare system is focused on sick care where we mostly treat people once they become ill; it's expensive and inefficient.
If you're looking at numbers, for instance, healthcare expenditures in the U.S. represent 18% of the GDP, which is quite dramatic. But when you compare U.S. healthcare to OECD countries, while [America] spends twice as much on average, it has among the lowest life expectancies among the top 11 nations.
That’s one of the issues; the access to healthcare is also not ubiquitous, [around] 3% of U.S. healthcare expenditures are going to 50% of the population. We can’t say that this is fair access to healthcare. The costs are also ballooning; there are two major areas, in our view, creating this bubble. One is that you have highly trained, expensive resources like medical professionals. You want them to be focused on the high-value activities, not just high-value and low-value activities, and then you have chronic diseases. [Half] of the U.S. adult population has a chronic disease, and more than two-thirds are considered obese, so it’s important to discuss owning a big issue and how all of this is converging to deliver poor outcomes.
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These statistics are basically saying that the system itself is probably not working as well as it could, and in the face of this, we're seeing three major trends happening. One [trend] is that technology and AI are coming in to disrupt the healthcare system, in a good way. The second thing is value-based care, you want to focus on healthcare, being much more preventative, and making sure that you're staying healthy; when you’re in good health and [you get] sick, you can get put back on your feet as quickly as possible at the lowest cost possible. Then the third is consumerization, which comes with technology and means more consumers are going to be in control of how they consume their healthcare.
HL: Your background has largely been shaped by your time at Google, Dell, and Nokia, so what was the attraction to make the move to healthcare?
Ferrand: First, I think healthcare is a fascinating industry… having worked in technology for a long time, I realized after having long discussions with [Parsa], that the time is right for technology to truly disrupt, in a good way. That was one of the reasons that I wanted to get into healthcare and help a company such as Babylon grow.
The second reason is that everybody wants to get up in the morning and have a purpose that gets you excited, and, frankly speaking, [working at Babylon] can touch the lives of millions of people and give them access to healthcare. This is something that is both fascinating and inspiring, which is why I wanted to be there and have a chance to reshape the way healthcare is being delivered to people.
The last [reason] is the team of people I've met at Babylon, which are talented people. The one thing that I appreciate that technology companies probably don't appreciate is that you can't get into healthcare as a technology company and be successful if you're not, at your heart, a healthcare company. You saw what happened with Haven, backed by Amazon, JPMorgan Chase, and [Berkshire Hathaway], even though [these companies] have great track records, these people were not able to perform in healthcare. This is due to the fact that in healthcare, you have to be a healthcare company before being a technology company.
What I like about Babylon is [Parsa] has been leading hospitals in the past, we have a lot of great clinicians with us, we just recruited a new chief medical officer, and it's all about how you marry your clinical operations with technology to deliver some magic. This is why I've joined not just Babylon, but now I’m happily in [the industry] and feel like we can revolutionize healthcare from sick care to preventative care.
HL: If we were to have a follow-up conversation in a year's time, where do you see Babylon within the U.S. healthcare system? Additionally, do you have a message to share with those in our audience on the provider or payer side who might be skeptical of the company's ambitions?
Ferrand: We hope that we'll have solidified our position as the global leader in digital-first integrated care and that we build a growing network of partners and providers around the world who share our mission of sharing information and putting accessible, quality healthcare into the hands of everybody on Earth.
I think a year from now, the Babylon 360 model of emphasizing preventative care to avoid costly sick care is going to become the new normal in healthcare. So, we're happy to lead that momentum. Clearly, there will be other companies doing it, this is a huge market, but we think that we don't have to be alone in doing this but we're happy, we're happy taking the lead on that front.
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In terms of the folks who are skeptical about Babylon, I would say we were founded in 2013 and we’re a pretty massive company. We're covering 20 million lives globally, we are the [top] primary care provider in the U.K., we're handling 1 million lives in Asia, we've started our business right here in the U.S., and a year from now, we’ll probably be the leading digital-first value-based care [provider] in the U.S. with more than 100,000 lives of Medicaid and Medicare under management.
We’re still humble but we’re looking at building this business step by step. We're looking forward to working with the payers and providers out there, we feel like we have good traction, but we think that our track record will speak for itself.
Lastly, coming from technology, I think what matters is to have a differentiated business model. We think with our AI, our scalable platform combined with our remote clinical operations, we can deliver a type of integrated value-based care that no one can deliver, and hence we can take the full risk on the cost of care for payers and providers, and that's something that is attractive for them.
Jack O'Brien is the Content Team Lead and Finance Editor at HealthLeaders, an HCPro brand.
Photo credit: Yogyakarta, Indonesia - April 27, 2020; Babylon Iphone Screen with Stationery on a White Papers. Babylon Health is a health service provider. #Babylon Health / Editorial credit: Devina Saputri / Shutterstock.com