Sloane Scott: On Being a Self-Pay Patient and How to Create Shareholder Value
Sloane Scott has an amazing personal story. Along with being a 3x ovarian cancer survivor, she has led multiple health tech companies to successful exits as a strategic leader and communicator. She discusses navigating her cancer journey with no health insurance and, as a successful business leader, discusses how to create shareholder value. She lays out in a detailed and practical way how to navigate safe pay as a patient.
Currently, she’s Chief Marketing Officer at Collette Health. She's seen healthcare from a business and patient perspective, and has lots of valuable insights to share on both.
Key takeaways:
In order to embrace patient self-pay, you have to remove the fear-based thinking (I must have health insurance) and learn how to negotiate for every single healthcare service you pay for.
The concept of self-pay doesn't trickle through to all areas of the healthcare industry, and how to educate each sector about self-pay.
Physicians tend to ignore DNRs (hint: it has to do with litigation).
Shifting to business, sales and marketing play a significant role in creating shareholder value, especially as companies are tasked with delivering quick results.
What healthcare doesn't talk about post-pandemic: the rise in chronic disease, chronic care, due to postponed care and appointments. .
When it comes to an exit (company sale) the “fly paper” that everything sticks to is still whether or not you created shareholder value.
Another critical way to re-think intellectual property in healthcare is around shareholder value.
Sloan’s “emotional paycheck” gets cashed every time she sees someone (usually a founder) get a check they never thought they would get.
Transcript
Tom Noser:
What's it like navigating a major health crisis when you have no health insurance? How do you communicate about death and dying with the people you love and make sure your wishes are respected? These are some of the questions I asked Sloan Scott a three-time survivor of ovarian cancer.
Sloan got her first diagnosis at 23, more than 30 years ago. After two bankruptcies from medical expenses, Sloan became an advocate for giving up on health insurance and embracing self-pay. Sloan lays out in a detailed and practical way how you can take your healthcare future into your hands and embrace self-pay. Along with being a cancer survivor, Sloan has led multiple health tech companies to successful exits as a strategic leader and communicator. She's seen healthcare from both the business and the patient side. And she has a story you won't want to miss on this episode of the Fortune's Path podcast.
Sloane, it is so good to see you.
Sloane Scott:
Likewise, Tom. Thanks for having me.
Tom: Well, thank you so much for coming. You have an amazing personal story and it's a journey that I would not wish on anyone, but one that you have accomplished with a tremendous amount of grace. And so you are a two-time survivor of ovarian cancer.
Sloane: Three time.
Tom: Three time. And you have been a self-pay patient that entire time?
Sloane: Not the entire time, the last 18 years.
Tom: Good Lord. Tell me how you came to being a self-pay patient. I think in most people's minds that's a nightmare.
Sloane: It's a long story, but the short version of it is that I went bankrupt twice trying to keep myself alive, and that was with insurance. So you max out, the bills pile up, the bill collectors start calling, you get letter after letter, you get threatening phone calls, you get collections agencies coming after you. And it's a very scary experience because you're trying to balance keeping yourself alive with how do I pay my bills? And that's even if you can work during the treatment. Now I'm a little bit on the older side, I'm 58. So if you go back to the first time I was diagnosed at 23 and second time at 38, healthcare was a lot different back then. The treatments for ovarian cancer were very new. Ovarian cancer was considered a death sentence when you were diagnosed with it. So the treatments were very aggressive and very expensive. I mean, they put you right into chemotherapy, right into radiation. And the first time I had over a half a million dollars worth of bills. And the second time I had close to a million dollars worth in bills.
Tom: And you were insured at the time.
Sloane: And I was insured at the time. And there was just no way to pay that. And bankruptcy was my only choice. And after that second time, and it was actually here in Davidson County that I had to do the second one, and I'll never forget the judge looking at me and just shaking her head and saying, "This is just a shame. You're doing everything you can to keep yourself alive and you're living in constant fear." And she granted me the bankruptcy and I remember going home and saying, "You know what? I am never doing this again."
Tom: So at that point you were done with insurance?
Sloane: At that point, I was done with insurance and I just said, "I'm not going to go there again. There's got to be another way." And I would say really it was kind of learn as you go.
So I was fine for a little bit. I kept the same doctors and all I would say is, "Listen, I'm uninsured." And they would say, "Okay, pay this." And I would say, "I can't pay that. I can pay this." And they would say, "Okay, great." And then I got, fast-forward, and I got to work in healthcare, the business of healthcare, and was really exposed to the system and how the system works and how the system doesn't work.
Tom: So how did being a patient, talk to me a little bit about that before we talk about how being a patient changed your point of view in the business. You'd been a patient, you went into the business. What did that explain about your experience? So did it make things make any more sense or just make you angry?
Sloane: A little bit of both. For me, it brought a dual perspective. There are a lot of people who work in healthcare, the business side of healthcare, who also have been patients. Most of us have been patients in some way, shape or form, but-
Tom: Not ovarian cancer.
Sloane: But they don't bring that level of experience and insight around the patient experience to that work. And that's what I always thought was something very valuable to bring that patient perspective into it. Unfortunately, that wasn't always the most valued part of what I was able to bring, but it helped me look at things through two different lenses.
Tom: I spent 10 years in a hospital management company that managed small, not-for-profit hospitals. We were responsible for, I was responsible for, educating the boards of those hospitals. They had no concept of what a fiduciary responsibility was. They really didn't have any idea about what community health was. They could argue for two hours about what lawnmower to buy, but if you were going to say, "Should we cut a service line," they all had nothing to say. That's kind of healthcare in a nutshell. This is a while back, I don't know if it's gotten better, but there was something, a saying we would kick around all the time, "No margin, no mission." And I always used to think, "Well, no mission, no mission." So I mean it's cliche that we talk about it's not healthcare, it's wealth care. But I mean you've experienced this, as you say, from both sides. When you assess healthcare as a system, what do you come away with? Is it just Kafka?
Sloane: Great analogy. The system is still broken. I believe there are a number of really good hospital and health systems and companies trying to fix the problem. The challenge becomes, and you've got to remember that the healthcare system in the United States today is the exact same system that was built back in the early '80s. If you go all the way back to when insurance started, you could even go that far back. It was put together pretty much with bubble gum and Band-Aids. I might be simplifying it just a tad.
Tom: Just a tad.
Sloane: It hasn't really changed that much even with the Affordable Care Act and that's a whole other tangent I could go down. But even with that, the business of healthcare has not changed. Healthcare as a vertical, especially when you look at hospitals and health systems, what other vertical in the world would operate at a three or 4% margin?
Tom: Yeah, it's true.
Sloane: And consider themselves a business? None.
Tom: The numbers are so huge, you can still make a lot of money.
Sloane: That's right. For me, what I try to do is I always look at, I truly believe, and one of my favorite books is Being Mortal by Atul Gawande. It's a fabulous book about ... the system of healthcare and his journey through it. But I go back to the fact that doctors and nurses get into the business of healthcare to help people, to make people well. And the healthcare system does everything to not do that. The two are in direct conflict with each other, and the patient is the one who suffers.
Tom: So let's talk a little bit about practical survival as a self-pay patient.
So if there's people, maybe someone will listen to the podcast who's facing a similar crisis, how can they benefit from your experience? What would you share with them to help them understand why you would ever become a self-pay patient and why that might be better?
Sloane: There's a lot of fear around needing insurance. You even see when someone's looking for a job, the first thing they negotiate is what kind of insurance do they have? How much are they willing to pay? What are they going to cover? If you remove that sort of fear-based thinking, and really look at it from a practical application, I liken it to buying a car, when you go to negotiate to buy a car. You never pay what's on the sticker on the window, you negotiate.
Tom: And so I do end up paying what's on the sticker.
Sloane: This is the same thinking. It's that same application. In essence, what you can now do as a patient is negotiate with your doctor, you can negotiate with the hospital, you can negotiate with your specialists on every single service that you pay. They are willing to take the cash up front because when you look at the fact that it might take them 90 to 120 days to get reimbursed, which is the mass, they will take it. What you have to do is really just rewire your thinking around it. What I would say to anyone who might be listening and sitting, staring at a pile of healthcare bills and going, "What do you mean I don't need insurance?" There's such a freedom that comes with that. You can absolutely do it.
Tom: So there's been a change in the law recently where medical debt no longer counts against your-
Credit rating ... credit score. So you've seen both sides of that.
Sloane: Yes.
Tom: Has that had any impact on you?
Sloane: Yes and no. I am not a slave to my credit score.
Tom: Right.
So when you go cash, you don't really worry about your credit score.
Sloane: Right.
I'm glad it is not the case so that no one has to go into bankruptcy anymore because that was the only choice back then. But now, there are a number of ways to look at being a cash patient. You brought up a couple moments ago this idea around community. Well, a lot of major hospitals and health systems have foundations inside those hospitals. And now they typically, which is a great change, will have some type of a patient pay advocate within the hospital who once you flag that you're self-pay and they take care of you, you go into the emergency room, you let them know right away you're self-pay - the level of your care is exactly the same. You are still given a great care. That patient pay advocate will come to your room and we'll say, "I understand you're self-pay. We have a foundation. Fill out this paperwork and we can help you with your bills." Great option to take.
Tom: You're a relatively high earner, and so when they see your income, do they ever like, "Oh, well."
Sloane: So I tell them that I don't need to fill that out, that I'm not eligible.
Tom: Smart.
Sloane: And I tell them that is for somebody who really needs it, and I can actually afford to pay my own medical bills.
So we're just negotiating.
Right.
Yes. And then I'm also part of a Christian healthcare sharing ministry.
Tom: Oh, wow.
Sloane: And have been part of that for quite a long time.And that certainly helps me with the healthcare part of my bills as well.
Tom: Can you explain a little bit about what a Christian healthcare ministry is?
Sloane: Sure. So the one that I belong to is called Christian Healthcare Ministries, CHM, and there are a couple of them out there, Samaritan's Purse. There's a few others I can't remember off the top of my head. But essentially the way that a Christian healthcare sharing ministry works is you become a member. The way that you become a member is you just have to be a member of a church.
And then you pay a monthly fee to be a member. Essentially when something happens, you have to go in the hospital, your husband or your kids need some kind of medical treatment. You carry around a card that they give you and you tell them that you're a member of Christian Healthcare Sharing ministries. They know that you're going to be paying cash. You negotiate. Sometimes they ask for a deposit up front, sometimes they don't. Sometimes you just got to wait until all the bills come in and then you submit it to the sharing ministry and your bills get paid. They get shared because you've been paying in.
Tom: A hundred percent of your bills?
Sloane: In a lot of cases, yes. Now it requires some work on your side. If you've ever had a hospital stay, you understand that the bills all start coming in. So you're going to get a bill from the surgeon. You're going to get a bill from the anesthesiologist. You'll get a bill from the nurse company that's managing the nurses. You'll get a bill from the hospital itself. You'll get the bills from if you were in the emergency room and the emergency room is outsourced managed, you'll get a number of those invoices as they come in. The designation of you being a self-pay patient doesn't always trickle through to all of them.
Tom: I'm sure it doesn't.
Sloane: So you have to call them up and you have to explain, and you say, "I'm a self-pay patient. What is your self-pay patient rate?" And sometimes they will say, "We don't have one."
And then I will say, "Well, what's your Medicare rate?" And they will say, X. And I said, "Okay, well that's your self-pay patient rate."
Tom: Right, right.
Sloane: So knowing that I can pay the bill, but I need you to give me a discounted rate. Then they'll go off and they'll come back and they'll say, "Okay, it's this." And I will say, "Okay, I need you to send me an itemized bill that shows that discount," and then I can submit that. And then it goes into the sharing process. Now, the sharing process is not immediate. It takes some time. Typically, it could take up to six months, but you do get paid back.
Tom: Interesting. So let me see if I understand this completely. You're paying money into the Christian ministry and they're saving that money. I guess they invest it, maybe not?
Sloane: Well, they share it among the other, someone else's healthcare needs.
Tom: So your funds-Because bills are coming in all the time.
Sloane: Correct.
Tom: And so then you get a bill from a provider, and then you call the provider and you say, "I'm self-pay. We need to discount this. What's the discount?" When you agree, you send the money to the provider, they give you a bill that shows the discount. You give that bill to the ministry. The ministry pays you.
Sloane: You don't even have to do it that way. I'll give you an example of a recent hospital stay, and it wasn't me, it was my husband. He contracted rhabdomyolysis, which is this weird-
Tom: It sounds awful.
Sloane: It was awful. It's this weird thing that sort of attacks your muscles and you produce too much creatine and it shuts down your kidneys. It's a very weird, scary thing. We had two emergency room visits. And on the second one, they put him in the hospital.
And we had hoped it was going to be a two-day stay and it ended up being a 10-day stay. I had known that he was going to have to go in and have this procedure. I negotiated with the hospital upfront and said, "I'm a self-pay," talked with revenue cycle management office, "I'm a self-pay patient. Can you give me an estimate of what all this is going to cost?" And they said, "Yes." And I said, "Okay, I will give you X down." I gave them a percentage down, and then we got into the hospital, and of course things changed very quickly.
While my husband ended up going into ICU, I had to go back down to the revenue cycle management and say, "Okay, this original estimate's not going to hold true."
Tom: Not going to be good, right.
Sloane: It's changed. It's going to change a lot. And they said, "Don't worry about it. We've recognized that you're self-pay. We'll hold all those bills, we'll get it until we've got the final amount." So I waited until they had the final amount and submitted that to my Christian healthcare sharing ministry. So I didn't pay anything back to the hospital other than that initial amount. And then all the rest of the bills started coming in. When they did, I did the negotiating if they didn't have the discounted rate and submitted them all to Christian Healthcare Ministries. They paid the providers directly. I didn't even have to do that.
Tom: Oh, wow.They paid the providers directly. So they have a claim service?
Sloane: Yes. So they paid their provider directly in that case. Now, if it's a smaller bill, they will send it to you and you pay the provider.
Right, right.
Now what I will say is during that period, remember that the way that the healthcare payment system works is most likely they've already sold that debt-
Yes.
... to a-
Tom: Care Payment or somebody.
Sloane: Exactly. Some kind of credit collections partner that they work directly with. So it may even be that during that period, they've already decided to discount that payment even more. You still, whatever the Christian Healthcare Ministries sends you, you send that directly to the provider.
That's really interesting. Now, they're not an insured, pardon me, they're not a licensed insurer, I'm assuming.
Sloane: They are not.
Tom: Which is good-
Sloane: Yes.
Tom: ... because it means that the insurance laws don't apply to them.
Sloane. Correct. And it's really for use when you have bigger events. So you don't use it if you're just going in for a checkup or you're going in for even an outpatient procedure. But again, that's when you negotiate cash.
Tom: Right. When your husband has a rare disease, it puts him in the ICU. That's when you call.
Sloane: Right, yeah. Where the bill goes up to a quarter of a million dollars before you can sneeze. And then you go, "Okay, this is what this looks like."
Tom: Looks like, right. I have one more practical question, then we'll move on to a more cheery, I mean, this is an amazing subject. So I'm thinking about that stack of bills. Do you prioritize that in any way? Like go, "I pay the doctors, I don't pay the hospital." Or do you just say, "Hey, whoever, I'm calling everybody the same day and whoever gives me the best deal, they're getting my money."?
In terms of negotiating, who's going to provide that service?
Sloane: No. More, well, that's actually, we should talk about that. I was thinking more like post-service. You've gotten your stack of bills, you've been in the hospital.
No, because-
Tom: Do you say, "I pay doctors, but I don't pay nurses," or something like that?
Sloane: No, they all need to get paid, right? They've all delivered a service.
Tom: Even hospitals?
Sloane: Yes. They all need to get paid, but the piece of it that I look at when I'm is all the bills come in, you itemize them for Christian Healthcare Ministries and you send them all in and they prioritize based on the funds that are available who gets paid.
Tom: Interesting.
Sloane: So you are keeping track of them because they'll continue to send the bills. And I just keep it very organized file with the bills. And I know as soon as Christian Healthcare Ministries notifies me that this bill has been paid in full, I take it out and that's done. And it's just kind of comes in a descending order.
Tom: So when you were completely on your own, did you do it the same way?
Sloane: I did.
Tom: And talk a little bit about that pre-service process. We've talked some about what happens after. Let's say I need a hip replacement. What do you do?
Sloane: My husband, I'll use my husband as a good example because I've actually negotiated more for him I think recently than for me. He had to have a back surgery a few years ago. And we have concierge medicine, so we also pay a monthly fee to a doctor. So we have concierge medicine, we have a doctor that is close to us that we pay a monthly fee to.
Tom: Is that in Puerto Rico or here or both?
Sloane: Here. That's in the United States. Well, on the mainland, I should say. It's here where I live. So we pay a monthly fee to them, and it means we can get in at any time. We can text that doctor at any time that compound all our medications. They take care of everything.
Tom: And they're a cash only physician?
Sloane: Cash only.
Tom: Nice.
Sloane: Cash only doctor. And it's great. We love them and have been there for several years. So Eric was having a lot of pain. And so they referred him to Williamson Medical Center, which at the time had Vanderbilt, was Vanderbilt. They're not anymore, but they were. And he had to have a contrast MRI. And he went right to him and said, "We're self-pay. What's the cash price?" And right away they were like, "How do you know how to ask for that?"
So my wife works in healthcare. She pays the bills. So the hospital called me and they said, "It's going to cost this." And I said, "Great, fine." And I just said to my husband, I said, "Make sure you get the disc." So he had the MRI. The doctor came back in and said, "You're going to have to have surgery." And he said, "Okay, we're self-pay. So you're going to need to call my wife."
The woman in the revenue cycle office picks up the phone and calls me and says, "Okay, here's what the doctor says. Here's what this is going to cost. Here's what the anesthesia is going to cost. We're saying it's probably not a full inpatient stay, but it could be close. So I'm just going to quote you for an inpatient stay, which is 23 hours." So less than one day, but if 23 hours-
Tom: You're still outpatient.
Sloane: Now you're inpatient.
Tom: Oh, okay.
Sloane: They can't, so it's a different billing. It's a different CPT code-
Tom: Gotcha, gotcha.
Sloane: ... in a sense. And she told me the price, and I said, "I really appreciate you being so thoughtful and helpful." And I said, "We're going to hold for the moment." It was an incredible price for that amount of time. And in the meantime, my husband got home with the disc and I said, "You know what? I'm going to do a little calling around. I think we can do better than this." And I called another health system that I'm super familiar with because it's where I go for my care. And I said, and I was able to pull a few strings working in healthcare and got him in to see a spine specialist who said that day that we went in with my husband, he said, "Yep, he needs surgery."
He said, "I understand your self-pay." I said, "I am." And he said, "So you're going to pay cash for this whole thing?" I said, "I am." And I said, "I'll tell you what, if you can pay in full today, you won't receive a bill." And I said, "Great. Tell me what that's going to be."
Yeah, yeah. Right.
And so this woman came up from the revenue cycle office and sat with me out in the waiting room and said, "Okay, we think it's going to look like this and it's going to look like this and it's going to cost this, and here's what we're going to charge you." And I said, "Great, but here, I'm going to pay in full today, so I actually think I'm going to pay this."
Tom: Did they take it?
Sloane: And they took it. And once they got in there, they ended up having to call in another surgeon, became a little bit more complicated. I didn't pay anything extra.
Tom: Wow.
Sloane: And he had amazing care. And it was one-fourth of what the other one was. So it can be done.
Tom: It can be done, yeah. But I mean, it's amazing. But also these providers are not competent in many ways when it comes to their money. They're not consumer facing businesses where you say to them how much does something cost? They're like, "I have no idea. No one ever asked that question."
Sloane: What's interesting about that, Tom, is the physicians are actually.
Tom: Okay.
Sloane: The physicians are pretty knowledgeable. They've been in patient care, they understand what it costs. Where you typically run into a roadblock is the people that work in the office.
Tom: Yes. In the physician's office or in the?
Sloane: In the physician's office. Hospitals are getting much, much better, not all of them, but a lot of them are getting much better because self-pay patients are becoming- A lot more common than they once were. So they are getting so much better than it used to be.
Tom: Wonderful.
Sloane: Which is great, right. And there's still lots of room for improvement, but it's typically either the people that work in the office because it's an unusual question to ask, and they're trained to work with insurance. They're not trained to work without insurance, so you're throwing them off their game a little bit. So what I just try to do is pack my patience and grace and understand that this person is working in an office and doing the very best that they can.
Tom: You're asking them to do something that's unusual.
Sloane: You're asking them to do something unusual. And I also think that there is, again, we're working in a system that's used to insurance paying for everything.
So even this system of CPT codes and how does all of that work, I mean, as you've seen some of my LinkedIn posts around my journey. And I've had CEOs from companies who are trying to figure this out, reach out and say, "Our company actually does that." And I said, "Actually, they don't." I said, "Because when it comes to complex conditions like cancer, like other chronic conditions, you don't have solutions for that."
Tom: No.
Sloane: You don't even have public CPT codes for that. There are private ones that I'm aware of, but you can't call a billing office and go, "Give me all the CPT codes," because that even throws them off their game.
I had to, in one of my negotiations for Eric's last surgery, actually had to educate the nurse who was actually working as a clinical manager of the office and say, "You just gave me an education I've never had." And I went, "Happy to help."
Tom: I want to change subjects briefly to talk about, I mean, you've had a terminal, a diagnosis of a terminal illness since you were 23, and that's 35 years ago. But you seem like a happy person.
Sloane: Very.
Tom: How do you do it?
Sloane: It's something I have. It's not something that defines me. The people that wake up every day and check their blood sugar, there's people every day that wake up and take a set of vitamins. I look at my condition is the same way. It's a chronic illness I've had for a long, long time. Sometimes it rears its ugly head. Other times it doesn't. And so I just manage it that way.
Tom: This is easy to say as a healthy 55-year old who's had one surgery in his life. But it seems to me that everyone has a terminal illness and it's called life. And we might be better off if we all had an expiration date. If we all, so let's say one ... To me, one of the most difficult things about, and obviously this is hypothetical, but about dying, is that it is the dying person's responsibility to prepare the living.
And most people who are dying just aren't up to it because they feel like shit.
And there's a lot of fear involved in like, "Oh my God, this is actually, I knew this was going to happen my whole life, but I didn't really know it, and now I really know it." So what if we all picked a date? For me, hypothetically, somewhere between my 83rd and 84th birthday.
So Alzheimer's is in my family, colon cancer is in my family, and none of those are fun. And I do not want to lose my mind. So I would rather be dead than lose my mind. And the thing about Alzheimer's is you don't know you're losing it. You have no idea. So I shared this idea about saying, "Okay, I'll take a half dozen fentanyl patches. I'll put those on me somewhere between my 83rd and 84th birthday," with a friend who's a physician who has cancer. And he says, "Don't do that. Make a pact with somebody so when you've lost your mind, they're going to come over and kill you. Don't just tell everybody, this is what's going to happen. Make a pact." I mean, this is a purely hypothetical conversation for me. As someone who at more than one time in their life has looked at the very distinct possibility of dying, what are your thoughts on all that?
Sloane: It's a great topic. What I would say is I early on knew that I had something that really was, in most cases, a death sentence. Ovarian cancer is called a silent killer that women wait too long to go get checkups, and then by the time it's diagnosed, it's really advanced. There's a lot of that. But I think early on, the experience of having to write my own DNR and write my own living will and write that many, many times over, because every time you go to a different hospital, unless you carry it with you, you have to have that in place.
And they'll get ignored.
So I have worked really closely with my husband to make sure that all of that, that that never happens. And so we are crystal clear on what's going to happen the minute the doctor says the pendulum is swinging the other way, exactly what's going to happen and nobody's going to be able to break it.
And we've done that with a professional. We didn't do that on our own. We got a lawyer to help us put all of that together in a trust and just make sure that all of my wishes are hard and fast and that no one can change them. And in the same way that you invest your money and set up wills and trusts for your kids and all of those things that you do, you can very much do the same thing with your health. And that can be included in that process. And so that's what we did.
Tom: So you're not picking a day?
Sloane: Nope.
Tom: But you're like, "Okay, under these conditions, treatment to be suspended."
Sloane: Correct.
Tom: Interesting. So I have a good friend who has an idea for a company called Inevitable, and it is about death planning. So he has interviewed physicians about how people deal with end of life care, and he's asked them about things like Do Not Resuscitate orders. And they laugh and they're like, "I ignore them.' 'Why do you ignore a do not resuscitate order?'" He says, "The piece of paper can't sue me, but your husband can sue me, and so I'm going to resuscitate you because I don't want to be sued." As you say, you're unconscious, you're in a very dramatic situation where you have no free will at that point. How do you get them to obey?
Sloane: It's a great question. I have a hard and fast legal document, and I have my husband who knows my wishes.
Tom: Who knows your wishes too.
Sloane: And I have family that is also listed there that know my wishes. And so I strongly believe it's something they'll have to adhere to.
Tom: Stoics are definitely having a moment, and a lot of this stuff, one of the big topics in Stoicism that Ryan Holiday does not talk about is suicide. They were all very pro, not all of them, but many of them were very pro suicide as being our last vestige of our will. It's like the shit has completely hit the fan, everything's gone wrong. The rest of your life is just suffering. There's no good way out. This is your final act of exercising your will. So I have a highly romantic vision of suicide. It's like, "Yeah, we're all going to go on the plane, go to Switzerland, they'll play the nice music, and I'll just drift off." But it's not me. It's not me alone making that journey. It's family. And you have many people who love you. And so how have you prepared them for it's like, "Don't worry about me," or I don't know, maybe you say, "Yeah, go ahead and worry about me." How do you prepare them?
Sloane: No, I've made it really clear what my wishes are, and I have palliative care built into that because I'm a big believer in palliative care. I've seen it work really, really well. And they're all aware. I've made my wishes very clear and very known. There's no ambiguity there on exactly how I want to go out of this world.
Tom: Do you feel like you've ... My mother's pretty ill. I don't know how much longer she has. I was talking to my brother about this last night. Like I said to him, "Have you feel like you've said it or anything you need to say to her?" And he was like, "Well, I see her regularly and we talk. And so, yeah, I don't feel like there's anything left in the table." Do you have a sense of getting up from conversations with people who maybe you don't see that often and are like, "Okay. Well, if that's the last conversation I ever have with that person, then I'm okay."?
Sloane: Great question. I look at it a little bit differently, and that is maybe some of this is age too, which I'll freely admit. My life has shifted much more to quality than quantity. And so every conversation I have is that. If I shuffle off all of a sudden, I can do that at peace. So I don't feel like those, there's a big circle that I, for some reason, haven't had those conversations with. My grandmother has a great analogy.
Tom: Is your grandmother living?
Sloane: She's not, that she left with me. And that was, you really only need six friends in your life. Three on one side of the casket and three on the other.
Tom: I love that. So my favorite writer is Michel de Montaigne. He's a French philosopher, and he talks about if you have one good friend, he's like, "One real friendship is something that happens once in a century." He sees friendship as being the very highest ideal for us and also exceedingly rare.
Have you had a friend like that?
Sloane: Yes. Yes. I've a very close friend - she and I have been friends since we were 14 years old.
Tom: Oh, wow. And how often do you guys see each other?
Sloane: Pretty often. She moved from Chicago about two years ago and lives a mile and a half from me.
Tom: Oh, man. That's fabulous.
Sloane: Yeah.
Tom: So Montaigne described it as, I can't say why we were friends other than that he was he and I was I. Is that sort of how it feels?
Sloane: Yeah.
Tom: That's a wonderful gift. Well, let's talk about something completely different for a moment. I want to talk about valuations of healthcare tech companies. And so I know you have, tell me a little bit about your history in health tech. It's pretty extensive.
Sloane: I've been really blessed over the last, say now it's what, eight years, almost nine, I've been able to work in the business of healthcare. And the majority of those companies were PE and VC backed healthcare tech because it turns out once you work with one of those and do a great job, they kind of flip you onto other ones. And that happened. And what I would say is, and I think Anna your wife was a hundred percent spot on pre-pandemic, it was a pretty active space. There was a lot happening at a much quicker pace. You look at the town that we live in, Nashville and the beauty of Project Healthcare and all these great programs coming out of the Entrepreneur Center, the Healthcare Council, all of the family funds in and around town that invest in these really interesting healthcare tech companies. And then across the US, the VC and PE firms that invest in it was really active space.
And the valuations were kind of crazy. I mean, they were in the four to six range, some higher than that. There's some unicorns still in there, and there's still some unicorns today, but they're rare. And it was just a really vibrant space to work in because when most of those companies, when they got that first tranche from the VC or PE firm, it signals a moment.
So all of a sudden, the leadership that was in place, depending on what was negotiated with the PE or the VC firm, they may or may not stay in place. They might have be part of the plan for a certain amount of time, but they've gotten big enough. Well, now you're beholden to someone else. Now you are responsible for creating shareholder value. That trajectory to create shareholder value from where you were to where you need to be is a pretty big delta.
And I was lucky enough to work in and alongside some of the best in the healthcare industry to learn how to operate within that delta and the role that marketing and sales played in that. That statement around sales cures all ills is still true.
And it played a significant role, but marketing was one of those sort of deep black holes that people were like, "We know we need to do it, but we're not sure why." So I really worked at the intersection of sales and marketing, and the two are tied really together and the ROI was around creating shareholder value knowing that at some point within the next 18 months to X amount of years, that VC firm, that PE firm is going to want their bait back and they're going to want it to look like this. And luckily enough, there are enough great CFOs who've worked in and around that. There are great sales, chief revenue officers have worked in and around that. So I was just able to really sort of create a process by which to help them build to exit using marketing as the engine.
Tom: So when you say process, is that strategy or is that more methodology?
Sloane: It's a little bit of both. It's strategy, methodology, and execution.So I didn't just wave a magic wand and sprinkle fairy dust.
I was actually in there helping-Doing it.
... them do the work and learning how to make really quick sort of pivots in the process as we learned. And I, again, I've just been very lucky to work in that. And so up until the pandemic, those exits were happening at a pretty rapid pace. And then the pandemic and everything stops. But innovation didn't stop.
You saw telehealth really start just take off all of a sudden in all these companies, you saw with the vaccines being created all of a sudden the speed to market with which a new pharma drug could come on change. I mean, so much change in that process. Some for the good, which is great. Now coming out of it, we've been what now four years outside of it, three and a half just about give or take. And I think in the business of healthcare, hospitals and health systems are still dealing with a huge chronically ill patient population.
That's a thing we don't talk much about.
That is markedly more sick than they were before because they put off getting care. Now you've got people entering into the emergency room that don't have one thing going on, they've got six things going on. There are companies, home healthcare became a thing, it's going to continue to become a thing. Technology, AI, all of these pieces that help make the patient experience more manageable, help extend a clinician's ability to be able to take care of patients. All of these have a tech bent to them in some way. So you see lots of great new companies coming on the market. What we're not seeing right now is that speed to exit. Those exits are getting-
Tom: Getting slower.
Sloane: They're slower. Cash is more expensive as we all know. There is less of an appetite this year.
Tom: You think 2024 is going to be slow?
Sloane: It's a good question. I don't know. I think a lot depends, some will be dependent on an election. As you well know, healthcare takes a little bit longer than other verticals.
So my sense is it's probably going to be a couple years at least.
Tom: I want to talk a little bit about specifically about exits and the role of the strategic story in an exit.
Is there a role for a strategic story or at the exit it's just, okay, the math guys stay in the room, everybody else goes out. We just open up the Excel sheets and we come up with a number at the end.
Sloane: Great question. Two answers. Yes and no. So yes to the financial piece. That's the whole point. Again, you're creating shareholder value.
Everything you do that becomes your piece of fly paper, that everything you do and everything you spend needs to come up against that. How is that creating shareholder value? Is it or isn't it?
Right? Yes, in that sense. The other thing, the no in that is that I think we as an industry need to reframe how we think about intellectual property.
One of the things that in healthcare tech, it's always well, is that patentable? Does that have value? Do we own the code? What does that actually mean? Yes, those are all still pieces that matter. But as you see open source with ChatGPT pulling in different types of technology, those aren't patentable pieces.
The way that you put them together is protectable, patentable.
Tom: Business processes can be patented.
Sloane: Correct. But there's another way to reframe and look at value, and that's the value of the customer relationships you create. Your customers, in my sense, are actually what I believe is the most valuable thing in your company.
Tom: Their relationships with you, yes.
Sloane: Because they're actually what creates that line item on the budget and your ability to have that traction in the market. If you can own a swim lane in the market and really own it well, that creates a lot of shareholder value.
Tom: I think social capital, in my opinion, is worth more than financial capital. And to me, what you're describing is that social capital.
In accounting speak, I guess it's goodwill, sort of everything that can't be directly attributed. That's part of the value of the company. When you look at companies with valuations vastly greater than their revenue or their physical assets or anything else like that, well, the difference is goodwill. As an individual, it's like, well, the most important thing you have is your reputation. Same thing as a company. One reason why mergers destroy so much value is the culture. The company's culture gets wrecked.
Sloane: Yeah. It's the business of brand. And they devalue that in the process. And I believe if you hold that fast and true in the process, you actually also create more value.
Tom: When you're planning it, I'm assuming you have planned exit decks, you've done things, okay.
Sloane: Oh yeah.
Tom: What goes into one of those things? Have you seen ones that really did well and ones which kind of stumbled?
Sloane: Sure. Because a deck is just a deck, and I really wish there weren't any more decks.
Tom: God, me too. No decks.
Sloane: No decks. You should be able to sit across from somebody to the table and do a transaction.
Tom: Can we just listen to each other please?
Sloane: I'm a big fan of getting rid of decks in general. What I can say is that if you have applied discipline and discernment as you've built to exit, then that deck is just exactly that. It's a deck. You've already demonstrated the value of the company. You've already demonstrated what VIP is that's protectable. You've already demonstrated your ability to create meaningful revenue. You're standing on your own. I still come from the, even though I've worked with PE and VC-backed companies, I still act like a bootstrapper and believe in that. That's to me, what does it. It's not the deck. The story's built from the moment you get the first tranche.
Tom: We're living our story.
Sloane: Correct.
Tom: I don't need to come up with a strategic story as I've been living it for the last six years.
Sloane: That's correct.
Tom: It's tough because you learn so much as you go. It's like so many of the assumptions you have about a business when you start it, you find out are false. It feels difficult to communicate all the things that we've learned. It's like, well, where are they in your financials? Well, they don't really show up. I mean, some of them are going to show up in the fact that things went down and when they went down, we learned a lot.
So it's almost, I feel like when someone is looking to buy a company, they only want to buy a company that no one would ever sell. It's such a healthy, profitable company. Things are going so well, why would you ever sell this company? Just keep it. And I also think that sometimes there's so much pressure for the funds to turn over that nothing will get in the way. They just want the deal. And then when the deal is done, then they go in and go, "Oh well, oh, that's worse than we thought. We'll just, management will clean that up." And their due diligence is focused on getting the deal done, not necessarily on whether it's a smart deal.
Sloane: And I would say, sure, you see those cases. I go back to the business of brand, which is where I kind of live and breathe. And I'll quote my mentors, a gentleman named Marty Neumeier, who was Steve Jobs brand mentor.
Tom: It's a good pick.
Sloane: He has shaped my philosophy around the business of brand. A brand isn't what you say it is. It's what your customers say it is.
So again, I go back to when you think about building to exit, when you think about a line item on a spreadsheet, the people that created that line item are your customers.
And someone is always going to, and I think you may remember this, Tom, but I was a part of some really fun exits early in my career.
Tom: You were at Flo, weren't you?
Sloane: Yeah. And I was at Echo with Mark early on too. Is that one of the things that I sort of learned in those wild, wild west, early '90 days, early '90s years in Nashville was that when you're looking at brand and business and these exits, you got to understand that when you get bought, you don't have control over your baby anymore.
Tom: No, you're done.
Sloane: And you need to reconcile that. And that's much more about the founder reconciling it because it's been their baby for a long, long time, that a lot of times companies buy you and shelve you and that's the point. But you got a nice payday.
Tom: Right, right.
Sloane: So I mean, that's kind of what it happened.
Tom: Right. Catch and kill, which is in the news now.
Sloane: That's what it is, and it's okay. But it gave you the ability to be able to go out and do other things. And then it becomes your choice as that founder or investor who got that payday with what you decided to do with it.
Tom: What do we do next?
Sloane: Yeah. What are you you going to do next?
Tom: Anna and I have just started watching Silicon Valley, so we're very late to the party.
Sloane: Yeah, it's a good one.
Tom: It is fun. We watched the first two episodes and then we watched the conclusions. We got to see where everybody ended up. But I love that the dilemma in the first one is take the money or run your company. How have you answered that question yourself in your life?
Sloane: Good question. For me, it's never been about the company itself really. It's been about the journey for me. Every company, my love is working with founder-led CEOs. But every company that I have had the honor to work alongside with, I've gotten so much more out of it than I ever put into it. And that's really what's shaped me and how I do that. My emotional paycheck gets cashed when I get to watch somebody get a check they never thought they'd ever get, and that all of a sudden they get to go out and do whatever it is they want to do or not do. That to me is sort of the thing that really keeps me going.
Tom: Sloane, it's been wonderful having you, and there's a lot of topics I want to cover. We're going to have to get back together again because I want to talk about the role of Christianity in business, and I think you may have opinions on that. And I also want to talk about whether anybody cares about happiness in business. And so anyway, this wonderful story of a very inspiring guest. And so thank you so much for being here.
Sloane: Thanks for having me, Tom.
Fortune's Path podcast is a production of Fortune's Path. We help SaaS and health tech companies address the root causes that prevent rapid growth. Find your genius with Fortune's Path. Special thanks to Sloan Scott for being our guest. Using an editing of the Fortune's Path podcast or by my son, Ted Noser. Look for the Fortune's Path book from Advantage Books on Fortunespath.com. I'm Tom Noser. Thanks for listening, and I hope we meet along Fortune's Path.