Optimizing Healthcare Spend with Luká Yancopoulos of Grapevine Technologies

We got called to action by a necessity and a fear for the well-being of people that we loved and cared for. So that was really our initial foray. We started compiling data from US Customs and the FDA medical device databases to see verified inflows of bed supplies coming into the country.

From there, we just connected those importers of regulated supplies to my mom's office, her friends who were also nurses, and handed off the contacts, communication, and they were able to get supplies. We thought our work was done.

But a few months later, we get a call from one of the biggest medical distributors in the history of the world, a 200-year-old company doing hundreds of billions of dollars in revenue, and they wanted to start purchasing from these college kids in their dorm room, which blew our minds. It was really the first indicator that something might be really wrong with how this whole healthcare supply chain is set up.

So from there, we got involved. It was our first business venture, pandemic relief supply. We ended up moving a lot of supplies to mainly distributors but also the frontline workers who we originally built this thing out for.

As things started to calm down, when we went back to school, we took our learnings and tried to rebuild things from the ground up, what this thing, the healthcare supply chain, would look like in a perfect world, and that's where Grapevine was born.

Sawyer Frank: How cool, man. Looking at the OroCommerce mission statement, it's creating business resilience for manufacturers, distributors, wholesalers, and suppliers. So there's obviously a relationship here, and I think a lot of that relationship is based on the fact that businesses have had to go through a lot of change in the last decade or less, right?

A global pandemic, supply chain issues that resulted from that global pandemic, shipping issues, or even a crisis you could call it. It's really cool because, obviously, we're both helping foster this buyer-seller relationship, and the way that I see your product is almost a hybrid between punch-out e-procurement buying groups, like we talked about GPO or group purchasing organizations, and even a matchmaking marketplace.

I know that we had talked about democratizing the buying experience for clinics. Can you tell me a little bit more about how your solution really fosters this democratization in the buying lifecycle for a clinic?

Luka Yancopoulos: Absolutely. So the way that the healthcare supply chain works today is people have got one supplier for most of the things that they buy for their medical practice at their hospital, right? It's usually one of these major distribution companies. They buy their drugs there. They buy their, everything, all in one place.

Maybe they've got different suppliers to service different specialty parts or specialty devices, but for the most part, it's one major source for at least the different products that they want to get. What this does is this basically gives these major distributors a monopoly on the spend for each medical practice, right?

They can charge whatever they want. There are no stores and options to bounce between and let the suppliers compete for your attention and create a healthy marketplace or ecosystem on pricing. We help clinics, medical practices, link as many suppliers that they already know and work with while creating a window into a one-click unlock of every other supplier that they might need.

This might be direct to manufacture on the products they already buy, the same products now at cheaper prices, disintermediating and creating more reliable supply chains. Or it may be new substitute suppliers that they haven't yet worked with, new brands that they're willing to explore.

So we bring together all these suppliers on a single screen, let you shop and compare from each of these different sources, all in one place. As you add to the cart, we're going to direct you to the same product but from a smarter source.

If the product is alternatively on backorder or in shortage, a local shortage, with the primary supplier that you might work with, we'll redirect you to a source that has that product in stock. We're creating optionality for people to both solve backorders before they happen and also cut their spend while they shop based on real-time pricing and availability.

Sawyer Frank: Excellent. As you mentioned, traditionally, a lot of these clinics are operating their spend or their needs through an individual supplier. As I would imagine, a lot of these are very large suppliers, maybe in the case of some multi-billion dollars, who have a large market share and have worked with these businesses forever.

Traditionally, in the B2B world, it can be pretty simple because a business is selling to a business. Obviously, in healthcare or even in any industry, there's traditionally a consumer behind the end of it, right? So we can talk about B2B2C use cases.

I think what's really unique about the medical supply chain is, obviously, it affects everyone's pockets, from the patient perspective, from the nurse's perspective, and also, traditionally, in the case of medical, I would imagine that there's high demand for products, and it lends back to why you started this business, as I would imagine, through the COVID period.

I think a lot of us can remember it can be hard to get a face mask because they're all sold out. So I'd imagine that's a value proposition for you, is creating this fair competition world where, as a clinic, as an individual nurse or practitioner, it gives me the ability to see inventory across multiple suppliers that I may or may not have relationships with, and then beyond that, potentially get them at a lower price that will ultimately affect the consumer at the end of the day, right?

Luka Yancopoulos: You hit on a couple of really interesting points there. I think it's important to say that the problems and inefficiencies that are glaringly obvious in the healthcare space to someone who's been in the supply chain and working through it for the last four years, those inefficiencies, those costs, those vulnerabilities, they're passed forward to the patient.

Whether it's the huge $1,600 bill you get when you have the flu and you go in for an IV drip solution, or the cancellation of a surgical operation that you have upcoming because they can't get the implant that they need to stick in your chest and save your life. We're talking about real things that impact not just the medical practices themselves, the businesses, but also every single person in this country.

So it's something that I think we can all relate to, something that we could all benefit from is driving further efficiencies in these supply chains. There's a trillion dollars of spend on pharmaceuticals and med supplies in the United States each year. Just under, it's a little bit of hyperbole, but it should be, I believe, 25% to 30% of that.

I think we can cut that down by 70%, and we've done that for major oncology groups, institutes, smaller medical practices. We've cut their spend more than in half. We've saved individual businesses millions of dollars, and we've got a great formula for it, and it's pretty simple: bring together all the different sources that a business already works with and let those suppliers compete in a fair market or a shopping center that the buyer creates for the business of the customer, for the business of the medical practice.

By doing this, prices are forced down, right? By doing this, a shortage that's occurring at one local distributor's warehouse can be filled in with the supplies from an alternative supplier. Beyond just optimizing and redirecting spend in real-time based on availability and best prices, we take that extra step, like you said, to introduce our medical practices, our customers, to new suppliers where it makes sense.

This means cutting out a middleman, cutting out his markup, and working directly with the end of the supply chain if it's the thing that's best for the medical practice and, ultimately, the patient. That's our agenda.

Sawyer Frank: No, it's great. It's really well said. Ultimately, in the world of consumerism, whether you're buying something from Amazon or your favorite manufacturer, buyers are becoming more discerning, right? They want things at a lower price, and that's why a lot of these solutions on the market exist.

Traditionally, in the B2B landscape, of course, between a buyer and seller, or B2B relationship, it's oftentimes done on a contract, right? Based on what they've purchased in the past year or past month, or what they're willing to commit to. So I'd be curious to learn a little bit more about that.

Obviously, these big suppliers, or even medium-sized suppliers, I would imagine, have direct relationships with the clinics, or whomever their end-user business is that they're selling to. Ultimately, how do you combat that, right? Is there an ability for a clinic to buy from a large or medium-sized supplier, and how does this negotiation occur within your solution?

Luka Yancopoulos: Just to be clear, all that negotiating that's done in the real world today, that just bolsters a medical practice's experience on Grapevine, right? Your hard work, the contracts you put in place, the prices that you've negotiated with each of your existing suppliers, those are all fed into Grapevine.

You type your credentials to McKesson, Henry Schein, Medline, whatever it may be, into a "Link Suppliers" window on our screen, and when you do that, your contracted prices are pulled in. If you have GPOs, your GPO pricing is pulled in, exactly what you would see directly with that supplier, exactly what you would hear if you called your sales rep on the phone.

That is what's pulled into Grapevine in real-time, and it's monitored day-to-day. So if you get a new contract in place and your prices go down 10%, great. That information is fed effortlessly into your Grapevine shopping center.

So we're big believers in preserving the value that existing procurement personnel and business owners have created with their existing supply chain, right? We don't want to build a marketplace where you're connecting with all net-new suppliers and net-new sources. We want to honor the value that you've created, honor the contracts that you've negotiated, and simply put those all in one place.

If there's an opportunity to redirect you to a contract you didn't know exists, a contract that you haven't had to negotiate, a contract that we at Grapevine have negotiated, where we do act as a GPO of sorts, as you unlock these new suppliers, then we simply redirect you to that option.

We don't force you to move away from your supplier. You still maintain a relationship with your sales rep on the orders that you send their way, but you're just given alternatives, whether that's alternative sales reps that might offer better service or a better relationship, or alternative sources for the same products or alternative products altogether.

It's about bringing those cross-reference, comparable substitutes into one place and letting you make a fair decision that's going to be the best outcome for your practice and, more importantly, for the patient.

Sawyer Frank: Awesome. Obviously, when we talk about multiple suppliers, we're talking about multiple data feeds. So I'd like to get into that world for a moment because I would imagine there are obviously some very critical elements that need to be populated within your product, right? Such as inventory, such as products, right? If they're searching for a particular item, such as prices, right? Maybe we can focus on that for a moment. What elements of data are most important to you and the clinics as they come into your product or your platform to find products and search for products and see what's in stock and more?

Luka Yancopoulos: So I guess we categorize the data that we're tracking into three main buckets. The first bucket is exactly what you're talking about, Sawyer. So the first is everything before you place an order, right? Making sure that when you're ready to click "Create Order," it goes to the best possible source based on your preferences, opinions, and what your business needs, right?

That information is exactly what you mentioned. It's the prices, it's the stock availability status. Is this in stock? Is it on allocation? Is it low stock? Is it out of stock, discontinued, whatever? And reading all that information from as many sources as possible in real-time.

Now the data gets, I think, a little more complex and interesting after they actually place the order, both seeing what is actually delivered on time. It's one thing to trust the promise or the ETA given to you by your supplier. It's another to see it delivered at that estimated time of arrival.

Again, when you've got a patient or an appointment or a surgical operation depending on you getting that implant in time to stick it in the person's chest, timing is everything. As you, after you place your orders, and you track down those orders, we'll send people... So we're live-streaming the tracking from all these different sources, also in one screen.

If one of those sources has a lag or a delay in the delivery of a product that you're going to need on time, we'll send you a notification saying, "Hey, this isn't going to get there on time. But here are three other alternatives that are also in your city, just down the street, that you can go and either pick up from yourself or get delivered to you by the end of today or by tomorrow morning," to solve this delay that you didn't see at the point of purchase.

So that's the second category, and it intertwines category one, everything before the order, the prices, the availability, with the live stream of order tracking shipments from all these different sources. We look at what things are coming in on time, what things might be delayed, and we use those prices and availabilities to redirect spend to other places.

We could also use that information to gauge supplier performance, right? We give them letter grades on how well they do relative to the expectations that they set. Are they hitting their ETAs? Or maybe when they say next-day delivery, they really mean next-week delivery. So we can give you and your suppliers performance grades based on the performance that they're marketing and promising versus what they're delivering on.

Then the third bucket, which is the really cool one that we're only beginning to explore here at Grapevine, is actual clinical behavior and usage, right? People can load into our... medical practices, our clinics... They'll load in their upcoming appointments by categories. They'll say, "Hey, here's an oncology chemotherapy IV appointment, here's a basic examination or consultation," right?

They load in these different appointments. We check out what they're ordering, and they set baselines on how much supply, what supplies should be used in each of the appointment types. Based on the scheduled appointments they've got upcoming, we're able to manage or predict, using predictive analytics, the amount of stock they have at any given time.

There's no cycle counting. There's no "scan it in with a barcode and type of quantity." It's just, we know what appointments you've got coming up because we're hooked into your calendar, right? We can predict how quickly you're using supplies.

With that, we can also see anomalies in clinical behavior, right? If a nurse or a doctor is using 10 times more supplies, IV solution per patient, than your other doctors, we can start to see anomalies, point out problems that might be going on in the clinical setting, and change behavior, retrain, leading to retraining of staff, or even in some cases, spotting moments of...

We've had a dermatology practice that had a nurse who was stealing Botox and syringes from the practice, bringing them home to her garage, and then shooting up her friends with, whatever. They were able to spot that by seeing the depletion of inventory relative to the expected depletion, or baseline, with the number of appointments they have. They're going into the closet. They're saying no supplies when they've only had four appointments that week. So where the hell is all the Botox?

Sawyer Frank: Yep. It's really interesting. It's ultimately helping allocate inventory for the ultimate end-user business, in this case, the clinic or medical practice. It's really cool. Obviously, in the B2B world, there are terms like "count and fill," obviously terms like "reorder" and "automated reorder," but this is really taking in an analytical component based on usage, which is really unique.

Luka Yancopoulos: I think we'll have succeeded in our vision over here, at least part one of our vision, when no one from the medical practice needs to spend a single minute or a single click on a screen to make sure their stockroom is always filled with the supplies they need and never overstocked to the point where they've got stuff expiring in the back of the fridge or things left behind or forgotten.

That's the goal that we've set out for ourselves with Grapevine: eliminating the need to shop altogether while knowing you have the best price and, ideally, cutting the entire US healthcare spend by 75%. That is our goal, and I think we can do it, and from there, we've got much bigger dreams and visions, but I think that's at least a five-year project.

Sawyer Frank: That would traditionally be a great way to conclude this conversation, but I don't want to neglect some of the data relationships that are important, at least in our world, right? As you think about an eCommerce site, whether it be B2B or B2C, it's really a relationship of data, right? There's traditionally a source of data in which this is coming from.

For my eCommerce people out there, the techies or the people that follow this podcast, they know that, traditionally, in our world, the single source of truth is predominantly an ERP solution, and that's where businesses are hosting their, traditionally, pricing data, in some cases, their product data, much, much more, right? Financial data, etc.

So in your world, traditionally, where are the data sources coming from? Are they coming from B2B sites or eCommerce sites like us? Are they coming from ERP systems? Are they coming from EDI potentially more? I understand if there are trade secrets here that we can't know about. I wanted to ask the question.

Luka Yancopoulos: Sure, yeah. We absolutely plug into these major distributors in several different ways. Some, it's through EDI, some it's through APIs, some it's through proprietary means that we've got in place.

I think a big thing about the procurement world and procurement software, our competitors, is they often, and even the ERPs, they often ask the customer, the person who's paying for the software, to collect the data and upload the data into the system. To me, that is an atrocity to our space, to ask a customer to acquire data for you to plug into your system to then create the value. It's insane.

You're creating more of a burden for a person to then get a reward, and now they're left balancing: is this additional cost, this additional data gathering, collection, and uploading, is that worth the benefit we're getting? There should be no cost. It should be completely effortless to save money. It shouldn't cost something to save something. It should save you something to save something.

So with that said, we've got integrations established with all of the leading suppliers and distributors in the space, and that's where we primarily read in the data. So people just link their account, their contract, if you will, and that data will flow in through the EDI, through APIs, and it'll populate in their storefront in an instant, and we fast-track the typical EDI setup by building great relationships with these distributors.

For the most part, there's an imbalance in the market, and a lot of the smaller distributors deserve more market share than they get, so they have done a lot to put their data on a silver platter for us because we redirect spend from massive legacy businesses that are hundreds of years old and have way too much of the market, more than they deserve, to those who are simply having better prices, better availability, and better service, offering the customers. Those guys, they love us. They serve their data up on a silver platter.

So now, with all that said, we are trying to move away from needing to harvest data as much as possible, right? Right now, we're basically requesting this data through EDIs on a daily basis from all the different distributors, and we are slowly able to group customers, right?

Whether it's by warehouse, right? Warehouse availability is consistent across every customer for that supplier. So if we know that one thing changes for one customer, we may know it changes for another 75 different businesses because they're all in the same city and all depend on the same Medline warehouse.

So we're trying to use, again, predictive analytics to map less data being fed into our system but having the same impact or result for our customers. It's proven to be pretty effective. So moving away from having to harvest data in real-time and moving towards predicting it ahead of time.

Sawyer Frank: No, it's so cool. Luka, ultimately, there's this age-old saying, I would say, in B2B, that the bigger B wins, right? That's one of the reasons why e-procurement or punch-out catalogs exist, right? Because if you're the bigger business, you don't necessarily have to conform to the smaller business's rules in terms of how to place an order. Ultimately, it goes back to what you just said. You're making my life harder for the same value or even less value.

I think what's really unique about this solution at Grapevine is that it's not just the bigger businesses that can win, it's the smaller businesses that can win too, by creating the same concept of procurement through a singular portal to have access to multiple suppliers, potentially the same products or new products at lower prices.

Luka Yancopoulos: It's absolutely a mantra as old as time is telling the best man wins in the Grapevine universe, and bigger does not mean better, right? There are guys who win in certain pockets of the merit, right? You might only have one warehouse out in the Northeast, and for customers in the Northeast, you're killing it.

Then you can earn more market share as a supplier, right? As a small regional distributor, you earn more market share by providing really efficient warehouses and fast deliveries and low prices, and suddenly you've earned such a market share through Grapevine that you can pop up another warehouse on the West Coast and continue to grow.

We're big believers in meritocracy and letting businesses compete for the attention of the customer, compete for the dollar of spend, and that simple philosophy moves mountains and saves millions in this space. We're excited to keep on doing it.

Sawyer Frank: And we're excited for you. It seems like this is a very disruptive solution led by a disruptive leader. Luka, just as we end our discussion here today, I wanted to see, in terms of getting off of the Grapevine or even the OroCommerce world, are there any books or even TV shows or movies that you've watched or read recently that you'd like to recommend to our listening group here today?

Luka Yancopoulos: Man, that's a loaded question. Is it audience-specific? Should I be talking about something in the world?

Sawyer Frank: No, no, it could be anything, anything that's inspired you.

Luka Yancopoulos: This is a tough one. I'll go with the Steve Jobs biography by Isaacson Walter. I just finished reading it. I'm actually reading another Isaacson biography now because I was so enthralled by the way he painted a picture.

You pair that with the Ashton Kutcher movie that's also on Steve Jobs, and it's a nice weekend. The things I like about what Steve Jobs brought to the table were an obsession with the customer, delivering things incredibly simply, right? Meeting the customer exactly where they're at, not forcing them into a future that they're uncomfortable with or that they feel like is a giant step, but making it effortless to adopt change and adopt a future.

It's almost, "How could you not see yourself using this or begin using this piece of technology?" The way that both design simplicity and an obsession with disruption come together in what the folks over at Apple did in the early days is really cool to me.

I admire Steve Jobs in a lot of ways for the way he handles things. Of course, he's got his shortcomings. But I also like, which I don't think many people know, I also like that he had a brief intermission in between developing, the iMac and the Macintosh computers, and getting ousted from Apple and coming back and building the iPod and the iPhone.

In between that time, there's a 15-year period that I don't think many people know about, where he found, bought, and scaled Pixar Studios and was lead on Toy Story, which is very close to home to me in that I was... that was my favorite movie growing up as a 10-year-old kid, five-year-old kid, whatever.

So I think that goes to show how in touch... they can make something that's not only... I've got my iPhone here... not only intuitive for a grandma in Arkansas and a tech entrepreneur in New York and really change the way they communicate with the entire world around them and the people around them, but maybe even more importantly, scale that down to a customer that no one thinks about as a customer, a little kid, and the way they dream about the world and the way they see their toys under their bed.

So I'm an admirer of Pixar. I'm an admirer of Apple, and I like the way that Isaacson paints that guy in that particular biography. I think it's a must-read.

Sawyer Frank: It's really well said and a good synopsis of what you're building over at Grapevine. So with that, Luke, I want to really thank you for your time. Hopefully, we can do this again sometime soon, and the best of luck to you and your company at Grapevine. Thanks.

Luka Yancopoulos: So I appreciate you guys, and good luck to you.