Our reflections on a conversation with Ro's CEO, Zachariah Reitano, about all things Ro
On Friday, we had the chance to host a conversation with Zachariah Reitano, the CEO of Ro, for the HTN Community. It was a really interesting conversation, and helped provide a lot of insight into how he thinks about the company Ro is building and the long term vision it has. We’re grateful for Z taking the time to sit down with us.
We took the opportunity to cover a range of topics during the session - Ro’s views on cash pay & insurance, the pros and cons of D2C, why competition from incumbents is a good thing, Ro’s impact on health equity, the competencies Ro has built, how Ro extends to other areas of care, Ro’s weight loss product, the role of providers at Ro, Ro’s long term orientation, and how folks evaluate working at growth stage health tech orgs like Ro. Here’s the video:
While we think the whole session is worth listening to for Z’s perspectives on the topics mentioned above, we’ve highlighted a few of our favorite takeaways, along with reflections on how the conversation has influenced how we think about those topics.
Those takeaways include:
One of the more interesting pieces of content we’ve seen from Ro was their recent post on LinkedIn about leveraging the Jobs-to-be-Done theory in healthcare. The idea, as Ro articulated is “to focus on what consumers actually WANT and use that to introduce things they NEED”. The post highlights how Ro uses the Jobs-to-be-Done theory to build a relationship with patients, and then builds upon that relationship to go deeper into their healthcare needs. Z repeatedly brought up a similar concept during the session, talking about how Ro is focused on helping patients achieve their health goals.
In this context, we were intrigued by the news released last week about partnering with the NIH National Institute on Aging to help drive registration in clinical trials related to dementia. At first, it doesn’t exactly seem like this fits into the concept of what consumers want - so why is Ro pursuing this? Well, one piece of it is that Ro’s team has a strong clinical interest in supporting clinical research, and there’s been recent research about a potential correlation between erectile dysfunction treatment and reduction in Alzheimer’s symptoms, meaning that Ro’s patient population fits squarely into this research.
But perhaps more interesting than that given Ro’s strategy, Z shared some insight into how Ro thinks about categorizing the three types of goals that people have related to their healthcare:
As he went on to discuss, goals in that third bucket require that the goals be presented to be patients so that patients are aware of them, and if Ro can help decrease the friction in achieving those goals, it can help move more goals into the first type, where motivation is greater than the friction. As Z noted in the call, it is significantly easier to reduce friction than it is to increase motivation:
“It’s often easier to dramatically decrease the friction than it is to increase the motivation that someone has – and that is where I think technology can play a really amazing role.”
Clearly Ro’s initial set of target conditions – i.e. erectile dysfunction, hair loss, and weight loss – are ones in the first type of goal Z highlighted above, where the motivation exceeds the friction in achieving those. Ro has been focused on helping address things that people are motivated to fix. Yet Ro has ambitions in expanding beyond that, and the NIH partnership seems like a really good example for how Ro is slowly starting to show signs of its ambitions to manage health conditions beyond the lifestyle-type conditions common in the first category of goals. It’ll be worth watching how Ro prioritizes goals in the second and third categories above - in many ways, it seems that the NIH partnership is indicative of the approach. Ro found an opportunity in the NIH partnership to highlight a goal in the third category where Ro can drive awareness and reduce friction in a manner that helps move it to the first category. This seems like a more natural next step for Ro building on what it has accomplished to date versus moving into the second category where motivation is lower than friction. More on this in the next section as well.
As we touched on above, one of the things we are most curious to see about Ro’s strategy moving forward is how it moves beyond the core set of conditions it treats today into more complex conditions and populations of patients. This transition will invite lots of questions as to how Ro builds trusting relationships with those different patient populations. We were curious to hear Z’s perspective on how he thinks about that expansion into more complex populations and how Ro thinks about health equity within that.
One of the mental frameworks Z brought up during the call while discussing this topic was the idea of extending moats versus creating potholes as he thinks about strategic priorities for Ro moving forward. His goal is to extend the product in a way that leverages Ro’s existing business capabilities and infrastructure. It’s not hard to imagine why it’s extended clinical conditions as it has - going from erectile dysfunction to hair loss to smoking cessation to weight loss to infertility - all of these conditions tend to be very goal oriented issues that individuals have a high motivation to change. They all fall in that first goal category articulated above.
This is quite different from expanding into more traditional healthcare domains, addressing chronic conditions like diabetes, hypertension, and high cholesterol. These more traditional diseases generally seem to fall into the second category of goal that Z articulated - ones where the motivation is less than the friction. And on top of that, for the complex populations of patients, the “friction” in achieving a goal is tied to other complicated issues of health equity and social determinants of health.
When you think about Ro’s acquisitions of Workpath (marketplace for at-home phlebotomists) and Kit (at-home testing), both seem to make a lot of sense within this framework if you look at them from the perspective of moat building while reducing patient friction in accomplishing their health goals. Having access to diagnostic testing and phlebotomists to help patients gather information as a baseline as part of care seems to fit squarely into Ro’s buckets in the third category of goals - collect information that helps surface health goals for individuals, and do so in a way that reduces friction, to translate those goals into the first category of goals.
We think that combining this mindset of expanding Ro’s moat and the goal-oriented nature of the care Ro is looking to deliver provides a potential roadmap for how they’ll evaluate a number of strategic expansion considerations over time. For instance, when you think about the question that many digital health companies are facing about how they interact with in-person care delivery, we imagine that Ro will consider it when it is needed to accomplish particular health goals and while reducing friction for patients. Ro has already demonstrated a willingness to go into patients’ homes, and we expect to see Ro doing more of that slowly over time as it looks to expand its moat.
Ro penned a recent post seeking to coin the term Direct-to-Patient (D2P) healthcare as the general term for what it and similar companies are up to. We’re clearly seeing a new type of healthcare company emerge that seeks to put the patient at the center of the model, driven by new technologies and consumer expectations. We took the opportunity to ask Z about some of the concerns that have arisen with the D2P movement, specifically around companies potentially causing harm to patients in pursuit of scale and financial returns. If you look at what’s happened in the ADHD market recently, it provides a good example of how this D2P mindset can go awry quickly.
Z provided a very thoughtful response to this critique of the D2P space, which is that the ADHD scenario is actually a “shining example of why direct to patient is awesome because that got shut down so fast.” The point he makes is an interesting one - that the status quo in healthcare has been so bad for so long, we need to make improvements upon it. And it’s not that D2P is going to be perfect 100% of the time, but it’s a feature of the model that when something goes awry, like in the ADHD market, it is addressed so quickly. As Z said:
“Direct-to-Patient isn’t, hey, every company that is a Direct-to-Patient company is amazing. To me, It's that [the Direct-to-Patient] arena is a self iterating one in which people have to fight over who can take care of patients the best, and it is the fastest to identify both where it is great and where it is bad. And so to me it's not that everyone who is direct-to-patient or everyone who is not is inherently good or bad.” (note: we lightly edited this for clarity)
His response certainly has made us pause and reflect at some of the challenges we’ve commonly associated with digital health startups attempting to scale. Any change is going to come with both good and bad actors, and the actions of bad actors risk tainting the work everyone else is doing in the space. But it’s not as though having bad actors is unique to the D2P movement - look no further than the last few weeks of NY Times reporting to see examples of providers and payors acting badly. Because of the pace of change in the D2P space, we collectively seem to hold it to a high standard, one that may be higher than what we hold traditional healthcare to at times.
We find the argument Z made about benefits of the D2P space as a self learning system to be a pretty compelling one - the more organizations are competing over meeting the needs of patients, the better for us all ultimately. Companies across the healthcare landscape will continue doing things that diverge from patient interests, but the faster we can all collectively move in that direction, the better.
Another one of the common debate points in the space these days centers around whether digital health is de-emphasizing the role of the provider in care delivery. Certainly when you hear Z talk about how he views the role of the provider, it doesn’t appear Ro is taking that approach. For instance, at 54:31, Z talks about how providers are embedded into the way Ro builds at every level of the organization. As Z expressed:
“If we don’t deliver an effective experience for patients from a clinical perspective… then we’re gonna go out of business.”
We’ve seen a number of moves from other companies that appear to de-emphasize the role of the provider in those organizations, and in particular there’s been a trend of moving providers from salaried roles to independent contractor status in order to drive financial savings for those organizations. It appears Ro is taking the opposite approach, instead keeping providers in salaried roles. Z also shared that Ro’s providers aren’t being compensated on metrics that might create conflicts - i.e. number of prescriptions. Instead, Ro gives providers bonuses based on patient satisfaction and quality of care. As we’ll get into the next section, this seems like a good example of a long term versus short term decision. Short term, certainly moving providers off salaried status will be beneficial financially. Yet if you can afford to take the longer term view, retaining salaried providers and building out a provider workforce that is incentivized to deliver quality care to patients consistently seems like a winning strategy.
From a philosophical standpoint, Z shared how his goal for the organization is ultimately to scale the type of relationship that his family has with his father, a clinician who has been able to provide trusted health care advice for every member of the family, and ultimately has saved each of their lives. It’s an interesting insight into the type of care that Ro aims to provide, which seems different from what the industry thinks of Ro today.
Z’s anecdote about the value of having a trusted healthcare provider in his family is something we think about often. This dynamic – those who have a trusted friend / family member who is a healthcare provider – is one way to think about how there already is a “two tier” healthcare system in this country. Those who have a trusted friend / family member who is a provider generally have access to care at a better price (free) and a built-in navigator to turn to.
Understanding how Z’s family benefited from that relationship seems like a fundamental piece of Ro’s long term approach that should tell you a lot about the company he intends to build here. Certainly, when you look at the initial conditions Ro has treated, it doesn’t necessarily seem like those have been reliant on a longitudinal trusting relationship with a provider. However, if you start to think about the longer term play Ro is making, those transactional experiences quickly look like a foot in the door to building longitudinal trust with patients, as they discussed in the Jobs-to-be-Done post. As Z referenced during the call, the saying about how “people overestimate what they can accomplish in a year and underestimate ten [years]” feels appropriate here.
Given the moves that other companies have been making in the space, it’s refreshing to hear Z talk about how providers are center stage inside of Ro - we hope this continues to hold true. Presumably, a central part of Ro’s thesis as it seeks to build out the type of relationship he has with his father will be the ability to employ high-quality, empathetic providers at scale. It’ll be worth watching how Ro continues to build its provider workforce over time.
Z shared a number of times that Ro’s long term perspective has allowed it to act differently than companies operating on short term time horizons. A good, tangible example of this is Ro’s expansion into the weight loss space, work it highlighted in this recent Medium post.
The post highlights Ro’s partnership with Gelesis, a biotech company that manufactures a new weight loss drug, Plenity. In November 2021, Gelesis announced that Ro would pre-order $30 million of Plenity, allowing Gelesis to build out manufacturing capabilities to scale the product. Plenity would be the only weight loss drug available via Ro’s platform. This relationship comes with positives of course, but also potential concerns. The positive side is that Ro brings its brand and scale capabilities to help bring a new treatment to the masses.
However, the concern lies in that Plenity is the single weight loss drug on Ro’s platform (although Ro’s post indicates they’re looking for other medications to add to the platform as well). In the interim, it means Ro has a financial incentive to sell more Plenity - you don’t preorder $30 million of product if you don’t think you’re going to move that product. When you are treating weight loss for patients but only make money from the prescription of a single drug for treatment, it seems like there is a natural conflict between business interests and patient interests. How does Ro ensure that providers aren’t incentivized to prescribe that single drug at the expense of patient interests? Z suggests there’s two levels to this answer. First, it’s the incentives that Ro uses for providers - their bonuses depend on quality and patient satisfaction, not the number of prescriptions those providers write for Plenity. And second, it’s the long term view Ro has in seeking to treat patients for life. As Z highlighted:
“The second a patient feels that we have made a recommendation that's in the best interest of our business and not their health, we lose them forever. So it is just such a short-term mindset.”
The long term approach that Z is taking in terms of thinking about the value of patient relationships is refreshing to hear. It certainly sounds like they’re approaching managing potential conflicts in the way you’d want to see a care delivery organization do so - which is great to hear from a growth stage digital health company given the challenges we’re hearing about on a weekly basis.
The only concern with maintaining a long term perspective like this is that it is only true until it isn’t. An obvious statement, yes, but many venture-backed companies in the space have discovered recently that you can only maintain a long term perspective so long as you’re either:
So while we appreciate the point of view, we feel obliged to note that many companies have had long term strategies that have needed to shift in the past year as investor appetite has shifted. Ro appears to have navigated this environment relatively well, although it hasn’t been without its own challenges as highlighted in this TechCrunch article a year ago.
This seems like the crux of the question for Ro in many ways - can it continue building the business in a way that ensures the long term view that Z is articulating is safe? Assuming it can do so, there’s a lot of meaningful long term opportunity for Ro here.
That note feels like a good one to end on. When you listen to Z talk about the origin of Ro and its ambitions, it’s hard not to be energized by his optimism and passion for driving change for patients. The idea of shifting healthcare to a patient centric system designed around helping patients achieve their health goals seems like something we all should be able to get behind. And Z seems to be very thoughtful about the steps that it’s taking to achieve that long term goal. Of course, there have been and will continue to be a number of questions that Ro will have to face as it continues on that mission. But if you go back to the central theme of Ro's vision - that it is building in pursuit of patient goals, it either is successful in doing that and the company grows, or it fails in doing that and the company fails. That long term incentive alignment is pretty compelling, to us at least.
As the industry moves towards a generally more cynical position about the potential for change in the healthcare space, we think businesses like Ro can offer a good reason to be optimistic.