Generation Zoom: what the generation raised during COVID can expect from their healthcare

Steven Loeb · June 4, 2020 · Short URL:

This topic was discussed at last week's Future of Mental and Behavioral Health salon

Healthcare is poised for a big change, not only thanks to COVID, which has already shifted how people want care delivered, but also thanks to technology that is putting more control into the hands of consumers.

There's a whole generation now who will grow up with Zoom-style interfaces, so what will they demand when it comes to their healthcare? This came up at our Future of Mental and Behavioral Health  event help by Vator, HP and UCSF last week in a panel co-moderated by Dr. Archana Dubey (Global Medical Director, HP Health Centers, HP) and Bambi Francisco Roizen (Founder and CEO, Vator), featuring Brian Garrett (Co-founder & Managing Director, Crosscut Ventures), Alex Morgan (Investor, Khosla Ventures), Alon Matas (President, Teladoc’s BetterHelp), and David Bond (Director of Behavioral Health, Blue Shield of California – Promise Health Plan).

Francisco got that going when she told the panelists in grid view on Zoom that they looked a lot like what she sees every day with her second grader. She coined his generation, Generation Zoom. Generation Z are kids born between 1997-2012. So second graders are the youngest of Gen Z.

"Right now I'm picturing everybody's in second grade, because this [Zoom grid] is what I look at quite a lot during the day, a Zoom homeschooling call. I think for sure, if not Millennials, the Generation Z, or maybe I'll call them Generation Zoom, will be demanding a different way of processing healthcare," said Francisco, who was responding to a comment made by Alex Morgan regarding what we can learn from China since it can implement nationwide processes.

China is a top-down and not a "let 1,000 flowers bloom" country, said Morgan. The US can learn from China because "they're able to, frankly, steamroll in certain things, which we wouldn't want to do here, but we could learn."

To which, Francisco replied: "I think we already just did by rolling in a pretty big nationwide process called Shelter in Place" and hence why telehealth has been quickly adopted and the behaviors we're teaching our kids, such as the convenience of teleconferencing for school, camps, etc will be hard to turn back. 

Francisco's Generation Zoom comment was also in response to her reference to Millennials earlier in the session. She noted that "consumers are far more in control of their expenses, not so much in healthcare, but across other parts of their lives and, in particular with Millennials, they’re going to become used to the transparency of the pricing and they are going to like on-demand and there's a number of retail outlets out there now, retail health clinics out there right now offering very transparent affordable healthcare," Francisco said, to which Morgan expressed some skepticism, calling it "a common narrative" that Millennials will cause "a titanic shift" in healthcare offerings.

"I don't know if I've seen that quite play out, but certainly I do believe the consumer experience with telemedicine, and the ease of use, will make it very, very hard to rollback on willingness to pay. The same thing is true as people get more and more practical experience with asynchronous solutions. It's gonna be very hard to roll that back and deny service when they’re like, 'This worked for me a month ago.'"

The challenge here is at some point the payers will have to find a way to ensure the reimbursement rates are proportionate to the services rendered. As one panelist said at our other Virtual Care conference noted, you don't want doctors charging $400 for a 10-minute telehealth visit.

This was the discussion at the start of the session: reimbursement. In light of a very uncertain future about what will be paid, how do VCs factor this into their investments? 

Francisco mentioned that doctors are finally getting paid for telehealth visits, but that it's unclear if they will still be paid six months from now, when coronavirus will, hopefully, be a thing of the past. 

"As you think about that in the companies you invest in, how is this uncertainty calculated into your decision making process and whether you'll work with a company or not?" she asked Garrett and Morgan, the two VCs on the panel.

"From our point of view, we’ve found that relying on the pay networks to provide reimbursement or even counting on self-insured employers, is very difficult channels to navigate. For us, it’s been really hard to find healthcare tech-related investments that can get to mass adoption without having some way to get insurance coverage," Garrett responded.

"What we have found is finding really large volume, what I would call 'niche communities.'  Think of something like hypothyroidism, very difficult to find high quality care because of a lack of doctors that can properly diagnose and treat that, and very targeted communities online that are actually easy to get to from a cost of acquisition tend to be types of opportunities that resonate with us."

Dubey then asked him if, as a result of COVID, if the companies he's invested have made certain offerings more upfront, such as telehealth, to which Garrett responded that "in all of the cases within our portfolio, there is an element of teleconsult that then leads to diagnosis, prescription ongoing compliance with care through digital texting technologies, etc."

"Then I think the key piece there, to go back to that payer provider dynamic, is when you can actually prove that you've delivered better care at a lower cost, with higher efficacy. Then you start to see the payers pay attention, or the providers realize, ‘Oh, wait, if I add a digital component to our cancer treatment, we would have better compliance with our treatment recommendations, and thus a better experience for the consumer and thus it differentiates why you would come to us for cancer care versus another hospital provider.’ So, we watched that entire thread, but they're very long life cycles to get to the point where you have enough data to validate any of it." 

Morgan then picked up the thread, mentioning that Khosla has "a bunch of different companies, taking a bunch of different approaches," including, Sword and Hello Heart.

"We, in general, have not focused our investments around products or technology that are very reliant on a particular reimbursement code. Things that we have that have some of that flavor, particularly in diagnostics, which have been very vulnerable to slight changes in reimbursement rate, or how things are bundled or unbundled, can be not a great position to be in if you're overly reliant on a particular margin," he said, noting that the firm has mostly focused our investments on technology and approaches that do work in a value-based model.

There are some "interesting potential changes afoot," Morgan said, including insurers who are now making profits because of all of the expensive non-emergency procedures that have been deferred thanks to COVID.

"Now, if all those procedures will suddenly happen all at a very fast clip, it will be very expensive for them. It kind of remains to be seen. That's the concern often from their position. Many of the provider organizations, of course, who were very happy in a fee for service world, are sort of miserable right now because if they were capitated they would be buffered from the reduction in their volume and their ability to bill," he said. 

In general, Morgan noted, Khosla, has been interested in taking a broad vision of potentially  impactful technology, and has "skewed a little bit more towards an outcome-based model, with technology that works in that scenario." 

"We do stuff that has a direct-to-consumer component, and there's a certain advantage there, including product development. If you can fight it out in the direct-to-consumer healthcare world, where... you have to win on product quality, as opposed to your enterprise negotiation skills, that can have certain advantages, although it can be quite challenging to make significant revenue that way."  

The discussion also touched on learnings the US could have from outside the US.  

"I wish I had more time in my life to study what's going on in India," said Morgan. "It's a very interesting situation because you have very disparate set of care delivery, you have all kinds of different clinical labs that are big, small, you'll have the Apollo model. It's very interesting and because so much is out of pocket pay, you have more of a sort of test bed of different models that are being tried and piloted. There are all kinds of solutions, people are trying different mobile-based EHRs that are being deployed in some states and not others. Just a huge ecosystem that lots of natural experiments are being tried," he said.  

Dubey responded to what Morgan, reminding everyone that HP is a global company, which requires Dubey to understand the healthcare in those countries.

"What we're learning is heavy use of technology in certain Asian countries, including China, having interconnectivity through having the technology, is extremely powerful, especially in times of COVID. And then we look at India and especially when I was rolling out some programs there, we noticed that how access to primary care is very fragmented," she said.

"But there's catastrophic coverage in the country, so there's a private-public model that is quite unique in India and so there's several things we can learn, how each of the countries responded to COVID, or how they innovated in those countries and what truly worked. And that could be quite interesting for the US too." 

Thanks to our sponsors: UCSF Health Hub, HPBetterhelpAvison YoungAdvsr Scrubbed, and Stratpoint. 

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