09/04/2018 in Blog
Last week, I sat on a panel at General Assembly Denver titled “Digital Disruption: Healthcare & Data”. The panel, which included executives from DispatchHealth, BurstIQ, and CirrusMD, was brought together to discuss how data is being applied in healthcare and how it can be used to address the needs of physicians, health systems, and patients. Healthcare is so vast and technology is evolving so rapidly, it’s always fascinating to hear how other companies are tackling the problems that they have chosen to focus on. I sincerely hope that both my co-presenters’ companies, as well as all the companies and future companies both in the audience and reading this post, will go on to have great success. Of course, history teaches us that few of these companies will be as successful as they hope. I wanted to provide my perspective on why this is the case, and more importantly, what can be done to up the odds of success.
There are many reasons why only a few companies in this space are ever successful. Right off the bat, let me assert that it’s never a technology problem. As someone much wiser than me once said, “If you can imagine it, we can build it.” I’ve never seen a health tech company fail because their engineers weren’t up to the task. Rather, the challenges almost always lie in a lack of understanding the true dynamics of the healthcare industry. In healthcare, there are three primary obstacles getting in the way of progress and innovation: money, regulation, and people.
First, healthcare represents roughly 17% of the U.S. economy. Although the general sentiment is that it is inefficient and change is necessary, healthcare is a business and there are huge moneyed interests in protecting the status quo. This is no different than any other major market. For example, an idea that has the potential to provide better care at a lower cost must contend with providers who by definition have an incentive to charge more and insurance companies who act like a bank and make money on the float. Just like anywhere else, it’s hard to be an upstart...especially when the companies you are going against have billions of dollars to compete against you.
Second, innovation is being slowed or stymied by regulation. As one of the most highly regulated industries in the country, a growing bureaucracy means time is being diverted away from innovation and problem-solving in favor of bureaucratic directives. I’m not saying this is a bad thing per se. A lot of this regulation is necessary to protect the interest of consumers. That said, I’ve learned over the years that if you ever catch yourself wondering, “why hasn’t someone already done this really good idea yet?”, the answer is almost invariably a regulatory constraint somewhere.
And third, it is really hard to change people’s behavior. Yes, technology can solve lots of problems better than people can, but at the end of the day, most improvements in the system require a person to do something differently. It doesn’t matter if this person is a doctor or an administrator or a consumer. Change is still hard. For example, diabetes is a global epidemic that affects 387 million people worldwide. As a result, 1 in 7 healthcare dollars globally is spent on diabetes care. However, that doesn’t stop people from frequenting fast food restaurants and consuming sugar. That’s why these numbers are projected to double in 20 years.
Although these obstacles may feel insurmountable at times, I am an optimist. These same three challenges that exist are the same three reasons why successful innovation continues to occur at an accelerating rate.
Yes, there are huge moneyed interests in healthcare, but there are also huge dollars at stake if meaningful change is accomplished. This industry is one where significant seed money and multi-million dollar “pilots” are possible. If you have an idea that can make one of the vested interests more money, you can get the money to get your idea off the ground faster than just about any other vertical.
Regulation and bureaucracy can slow down innovation, but that provides the opportunity to observe technologies evolving and playing out in other markets. There is a general rule of thumb that new technologies take five to ten years before taking hold in healthcare. This helps entrepreneurs gain perspective on what works and what doesn’t work in other verticals and then learn how to apply innovations to healthcare. Once a new technology does start to penetrate the healthcare system, it can often do so much more rapidly because someone else already worked out all the bugs.
Most of us who go into healthcare do so for a reason much bigger than our commercial interests: to help other people. Nothing is more important in this world than helping people live longer, happier and healthier lives. Every one of us has the ability to touch millions of lives with the technologies we work on. That it is not hyperbole; it’s real. There’s an old saying that “if you save a single life, it’s as if you saved the whole world.” With technology, each of us can truly help save hundreds, thousands or even millions of lives. It’s this understanding that makes what we do so energizing.
Thank you to Dan Edstrom, Vice President of Business Intelligence and Analytics at DispatchHealth, and Amber Hartley, Chief Corporate Development Officer at Burst IQ for joining me on the panel and sharing your perspective, and Kellerey Lohman, VP of Marketing and Communications at CirrusMD for moderating a lively and interesting discussion.
Let’s go save some lives!