You Say You Want A Healthcare Revolution?

6/21/12Follow @venturevalkyrie

You say you want a revolution
Well, you know
We all want to change the world

—The Beatles

I had the pleasure of attending a “salon” type dinner hosted by Xconomy and its chief correspondent and San Francisco editor Wade Roush last week (and graciously sponsored by Silicon Valley Bank and Alexandria Real Estate Equities). The dinner included about 24 people, all of whom in some way had a connection to the emerging field of digital health. In addition to the sponsors, the group featured many CEOs of newly minted companies, some highly experienced and at their second or third rodeo, and some very new to the big desk in the corner. Also present were a few industry thought leader and advisor types, including representatives of Rock Health and Singularity University, as well as a few venture investors, just to be sure all the air would get sucked out of the room. Because the dinner was meant to be off the record, I have not attributed points below to specific individuals.

The theme of the dinner was “The Quest to Disrupt Healthcare,” and at the beginning of dinner we started around the room to introduce ourselves and to answer the question posed by Wade, which was, “What is the single largest headache you face in your business that, if solved, would lead to exponential growth?” It was a very thought-provoking question. I was struck by the fact that while other topics came up, the one that rang out loud and clear was this: the healthcare industry, particularly that defined by traditional institutions such as payers and providers, is just not interested in or committed to innovation.

It was an interesting perspective to hear from entrepreneurs, who have bet the entire farm in many cases that their newfangled idea will change healthcare, make them rich, and/or make them famous. (FYI: venture capitalists always prefer the ones who want to be rich over those who want to be famous—it’s all about alignment of incentives.) In fact, one attendee kicked off the conversation by saying she had recently attended a big conference on innovation that had one session about innovative disruption in healthcare and that no one showed up for it. Instead attendees chose sessions about gaming and social media while the crickets chirped uninterrupted in the healthcare room. Another dinner mate characterized this issue from a different perspective, talking about how the great minds in Silicon Valley need to be focused on changing healthcare rather than on stealing attention by building things like Twitter and games. Or, to say it in a way people will understand, #getonboardthehealthcareinnovationtrainpeopleorwearedoomed.

There was a lot of talk about how the FDA is limiting innovation, or at least potentially so, through regulatory foot-dragging that makes it far more costly and time-consuming to get products to customers, but that wasn’t the crux of the concern (and some of us didn’t really agree that was a significant limiting factor in digital health at all). Rather the focus of the conversation was how traditional buyers of healthcare solutions talk the innovation talk, but when it comes right down to it, are not interested in paying for it. One health IT CEO summed it up by saying that the healthcare field is afraid of innovation, resulting in impossibly long sales cycles and chief information officers who are risk-averse because they have had a few bad experiences. There was a discussion about how payers and provider systems in particular will dip their toes in the water with small innovation pilots, but in the end rarely commit to rolling out big new ideas, leaving their co-pilots, the entrepreneurs, high and dry and drifting at sea Amelia Earhart-style.

Extending that thought, one of the field’s thought leaders argued that an obsession over who pays and who reimburses for healthcare solutions is limiting the imaginations of entrepreneurs.

You say you got a real solution
Well, you know
We’d all love to see the plan
You ask me for a contribution
Well, you know
We’re doing what we can
—The Beatles

Inevitably this discussion about how little true innovation is valued in healthcare led to a corollary discussion about how this manifests itself in a lack of funding for early stage companies that are bringing healthcare innovations to the fore. The entrepreneurs at the dinner were almost universally frustrated in their quest to … Next Page »

Lisa Suennen is Managing Partner at Venture Valkyrie Consulting, a firm providing advisory services to companies, organizations, and private equity firms in the healthcare field, and the co-author of Tech Tonics: Can Passionate Entrepreneurs Heal Healthcare With Technology? Follow @venturevalkyrie

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  • retrievethis

    The medical device industry has “jumped the shark” for many consumers and perhaps for VC, too.  Demands for quicker approvals of unproven, more expensive ‘innovations’, no tax, no warranty, no post-market independent data and judicial entitlements at the expense of patient harm/citizen rights may eventually prompt revolutionary rethinking.  The #1 expense of Medicare is joint replacement.  Anybody listening?

  • Fsowa

    The joint-venture between IBM Watson’s Healthcare Solutions, Nuance Communications, Apple (iPhones and iPads with Siri); and Google Android (smartphones and tablets with Google Go) and Dragon Naturally Speaking Software from Nuance — will create the disruptive innovation potential for a speech-recognition (SR) “voice-driven user interfaces” a “VUI” (at least in healthcare, and in investment banking and other situations where speed and ease of voice supercedes the need for “graphics” i.e. NOT the best for manufacturing and engineering) that will replace the traditional web-based graphicl and text-based user interface (GUI).

    That would be a monumental shift in the stale healthcare industry — as it would at least half the costs going forward under the Affordable Care Act, and the Health Records Act — making the projected deficit spending trendline flatten out through 2024. And it would create a deep data mined “big data” collective, that would act as a “physician’s assistant” and rapidly diagnose health issues using smart-AI to autonomously ‘learn’ about human health.

    It was driven by the DARPA CALO Initiative — and was designed to provide field military and surgical assistance in disaster areas and war zones — and has already been deployed in special operations and the US Army Medical Corp. Now, it’s time to reap rewards in the civilian sector through IBM’s Solutions for a Better Planet work in SR and linguistics. Because of this, as a futurist, I’d have to disagree with the conclusions drawn in your opinion piece.