Entrepreneurs

Screen Shot 2014-05-14 at 8.03.26 AMI WAS NOW the CEO of a rising medical data company.We built automated systems to handle the administrative chores for thousands of medical practices. They didn’t buy anything from us. Instead, they subscribed to a service on the Internet.

This was what would later be called a cloud-based service, but in these early days of Internet era, we were still searching for a name for it. My partner Todd used to say in speeches that he would give Polynesian fruit baskets for life to anyone who came up with a single name for the combination of software, knowledge and work that we were selling. We had moved back east and had a new headquarters in a historic brick armory building along the Charles River near Boston.

Our future looked fabulous, except for one problem: My cousin, the 43rd president of the United States, was about to sign a bill that could destroy us.

This bill, like so many governments initiatives, stemmed from the best of intentions. The idea was to encourage the migration of the health care industry from cumbersome binders full of paper to electronic records. How was this to be accomplished? Well, hospitals and doctors were forbidden by so-called anti-kickback laws from exchanging services, information or products of value with each other. (It’s a law that infuriates me, for reasons I’ll go into later.) The bill before Congress in 2004 offered a regulatory safe harbor for hospitals to provide doctors with all the digital technology the bureaucrats could think of: servers, software licences, and training. That was absolutely the right answer . . . for 1982. The long and short was that hospitals could buy all the old stuff from our competitors, but none of the new still-to-be-named services from us. As often happens, the technology was advancing much faster than the law.

I caught the shuttle down to Washington and commenced lobbying with the fervor of a man with a gun to his head. I raced up and down the marble halls Congress, looking for someone, anyone, who would take the time to learn why this bill was so very wrong, so backward, so devastating, so lethal—at least to athenahealth.

But let me tell you, if you walk into Congressional offices sputtering about a clause in a bill that practically no one has read, something that has to do with hardware and software and online services, people tend to hurry away, or point you toward the door. I could find no one to pay attention. And as I grew more frantic, I started talking louder and faster. That didn’t help things.

Some might find my frustration strange, considering that during this drama my cousin was sitting a mile away, in the Oval Office. Wouldn’t a Bush, facing legislative trouble in Washington, contact someone in the White House entourage? The answer is no. Placing a call to him was not even a remote possibility. For starters, it’s unethical. It is also politically foolish. It would place him, me, and my company in scandal and bring shame upon our family. I would be much more willing to climb the steeple of the tallest church and bungee jump naked in the middle of the night than to call my cousin. And even if I were dumb enough to make the call, I trust George would have the good sense to tell me to get lost.

Continue reading “Government (Or, How My Cousin the President Nearly Killed My Company)”

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Last week, HHS issued its much-anticipated report about the first wave of enrollees in the state and federal health exchanges. Its release coincided with the 32nd Annual J P Morgan Healthcare Conference in San Francisco, arguably Woodstock for health care investors.

HHS reported that, as of December 28, 2.2 million signed up for coverage. They are older and probably sicker than the overall population of 50 million uninsured in the U.S.:

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Per the analysis, 54% of these are female, 71% are eligible for financial assistance and most signed up for silver plans (60%) vs. the more expensive platinum (7%) and gold (13%) or the less costly bronze (1%) options.

The 14 states run exchanges fared well in the first 90 days accounting for 956,991 enrollees—most in blue states where governors were supportive of the exchange effort. In fact, 10 exceeded their enrollment target even though the national target fell 1.1 million short.

Continue reading “Field Report from JP Morgan 2014″

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I recently attended the flagship Health 2.0 conference for the first time.

To avoid driving in traffic, I commuted via Caltrain, and while commuting, I read Katy Butler’s book “Knocking on Heaven’s Door.”

Brief synopsis: healthy active well-educated older parents, father suddenly suffers serious stroke, goes on to live another six years of progressive decline and dementia, life likely extended by cardiologist putting in pacemaker, spouse and daughter struggle with caregiving and perversities of healthcare system, how can we do better? See original NYT magazine article here.

(Although the book is subtitled “The Path to a Better Way of Death,” it’s definitely not just about dying. It’s about the fuzzy years leading up to dying, which generally don’t feel like a definite end-of-life situation to the families and clinicians involved.)

The contrast between the world in the book — an eloquent description of the health, life, and healthcare struggles that most older adults eventually endure — and the world of Health 2.0′s innovations and solutions was a bit striking.

I found myself walking around the conference, thinking “How would this help a family like the Butlers? How would this help their clinicians better meet their needs?”

The answer, generally, was unclear. At Health 2.0, as at many digital health events, there is a strong bias toward things like wellness, healthy lifestyles, prevention, big data analytics, and making patients the CEOs of their own health.

Oh and, there was also the Nokia XPrize Sensing Challenge, because making biochemical diagnostics cheap, mobile, and available to consumers is not only going to change the world, but according to the XPrize rep I spoke to, it will solve many of the problems I currently have in caring for frail elders and their families.

(In truth it would be nice if I could check certain labs easily during a housecall, and the global health implications are huge. But enabling more biochemical measurements on my aging patients is not super high on my priority list.)

Continue reading “Knocking on Health 2.0′s Door”

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As of last week, the heart of Obamacare is upon us with the opening of the health insurance exchanges (HIXs).  And while some think this represents the heart of darkness, it is hard to imagine that anything will stop January 1, 2014 from coming and, with it, a new legal requirement for all Americans to have health insurance.

Ushering in this new world order, the HIXs are essentially a “Match.com” to put people together with insurance products, representing a way that, for the first time, Americans will directly purchase healthcare without the prospect of being denied coverage or having their employers buy on their behalf.

In fact, the new HIXs create a direct relationship between consumers and health insurers in a way that has never existed before, and with that comes the need to fundamentally disrupt traditional methods of delivering health insurance products.  Not since the advent of employer-paid health insurance after World War II or the start of the Medicare program in 1966 has there been such a broad-scale opportunity for health system transformation.

There are few markets that are mandated by law to include virtually every single American man, woman and child, making the opportunity particularly juicy to investors.  For those entrepreneurs who figure out how to transfer the secret sauce from cheeseburgers that impair health to insurance-related products and services that improve it, the next few years offer an opportunity to turn market confusion into gold.

Among the biggest opportunities are investments in technologies and services that power the new healthcare exchanges.  Venture-backed companies, such as GetInsured.com, have emerged to provide the various state-sponsored exchanges with the back-end technology that enable comparison-shopping, financial transactions and enrollment support essential to operating the HIX marketplaces.

But while state and federal healthcare insurance exchanges are the main topic of conversation this week, much of the real action has and will continue to take place in private exchanges serving the large and small employer market, particularly as employers do the math and figure out it may be in their financial best interest to end their role as benefit plan intermediaries.

Continue reading “Out of Chaos, A New Beginning”

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Today marks the beginning of the 8th annual Healthcare IT Week. Healthcare IT Week was started and continues on as a collaborative forum for public and private healthcare constituents to discuss the value of health information technology (health IT) for the U.S. healthcare system.

It is amazing to see how far health IT has come over the last 10-15 years.  It has its own week!  If, a decade ago, you told people that health IT would be a core focus of investors, entrepreneurs and everyone else in healthcare, the energy produced from the eye rolling alone could power the lights on the Las Vegas Strip for a month.  The basic sentiment back then was this: Why would anyone invest in, think about, care about health IT when the consumer Internet was rocking and companies selling online dog food could get started on Monday and sold on Friday for a bull mastiff’s weight in gold?

Today it is quite clear that healthcare IT is a hugely significant part of any success we are having and will continue to have in transforming our healthcare system from one where 30% of cost and care is wasted or the result of error to one where value reigns supreme.  We do not believe anyone rational would now argue that healthcare IT is non-essential to improving the quality, productivity, efficiency, cost and outcomes we produce in our healthcare system, although the path is not always smooth.

And it’s about time. Technology has been used to optimize and redefine virtually every key industry except healthcare. Manufacturing has gone from human assembly lines to robotics; banking has gone from tellers to home banking; travel has gone from agents with brochures to Travelocity; and yet in many ways, the fundamental practice of medicine hasn’t changed in decades.

Continue reading “Can Entrepreneurs “Cure” Health Care With Technology?”

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Recently, there has been an uptick in newsflow around the “series A crunch”/ “the valley of death” in regards to financing. Because of who we are (a firm that connects investors with private equity investments); we at Poliwogg see a lot of the “crunched” and “valley-dwellers.” We have some good news. The good news is that we are seeing increased interest on the part of accredited investors who have not invested in private companies before and who are now more open to the idea in light of lackluster returns in other asset classes. Aggregating this group of investors allows for investments in the range that are too large for a traditional “friends and family” round but are too small for traditional institutional investors where the crunch is most pronounced. The caveat is that companies need to be ready to meet the demands of this new crop of investors. Probably, what will be required will be more stringent than what companies have been asked for in the past. On the plus side in exchange for more requirements, these investors are often more patient and more passionate (especially in the disease categories) than traditional investors.

A few observations about what we are seeing (we view mostly healthcare companies):

• Asset prices seem fairer than they have been in a while especially when compared to the prices of similar assets in the public market; spurring investor interest.

• There do seem to be a large number of companies that raised seed rounds (sometimes in substantial sizes) from friends and family. That said given the lack of arms-length transactions the supporting documentation ( e.g. possessing an accountant and law firm, audited financials) often seems a bit lacking in our view and can make a more institutional looking round challenging if not impossible. More disclosure is always better.

Continue reading “Peacefully Coexisting With the Valley of Death”

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When I was 13 years old, the Altair 8800 appeared on the cover of Popular Electronics.   By 16, I was building enough hardware and software that I achieved the Malcolm Gladwell 10,000 hours of competency by age 18.     By 19, I founded a company that produced tax calculation software for the Kaypro, Osborne, and new IBM PC.   Every week in the Silicon Valley of the early 1980′s brought a new startup into the nascent desktop computer industry.

To me, we’re in a similar era – a perfect storm for innovation fueled by several factors.  Young entrepreneurs are identifying problems to be rapidly solved by evolving technologies in an economy where existing “old school” businesses are offering few opportunities.

This morning, I lectured to an entire classroom of MIT Sloan school entrepreneurs .   Today the Boston Globe published articles about the Harvard Innovation Lab and the Mayor’s efforts to connect entrepreneurial students with mentors.

Tonight I’ll introduce a Harvard Medical School entrepreneurial team at the Boston TechStars event.

This pace of innovation reminds of that time 30 years ago when Sand Hill Road was just beginning its evolution to the hotbed of venture investing it is today.

Who are these new entrepreneurs and what kind of work are they doing?   Tonight I’ll be introducing Lissy Hu and Gretchen Fuller.

Continue reading “The Next Generation of Entrepreneurs”

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