TECH: Will Silicon Valley invade health care? by Andy Kessler

Andy Kessler is a finance guy who’s worked on Wall Street and ran a hedge fund. And like a rich-man’s Michael Lewis, he’s written a couple of books about Wall Street and the money world, and, following down the path that Maggie Mahar’s taken, he’s moving onto health care (presumably before he finds something more interesting like baseball! His book is called The End of Medicine: How Silicon Valley (and Naked Mice) Will Reboot Your Doctor. Andy saw my recent talk  at PARC and decided that I ought to know about his views, and they’re at the least provocative. So here’s a taster:

Will Silicon Valley invade health care?


What the heck is a tech and finance guy like me doing sniffing around medicine? Well, I think IKessler_good_1 figured out that the way to save the $2 trillion healthcare industry – it’s for people to not get sick by getting doctors out of medicine. After spending the last few years following doctors and radiologists around, visiting cancer centers and spending time watching mice get poked and prodded, I’ve realized it is time to embed the expertise of doctors in silicon and software. Why have radiologists read mammograms to find 1 in 200 that have breast cancer? Today, a third of mammograms now have their second read done by computer, computer aided detection from companies like R2 and iCad, and for $29, much less than a radiologist, and perhaps more accurate. For me, that’s just a start. But I was astounded to learn that CT scans are on the same learning curve as PCs and iPods and cell phones. One slice per rotation moved to 4 slice, 16 slice, 64 slice and soon 256 slice CT scanners. Instead of film, the output is a high res color 3D model. Beats a blood pressure reading and cholesterol number, which is all that physicians can manage. They are flying blind.So I started running the numbers. State of the art scans are still close to $1000. Say 1% of adults have heart attacks every year. A stent procedure runs about $15,000 just for the stent, with the hospital stay and bandaids, you are in for closer to $20-30,000, let alone lost wages and productivity. Heart scans today are around $1000. So if you screen 100 people, it costs $100,000, certainly more than treating the 1 in 100 heart attack patient. So,…, Blue Cross won’t pay for scans. It is better for them if nature does their screening for them, you or I actually having a heart attack – ding, ding, ding, we found our 1 in 100.They probably still wouldn’t pay if the scans were $500. But they might at $200. And they certainly would pay at $100, because it would be cheaper to screen than to pay for care. Because it is on the silicon learning curve (down 30% every year, 50% every two years), it is pretty easy to see $100 scans within five years, probably less. Heart attacks and stroke may become a thing of the past.And cancer, the third member of the Big Three in healthcare spending? Structural CT scans will transition to molecular imaging to find cancer early. I can see biomarkers on antibody chips that can eventually sell for $1 or maybe even 10 cents can detect unique cancer proteins in blood and flag cancer early enough for much cheaper treatment, beating symptoms by five years.Doctors can’t do that. In the end, I believe that Silicon Valley will do to doctors what ATMs did to tellers.

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19 replies »

  1. we need to take care of our health , as we are been affected by nature , due to human’s invasion on nature .

  2. The bottom line is we need to make *health* the primary focus of healthcare instead of profit! That would solve most of the problems.

  3. The bottom line is we need to make *health* the primary focus of healthcare instead of profit! That would solve most of the problems.

    My best friend’s wife went to high school with Andy, so I’ll try to be gentle.
    Relying on technology to do medicine is akin to relying on technology for education and teaching.
    Nice theory for the ivory-tower crowd — lot harder in the real world. Too much v’bility — insurers get nervous — sorry, Charlie.
    Keep trying, Andy. You may hit paydirt. And your old pals at Chemical Bank say ‘hi.’

  5. The adoption of technology to healthcare will eliminate society’s need for doctors no more than the aviation industry’s adoption of all kinds of technological bells and whistles has eliminated its need for pilots. Technology is a means to an end. Kessler confuses it with the end in itself. With more sophisticated technological tools available to MDs, the market for tech savvy doctors who know how to use the technology and effectively integrate it with plans of care will only expand. You can see this today with the medical industry’s adoption of electronic medical records. Doctors’ newfound access to clinical information on-demand has not diminished their importance one iota in the medical setting. If anything, it has made them more effective by eliminating the trivial aspects of the job – not to mention the occurence of human error. Likewise, with greater technological advancement, doctors will have more tools at their fingertips to make better clinical decisions. But the need for educated people to make those decisions by being savvy users of technology and explain those decisions well to patients will be in ever-increasing demand. One day, perhaps we will be treated by disease fighting computers that are indeed smarter than human beings. But that scenario is straight from science fiction, and i don’t anticipate experiencing it in my lifetime.

  6. Boy, everyone is so worked up over here. What healthcare needs is a version of “Blue Ocean Strategy” Watch as Personal Pediatrics reinvents the lost art of pediatric house call medicine. We are a marriage of high tech systems and service to provide children excellent care where they are most comfortable, in the home. ( No matter what blue cross blue shield says) Our system is so customized, user friendly, streamlined, that our customers don’t CARE whether their outdated warped full coverage insurance will cover for our services. Remember insurance covers in 2006 for an hour wait to see a nurse for five minutes. If you want your pediatrician on the from lines for you consider one of our Personal Pediatrics affiliate doc’s coming soon to a neighborhood near you, Silicon Valley no exception. The story unfolds at my blog personalpediatrics.blogspot.com

  7. What a string of love. Does anyone actually think a guy from Wall Street knows anything other than numbers? Everything is paper, no consideration for a living thing. Replacing Doctors, how stupid.
    I have been attached to Silicon Valley for nearly 30 years. Regardless what comes out, “someone is getting replaced!”. No-One brings the fact up, A HUMAN WITH BETTER TECHNICAL SKILLS HAS TO RUNS THIS. Hence a total overall improvement of current status.
    Our only question is: why are patients not given a DVD of their records, images or scans. I asked for one from the same place I supply media, talk about a deer in headlights.

  8. Prevention is the best medicine. Not a secret, known for years, taught in all health professions, never discussed openly (outside the classroom) in healthcare circles. To date, prevention equals no profit and often loss. Quality in healthcare(the new vogue) is a non-starter(read non-profit). Mr. Kessler hit it on the head, scale is key – make prevention profitable and we can improve health and quality of life while addressing the costs.

  9. I agree in the comments shared by both Maggie Mahar and Dr. Eliastam. Technology is only a tool. The power of data mining, predictive modeling or computer aided detection is not just about real-time analytics, artificial intelligence or clean data. It’s about the business insight and professionals who understand what my problems are and how to solve them. We have become culture of creating products vis-à-vis creating solutions.

  10. “The End of Medicine” The title says it all. This is obviously a take off on Francis Fukuyama’s (1992) “The End of History.”
    Now there’s a book that’s really stood the test of time!!

  11. We call health care “health care” while it is really sick care. From the taster, I can see that Andy Kessler is interested in both technologies and prevention (screening). However, doctors and insurance company don’t think this way. A big change is needed in the reimbursement system to wake up most of the health care consumers.

  12. We need a change ( a reduction) in the insatiable demand by us humans who will always want more healthcare for less out of pocket funds. This resetting of the demand will only come if we have a major event, like a war or a recession. Until then who among us individuals is going to willingly take less healthcare for the benefit of the community? Look at the antibiotic problem.

  13. You forgot the generalization about self-promoting bloggers who write dime a dozen nonsense and go around feeling morally superior to MSM for no reason! Must be tough being wrong about stuff 90% of time and have no one call YOU out… LOL, dude.

  14. The original article is delusional. Computerized CT readers miss a shitload of pathology. They are nowhere near ready for prime time yet.

  15. I love Eric’s generalizations.
    Sounds like the talk about “greedy doctors”, “rapacious pharmas”, “profiteering hospitals”, “criminal HMOs”, “patients expecting perfection” and my personal favorite “sodomite lawyers”. Have I missed anyone? Oh yeah – “out of touch politicos and wonks” and of course “stupid consumers”.
    If Jim Clark was clueless on healthcare this does not mean everyone else in Silicon Valley is.
    Watch my blog for interview with Andy to sort things out.

  16. This sounds just like Jim Clark (and Steve Case for that matter), who thought in the ’90’s that Healtheon would just waive a magic wand with IT and fix the industry’s back office inefficiencies… just draw it up on a paper napkin, and poof, all the healthcare problems solved with silicon, smoke and mirrors.
    Unfortunatly, there are these Valley’s software engineers and bankers out there, who still haven’t learned from their past mistakes. Probably because they are still too arrogant to believe anyone in healthcare might actually be smarter than them, and they don’t see the value of investing a penny of time to really understand the complexities of our industry…. it’s all about getting rich quick to them, not making innovative change that puts human life and dignity ahead of the almighty dollar.
    These jokers are of course never going away, considering the size of the market opportunity. But just b/c some guy with no clue is lobbing a bunch of crap over the wall to “shake things up”, don’t confuse this with what’s really going on…. the tired old game he’s playing is to dupe other “smart money” guys into ponying up bucks, then while getting rich over night by over promising and under delivering on “revolutionary ideas” (hmmm, where have I heard that company name before), eventually sail off into the sunset as the new new new without having done a thing guy…
    Seen this movie before, always ends the same way.

  17. I don’t think we need more machines performing more tests. We need more doctors practicing what some call “thinking medicine”–listening to and talking to the patient. That would not make more money for Silicon Valley, but it would lead to better diagnosis. Too often, doctors run a test rather than taking a detailed history of the patient’s past and present symptoms.
    Many doctors feel that, as a nation, we’re over-tested–just as we’re over-medicated. See Dr. H. Gilbert Welch’s excellent book, “Should I Be Tested For Cancer: Maybe Not and Here’s Why.”