Dial Back The Hype

I like health Web sites and tech start-ups. I think the democratization of medical information is a beautiful thing. It’s a cliche that you can find out more about a hotel than a doctor with a few Google searches. I love how that’s starting to change. I also think that electronic medical records will improve health care over the long haul.

But I am also cynical about the idea that technology is some sort of panacea all that ails the sector. I read Michael Lewis’s book The New New Thing when it came out in 1999. There’s a great anecdote in it about Netscape founder Jim Clark. He was looking for another big challenge and decided–this was 1996–that all that was missing from health care was good software. So he started Healtheon. To Clark it was just a matter of writing some really good code and all the inefficiencies and paperwork that bedeviled the industry would go away. His business plan was a flow chart showing how software cuts out paperwork. It was simple.

Flash forward and Healtheon is buried somewhere deep inside WebMD. There’s still a lot of waste and paperwork that hasn’t gone away.

Since Clark there has been a parade of other ambitious health-tech entrepreneurs. Do you remember the search engine Wondir? Or the comparison-shopping site Vimo? Or Carol.com? How about Steve Case‘s modestly named Revolution Health? What about Subimo?

Just like Healtheon they all failed to catch on, much less “fix health care.” Castlight is a more recently hyped entry in the field. Another is John Doerr‘s company Essence Healthcare. HealthTap is another one that’s gotten buzz.

Though people keep trying, the track record of trying to “solve” health care the Silicon Valley way is fairly uninspiring.

That’s why I cringed this week when I saw another company–and another reporter–fall into the “if we Webify health care we can fix it” trap. The Times profiled ZocDoc, a New York start-up that has raised over $90 million from big names like Amazon’s Jeff Bezos. Its business is an interesting one. It’s like OpenTable, but instead of helping you get a restaurant reservation, you use it to get an appointment with a doctor.

But here’s the money quote from the article that made me shake my head:

“We’re one of the companies that can help fix the health care system,” said Dr. Kharraz, a physician and ZocDoc’s chief operating officer. “We’re making doctors more efficient and helping patients find the hidden supply of health care.”

Uh oh. Why go there?

ZocDoc has a cool service that’s attracting doctors. It will hopefully make some money for its investors. But why does it also have to “fix the health care system?”

There are lots of interesting debates about whether our health system is broken, if so why, and how to make it higher quality, lower cost, less wasteful, and so on. But I promise you that nobody having these debates has pinpointed the inability to get a doctor’s appointment as part of the problem.

So why do start-ups fall into this trap of promising to fix health care? I have a couple theories.

The Apple Effect There’s an unofficial requirement that tech companies can’t just build a great product. They also have to make the world a better place. Remember how Steve Jobs recruited John Sculley from Pepsi by asking if he wanted to spend his life “selling sugared water? Or did he want to come with me and change the world?” The punch line, of course, is that Apple has changed the world. But that kind swagger has also raised the bar. Every other tech company must act like it’s doing something more than just engineering a cool product.

Everybody In The Industry Must Be A Reformer When you’re in health care, changing the world means “fixing it.” I’m someone who thinks that our country’s health care system works better than any other and that the crisis has been vastly overstated. But I’m in the minority. We wouldn’t have just passed a $1 trillion health reform bill. So if you are an entrepreneur it’s tempting not just to “change the world” by making doctors offices run a bit better. You shoot higher. You will fix the world! Apply the same rhetoric to OpenTable and the food business and it sounds kind of silly.

Overzealous Tech Reporters Usually technology reporters, not health care reporters, write these hyped up stories. They need a hook for why the company will be the next Facebook or Google. Health reform is staring right at them. They may get the quote simply by asking over and over again the “fixing health care” question. And for whatever reason, there’s little effort to hold previous companies accountable that had the same ambition.

Health Care Is Analogue Medicine is easy to diss for being a Luddite field. Doctors don’t use email like other professionals. The paperwork is out of control. Hospitals are big, messy service businesses. There’s a feeling that any service can be better with technology.

This diagnosis is true. But the cure is not necessarily as simple as adding software. (Although that is happening with the widespread implementation of electronic medical records.) What’s harder to grasp is that health care is not just a service. It’s an experience. And while many services can be replicated online, human experiences can not. There’s no real electronic replacement for being seen by your doctor. When you take a pill you can’t do it over the Internet. You obviously can’t get virtual surgery.

So it’s true that you can point a finger at health care and say it lacks tech. But it’s not because the technology doesn’t exist. It may be that technology doesn’t really fit. To make a comparison to another “experience sector”: the Web also can’t replace a vacation. It can enhance it, perhaps. But it’s a human experience existing in three-dimensional space.

Going After Bricks & Mortar Many of these health-tech start-ups have looked at a big hospital, or a doctor’s office, the same way Amazon.com once looked at Barnes & Noble. Make the industry faster, chaper, more transparent and disaggregate the market–and you’ll win. (I’m in favor of all those things, by the way.) But in health care it hasn’t been an easy road. Just ask Google, which had to shut down its Google Health product last year after nobody found much utility in storing their health information online. Microsoft HealthVault may be next.

If I were working at one of these health start-ups I’d be careful not to over-hype what I’m doing. (And not just because I’m a superstitious, jinx-minded guy.) I think health care needs more entrepreneurs. But a team of engineers coding all night, no matter how smart they are, how well they’re funded, how much publicity they get from the tech press, or how high their ambitions–is not going to “fix” health care anytime soon.

Matthew Holt, who hosts the Health 2.0 conference and has followed this space more comprehensively and for much longer than I have, makes a similar point in an article he wrote this week on THCB.

He was taken aback recently by the hype surrounding a start-up called CareZone. It appears to be a private Facebook for people taking care of sick loved ones to store information. It also has a certain hubris and a big-name founder from the software industry. It might turn out to be great. But as Holt writes convincingly: don’t act like this kind of thing hasn’t been tried before.

David Whelan is a contributing editor at Forbes, where he was a staff writer for 8 years covering health care payers, providers and policy. He’s currently studying and working in hospital administration. Follow him on Twitter @WhelanHealth

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  2. My only real concern about Zocdoc’s model is that while Opentable IS the scheduling function inside the restaurant, for 90% of practices that function is done by a practice management system. which also do billing/payment, and a whole lot more. Those systems are more and more cloud based and most could easily add a patient interface or have already done that, They cost about $2-400 a month now–so adding another $250 a month for another booking system seems unlikely to be sustainable unless it comes with a guarantee of several new patients per month….which is why apparently doctors are joining

    And I hate to throw stones as I like the service but if you live in San Francisco and want a pediatrician on ZocDoc, they want you to drive 15-60 miles away…. so plenty of work to be done on their network

  3. Physicians are the “center of the universe” in our system and if ZOCDOC can scale, expand their service line, and most importantly remain relevant through payment & access reform they do have a chance to make a great overall impact. Moving from appointments to other services would be required (the 3Rs – 60% of all calls – referrals, refills, results).

    They are moving at a good clip and have several patents pending to lock down this space (if they pass..(?)). Unlike some of your example, ZOCDOC has a pretty extensive LOCAL sales and support team in the field.

    However, a $250 per doc per month price point leaves a wide pricing berth for others to chip away market share on a tactical per market level.

    Rarely does anyone come up with any “new” ideas – equally as rare is someone who can execute – ZOCDOC has executed.