OP-ED

Government (Or, How My Cousin the President Nearly Killed My Company)

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.

At the time of this drama, my fast-growing company employed hundreds of people in Massachusetts. But I could not get anyone on the state delegation to hear my plea. (It’s conceivable that my family name was working against me.) Finally, I located a congresswoman who would listen to me. It was Nancy Johnson, a Republican who had been representing her Connecticut district since 1983. She chaired the health subcommittee of the powerful House Committee on Ways and Means.

I walked into her office and saw the 69-year-old congresswoman sitting behind a desk. She was paging through an enormous sheaf of papers. That was the bill. Embedded in that piece of legislation were hundreds, if not thousands, of amendments, earmarks, and wrinkles added by one interested party or another, along with thousands of other details that just landed there by dumb luck. Other items, like the all-important clause “and Internet services,” were simply missing. It struck me as I watched her paging through this bill that my drama was only one of thousands, or even millions, that would result from this mountain of legislation. A single detail can throw lives, or entire companies, into a tailspin. It can reroute billions of dollars, turning winners into losers, and vice versa. Government is like the giant with an uzi. It means so well, but if it gets scared or sad or confused, it can squeeze off 80 rounds without even noticing the bodies falling around it. One single law can put technologies that should have disappeared a generation ago onto eternal life support and close the door on their superior replacements. Now, in the last day or two before the bill becomes law, Rep. Johnson was committed to limiting the damage. She was gamely attempting to filter out dangerous bits and pieces. It was exhausting work.

She asked me what I needed. I started my spiel. I went on about hardware and software, and the future of Internet-based businesses, and the importance of medical data traveling across networks. It was the key to efficiency, fairness, the economics of health care, research . . .

“STOP,” she said. “That’s too much for me. What words on what page?”

I pointed to the clause where it said “computers and software,” and asked her to add “and Internet services.” She did.

Danger averted. Our company would survive this bill.

But let’s consider this process for a moment. It has nothing to do with innovation or satisfying customers or delivering great results. It has everything to do with cultivating influence among politicians and regulators. To create a modern, caring and efficient health care economy, we have to create more spaces where entrepreneurs can compete in the marketplace—and not in the corridors of Capitol Hill.

Unlike many entrepreneurs, I had reason to feel comfortable in Washington. Even though I couldn’t call my presidential cousin for help, I had my political name, fancy venture firms behind me, and my equally fancy business degree from Harvard. That gave me the confidence—or hubris—to assume I could get in there and make a difference. I was an outsider with insider status. I’d guess that 90% of businesses that get blown up by government mis-steps, or even prevented from being born, are run by outsiders with outsider status. That is why it’s so hard for an activist government to be effective. It works with known players—while the future should be in the hands of unknown players working to make the household names obsolete.

The government, by regulating industry, actually ends up protecting the incumbents. Here’s how. Let’s say the news comes out that insurance companies are taking advantage of customers in an especially awful way. Because this a service that society views as vital, the government comes in and says, “Whoa, what’s going on in here?” Now the best thing to do at this point would be to make it as easy as possible for new entrants to come into the system and disrupt these guys—clean their clock, kill them, or at the very least force them to change. But instead the government looks to control them. They do this by writing up cumbersome regulations. These discourage newcomers from the market. Many of the best would-be competitors don’t employ a single lobbyist or lawyer. They take one look at a market regulated up the wazoo, and conclude, wisely, that they’re not built to play that game. They’re better off building a new video game or a dating app. So instead of making the bad incumbents vulnerable, the government leaves them fat, lame and stupid—but with formidable lobbying power. Since these companies employ a lot of people, they become untouchable.

This brings me to my favorite paradox. The industries we care about least innovate at the highest speeds, while those we hold deepest to our heart innovate hardly at all.

Jonathan Bush is Chief Executive Officer, President, and Chairman of the Board of Directors of athenahealth, Inc. This post is an excerpt from Chapter 4 of Jonathan’s new book, Where Does it Hurt? An Entrepreneur’s Guide to Fixing Health Care.

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Veolacheap wheatgrass juicerSteveofCaleyCurly Harrison, MDJonathan Bush Recent comment authors
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Veola
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SteveofCaley
Guest

It is worse, far worse than most people grasp. We are in the iron grip of Bureaucracy that Max Weber wrote about. The reason that entrepreneurs can thrive is hardly ever because of their brilliance, or the magic hand of Shopping, but that it takes a few years for classical 19th century business practices to catch up with them and drown them. The culture killed the USSR as certainly as Len/Stal did. In fact, Lenin was a HUGE advocate of American 19th century business practices – he really put them into effect! Our traditional bureaucratic and business ingenuity made the… Read more »

@BobbyGvegas
Guest

FROM THE AMAZON “LOOK INSIDE” SAMPLE I used Dragon to transcribe this little excerpt. “In the lumbering healthcare industry that we have come to know in the last half-century, information is a scarce resource. Patients rarely have access to the records. No one can hazard a guess as to what an operation, a medicine, or even a Band-Aid might cost. Keeping this information button and up benefits the incumbents, who thrive within what we might call and ignorance economy. Some, as we’ll see, are still attempting to control their local markets by limiting access to data. It sooner or later,… Read more »

Curly Harrison, MD
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Curly Harrison, MD

HIT is not fixing why is broke, and may be making it worse.

That the HIT vendors have been devoid of surveillance and regulation for the life of that industry, the level of innovation that we users see at present is pathetic. There is not any. EHRs and CPOE and CDS are impediments to individualizing care.

Regulation and surveillance can only improve the quality of the devices and up the ante for innovation.

Brian Baum
Guest

Vik – the proverbial glass is half full or empty. I haven’t given up yet. I think it is up to us to create a consumer health experience that is engaging and appealing to the mass market. There is no getting around the issue, the fact, that if you have the means you can access any level of healthcare. However, unless we can find a way to engage the average John and Jane Doe – to minimally be “health aware” – then we will put everything at risk. The tools are at our disposal – we “simply” need to package… Read more »

Brian Baum
Guest

There’s too much broke not to fix. – and on that point – certainly we all agree.

Vik Khanna
Guest

I submit that it is not fixable. At all. All we are doing, writing about and arguing about are band aids on a hopelessly broken system in which, like everything else in nearly all cultures around the world, if you are connected, educated, savvy, and affluent (like many if not most THCB devotees) you will (almost) always get what you want. Everyone else. Well, they get what they get.

Until we are willing to fix the tax code, campaign finances, Congressional pay and perks and other foundational issues, we are just tinkering.

Jonathan Bush
Guest
Jonathan Bush

God I love the dialogue! Entrepreneurism and innovation is happening in pockets of health care – too small of pockets, but it is happening. Whether the entry is easy or difficult, find your way into health care. There’s too much broke not to fix. See you on the frontier folks.

Brian Baum
Guest

My comments were not pro or con regulation. Regulation is necessary and we can probably all agree that healthcare is the most regulated industry. I suspect we all also agree the current track of healthcare is unsustainable. We spend more than any other country and from an outcomes and efficiency perspective get less. With that said, it is unlikely regulation = efficiency or stimulates innovation. For all the regulations within the industry a report issued by Journal of Patient Safety in Sept 2013, estimates that more than 400,000 people die each year due to preventable errors within hospitals. That’s the… Read more »

Saurabh Jha
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Saurabh Jha

I have one word for that Brian: culture. Not culture as in eating chicken tikka masala, but professional culture, safety culture, work culture.

What I see and really fear is that physicians are beginning to tune out. Call it regulation fatigue, a bit like alarm fatigue, physicians are losing their sense of proportionality, their sense of granularity.

I tune out as well when my wife reminds me of the chores I repeatedly dodge. But that’s temporary. Physician tune out, I fear, might become a permanent thing.

Vik Khanna
Guest

Good. Let’s hope the ones who tune out fastest and permanently are the ones like the ortho guy bragging in an essay a couple of years back that he makes $330,000 a year via referrals to an x-ray facility he owns. He doesn’t mention whether the films were medically necessary, added value, improved outcomes, enhanced the patient experience or anything else that a thoughtful reader might conclude was useful. But, it sure is nice to make the equivalent of six new S-class sedans every year for exposing your patients to radiation they didn’t need and then boasting about it. The… Read more »

Saurabh Jha
Guest
Saurabh Jha

There is a series of steps, very logical, that starts like this. Greedy doctors make a lot of money. Slash the pay and we will get rid of the Gordon Gekkos and enrich the profession with Dalai Lamas. Perhaps. But the action is at the margins where you will find doctors who want to earn and do a good job. So what happens is you neither get rid of enough Gekkos (because you over estimated how many were around) nor enrich with enough Lamas (because you severely over estimated how many were around). You’ve driven the middle of the road… Read more »

Saurabh Jha
Guest
Saurabh Jha

“Regulations attempt to keep us safe, you’d be the first to reach for a lawyer if you were hurt by someone not following regulations.” Actually, people blindly following rules and craving more rules scares the living daylights out of me! And the trouble is that you might not be able to sue someone for messing up for following the rules and suspending judgment and common sense. 100 % oxygen leads to blindness in neonates. This doesn’t mean oxygen is useless. Yet, if one responded to the caution that 100 % oxygen is dangerous with “what, you want to die of… Read more »

Peter1
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Peter1

“1. Regulations are necessary. 2. Over regulation is dangerous.
Really, it’s that simple.”

If only it was that simple.

Saurabh Jha
Guest
Saurabh Jha

Of course it’s not that simple in practice.

The large players want more regulations, because they know they have the economies of scale to overcome the bureaucracies of scale, and others don’t.

The frightened mobs want more regulations to keep them safe from the monopolists.

This is Greek Tragedy 2.0: the American version.

Saurabh Jha
Guest
Saurabh Jha

“Moreover, this is what is known as Snarky Rhetorical Pushback, not literalism.”

You have a generous supply of unintended irony! And it certainly helps as I’ve just been subjected to a miserable movie for the last couple of hours.

I like hyperbole.

By evil capitalism I assume you mean those rapacious start ups dodging the employer mandate that’s no longer a mandate.

Government deliver us from such evil!

And to think there was once a frontier spirit!

@BobbyGvegas
Guest

“And to think there was once a frontier spirit!”
__

An imaginary romantic, bucolic time long gone. It was actually Nasty, Brutish, and Short, by all objective historical accounts, as has been the bulk of recorded human history.

“evil capitalism”?

Point me to where I said that. And unlicensed blog commentary psychoanalytic imputations don’t count, Saurabh.

@BobbyGvegas
Guest

“I veer towards over estimating the intelligence of the discussants”
__

Flatter yourself, by all means.

Saurabh Jha
Guest
Saurabh Jha

It is you I’m trying to flatter. Although I can see how you might feel damned by faint praise.

Saurabh Jha
Guest
Saurabh Jha

“It was actually Nasty, Brutish, and Short”

It was that as well.

“Point me to where I said that.”

Two can play the game.

The bottom line from this piece is that regulations hurt the entry level entrepreneurs.

You won’t hear the CEO of Goldman Sacks complaining about regulatory complexity.

You may disagree with the premise, and I would be eager to hear a well thought out argument why so, one that doesn’t descend in to you’re with me or the the Tea Baggers and birthers (they get a painfully boring after a while) but surely you get the premise?

Peter1
Guest
Peter1

“The bottom line from this piece is that regulations hurt the entry level entrepreneurs.
You won’t hear the CEO of Goldman Sacks complaining about regulatory complexity.”

That’s just a fact of life – those there first always have the advantage. Would you disband regulations for newcomers to level the competition?

Your assertion that “regulations” hurt is meaningless. The discussion is what regulation and why and who would it hurt if not in place.

Regulations attempt to keep us safe, you’d be the first to reach for a lawyer if you were hurt by someone not following regulations.

Saurabh Jha
Guest
Saurabh Jha

JHC! How hard did you have to suspend cerebral activity to totally miss the point here!

“Your either with 100 % regulations or Genghiz Khan.”

That sums up the gist of your sentiment!

I lost my binary approach to thinking shortly after losing my Babinsky reflex. Actually, I envy your Manichean approach to thinking. It does make life a little simpler!

@BobbyGvegas
Guest

You’re the one who made the unequivocal assertion and hyperbolic extrapolation. Not me. Talk about “binary.” Don’t put words in my mouth, kindly spare me the False Dilemma fallacy. You haven’t summed up anything. Sorry.

Saurabh Jha
Guest
Saurabh Jha

There’s either willful ignorance or constitutional ignorance. I’m going to give you the benefit of the doubt and assume the former.

The only premise to be debated here is whether the intensity of regulations have any negative effect on innovation, or is it just more the merrier, ad infinitum.

(if the Bush name is giving you a Pavlovian reaction, I can link to other thought leaders in the field).

@BobbyGvegas
Guest

I can get along just fine without your patronage.

@BobbyGvegas
Guest

“The only premise to be debated here is whether the intensity of regulations have any negative effect on innovation, or is it just more the merrier, ad infinitum.”
__

Perhaps you should have stated that at the outset.

Saurabh Jha
Guest
Saurabh Jha

I didn’t feel the need.

There again, I veer towards over estimating the intelligence of the discussants, rather than under estimating.

@BobbyGvegas
Guest

“Yeah, you’re right. Let’s just do away with all regulation. Private markets, as we have all seen yet again recently, are utterly self-regulating.”
__

Moreover, this is what is known as Snarky Rhetorical Pushback, not literalism.

Saurabh Jha
Guest
Saurabh Jha

Great piece. This is basic epistemology that some people don’t ever understand.

Regulations not only raise the fix cost of business, they dull imagination.

They reduce the space in which intractable knowledge can operate.

They reduce the frequency with which the dice is rolled, which is the key to creative destruction.

If they had been present to this extent in 1903, the Wright brothers would have probably been in some planning commission, charged with planning the next plan to plan the working committee for the development of the first flight.

@BobbyGvegas
Guest

Yeah, you’re right. Let’s just do away with all regulation. Private markets, as we have all seen yet again recently, are utterly self-regulating. And, courts? We don’t no need no steenkin’ Unelected Judges interfering in the productive, unfailingly beneficent miracle of free markets, indulging all these “frivolous” torts and criminal actions. Seriously? That’s the most naive thing I’ve read all day. Human affairs get regulated one way or another. By the peoples’ government or by corporations (oh’ scuse me, I repeat myself these days), or at the point of a weapon. What have I missed? Those ARE in fact the… Read more »

Brian Baum
Guest

Peter1 – of course the question “half dozen companies” was rhetorical. The reality is one company cannot change the course of the industry – but hundreds or more will. Innovative companies across the industries many sectors are stepping up.

Those, like athenaHealth, that do not step up will be disrupted by the masses that do.

Brian Baum
Guest

Rob – the challenge is the inefficiency is everyone’s problem but no one’s responsibility. If athenahealth compromises they risk a perceived competitive advantage. The CommonWell Health Alliance was established in 2013 to promote system interoperability. A year later Carequality was launched with a similar mission. But that is akin to the fox guarding the hen house. Has the entire three trillion dollar health industry abdicated the future of the industry to electronic record companies – and then only the largest companies of the sector? Are a half dozen companies “neutral” enough to shape the information future of healthcare? My company… Read more »

Peter1
Guest
Peter1

Will the disrupter crazy Athenahealth step up?

“Are a half dozen companies “neutral” enough to shape the information future of healthcare?”

Seems the FCC has to consider if giving a “half dozen companies” control over internet access speeds is “neutral” enough” You can’t run a political campaign on neutral companies – how are you going to run a health care system and satisfy “neutral” donors.