I 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.