THCB reader and occasional contributor Dave Chase had this to say about Bill Crounse, MD’s recent post “Why the Creative Destruction of Healthcare May Not Be a Good Idea.”
“There is no doubt there are some obnoxious people throwing around arrogant/naive ideas. However, the “creative destruction” and “disruptive innovation” that has been most impactful has come from physician-entrepreneurs. Often, they are the most provocative and hard-hitting in their language.
It seems loosely similar to how the most virulent anti-smokers are former smokers. They want others who they can relate to experience the liberation they’ve experienced.
I wouldn’t assume ill-intent from these MD-entrepreneurs using direct language. They simply were fed up with what they experienced as “broken” and stepped up with approaches that have out-performed.
I’m thinking about the MD-entrepreneurs and innovators who have led CareMore, Nuka Model of Care, Qliance, Iora Health, MedLion, Healthcare Partners, etc. Sometimes to catalyze change, one must use stark, hard-hitting language.
That doesn’t seem like a foreign concept to the many excellent MDs I’ve known over the years. I have enormous respect for any entrepreneur, especially one coming from tradition-bound professions who are willing to stick their neck out and endure enormous personal financial risk.
Bob Margolis shared how his colleagues referred to him as a “communist” and his team-based model as “communism” yet Bob’s org achieved far better outcomes. He had the last laugh when that “communist” sold his business for $4.4B last year.
The comments from these MD-entrepreneurs is they feel they aren’t doing their MD friends any favors by candy-coating what is widely recognized as a system that isn’t close to reaching its full potential.
In contrast, the orgs those MD-entrepreneurs are running are the reigning “Triple Aim Champs” that we should celebrate — colorful language or not. Often the most impactful entrepreneurs aren’t particularly “polite” in their language — Steve Jobs, Bill Gates, Larry Ellison et al called it like they saw it.
What’s wrong with that?”
It’s been over a month since I joined the ranks of the unemployed and started building my new practice. For not having a job I’ve kept very busy. Here’s what I’ve done.
I presented the idea of my practice to about 150 people.
It was a wonderful experience, and was quite emotional for me seeing a bunch of patients in one place. The reception was wonderful. I was hoping to get a video of this up, but the fates were fickle and it was not possible.
I wrote a business plan
My accountant didn’t even laugh when I showed him. The idea was to look ahead at my months ahead and see when things would become profitable. There are a bunch of huge questions that my affect this: how many staff I have, how many patients I have, what it costs to upgrade my office space, but I did a worst-case scenario (short of the Zombie Apocalypse) and the fact that my overhead is low makes it easy to be profitable quite quickly.
I got a location for the practice.
Today I went through the building with a designer and am working on getting it ready to use. I am not doing the whole renovation at the start, as I won’t really know what the practice will need until it’s up and running. I want it to be very comfortable and welcoming. Most doctor’s offices are not places that say “welcome” to patients, but that’s what I want to convey.
I set a fee schedule.
· Age 0-2: $40/month
· 3-30: $30/month ($10/month if they are away in college)
· 30-50 $40/month
· 50-65 $50/month
· 65+ $60/month
Family maximum will be $150/month
Health system CEOs would be well advised to study what newspaper industry leaders did (or perhaps more appropriately, didn’t do) when faced with a dramatic industry change. Turn back the clock 15 years and the following dynamics were present:
- Newspaper leaders knew full well that dramatic change was underway and even made some tactical investments. However they didn’t fundamentally rethink their model.
- Newspapers were comfortable as monopoly or oligopoly businesses allowing for plodding decisions. Their IT infrastructure mirrored the plodding pace with expensive and rigid technology architectures.
- Newspaper companies bought up other newspaper chains and took on huge debt.
- Owning printing presses was a de facto barrier to entry allowing newspapers unfettered dominance.
- Depending on one’s perspective, it was the best of times or the worst of times to be a leader of local media enterprise.
Before they knew it, owning massive capital assets and the accompanying crushing debt became unsustainable. The capital barrier to entry transformed into a boat anchor while nimble competition dismissed as ankle-biters created a death-by-a-thousand-paper-cuts dynamic. Competitively, newspaper companies worried only about other media companies or even Microsoft, but their undoing was driven by a combination of craigslist, monster.com, cars.com, eBay, and countless other marketing substitutes for their advertisers. In addition, there were easier ways to get news than newspapers. Generally, the newspaper’s digital groups were either marginalized or unbearably shackled so that the encumbered digital leaders left to join more aggressive competitors. The enabling technology to reinvent local media didn’t come from legacy IT vendors who’d long sold to newspaper companies, but from “no name” technologies such as WordPress, Drupal and the like.
Recently ZocDoc had a huge funding round demonstrating the success that they are having. There’s a number of lessons learned from ZocDoc’s experience. Unfortunately, many haven’t demonstrated Zocdoc’s wisdom leading to a large number of healthtech failures. A recent study highlights this phenomena. After interviewing 110 digital health entrepreneurs, RockHealth recently released its study Rock Report: State of Digital Health demonstrating the disconnect between the startups getting funding and what many startups are pursuing. This disconnect is the last and most important reason healthtech companies have failed that are detailed below. The following are the top reasons why healthtech companies have failed or had to do major pivots in order to survive:
Lack of Specific Focus or Adoption point
It’s well documented that a lack of focus kills startups whether they are in healthcare or not but it is particularly prevalent in healthcare. The diversity of opportunities in healthcare is so great that it’s tempting to try to solve it all. These startups are ignoring the old saying about how to eat an elephant — one bite at a time. Too many startups are trying to swallow the elephant whole.
Expected consumers to pay
With the exception of weight loss programs, there aren’t many examples of consumers paying directly for health services. Over time, this is likely to change as more of the burden of healthcare costs gets shifted to consumers as was highlighted in a Healthcare Disruption series (see links below). However, I’d be very cautious about any business expecting to have consumers pay in the near-term.