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Tag: Startups

The Creative Destruction of the News Business and Other Weird Stories

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.

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Medicine’s Tech Future: the View from the Valley

A few quick impressions from last week’s FutureMed extravaganza put on by Singularity University at the Museum of Computer History, a stone’s throw from Google’s Mountain View headquarters.

The event featured an exhibition session where emerging digital health companies (with some others) demo’d their initial products, followed by a plenary session introduced by FutureMed Executive Director (and former MGH medicine colleague) Daniel Kraft, and featuring presentations to the packed house by several leading innovators – including one of the developers of IBM’s Watson, which is pivoting from Jeopardy to clinical medicine.

Given the high density of reporters there – to say nothing of innovators, would-be innovators, VCs, and assorted poseurs (categories not mutually exclusive) – I expect there should be lucid coverage available elsewhere on the web.

Instead, I want to capture the three sequential reactions I had, which strike me as somewhat analogous to Haeckel’s Law (ontogeny recapitulates phylogeny), as each response seems to reflect a distinct stage of professional development.

The inevitable initial, and most visceral reaction to this sort of event, is that technology is wicked cool, and will deliver us all; I think this two minute introductory video captures the vibe more effectively than any description I could offer.   I’m also certain any student of semiotics would find it especially rewarding.

Accordingly, even much of the informal discussion at the event seemed to revolve around Big Questions, lofty ideas, and the Next Big Thing.  New technologies and approaches – artificial organs from stem cells!  Computers that can read your mind! Bottom-up innovation!  Exponentials! – were discussed expectantly, the key question being not if, but when.  The remarkable progress many in the tech crowd had seen in other disciplines suggested that technology advances in health would be similarly achievable, and just as inevitable.

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Startups: The Other Health Technology Revolution

These days my physician colleagues and I are up to our necks in a health technology revolution.  To be honest, its not as captivating as Pinterest or socially-engaging as a Google Huddle but to be sure your life will depend on it.  The revolution ushered in by electronic health record (EHR) is less about the technology than the widespread impact it will have on patient care.  Rather than digging through stacks of paper charts, your doctor will have ready access to all of your health history on a digital device.  And not just your health history, soon I will be able to combine it with the history of other patients in my practice: the digitized data will allow me to track the childhood obesity rate in my clinic and trend it over time with just a click (or tap).  But look out, there are glimmers of another emerging health tech revolution.

I recently attended the Health Innovation Summit organized by Rock Health, a seed accelerator for health startups based in San Francisco.  Coming from the bureaucratic and comparatively stagnant world of health care systems, this event made me feel like I could dream again.  Speakers provided pearls of wisdom for an engaging design.  Panels offered strategic advice to attract VC and Angel funding.  Most exciting was the chance to hear from entrepreneurs, each of whom offered their own incremental solution to improve health.

Take something like Cardiio, which measures heart rate in a few seconds by scanning your face.  Imagine how future related technologies could replace monitoring wires and tubes thereby improving comfort during a hospitalization and reducing hospital acquired infections.

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Context Is Everything

A few weeks ago, I had the opportunity to talk with an innovative company about a new product.  I make it a policy not to endorse any particular company or product on this blog, so this is not an endorsement.  Rather it is a fascinating story that tells us lots about human nature and gives us clues on how we should design healthcare programs, apps, etc. as we move into the world of patient engagement and accountability.  And we are moving there. Whether your focus is achieving meaningful use of your EMR (increasingly we’re going to be graded on how we engage our patients in this regard), the journey to becoming an Accountable Care Organization (as we enter an environment where we’re compensated for quality and efficiency, patient engagement becomes key) or simply that you realize that we don’t have enough healthcare providers to take care of all those folks who need it (in this case, patient engagement becomes a tool to give patients the opportunity to be their own providers, taking work off of our beleaguered primary care workforce), patient engagement is all the rage.

Right out of the gate, we health care providers have a big hill to climb.  We are the ones who remind you that you are sick. Who wants to be engaged with that?  Once patients get into the mindset of being sick, the context becomes pain, suffering, inconvenience, depression, time out of work, rehabilitation, and on and on. It’s no wonder that patients don’t engage much (other than the occasional masochist among us).  And the conversation immediately gravitates to whether insurance will pay or not. We’ve observed patients in our connected health programs who are happy to go to the sporting goods store to fork over their own money for a heart rate monitor so they can watch their heart rate during a work out, but baulk at paying for a blood pressure monitor to be part of a hypertension program.  After all, fitness is your own business, but when we’re talking about sickness your insurer owes you ….

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The Emperor’s New Social Network

You can’t get much cooler than HealthTap: slick Silicon Valley start-up, social media darlingsavvy and successful backers. But when you closely examine the service HealthTap actually provides, the money and good looks fall away. Like in the fable about “the emperor’s new clothes,” behind the buzz, there’s nothing there.

OK, maybe one thing: a really risky way to get medical advice.

Here’s how a Feb. 4 New York Times article described the company’s website:

[U]sers post questions and doctors post brief answers. The service is free, and the doctors aren’t paid. Instead, they engage in gamelike competitions, earning points and climbing numbered levels. They can also receive nonmonetary awards — many of them whimsically named, like the “It’s Not Brain Surgery” prize, earned for answering 21 questions at the site.

Fellow physicians can show that they concur with the advice offered by clicking “Agree,” and users can show their appreciation with a “Thank” button.

So far, so good. But there’s more. The professional credentials of the physician answering your question, such as a board-certified specialty, are not available on the site. Instead, you get a crowdsourced “reputation level” built up by accumulating HealthTap awards, by  clicks of approval from other doctors and by other measurable activities at the site.

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The Perfect Storm For Innovation

In my career, there have been a few perfect storms, defined as “a confluence, resulting in an event of unusual magnitude”.

When I was an undergraduate at Stanford University in 1980, two geeky guys named Jobs and Wozniak dropped by the Homebrew Computer Club to demonstrate a kit designed in their garage.   IBM introduced the Personal Computer and MSDOS 1.0.   I purchased an early copy of Microsoft Basic and began creating software in my dorm room including early versions of tax calculation software, an econometric modeling language, and electronic data interchange tools.   Every day brought a new opportunity. The energies of hundreds of entrepreneurs created an industry in a few intensely creative months that laid the foundation for the architecture and tools still in use today.   A guy named Gates offered me a job and I decided to stay in school instead.

In 2001 when I was first hired at Harvard, a visionary Dean for Medical Education, a supportive Dean of the Medical School,  talented new development staff, and a sleepless MD/Phd student came together to create one of the first Learning Management Systems in the country, Mycourses.   Robust web technologies, voice recognition, search engines, early mobile devices, and new multi-media streaming standards coincided with resources, strong governance, and a sense of urgency.  Magic happened and in a matter of months, an entire platform was created that is still powering the medical school today.

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Do Something Really Innovative In Health: Crowdsource Problems, Not (Just) Solutions

Businesses exist to solve problems, right?  Certainly, this is the heart of the classic entrepreneurial model: you become obsessed with a particular problem, and create a business to solve it.  Example: eBay was created by Pierre Omidyar to solve a perceived problem with inefficient markets, and since its inception has generally focused on doing exactly this.

Most enterprises are not blessed by such a coherent focus, at least not for long.  More often, organizations – including university research labs as well as for-profit businesses – have a point at which they realize that their challenge has changed, and the problem they thought there were going to solve has shifted or even completely disappeared.  The team – often an impressive group of people representing a wide range of capabilities — is then left to figure out what to do.

While disbanding is always an option, it rarely seems to happen, at least volitionally.  Businesses, projects, academic enterprises – all are obsessed with their own survival, which rapidly becomes the defining mission.  As a result, the organization urgently tries to figure out a way to pivot, a way to apply established resources in a different, useful way as it searches for a purpose to justify its existence.  Very often, the question becomes: what should we do – what problem should we solve?

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Nimble Medicine

In a piece for the New Yorker, Dr. Atul Gawande outlined how, early in the 1900s, more than forty per cent of household income went to paying for food and food production consumed roughly half the workforce. Beginning in Texas, a wide array of new methods of food production were tested. After many pilots, tests and information dissemination, food now accounts for 8% of household budgets and 2% of the workforce. As a wide array of small innovations ultimately led to the transformation of farming, so too is a rapidly building wave of innovative new care and payment models leading to similar breakthroughs in healthcare. I call this Nimble Medicine.

Until recently, attempting a new care or payment model meant long planning and development cycles. The cost and complexity of testing new models prevented many from being tried. Even today, the leading HealthIT vendor is known to charge $100 million and up for its software. Amazingly, they require three months of training before they even let people administer the software.

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The X Questions

Ten existential questions will make the difference between stumbling into the future and thriving

The questions have changed. The key strategy questions that the C-suite must be asking—and getting answers to—are different now than they were in the past, even from what they were last year. Most of today’s health care CEOs and C-suite leaders are missing many of the key questions they need to ask to drive strategy now, this year, this budget, in order to survive the next three to seven years. Which ones are you missing?

A New Mind-set

Today and for the next few years the weather of this industry will be dominated by pervasive, discontinuous change. Structures, revenue streams, relationships of every level: All are shifting in fundamental ways. Specifically, the weather will be driven by:

  • invention and propagation of new business models;
  • shifting risk onto both the provider and the patient, accompanied by building of new risk-based relationships, contracts and alliances;
  • smart primary care coming to the fore as the foundation of health care, driving most business models;
  • digitization and automation going wall to wall and beyond the walls—accompanied by powerful new info-capacities, from “big data” strategic analysis to new ways of reaching and bonding with customers; and
  • a striking new need for efficiency and effectiveness in response to rapidly rising demand as the baby boom ages, the baby boom health care workforce ages and disengages, and the newly insured increase their use of health care facilities.

Most of these factors, except the very last, are not dependent on the health care reform act, and will not change much if the act is altered or set aside.Continue reading…

The Entrepreneur’s Dilemma

Last week Steve Case wrote an Op-Ed in the Washington Post called Give entrepreneurs room and they will grow the economy.  For those not familiar with him, Case was the original founding CEO of AOL and he has been an active healthcare investor, among other things, for the past 7 years.  My firm, Psilos Group, is a co-investor with Case’s Revolution Health Fund in a health services company called Extend Health.

Anyway, it was a very good editorial and one of the statistics within it particularly stood out to me in light of my venture capital role:  firms less than five years old have produced 40 million American jobs over the past three decades–accounting for all of the net new jobs created in that period.  That is a pretty stunning fact and also one that really makes a person scratch their head about current U.S. policy towards start-ups.    It is worth watching this Kauffman Foundation 3 minute video which is very instructive about start-ups and job creation.

Nowhere is this issue more relevant than in the healthcare industry, which conveniently happens to be the only thing I know anything about.  In a world where there is no way out of the healthcare crisis except through the innovation of new ideas to solve our healthcare problems, young companies are the golden ticket to new employment.

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