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?
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.
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…
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.
Monday’s WSJ (online now) features an exceptionally important and courageous op-ed by Harvard professor (and frequent co-author of mine, although not in this case) Tom Stossel, discussing a rule within recently enacted healthcare legislation with the Orwellian title, “The Physician Payment Sunshine Act,” focused on physician/industry relationships.
Taking its name from the assertion that “sunshine is the best disinfectant,” the Act apparently aims to help disinfect physicians who might be contaminated by industry contact, an interaction the Act seems to assume is intrinsically corrupting — in stark contrast, one suspects, to the many other activities in which physicians engage, and the many other factors in their environment that might influence their behavior, as Stossel and I previously discussed here and here; see here and here as well.
To restore physicians to their baseline state of virginal professional purity, the Act mandates a stultifying series of reporting requirements, impacting amounts as little as $10. While such reports may be a Pharmascold’s wet dream, they are a logistical nightmare for the physicians involved, and serve to create an enormous compliance bureaucracy for everyone.
My recent experience at an innovation symposium at Duke University, as well as my frequent informal conversations with academic physicians at other leading institutes, suggest the increasing bureaucratic hurdles confronting university physicians seeking to strengthen the essential translational relationship between academia and industry are a particularly unfortunate problem, and are having the presumably intended effect of stifling these interactions. Young physicians worry that the burdensome requirements are overwhelming, while senior leaders seek desperately to avoid the inevitable media takedowns predictably led by the NYT, public radio, and the rest of the usual suspects. (Not infrequently, these stories seem to originate with material selectively provided to a sympathetic journalist by a plantiff attorney — but of course, nothing cozy or sketchy here….)
While working away on my laptop at a hotel breakfast, I couldn’t help but overhear the four gentlemen poring over an iPad two tables way. Their intense discussion revolved around rolling out their high-tech prototypes in a medical care complex. Since I’ve written about prototypes and prototyping, I couldn’t help but eavesdrop.
The foursome represented a mix of medical care complex personnel and what was clearly an entrepreneurial innovator with a potentially high-impact idea. I’ll skip the technical details, but this was clearly a sophisticated group who were both smart and ambitious. The prototypes were their gateways to success. Their debates included whether it made more sense to field one or two more “finished” prototypes or whether they could get more information more quickly by fielding “roughs.” Were “staggered roll-outs” more cost-effective than “staggered builds”? They talked about the need to be able to “patch” quickly and whether their prototypes should optimize particular subsystems or overall system performance. They argued timelines and sequencing for test.
These questions are classic and it’s always fascinating to hear how — and what — decides them. Getting great value and insight from prototypes and pilots is more an art and craft than a science. Successful tech prototyping in health care contexts is particularly demanding.
That’s why the more passionately they spoke, the more nervous I got. Something was missing. Whenever innovators gather, I always listen for what’s not discussed. In almost 50 minutes of detailed discussion (yes, I am that kind of eavesdropper), I heard not a single mention, reference or allusion to the challenge of training the people onsite on how best to use or learn from the prototype. Details of prototype design and roll out were discussed as if the medical care personnel were irrelevant to the process. It reeked of “over the wall” technology transfer. OMG.
If you’re a hammer, you just want to smash nails; if you’re a programmer, you just want to build features. But features do not a successful product make. This is the central myopia that eventually blinds even the most brilliant engineer-entrepreneurs, unless they’re smart enough to surround themselves with people who can check their bias.
If you want an interesting example of this phenomenon, look no further than Adam Bosworth, the co-founder and chief technology officer at San Francisco-based health gamification startup Keas. There’s no question about this guy’s brilliance. At Citicorp in the late 1970s, he invented an analytical processing system that helped the bank predict changes in inflation and exchange rates. At Borland, he built the Quattro spreadsheet, and at Microsoft, he built the Access database. He was one of the first to propose standards for XML—the foundation of most Web services today. At Google, he helped to develop Google Docs before moving on to start Google Health.
But as everyone knows, Google Health was a failure—and so was Bosworth’s next effort, Keas, at least until the venture-backed startup went through a dramatic pivot in 2010. How Bosworth figured out that his old approach wasn’t working, and how Keas reinvented itself as a provider of health-focused games for large employers, is the tale I want to tell you today.
I’ve had the luck to attend medical school in the city of San Francisco during what will be looked back on as the start of transformational change in our health care system. My growing interest in technology and new business models as the disruptive forces behind this change, as well as marriage to a technology entrepreneur, has me frequently rubbing elbows with movers and shakers in the digital health space. One question I constantly receive (other than how I feel about being replaced by a computer) is how to get ideas and products in front of practicing physicians for product feedback or to test the market. Even more commonly, I’m asked why we are so resistant to technology and change in the way we practice. My reply usually takes some form of the following.
1. Show us the data.
The robust system medicine has developed for testing innovations in clinical care, disseminating these ideas, and transforming practice standards is being entirely overlooked (or alternatively scoffed at for being too cautious and slow) by most entrepreneurs. We insist on data to show that the newest pharmaceutical drug, procedure, or implantable device is safe and at least as efficacious as placebo, (and due to comparative effectiveness, this may soon become as compared to the standard of care). It should not be any different for an EKG iPhone app I use to rule out a myocardial infarction in your mother, or a motivational weight loss app the patient invests days of their time into with no results. These are not restaurant recommendations where a failure means bad sushi. These are people’s lives and well being, and we feel it’s unethical to start recommending unproven products.Continue reading…
The solution to the nation’s long-term deficit problem is generally portrayed as a choice among sharp budget cuts, major tax increases or a combination of the two. Given the magnitude of the problem, some level of sacrifice is probably unavoidable. But there is a third, overlooked approach to major budget savings — innovation — that the new congressional supercommittee should also include as a key component of its deficit-reduction strategy.
Innovation in this case is the process of trying a range of promising approaches and using rigorous evaluation methods to determine which of them really work. In many areas of the economy — such as information technology, agriculture and manufacturing — innovation has often identified ways to both reduce cost and improve performance. This has led to amazing progress over time, including exponential gains in computing power over the past half-century at a steadily decreasing price. So a logical question is: Can innovation in policy produce more effective government at lower cost?
The answer is yes. There are proven examples, from U.S. welfare policy and other areas, where innovative reforms produced major budget savings while simultaneously improving people’s lives. This suggests that part of the answer to our deficit problem lies in American ingenuity and not just sacrifice.
Blueprint Health is a specialist health IT incubator that just opened its doors this week and selected its first group of startups who get $20K each and a chance to hang in a nice art gallery in Soho that’s opening officially Thursday (FD Health 2.0′s NY city team will be moving in too). You can read more at Techcrunch and see the HUGE list of mentors here (I was thinking of throwing my hat in the ring until they told me it involved work!). But I wanted to ask Brad Weinberg & Mat Farkash, the founders, what was so special about Blueprint, so Mat told me:
Matthew H: Describe the Blueprint program
Mat Farkash: Blueprint Health is a New York based health-focused accelerator that is a Charter member of the TechStars Network. Blueprint Health kicked off its three-monthWinter program on January 9 in its 12,000 square foot office in SoHo and will also host a summer program in 2012. The program is a heavily mentorship focused, providing teams with access to over 120 mentors, all of whom have experience in the healthcare industry, including many physicians and health providers.