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U.S. Health Care & U.S. Productivity: A Dissent

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By JOHN R. GRAHAMPicture 13

One of the great myths about American society is that our lack of a “universal” health plan harms our competitiveness.  The masters of this refrain, of course, are the American automakers.  Years before driving themselves into bankruptcy and the unwelcoming arms of their new owners, the American taxpayers, they used to claim that they spent up to $1,600 per car on health care.  This was more than they spent on steel, and a multiple of what they claimed their foreign competitors spent.  In her well received book, Who Killed Health Care? America’s $2 Trillion Medical Problem – And the Consumer-Driven Cure (New York, NY: McGraw-Hill, 2007), Professor Regina Herzlinger of Harvard Business School claims that these complaints are inflated (pp. 104-105).

Furthermore, we don’t hear Mark Zuckerberg complaining that Facebook’s health care costs are preventing him from competing against foreign social-media businesses.  Indeed, while all Americans complain about health costs, the argument that our health “system” reduces our competitiveness versus other countries with “universal” health care is actually quite weak.  Indeed, the percentage of all firms offering health benefits actually increased from 66 percent in 1999 to 69 percent in 2010, and a greater number of smaller firms have begun to offer health benefits, according to the Kaiser Family Foundation.

One oft-cited metric is that the United States spends far more on health than other countries as a share of Gross Domestic Product (GDP).  But this measurement can mislead.  It is a ratio composed of a numerator and a denominator.  The numerator – the real cost of medical care – has grown slightly slower in the U.S. than Europe.  Advocates of government monopoly health care point out that Canadian and U.S. health spending as a share of GDP was about the same before the Canadian government took over health care, but diverged starting in 1970, soon after the government completed its takeover.  They present this as evidence that the state can control costs better than the private sector.  However, real GDP growth in Canada dramatically outpaced U.S. growth between 1969 and 1987, meaning that the denominator of the health spending per GDP ratio grew much faster in Canada, not that the numerator grew much slower, according to research by Professor Brian Ferguson.

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Who Cares?

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By PETER KRUGERPicture 8

The father of a wireless engineer, who made a good living designing mobile devices, contracted a rare and chronic form of athlete’s foot. Over the course of a few months, the father’s condition worsened and eventually he died. Vowing he would make sure that no-one suffered the way his father had during the last few weeks of his life, the engineer set about developing a wireless athlete’s foot detector.

After obtaining the backing of a venture capitalist, he licensed technology from a university spinout that specialised in bio-sensing and embedded it onto a wireless chipset, which he then packaged into a simple mobile device. The athlete’s foot monitor is now on the market and our wireless engineer is talking to a number of healthcare providers, including the NHS.

There are two important things about this story; first it is complete fiction – and  second; anyone who has been involved in the wireless and mobile industry, will have come across real life examples of personal quests masquerading as business plans.

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New Law Lets the Feds Sponsor Prize Competitions

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By GLENN LAFFEL, MD, PhDPicture 7

The repeal of Don’t Ask Don’t Tell and the ratification of a brand-new START treaty represent milestone achievements for the suddenly prolific lame duck Congress, and the press has covered these developments accordingly. But Congress passed another law amid this flurry of activity—the America COMPETES Act—and although the media didn’t cover this move nearly as vigorously, it is potentially quite significant and praiseworthy in its own right.

America COMPETES authorizes continued growth in the budgets of the Department of Energy’s Office of Science, the laboratories of the National Institute of Standards and Technology, and the National Science Foundation, 3 agencies focused on incubating and generating innovations designed to keep our country at the forefront of an increasingly competitive global economy.

Beyond this, in what many hope will become a bona fide turning point in the effort to leverage American ingenuity and innovation, America COMPETES empowers all federal agencies to sponsor prize competitions to spur innovation, solve particularly vexing problems in their domains, and advance their missions.

Prize competitions are proven to be an effective strategy for energizing our country’s innovators. The private sector and philanthropists use them increasingly. According to a study by McKinsey  in fact, more than 60 prizes valued at $100,000 or more were introduced by such organizations between 2000-2007. Total prize money associated with these competitions approaches $250 million.

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Send in the Clowns!

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By David Williams

David is a long time friend and occassional contributor to THCB. And he politely asked if the THCB audience would be interested in helping contribute to the charity he works with–please read and give what you can–Matthew Holt

Picture 41

The Hearts & Noses Hospital Clown Troupe provides professionally trained volunteer clowns to hospitalized children in Greater Boston and training for other clown troupes worldwide. I’m chairman of the board of directors and hope you will join me in supporting the work of the clowns by making a donation.

Hospitalized children often experience stress, fear, and anxiety, which can become a barrier to healing. Hearts & Noses clowns are specially trained to provide relief for ill children and respite for their families. Our clowns strive to uncover the hidden spirit of joy and the creative energy that lives in the heart and soul of children− a spirit that is often dampened by the sterile and sometimes frightening clinical environment. Our clowns’ central goal is to engage, empower and give choices to hospitalized children.

After a life-changing trip to Russia with famous clown and physician Patch Adams, troupe founder Jeannie Lindheim began offering a series of seminars on hospital clowning in the 1990s. Lindheim, an actor, began training clowns to visit ill and disabled children at Boston area hospitals. She formed the Clown Troupe and worked diligently to build a strong, professionally-trained group of volunteers. More than a decade later, our clowns are still all volunteers and we have helped build clown troupes throughout the world.

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Health 2.0 News launches

By Matthew Holt

H2news_125x125 Today I'm very excited to tell you that Health 2.0 News is launching. We‚Äôve had the Health 2.0 Blog for several years now and of course have extensively covered the world of Health 2.0 and the Health 2.0 Conferences on THCB. But we‚Äôve been a little behind in tracking the news and activity that‚Äôs going on daily in the world of Health 2.0 companies. 

Meanwhile the Health 2.0 organization has grown significantly to do much more than conferences. We‚Äôre now actively tracking several hundred Health 2.0 companies in a private database, we‚Äôre working on consulting projects, we have a major developer challenge program and we have more in the wings.

So from today the all new Health 2.0 News will be actively tracking industry news, showing video of Health 2.0 events, and having editorials from important Health 2.0 leaders. Please head over to Health2News.com and join us!

How VCs Use Advice From Experts

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By JOHN STEUARTPicture 91

Recent media articles have scrutinized the use of doctors, scientists and experts by pharmaceutical companies and hedge funds, often casting them in an unflattering light. Experts can play a valuable role, but it is a case of caveat emptor – and sometimes for the expert, as well as the organization hiring him. Biotech or medical device companies that are trying to promote new products, for example, could undermine a medical expert’s perceived objectivity if financial ties are not clearly disclosed upfront.  Experts providing information to hedge funds must be particularly careful not to disclose non-public information about publicly traded companies and run afoul of insider trading restrictions.

Venture capitalists also commonly rely on personal and business expert networks to help gather investment information to make smart investments in private companies.   Because early-stage venture firms do not invest in public stocks or promote independent projects, experts can work with VCs and VCs can work with experts without risk of reputation or objectivity.

Here is how I and other venture capitalists use outside experts:

Personal networks, by far, tend to be most valuable. For example, sometimes I contact a childhood friend who is now an orthopedic surgeon at the Cleveland Clinic. If CCV is thinking about investing in a product related to surgery, I ask his opinion. His input is good — and it’s free counsel from a valuable source.

Like other VCs, I also look for expert guidance inside existing portfolio companies. I’m currently working on a project related to a software system for gene sequencing, for example, and I have consulted a chief technical officer at a CCV portfolio company who is highly knowledgeable in this space.

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