Comment by leggomylibro | Hacker News Reader

Comment by leggomylibro | Hacker News Reader

Oof. The site was practically named after WebMD, and the founder didn't do any market research on that competitor to gauge how viable the business was before quitting their job? This person probably should have known that their main competitor made $0.50/user before they quit their job. Also:

>It had been a bit of a working assumption of mine over the past few weeks that if you could improve the health of the patients then, you know, the doctors or the hospitals or whatever would pay for that.

This person uses the "X% of Americans" line, so they live in the United States, right? The one in North America that views healthcare as a business to wring money out of? They definitely should have done more market research if they could type that with a straight face.

But hey, hindsight is 2020 and they only spent $40k on some very valuable firsthand experience. Sounds like a win if they're planning to run businesses in the future, but for ideas without a clear path to making enough money to sustain themselves, try to use other peoples' money next time :)

That line stood out to me also. Anyone who feels that the primary goal of healthcare in the US is to improve health outcomes is incredibly naive about how this industry (which is over 20% of the us economy) works. There is only one group in the entire industry which has an incentive to keep people healthy (insurance) and that is the most hated of the bunch!

.. and the doctors he talked to felt they already had the knowledge they needed! If anything, they felt, perhaps, that this devalued their existing knowledge. And they don't make 10% more money for providing 10% better outcomes.

This is probably the root of the problems in US medicine: there is no effective feedback. The ACA (Obamacare) did a little work on this with Medicare payments to hospitals, but that is an exception in the system.

What could we do to make this the basis of the system? Without driving doctors away from patients who have bad prognocices?

Take a look at HMOs, such as Kaiser Permanente. HMOs combine the function of insurers and medical providers in a way that aligns incentives (everyone pays about the same, but healthier people need less care and are thus more profitable customers). There are many problems that come with the HMO model (e.g. the potential for low quality care), but when it works, it directly solves the problem you addressed and exists in the US.

Perverse incentive structures are the fundamental reason US healthcare is so expensive and stupid. It's not "greed" in a simple sense, and it's not "regulation" in a simple sense. It's a system of interacting problems that needs treated in a systemic way.

Blaming the insurance companies strikes me as the political equivalent of yelling at the cashier.

I mostly agree, but...

Insurance is one of the oldest industries in the US, which means they have accumulated many (probably well meaning, but ultimately stupid) regulations over the years.

For example, to be taxed as an insurance company (e.g. avoid paying tax on premiums that will partially be paid out in the future), most states assign a maximum profit margin.

That means, in order to make more money as an insurance company, it's perversely in their best interests to increase the cost of medical care as much as possible. Medical care is not like cat bonds that might wipe out your risk pool, so it's just a cashflow game.

That's not to say there isn't any downward pressure. On a day to day basis, individual claimants eat more into that margin than was budgeted, so a company might have to raise rates higher than their competitors (essentially they have some pressure to deny claims), but there is very little systematic pressure to reduce overall costs. Also, marketing budget does not count towards profit, which is why insurance companies are in this rat race of brand advertising to steal customers from each other. With auto insurance, for example, upwards of 40% of your premium is just going out the door as ad spend.

Anyway, I would assign a lot of blame in this perverse incentive scheme to poor regulations.

To put it in software terms, it's not a bug, it's an architecture flaw. The "poor regulations" aren't individual issues, but rather part of the fabric of a framework that causes perverse incentives. Therefore, the simpleminded conservative/rightwing solution to "reduce regulation" doesn't eliminate the perverse incentives - it just changes the flow, the way tossing a rock in a river does.

If I were the one making the decision, I'd change American healthcare with one big thing, modeled on the Japanese system... price controls. Japan's system is more or less like ours, but with one key difference - a government panel sets the prices for all medical goods and services. Providers and insurers have to make their profits within that price structure. This incentivizes both to reduce costs, for the sake of their own profits.

Of course, this would be called radical socialism or some such stupid in America, and Democrats aren't even talking about it (Republicans have no ideas at all on health care). But it's politically a much lower threshold than single-payer (throwing out the whole framework and starting over, basically). And it demonstrably works - Japan's system costs less than half what ours does per capita, with better outcomes.

> There is only one group in the entire industry which has an incentive to keep people healthy (insurance)

The motivation of insurance is to keep the cost of treatment less than the income from premiums -- it doesn't have anything to do with how healthy people are.

My thoughts exactly. In fact I would modify this to:

> the motivation of insurance is to keep the cost of treatment that they cannot avoid liability for less than the income from premiums

Yep - the motivation of health insurance is to keep people out of hospitals and away from healthcare professionals as much as possible.

Sometimes that aligns with keeping people healthy, but other times that aligns with women not getting routine prenatal screening and thus increasing the infant mortality rate.

This is changing. Medicare, medicaid and to an extent tricare are switching away from pay for service models, so there is a financial incentive for providers to improve health outcomes.

OK, so build a site that takes a bunch of patient info (demographic, genetic) and generate 1000s of custom meta-surveys that estimate the most effective medication for that specific patient by weighting the data in various ways. Return only the one that suggests the highest-priced medication. Eventually, move to a bidding system where pharma companies can sponsor the custom reports that recommend their products. Give 5% of the profit to developing world vaccination projects and it'll save lots of lives overall.

Imagine you have a chronic condition, and every month your insurance writes a substantial check for your care. A new treatment comes along that might fix your condition permanently. Surely they'll leap to pay for it?

Unfortunately, they probably won't want to. People frequently change insurance, so the most likely outcome is they'll have to pay for an expensive treatment, but never see the savings.

This is currently playing out for some new expensive new gene therapies.

Shouldn't it still work out in the aggregate? Assuming people move both in and out of the provider?

Sure, but the decisions get made at the scale of a single company, not the industry as a whole.

For the mentioned new gene therapy treatments, people have been asking congress to come up with a new model for how to pay for treatment. Here's a recent opinion piece by a Louisiana Senator where he lists off the proposals he's heard: https://www.statnews.com/2019/06/12/paying-for-coming-genera...

> There is only one group in the entire industry which has an incentive to keep people healthy (insurance) and that is the most hated of the bunch!

A testament that the demand for healthcare services is not only about health results. Albeit there are grave challenges about the way Kaiser or HMO's have supposedly better health results.

At Healthify we’ve built a business by aligning positive health care outcomes with the incentives of people paying for healthcare. I think it’s incorrect to say that American healthcare isn’t interested in positive outcomes, it’s just that the systems in place have made it difficult to track and understand those outcomes in the first place.

We just raised a series B and are hiring engineers (very remote friendly)!

> The founder didn't do any market research ... before quitting their job

That was the entire point of the article (written by the founder). What was the point of this comment?

IMHO the point of the article is its title - and certainly, furthermore, the point made at the end:

“To succeed, an offering must create value for all entities involved in the exchange—target customers, the company, and its collaborators.”

I believe the point of this comment is 'do market research before quitting your job'. The author could have learned their presented points while operating this as a side project concurrent to their existing job.

> they only spent $40k on some very valuable firsthand experience.

This. It is very hard to get real world experience. $40k is cheap compared to a bootcamp that won't teach him even 1/10th of this life experience.

Btw, actual figure is not $40k, but one should consider it close to $100k+ if you factor in that he used up his "make my parents support shelter, food, living expenses, car". Depending on the cultural background, they wont be doing this many more times. If you consider how much he lost on the (bay area) salary he otherwise would have earned, add another $100k

Yup. Depending on how attractive OP is to high-salary big tech employers, the opportunity cost alone of not getting paid for most of a year could easily be several hundred thousand dollars.

I feel like the best play would have been to spend 100% of his effort to get WebMD as the first Angel Investor.

If WebMD owned 20% of his product, for say $300k in Seed Money, he could have used that Runway to build something really cool.

And WebMD would have an incentive to promote his site and help bring free users.

that's exactly what I was thinking - plus what startup story is complete without some VC intervention?

Does anyone know Bob Brisco the C.E.O. of Web MD?

I'm going to try and get this in front of them using my contacts, but it is a long shot.

He also seems to have misread Susan.

In the story she describes the project as "fun" before he asks what she'd pay. At that point he probably should have picked up that she was being kind and was not in fact seeing a product she was interested in buying.

He probably could have figured that out by asking doctors before he built the thing.

> He probably could have figured that out by asking doctors before he built the thing.

Which is the entire point of the article, made very explicitly.

> WebMD

I think he should target not WebMD audience, WebMD doesn't provide searchable and visualizable database of trials and outcomes, but more professional crowd: research institutions and universities, government, pharma corps, pharmacists, hospitals, and charge some subscription fee (e.g. $200/m), and it would be totally different story.

You spend the whole comment putting down the author for making mistakes and then try to make it look like you're retracting this by putting a positive spin on it towards the end. Not because you especially care, but because you don't want people to downvote you to shit for this obvious trash talking.

"try to use other peoples' money next time (smiley face)" A++++ douchery. Nicely done.

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