Healthcare
avc.com
avc.com
That being said, it is not a technologically challenging industry at the moment. Most of the work that is being done is just automating existing paper-based systems. The regulations that everyone worries about are really not very onerous. Complying with HIPAA is mostly common sense and the FDA does not yet regulate most information systems unless they control medical devices or provide specific types of alerting (vendors are preparing for the day when they do).
Two of the biggest challenges that I see are the caliber of the technologists in the industry and the absolutely disgusting new interoperability standards that are being developed by people with questionable technical skills.
The company to watch at this point is Epic (I do not work for Epic). They are really crushing a lot of other companies and they are somewhat progressive.
If people are interested in some of the technology that is being used in the industry outside of the standard .Net and Java stuff take a look at InterSystems. They even have all of their product documentation online, which is a bit of a rarity for enterprise vendors.
We need the SMTP of medical communications, not the Microsoft Exchange. Epic's system is very like the latter.
All medical software suffers from the problem of all software where the end user and the creator of software isn't the same person - it just doesn't work in a way that makes sense.
The problem, for medical software at least, is that once you've one of the very few people who have a medical degree, you're often in demand to the point that deciding to 1. write software at a competent level and 2. have the business moxie to turn it into a decent business, the talent pool is basically nil.
http://stackoverflow.com/questions/256876/tips-for-learning-...
Healthcare innovation will remain low, and costs will continue to grow at double digits, until America passes real healthcare reform. Allow insurance competition across state lines, give private individuals the same tax treatment as employers when buying healthcare, and allow individuals to form groups to purchase health care (e.g. alumni groups, church groups, etc). Those three steps would go a long way to opening up the industry to the web and to innovative, competitive forces.
the government is people.
The whole second paragraph makes it clear that you don't understand the complexities of the Healthcare industry. You provide very broad brush statements like "allow insurance competition across state lines", the complexities of that single issue alone are staggering. Are you aware that the strength of most in-state insurance carriers is their in-state network. An insurance company IS it's network. In addition each individual state has a Department of Insurance which also regulates all carriers in that state. DOI rules and regulations vary from state to state. Expanding your coverage to another state is a very complex undertaking.
Also, Individual groups do have the ability to purchase healthcare - see many professional organizations(AIGA, etc) as working examples of this today.
In either case, making those changes won't just magically open the industry to "the web and to innovative, competitive forces". There are already competitive forces at play. Any new player attempting to join the fray faces an uphill battle just in the regulatory aspects of the business alone.
What do the advantages of the web and new technologies bring to insurance? How do these changes the provider networks which are the backbone of major insurance coverage today? These are the types of questions which need to be posed, and the people in the best position to answer these questions and change the game are insurers themselves. There are many smart and talented people working in insurance. The recent proposed Healthcare changes have helped to begin the process of moving forward and thinking differently, but with an industry like this it will take time.
It is happening, insurance providers are looking at new technologies and ways to provide the coverage that people expect, for lower costs, in new and different ways.
Are you sure about that? Last I checked, the feds mandate an immense number of details about how private insurance is provided, and that is only growing with the new health care law.
>"I would not characterize the entire private insurance industry as an "employer-provided insurance ghetto" - what does that even mean?"
1 of every 2 dollars spent in health care in the US is spent by the government. These three programs are clearly the 800 pound gorillas in the room. Medicare's price controls directly drive shortages and oversupply, and its billing practices set the standard for the rest of the industry.
Much of the distortion in the current system come from the fact that employers can deduct health care expenses, which means that you save around 15-30% versus buying healthcare as an individual with aftertax dollars. That single policy is what ties health care to your employers-- in my mind, a kind of serfdom that keeps people tied to jobs simply because of health care insurance.
So getting tax equality by eliminating the deduction, or extending it to individuals, would rock the market. Beyond that, it actually is as simple as allowing interstate competition, which will allow people to escape all of the insane state regulations, and lack of choice, that drive up costs.
And groups can't organize to purchase health care-- I'm talking about a world where my university alumni association or church has a plan, and I could choose that for life, and it has the same tax and regulatory treatment as my employer's health care offering. I want vastly more diverse delivery mechanisms, all competing for my business, and ideally with a long-term relationship that would naturally incentivize preventative care.
(Personally, I am so glad I have $100/mo $3500 deductible HSA coverage, personally; I'll eventually set up employer healthcare at my startup, but in the perfect world, I'd rather pay employees 1.5x as much to manage it themselves, and maybe another .5x to the government for other people's care; trying to find and manage benefits like that is a big pain.)
Those lucky duckies! http://en.wikipedia.org/wiki/Lucky_duckies
Also, Medicare will not compensate providers for bad outcomes, but Medicaid is state-administered and usually just pays claims blindly. Entitlement arbitrage is bankrupting many states, but that's a whole other issue.
IMO, we've created a multi-headed hydra, where the only winners are the mandarins who understand the arcane regulatory structure.
I actually believe in the (now-dead) Republican policy that, in the US at least, education is a state not Federal issue. By making it a Federal issue, we're just creating one giant bureaucracy and we all know how good those are at solving problems.
We should probably have a model like some European countries where the money follows the student and what school a student can go to isn't restricted by some arbitrary boundary on a map.
Likewise the tenure system has to go. What was imagined as a means of allowing academic freedom has become a recipe for entrenched mediocrity and stagnation.
Also, it's a problem that schools are largely funded by property taxes. This alone ensures a better education for the rich. I'm not sure what the alternative is but we need one.
As for healthcare, IMHO we're largely in this position because of the "blank check" model for health insurance and because of pharmaceutical patents.
Each country has different laws about what is patentable and what isn't. In the US, for example, nuclear technology is expressly forbidden from being patented as it is seen as a matter of national security. In India, health care is seen likewise so pharma patents aren't allowed, providing for cheap generic medicine.
I foresee a day when the US will swing in India's direction. Not that I necessarily think this is all good. The fact is, drugs are expensive to develop but it's also true that the pharmaceutical industry spends more on marketing than anything else (basically getting doctors and hospitals to use their drugs).
Also, litigation is a problem for health care. We all pay for outrageous punitive damage awards.
Lastly, it's a problem that insurance in the US is essentially tied to employment and large employers get that substantially cheaper than smaller employers (let alone individuals).
And of course the complexity and administrative overhead are huge problems, which is probably the one area that could be disrupted without government intervention. But it doesn't help that part of the reason things are so complex is essentially to deny coverage.
I'm not an expert, but I think it's very important for us (normal citizens) to be skeptical of these kinds of claims:
http://en.wikipedia.org/wiki/Tort_reform#Healthcare_industry
Large corporations have created a mythology of an epidemic of frivolous lawsuits that Americans have completely internalized: those women weren't sexually harassed they just wanted to be bought off, or: she probably spilled coffee on herself on purpose.
Also, you mention government bureaucracy and efficiency: I think it's worth pointing out that you can have a large amount of inefficient private sector bureaucracy, where the government could step in and create a more efficient system. The highway system is one obvious example. I think healthcare is also in this category.
Is there precedent for this? It's not that I disagree that we have policy-level, institutional problems that won't be fixed by the next hot startup.. But I do think that many of those problems are pinned to overwhelming costs that innovation could demonstrate ways of affecting positively. The way we deliver healthcare in the US is far too costly, inefficient, and frankly dangerous.
It can be a pain in the ass to innovate within the current context of healthcare IT, but there are more opportunities now than ever before to completely ignore the way things have been done until now and make a dent.
[Disclosure: Been building in healthcare for a little over a decade, and currently bashing away at an early stage startup that's devoted to completely rethinking the way primary care is delivered]
"Large networks of engaged users" do exist, but the ones who control real money (doctors, hospitals, insurers and pharmas / device makers) are highly suspicious of outsiders. Every one of them has the incentive to not share their data with the competition, even though they will all publicly pay lip service to doing this in the name of "improving patient care".
If you look at patients / consumers, you can roughly divide them into the healthy and the sick. The healthy ones generally speaking do not want to invest time and effort into their health, unless it overlaps with lifestyle / food / entertainment - well covered by ventures we do not normally put into "healthcare" category. If you look at the sick ones, they tend to skew to the older demographic with lower online literacy. Even when you pick out the ones active online who care enough about their conditions what you get at best is small niche communities like PatientsLikeMe.com that are at best able to function as support networks and clinical trial recruiting sites.
Did I forget to mention that pharmas and device makers are mortally scared of participating in social media because of FDA? They are in business where even acknowledging any adverse event could make them liable for billions. This is a great example of why for most of the healthcare industry social media is all downside and very little upside.
And each other.
1: What I mean by this idea of different models is that everyone seems to assume that all universal healthcare schemes are created equal, but this is simply untrue. Some examples:
- Potential single-payer systems proposed in the US are most often compared to the Canadian system, but Canada actually has one of the worse systems (according to my previous metrics) among OECD countries.
- People also assume that a single-payer system is the only way to achieve efficiency, but Germany has a very effective healthcare system which is not single-payer.
Of course, even setting aside that we seem bad at considering the details of a solution to this problem, the real problem, in my opinion is that we can't even agree on what role government should play. If we can't even agree that the government should solve the healthcare problem, how can we even begin to agree on a solution?
You can make a decent, linearly growing business if you can survive 2-3 years long sales cycles. So it makes sense that VC's don't want to venture into this space.
Because we are not allowed to. I can't even write an iOS app that shows images if they happen to be X-Rays.[1] Its a group of giant monopolies and special interests who as an industry spend more on lobbying than any other industry ($250m in 2010)[2]
And they need to. The industry is ripe for disruption. It amazes me that we allow utterly fallible human beings to attempt to diagnose in a 5 minute appointment conditions that they may never have heard of. And we talk of older doctors having more experience, but only more experience in the stuff they see everyday. Meanwhile computers can diagnose conditions more accurately than humans [3] but we'll see how far the AMA lets that go. Probably require an extra specially trained doctor to operate it. They'll probably require a man to run in front of it with a flag lest this dangerous machine hurt a patient.
[1] http://www.macworld.com/article/161397/2011/07/fda_regulatio...
[2] http://www.opensecrets.org/lobby/top.php?showYear=2010&i...
I'm not saying you're entirely wrong, just that its not a simple as you make out.