People, Person, Computer, Electronics, LCD Screen, Laptop, Pc

Ursheet Parikh Hosts Discussion on Digital Health Trends

How Entrepreneurs Find Blue Skies in the Cloudy Future of Healthcare

The future of healthcare is both sunny and cloudy.

It’s sunny because there has been no time like the present. We’re at a unique juncture where a confluence of cutting-edge technology, medical science, consumer interest, institutional vision, and available venture capital are simultaneously in sufficient quantity to push human health forward.

It’s cloudy because, at least in the United States, the government is both the regulatory body and the largest payer of healthcare fees — and the government’s plan for the future remains not only uncertain but chaotic. The government pays upward f 40% of annual healthcare expenditures.

The question we’re focused on at Mayfield is what this all means for entrepreneurs. We recently hosted another of our occasional healthcare summits, gathering leaders from startups, major medical institutions, and peer investment firms, among others, in San Francisco to discuss the current state of healthcare.

For our most recent event we had guest Murray Ross, a longtime healthcare professional in government and, more recently, Vice President, Kaiser Foundation Health Plan Inc., and Director of Kaiser Permanente Institute for Health Policy. He helped us navigate this highly ambiguous territory we’ve currently found ourselves in.

Kaiser’s Ross opened the evening by noting that Health insurance is the start, not the end, of the discussion. “For all the effort during the current and previous presidential administrations,” he said, “all that the government has been focused on is healthcare coverage. We haven’t really begun to address the fundamental problems.” Ross delineated these as follows: (1) Affordability, (2) Fiscal sustainability, (3) Access to care, and (4) Quality of care. “By extending the conversation about health insurance we’re delaying the conversation about healthcare,” he said. “While most public discourse on healthcare is about insurance and coverage, when we talk about health policy, entrepreneurs see more than just Medicaid and Medicare. It includes NIH, FDA, trade laws, life and safety, regulation for provider practices.”

Thus began our evening. What follows are some key takeaways from the discussion at our event in support of why now is the best time to be a healthcare entrepreneur — plus some unique hurdles that entrepreneurs will need to consider.

Now #1: There are multiple potential markets here

There’s a lot we can be doing in the consumer space around prevention, wellness, wellbeing, and choice of insurance. The money is, in the cynical short run, all about sick people in hospitals. The long run is about keeping people out of those hospitals. New companies are going to reinvent the system because incumbents have limited incentives. I think “precision everything” is going to be a big part of the solution: precision wellness, precision care delivery, precision diagnostics, and precision medicine will all enable highly personalized service delivery with the lowest waste. Machine learning is going to be ubiquitous in its application for this personalized service delivery — from diet to exercise to wellness to chronic care. There are a lot of health contions that won’t be solved medically. Things like obesity and diabetes, for example, are solved by improving the health of communities, not just through treatment. A lot of progress will occur outside the four walls of the clinic. For entrepreneurs, you look at what’s spent on diet, gym, mental health, etc. and you’ll see there are a lot of products that will come out and yield dollars from the healthcare budget.

Now #2: Regulation often is the mother of invention

Take congestive heart failure as an example. It was the low hanging fruit of healthcare, involving continuous readmission. Medicare changed the rules, and suddenly hospitals found a way to reduce readmission. This is a model of how changes in regulation — changes that emphasize the correct metrics and incentives — can spur innovation. Payment process changes can often be catalysts for innovations that can drive adoption of startup solutions.

Now #3: Sustained user engagement can provide a competitive advantage for startups

There are several stakeholders that entrepreneurs need to satisfy and they all care about sustained user engagement. First, there are self-insured employers carrying risk who are looking for solutions they can engage their employees and families in. Second, there are individual consumers who are getting used to things happening faster and better. We need services that can deliver value to that expectation. All incumbents across the healthcare spectrum are interested in engaging with startups on areas of user engagement.

Now #4: Ever-expanding healthcare issues and scenarios

Unintended consequences play a huge role in healthcare. Solving diseases just opens the opportunity for new diseases to prosper. Take a look at heart disease: as we continue to reduce it, the result is people living longer, which means a rise in Alzheimer’s. The same can be said of testing. The more tests we do on individual patients, the more we reveal additional problems we weren’t even looking for, which means more healthcare needs to be provided. Hurdle #1: Healthcare differs from all other industries We don’t just say this to make ourselves feel special. We have multiple producers selling the product (surgeons, anesthesiologists, rehab, primary care), all with different incentives. It’s hard to identify the product at the point of sale. We don’t know when the product will end, and even when it starts is a little unclear. There’s a lot of art versus science, with differing opinions among equally educated and accomplished practitioners. There’s also an enormous amount of monopoly power — geographically, in the intellectual property of pharmaceuticals, and so on. Healthcare is, in addition, the only industry where supply can drive demand as we see with availability of new tests, procedures and medications.

Hurdle #1: Healthcare differs from all other industries

We don’t just say this to make ourselves feel special. We have multiple producers selling the product (surgeons, anesthesiologists, rehab, primary care), all with different incentives. It’s hard to identify the product at the point of sale. We don’t know when the product will end, and even when it starts is a little unclear. There’s a lot of art versus science, with differing opinions among equally educated and accomplished practitioners. There’s also an enormous amount of monopoly power — geographically, in the intellectual property of pharmaceuticals, and so on. Healthcare is, in addition, the only industry where supply can drive demand as we see with availability of new tests, procedures and medications.

Hurdle #2: Shared data is a steep uphill battle

It’s going to be more difficult than many people supposed to get institutions to really open up their data and share it. The technical problems of data sharing aren’t the hard part. Once there’s a business reason, it gets done. Provider culture plays an overwhelming role in this. Not only are providers resistant to sharing their own data, they are resistant to using data they didn’t play a role in collecting. It’s not in many people’s interest to share their data because doing so could potentially open up the organizations to criticism of their medical practices and potential lawsuits. Institutions don’t talk about clinical trials a lot because they don’t know how their members will respond to such information. De-identified data is great for research, but for it to be actionable from a business standpoint you need to know where it’s from. Every incentive is against the sharing of data. You could build the best sharing cloud service, but on a sociological level businesses in healthcare are culturally dead set against it — and that is a problem you can’t code your way out of. However, if a company can get enough data to be at scale, they would be at a big advantage.

Hurdle #3: The end users of health technology are not themselves technologists

We’ve learned, for example, that a nurse might say he doesn’t like graphs. This is a caregiver who is not an analyst. As a result, an entrepreneur recognized the benefit of not having a technical UI for these caregivers and found success with just messaging and conversation bots as the user interface.

Hurdle #4: Healthcare expenditure is growing, which has created opportunity — but also exposure.

The thing to keep in mind is that America isn’t different; it’s just ahead: A lot is said about the high cost of healthcare — its price, and its percentage of the GDP — in the United States versus other countries, but it’s clear that in many cases, such as Germany, those countries are simply a decade or so behind the U.S. A lot of wage stagnation in the U.S. is the result of the rise in healthcare costs. They’re earning more, but the difference is all going to healthcare.

Hurdle #5: Efficiency models and bundles are up against the odds.

Value-based care and bundled care are stymied by the dilemma of many producers. Even when the hospitals want bundles, lots of other providers don’t, and this has been the issue since at least the late 1980s. It’s hard to administer the economics. The pushback from the industry — that is, from people excluded from the bundle — is big. That said, it is one of the few ACA ideas that appears in all the Republican plans. Hurdle #6: Startups must become lobbyists if they’re true to their mission: One of the evening’s participants, Jason Langheier (founder and CEO of Zipongo, a Mayfield portfolio company), quoted David Gergen on this topic: As social entrepreneurs, if you don’t work with, or within government, you can never truly scale your impact. Startups have a big role in using demonstration projects to get not just our government but other governments as well to see the benefits. What’s the real problem of obesity? As long as the food industry is better at getting your attention than the health industry, then you’re going to lose the health battle. You have to deliver on consumer engagement and convenience. Get it in their budget zone and have people’s back for real, in order to help keep nudging them to the right decisions.

In conclusion, there are huge opportunities for healthcare entrepreneurs right now. The incumbents, who have been part of the system that has created the massive problems, are not going to solve them. And remember: If there are no cuts to coverage due to regulatory changes, then entrepreneurs will have these business opportunities anyway. If there are cuts, then any product that decreases cost while driving better user experience is going to be all the more valuable.

Originally published at www.mayfield.com on September 18, 2017.


Ursheet Parikh Hosts Discussion on Digital Health Trends was originally published in Mayfield Viewpoints on Medium, where people are continuing the conversation by highlighting and responding to this story.

Read more >

Published on Sep 18, 2017

Other people viewed

Sr. Director of People Operations

HealthTap United States United States
Are you a leader who can be both strategic and hands-on and leverages a passion for people and will focus on continuing to foster a positive company culture? Three times yes? Sounds like we found a match! Who we are HealthTap is a technology com...

Enterprise Solutions Consultant

HealthTap United States United States
Do you enjoy working with partners and creating strong relationships with stakeholders? Can your source and close deals?Do you have the finesse to communicate technically complex presentations to a non-technical audience? Three times yes? Sounds ...

Full-Stack Software Engineer (Data Workflow)

Outreach United States United States
The Role The Data Workflow team at Outreach owns the data and data workflows that drive the Outreach product itself. Their work drives revenue efficiency for our customers and innovates in the management and visualization of data. Full stack engi...

Manager of Client Engagement

Outreach United States United States
The Role As the Manager of Client Engagement, SMB & MM Accounts you will lead and manage a team of CEMs who are focused on implementing Outreach and delivering value to customers in the first 60 days of their license. This is a demanding role...