It’s time we got honest about healthcare innovation
Like many healthcare leaders, I’m preparing to descend on Las Vegas next week for HLTH USA . There will be lights. There will be talks by Howie Mandel, Andy Roddick, Chelsea Clinton, Arianna Huffington, and Nick Jonas. There will be a performance by Ashanti and Fat Joe. There will almost certainly be professional massages and a puppy petting area. And there will be an interminable wave of hype about how our innovation is changing healthcare for the better.
Coincidentally, yesterday the Washington Post published a feature story on declining life expectancy in the US. I encourage you to read it. During the 20 years I’ve worked in healthcare, deaths among working age adults from diabetes have increased by a third. Deaths from liver disease have increased by half. Deaths from hypertension have nearly doubled. All while billions of venture dollars have flowed into healthcare innovation.
How do we explain this gap between innovation investment and the outcomes those investments are designed to drive? The generous explanation would be we’re learning what works and doesn’t, and it’s still too early to see the fruits of most investments. But I think something else is going on.
I think many, maybe even most, of our healthcare innovation is not designed to improve health. Improving population health would generate enormous value, but it’s incredibly hard. An easier path to returns is to exploit market inefficiencies. And we’ve seen lots of these:
Some of these businesses are still chugging along. Others have imploded spectacularly when customers or regulators realized they were actually making our healthcare system worse, but generally after early investors have already netted a sizable return. In my personal journey, I’ve been privileged to work on some initiatives that delivered significant improvements and health in a sustainable business model. But if I’m honest, most of the initiatives I’ve been a part of helped some individual patients but largely saddled our healthcare system with higher costs not justified by the clinical gains we generated.
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I’m fortunate to know numerous incredibly bright healthcare entrepreneurs, innovation customers, and investors, and 95% of those entered this field because they want to make the system better. But we’re all collectively trapped in a system that rewards exploiting inefficiencies more than driving real value. An entrepreneur can build sustainable unit economics improving patient health but can build sustainable unit economics faster by getting revenue for a product that’s less impactful but cheaper to deploy. An investor can get a return from investing in companies transforming patient lives, but the return will be higher if their portfolio companies are able to generate revenue without taking on the costly work of significantly improving patient health.
How do we fix this? I don’t have definitive answers, but I do have some ideas.
These three steps are hard. And success will be partial at best. But the glass-half-full part of me looks at the $1 trillion of waste in our country’s healthcare system and recognizes fixing even 0.1% of that is $1 billion in savings. Helping 0.1% of the 130 million Americans suffering from chronic disease is making a meaningful improvement in 130,000 lives. Even though those numbers are a fraction of their wholes, I still struggle to wrap my head around that magnitude. We’ll never be perfect as an industry, but we can be better, and the impact of that would be extraordinary.
For those of you coming to HLTH, I’d love to continue this conversation there. And for everyone, please share your reflections and ideas in the comments – I’m excited to move our industry forward together.
I help uncover new revenue streams, proving what will work in market - before you build or manufacture a thing | Mentor | ex. L’Oréal, Accenture | 30 under 30 winner
8moRichard Gurley thanks for this, what a read! Im deep in Outlive by Peter Attia and the concept of Medicine 2.0 and 3.0. My dad is a GP and I’m always somewhat flawed about the lack of root cause concern
Product Manager and Chief of Staff, Cicada Technologies, Inc. | Former Morgan Stanley Capital Markets | FinTech Innovation Leader | Personal & Professional Growth Expert | Company Culture Management
10moThanks for the share, Sima. I agree with your sentiments, there is an alarming disparity between innovation investments and declining life expectancy. It's time we collectively steer innovation towards improving population health.
Great piece Richard Gurley I wonder if there's a "B Corp" concept that could be applied to healthcare innovation? Could we say to innovators that these X things are wrong and therefore get those innovators to sign up to not do them? Could that then become a badge healthcare purchasers use to pick companies with better value?
Building onramps to modern healthcare | AI x FDA | Dad | SF career, Philly roots
10mo🎯
Gen AI & Blockchain Technologist | Data Analyst | Outsystems Developer
10moGood read! I have always thought that for us to solve healthcare we would need to attack the root problem: the disconnected ecosystem that fails patients and providers time and time again. Tech ventures into healthcare is only to make money with their respective core businesses. It is like trying to fix the symptoms without addressing the underlying causes.