
What’s Really Killing Digital Health Startups - mauriziodaniele
http://techcrunch.com/2015/10/30/whats-really-killing-digital-health-startups/
======
salimmadjd
I'm in the Health IT space but we took a different approach. Early on we
realized most Health IT companies are really pharmaceuticals but they don't
realize it. What I mean by this is, you need to have the budget of a
pharmaceutical to play in this space: 1 - you need to spend millions to win
over consumers and 2 - you need to have an existing network of connections
into doctor's offices to convince them of your solution. Big Pharmas have both
of those. They have reps that constantly visit doctors or hospitals to engage
them and they have a well spent marketing budget to build awareness for their
product. Most startups can't do either of those.

Then there is the long cycles. We signed some global Big Pharma brand (can't
disclose). They actually approach us and were very eager to work with us. But
even with that, it took exactly 2 years before we were able to roll out our
pilot partnership.

Basically you need to go into this knowing it'll take 3-4 years before you can
show any traction.

~~~
specialist
This comment and the OP mirror my own experience(s).

Additionally, data interchange between competitors is a non-starter. Possible
solutions (work-arounds) will be single payer or continued market
consolidation (hospitals merging and then implementing one of the big systems
like EPIC).

Not mentioned is that continued churn like HL7 v3, ICD-10, meaningful use,
etc. are hugely onerous while adding zero value. A cynic might wonder if its
just make work for the consultants.

\---

Source: My team designed, implemented, and supported the backend of 5
exchanges. Like this one:

MedPlus to Implement Clinical Portal and Information Exchange for the Brooklyn
Health Information Exchange (Jan 11, 2008)
[http://newsroom.questdiagnostics.com/index.php?s=30649&item=...](http://newsroom.questdiagnostics.com/index.php?s=30649&item=94401)

~~~
selimthegrim
You don't think HL7 v3 being somewhat of a markup language was an improvement?

~~~
specialist
It's a massive step backwards.

Bad has HL7 v2 is, it was a known evil.

With HL7 v3, there's so many more places to stuff data. And when it wasn't
clear what goes where, partners created novel solutions. Just like with v2,
but now with XML syntax.

We participated in an early NHIN competition (shoot out). The official WSDL
only worked with one tool stack (Visual Studio?). I finally gave up and just
screen scrapped the good bits. Used xpath to pull out the useful bits. Used
SoupUI to create prototyped requests, manually massaged them to work, then
turned them into Velocity templates.

We captured "official" requests and responses, stored them in source control.
When something broke, we'd use diff to find the mutation. Turn-around was a
few hours. Our two person team ran circles around our partner's teams with
dozens.

I still use the fake it strategy for anything XML or web related.

~~~
ethbro
As someone else who works in this space, this rings incredibly true.

I get the sense that the reality of any medical exchange format is 50% data
structuring and 50% legal structuring.

Which is unfortunate... as lawyers aren't very good at commenting their code
for non-legal professionals.

------
bpatrianakos
Having done exactly this type of integration with legacy systems I think a
point that gets glossed over is that it's the startups themselves who are full
of engineers who think that the whole world has moved on to using NoSQL
Node.js RESTful JSON APIs in the cloud (that buzzword soup was intentional)
when the reality is that the majority of established businesses are using
unsexy and what they would consider to be "legacy" technology.

So you have companies like one I was recently a part of integrating a Node web
app and API with SOAP and SAML end points and suddenly it's everyone else's
fault that things are hard when really you probably should have thought
through those tech stack choices before you started.

I'm not saying the article is wrong. I agree with it wholeheartedly but
there's a lot to be said for not researching the market you're about to jump
into thoroughly enough before you begin.

~~~
tkiley
Heh.. you hit the nail on the head here. I've been in health integration for
the past five years. By restful nosql whizbang node standards, healthcare is
full of really weird old shit, and if you want to interoperate, you have to be
ready to party like it's 1999, because a lot of these systems were legacy even
then.

It is rather frustrating to see some of the API designs that are finally
getting shipped in healthcare now, though. Right now, I'm interfacing with a
market leading EMR vendor's web services API. They advertise it as "REST" with
a straight face, but it's the lake wobegon of REST APIs, where all of the
responses are "HTTP/1.1 201 Created" (even the GETs) and all of the response
times are horrible.

Personally, I'm rooting for startups like Redox Engine
([https://www.redoxengine.com/](https://www.redoxengine.com/)) to bring some
sanity to this world, because I don't think the EMR vendors are going to do it
on their own.

~~~
bpatrianakos
They won't do it on their own because there's really no incentive to make this
information easily accessible. Healthcare is like Microsoft and Oracle in the
90's. Everyone wants you locked in to their platforms and services. Add to
that the fact that you're constantly dealing with incredibly sensitive
information on the level of financial data (arguably even more sensitive) and
it gets worse. In finance you have PCI compliance to deal with. It's tough but
not as crazy as $50k fines for every instance of leaked data with HIPAA.

~~~
webjprgm
It may not be deliberate attempt to lock customers in, but just the first part
of what you said: there is no incentive to make this any easier. It basically
works, so hospitals/clinics that need to make a few simple customizations can
do so with REST API calls but it isn't easy enough for third-parties to
quickly and easily build large applications. There's so much going on in
healthcare that it is hard for big vendors to justify cleaning up their web
services over doing other things. Especially when the "interoperability" buzz
fits in better with supporting FHIR, CommonWell, Healtheway, HL7, etc.

------
seanduffy
I’m in the digital health space (CEO of Omada Health).

Agree completely on the IT & product integration barriers highlighted in the
article. This (& more) make health care a nuanced place to build a business.

There are simply more stakeholders to manage:

    
    
       - Employers (Google, etc; those w/ >500 emps usually carry financial health care risk)
    
       - Plans (United, etc; both carry risk and administer employer plans)
    
       - Providers (Sutter, etc; deliver care, can carry some risk, contract with plans, and sometimes contract directly w/ employers)
    
       - Benefits Consultants (Mercer, etc; guide employers, more)
    
       - Societies (AMA, etc; build guidelines, unify provider voices, more)
    
       - Patients (you; remain frustrated w/ system complexity)
    
       - Consolidators (McKesson (Rx logistics & channel), Express-scripts (pharmacy benefit manager); add leverage and efficiency)
    
       - Regulators (HHS (HIPAA), FTC, FDA, etc; define ground rules for all these players)
    
       - Suppliers (Pharma, device, digital health; sell value into this space)
    

This # of important stakeholders makes it difficult to “trace a dollar” and
figure how who is your buyer. It's important to understand the basics of the
financial, contractual, and regulatory relationships between all of these.

But it’s also very, very fascinating. And once you suffer through some of the
learning curves can get quite fun. There are enormous financial _and_ impact
opportunities to be had. The wall can be a little high.

I'm always still learning, but if you need help on your idea and how it'd fit
in, email me at sean@omadahealth.com.

~~~
Sherri
This is a GREAT post. It is a giant puzzle, not for the faint of heart but
very fun. Provider motivations vary widely based broadly on their economics
and interests. There's 316 distinct U.S. markets alone! Cheers, Sherri
(CEO@Medigram)

------
apalmer
Based on this article whats killing digital health startups is they dont
understand they are fundamentally in the integration business.

I worked for a company in a total different sector that eventually ended up
being acquired for a significant amount of money.

More or less the company 'succeeded' because almost everything 'product' wise
was window dress. the actual value of the company was the fact that we had
done the legwork to integrate with dozens and dozens of difficult legacy
systems and was able to expose them in a single unified API that our 'product'
used. The purchasers didnt really value the 'product' or the companies 'brand'
they valued the integration and the business relationships with the
integration partners that were necessary to keep these integrations working...

Seems like what the article is really saying is that in this particular market
the money is in the integration not the 'product' over the integration.

~~~
joe_the_user
Certainly you can make money at integration, vast amounts of money are made.
But as one friend in the business really did tell me once "your job is taking
one piece of crap and another piece of crap, get them to talk to each other
and so turn them into a third larger piece of crap". Integration "works" but
overall often makes the problem worse or at best allows you to run place.
Imagine when something else has to talk to your "talks to ten things thing".

For good or ill, The _start-up ideal_ is generally to solve problems broadly,
to disrupt an entire industry rather than build one more extension to that
industry.

The problem of integration, of conforming to byzantine standards and to the
mess that overall existing health IT, is itself _still_ just a detail in the
overall problem of health and technology.

The fundamental problem is the messiness and unpredictability of physical
human bodies/human health.

The reason that health records are a mess is that there is no easy to way to
universally classify "what is going on" with a given person in a cut-and-dried
fashion. For any field of a health record, there is significant gray areas
once you get to a large scale (including "basic" things like "male" and
"female").

Just as much, health procedures often don't benefit from automation because
what one person does to care for another person is subtle and not easily
codified.

~~~
kuschku
> For good or ill, The start-up ideal is generally to solve problems broadly,
> to disrupt an entire industry rather than build one more extension to that
> industry.

But which start-up has ever done that?

Not even Google or Facebook did disrupt an entire industry – they just built
one more extension to an existing industry.

~~~
joe_the_user
Meh,

Come-on, look at my context. Of course, disruption is never a fundamental up-
end, just a streamlining towards a simpler and more productive approach - Uber
and airBnB being the classics (whatever their social value or lack there-of).

The start-up approach (or disruption, the most archetypical part of it) is
aiming for more streamlining at the end of the process - rather than aiming to
be one more orifice slurping up money from one of the vast streams of money
that already exist. Contrast AirBnB with a company that might "let you reserve
rooms with ten of the largest hotel chains in the world" \- sure, both change
things, neither absolutely change the world but AirBnB is still a more
fundamental change (again, in values-free terms).

~~~
kuschku
Well, many successful startups are just that, though.

"let you reserve rooms with the 1000 largest hotel chains in the world" is
quite a fundamental change, as you get direct price comparison, info in which
weeks it will be cheapest, etc. (And, unsurprisingly, there are dozens of
startups doing exactly that).

------
gmarx
Saying these companies could just open their APIs is probably wrong. None of
the legacy EMRs has a good underlying data model and what they have tends to
be customized per site. There might be some minor functionality you could get
to work consistently across sites with such an open API but chances are it
wouldn't cover everything your innovative startup needs.

In summary I don't think it's only lack of willingness; bad design was baked
in from the beginning and piled up over the years.

As an aside, speaking as doc and programmer whose been in this field for more
than a decade, I repeatedly find hilarious the hubris from developers coming
from outside the field who think they are gonna fix healthcare with their
amazing new perspective. Poor bastards. I feel sorry for the ones who aren't
being arrogant dicks about it.

I recently reconnected with a guy who had a super high profile successful
startup (like, success level=my mom even uses it) who tried to start his next
company in healthcare. Fast forward a few years (i.e. a few weeks ago) and he
sounds like he has PTSD

~~~
specialist
What you say is true. I solved the problem by flipping it around.

I'm going to give away the secret sauce I created for our backend.

"Traditional" EMRs imagine an idealized data model and then write ETLs to
import to that model. The jargon we used was "adjudicating the single best
record (SBR)" or "source of truth".

My system slurped up all data, stored mostly as-is, and then used information
retrieval strategies (think Lucene) instead of querying (think SQL).

This solution was wicked fast. We showed our customers data back to them, so
validation was simple. And we were super nimble when they changed their minds
(what is a "visitation", how to displays scripts, updating lab results).

Sad story short: our group was acquired, my strategy made the reigning CTO's
head explode, he attempted a rewrite, failed, then the execs killed the
product.

~~~
gmarx
Better search is definitely needed and seems like something the EPICs and
Cerners of the world could easily do if they just assigned a couple smart
people and left them alone. Instead they'll probably form vast teams of search
stakeholders.

But search is only one need. You say EMRs imagine an idealized model. Maybe.
They certainly never develop one. And that's what you need to reach the
potential of medical data analytics. The software needs to "understand" what
the data means without constant human intervention

~~~
specialist
Perhaps my effort was informed by my prior experiences with ERP/CRM systems
and the semantic web.

I'm firmly in the folksonomy (vs taxonomy) camp.

We just showed our customers data back to them. In most cases, it was the
first time they'd ever seen it. Hence the churn on "what is a visit",
resolving scripts, etc.

I don't know anything about medical data analytics, but if we captured the
data, then its there to be mined. It was just HL7 (or whatever), as is.

~~~
sk5t
Honest question: who wants to read raw HL7? To whom is the ability to access
HL7 on-demand a killer feature?

------
d0m
Also something less talked about is how hospital administrators don't want to
share their data for competitive advantages. So, they're more than happy
letting the EMR vendors taking the blame for the lack of interoperability
while in fact that said lack of interoperability is exactly what they're
looking for when partnering up with an EMR.

So, when trying to sell a third-party product to a hospital, administrators
forward you to the EMR vendor, while EMR vendor forwards you to the
administrators :) Each of those "forwarding" takes a few months.

~~~
jobu
This. Interoperability is great when it lets data into the system, but a huge
threat when it allows data out.

------
kohanz
_As any engineer knows, most software applications have APIs; it’s simply a
business choice whether to publish them or not._

This makes it sound like opening an API up to the public is akin to flipping
on a light switch, which as we all know is rather misleading. There are
significant investments and expenditures (documentation, support, etc.) to
make if you want to properly serve up a public API and no, not every company
does those things as a side effect of developing a product.

~~~
JoblessWonder
Totally agree.

And I'm not sure it is safe to say that "most" software applications have APIs
in the sense the author means.

~~~
eitally
In enterprise, unless it's been written in the last 5 years, the odds are good
that it doesn't have APIs. Or, if it does have APIs and was written in the
past 10 years, those APIs are only intended for internal (within the app
itself) consumption and could never, ever be used externally.

~~~
JoblessWonder
Yeah. From my experience, public API's are only opened up when there is enough
money generated from them to fund someone dedicated to managing/implementing
them.

------
tzier
Digital health is difficult since:

1\. [B2B] Providers/enterprises aren't willing (or able) to integrate into
legacy systems

2\. [B2C] Consumers see their futures selves as strangers [1], and most aren't
willing to put in time now to prevent something that may or may not happen in
the future (e.g. sickness)

Which is sad, because this is a huge area for tech to have a meaningful impact
on lives.

There are definitely some interesting companies in the space. For example,
Omada Health [2] sells to companies. Companies like them because their
employees' health increases (meaning more time spent working) and insurance
companies like them because their loss ratio decreases.

[1] [http://www.vox.com/2014/12/18/7414105/procrastination-
future...](http://www.vox.com/2014/12/18/7414105/procrastination-future-
planning) [2] [https://omadahealth.com/](https://omadahealth.com/)

~~~
msrpotus
I wonder if part of the B2C difficulty is that insurance pays for most
healthcare but (with a few exceptions) not for the lifestyle choices that
would reduce healthcare costs.

If there was more of an emphasis on preventative measures that insurance paid
for, I wonder if it would be different.

~~~
ghaff
What lifestyle changes would an insurer pay for--at least without very
intrusive lifestyle monitoring? (Which will increasingly be possible to do
whether it's done or not.) There are often discounts for gym memberships and
the like. And annual physicals are typically paid for.

~~~
msrpotus
I'm genuinely not sure. Paying for gym memberships, FitBits, and things to get
people exercising could be one option. Or maybe insurers could use extra
incentives to encourage people to get flu shots or regular checkups?

~~~
_delirium
One thing ACA did which at least is plausibly useful (though whether it'll
move any statistics remains to be seen) is to include an annual physical plus
all CDC-recommended vaccines with $0 billed-to-patient cost. So even if you
otherwise have a high-deductible plan, you don't pay a copay or deductible for
those services. This isn't quite an active incentive, but it's an attempt to
remove the price disincentive, with the hope that'll result in higher
vaccination rates (the flu vaccine is included).

------
markolschesky
I think it's interesting that this article is being written in a time when
more Digital Health startups are surviving than ever before. It doesn't take
being an insider to succeed in healthcare anymore; there's better options for
hosting and information is no longer hidden or sold on how to integrate with
EHRs and payors.

As someone who has spent the majority of my career working in Digital Health
(née Health IT) and helping people get data in and out of EHRs, I think any
assertions that we're about to enter a new era of magical integration efforts
are usually off base. There's no magic bullet to solve digital health
integrations. It takes:

\- Defining the value proposition of integrations for your market (Meets
regulatory concerns, reduces double documentation, saves time and money)

\- Knowing what the playbook for integrations looks like for your industry.
What does it mean to be an integrated telehealth vendor? An integrated cancer
analytics platform?

\- Having a team that know how to operate in the space. EHR and HL7 vets are
hard to find, recruit and retain. I think this is particularly true in the Bay
Area. Expertise here is crucial.

I know alot about this and this is what our team at Catalyze has focused on
solving NOW, not whenever the magic solution arrives. Looking for help on
keeping your Digital Health startup alive? Let me know. I’d love to help you
out. Email me -> mark <at> catalyze.io

------
npalli
Lot of interesting comments about difficulty of IT integration. However, there
is a much more fundamental problem with Healthcare IT. That has to with a lack
of a functioning market. Thanks to HITECH subsidies, a bunch of money has
flowed into EHR and related systems. It gives the impression of a customer
paying for these systems, but once that fades a lot of these HIT companies are
going to find that they are not in a market. People who think another 3-4
years will fix the issue are in denial.

Look, there are lot of industries that work in IT integration. If you take
manufacturing, retail, finance, telecom etc. there hundreds of systems from
the '60s and integration (and all the pain) is probably 80% of the work. 100's
of billions of dollars are spent on IT integration. There is no magic 'one
true IT system' but lot of hard work and slog. Nothing very special about
healthcare. But, there is functioning market in these industries. Consumers of
these systems have a very clear idea of how IT is going to help them run their
business, it is sustaining system. They pay money, IT people build systems.

Not so in healthcare IT. Healthcare consists of bunch of fragmented and tiny
providers interspersed with some large players. As such very few are managed
as a business (as a retailer would for ex.), instead it is managed almost like
a bazaar style haggling model. Try to squeeze out as much as possible from the
insurance company, reduce the cycle time of payment, negotiate some extra
tests, enter the correct ICD code etc. No standard business metrics that
everyone can agree upon. If the value pitch is "we will help you get paid",
then you have failed. My view is that this state of affairs will continue
until there is some large scale integration and verticalization. Until we have
these fragmented healthcare system in place I don't see a good future of
healthcare IT.

I mean sure there will always be some people doing this, but people have
working on healthcare IT since the '60s. Having super clean one true data
model is fanciful at best but it actually will not solve anything. The $40
Billion of HITECH subsidies have managed to create a half assed EHR ecosystem
with Epic taking a chunk of the market share. It will be interesting to see
how the industry will manage to get the customers to pony up the next $40
Billion and the next and the next. In a fragmented system, the only IT system
that can work is some sort of Slack type system (or communication tool) for
patient/providers or between providers.

------
Mz
Give me a fucking break. HIPAA compliance is actually an issue. Published APIs
may have benefits to businesses, but what is the benefit to the patients? He
claims this hurts patients when his only evidence is his company couldn't cut
it. HIPAA was written in the interest of patients who don't want the entire
world to know they are HIV positive or have had 5000 sex partners because they
are a sex worker or whatever. Lives can be ruined by leaving that kind of info
flapping in the wind. Furthermore, federal fines for not complying can be
painfully high.

If you don't want to deal with HIPAA and take it very seriously, then stay out
of this space. You aren't worthy.

~~~
organsnyder
Just because the APIs are published doesn't mean that the data is out there
for any unauthenticated client to access. Of course HIPAA is important, but it
is not a serious problem for interoperability.

I work on a SOA team for a large healthcare organization, so I'm well aware of
the issues. The problem comes down to the usual case of entrenched vendors
working to protect and expand their turf. EHR vendors are notorious for being
terrible for interop—some are better than others, but they all see
integrations as competing with their own offerings. Non-trendy methods of
exposing data—SOAP, custom MUMPS code, direct SQL access—are the norm. That's
not a problem, except that documentation is often incorrect or nonexistent
(while being restricted to direct customers, of course), and the vendors
really don't care about APIs. They see interop as a necessary bullet point on
a sales sheet, but they'd rather not have those APIs be used in place of their
(usually crappy) complementary apps that they're trying to upsell.

Interop is a HUGE win for patients. Without it, we lose one of the main
advantages of EHRs—the ability to access our own information when we need it,
and allowing the information to be fluidly shared between providers. Of
course, privacy is paramount—but in my experience, interop is not the attack
vector I'm most concerned about.

~~~
Mz
Well thank you for those remarks. It really doesn't change my assessment of
the piece. He is basically arguing that his competitors aren't graciously
handing over the reins so he can make bank. How shocking. Like him, other
people want to protect their income stream.

He dismisses the presumed "cheap excuse" of HIPAA compliance given by someone
who did not want to work with him. This does not give me confidence he takes
HIPAA seriously. I had annual HIPAA training (as well as Gramm-Leach-Bliley)
when I worked for a major insurance company for a few years. So I am not
unfamiliar with HIPAA.

------
webjprgm
BTW, while I would love to improve the healthcare industry and I wish you the
best of luck, I don't think software is the primary problem. Sure, it is very
expensive and always 10 years out of date. But the real problem is government
and the payer model.

I'm excited to see where retail clinic initiatives like CVS's go, since that's
actually a real change to how I, the patient, get care. Instead of consulting
my insurer's website to find out what clinics they accept then calling up to
make an appointment in a busy doctor's schedule, if I could instead just walk
into the store and get what I need like I could any other product that would
increase the convenience by enough that I might use it to keep healthy rather
than to fix myself when I'm very sick.

We need ways for companies to compete in giving the most convenient service at
the best prices. We need full price transparency. We need the prices to be
things people could actually pay. (Insurance was originally for catastrophic
care where the cost for a major illness or surgery would get too high.) Having
prices so high that only insurers can pay them means only insurers DO pay them
and since hospitals and clinics know this they can charge whatever they want.

(I once went to a dentist who advertised cheap wisdom tooth removal. I found
out the way he did it was send a huge bill to the insurance and whatever the
insurer declined to pay he would just forgive. Basically he is kinda willing
to work for free but take as much as he can possibly get from the entity that
has the deep pockets.)

~~~
chimeracoder
> (Insurance was originally for catastrophic care where the cost for a major
> illness or surgery would get too high.)

Agreed 110%.

> Having prices so high that only insurers can pay them means only insurers DO
> pay them and since hospitals and clinics know this they can charge whatever
> they want.

I've explained this in more detail on another recent HN thread, but basically:
prices are 'so high that only insurers can pay them' by design, but it's not
for the reason most people think.

It is generally illegal for providers (hospitals/doctors/etc.) to charge
different rates to different patients based on their insurance status[0].
However, it is not illegal for providers to negotiate standard rates for
specific payers. Combine this with the fact that providers lose money on their
publicly-insured patients[1], and it becomes clear that they have to
overcharge the rest in order to end up in the black.

So what they do is set absurdly high sticker prices, knowing that the private
insurers will negotiate those down (usually this is done in multiples of what
Medicare pays - e.g., Aetna will say, 'We'll pay you 150% of the Medicare
price for billing code 99481 this year'.

Uninsured patients are stuck with huge bills as a result, though this is
basically an unintentional side-effect of the fact that hospitals _can 't_
give them lower bills initially. It's also the reason that hospitals are
almost always willing to negotiate with uninsured patients. If they know to
ask, they can almost _always_ get that down to 10% of the original rate. That
bill isn't meant for individuals, they don't really expect individuals to pay,
and they'd much rather negotiate a discount and have it paid in full
immediately than have a patient default, which has negative repercussions for
their bad debt ratio.

Privately insured patients end up having higher premiums as a result, because
their insurers are paying higher rates to subsidize other patients who are not
paying any premiums at all (publicly insured patients)[2].

[0] There's a little nuance to this, but that's the general idea.

[1] Medicare reimburses less than the actual costs of services provided per-
patient, before accounting for any overhead

[2] This subsidy happens at the claims level, so it counts towards the
insurer's requisite MLR.

~~~
maxerickson
_[1] Medicare reimburses less than the actual costs of services provided per-
patient, before accounting for any overhead_

Hospitals don't even know what a given service costs, so this statement seems
to need a little more equivocation around it.

~~~
chimeracoder
> Hospitals don't even know what a given service costs,

That's not really true. We're talking about the costs of goods sold, which
means it's pretty easy to place a lower bound on the marginal costs. For
example, if the lab supplies for running a certain test cost $100/unit from
the vendor and Medicare pays $93, you know that the hospital is losing money
off of it. We're not taking into account the overhead, infrastructure, or any
of that stuff, since it doesn't factor into COGS.

Anyway, this number comes straight from Medicare's own figures, astonishingly.
I can't dig it up right now, but it's in the public record, somewhere within a
~100 page PDF. I have the PDF at home and have linked to it on HN before.
Medicare literally acknowledges that they reimburse less than 100% of the
direct costs that they incur (in 2012 it was 93%, IIRC.)

~~~
maxerickson
I don't see it here:

[https://hn.algolia.com/?query=by:chimeracoder%20medicare&sor...](https://hn.algolia.com/?query=by:chimeracoder%20medicare&sort=byDate&prefix=false&page=0&dateRange=all&type=comment)

I don't think you would have linked it in a comment where you didn't mention
medicare.

I'm honestly curious about it, I certainly believe that Medicaid
reimbursements are not matching costs, but I think for Medicare they often
are.

~~~
chimeracoder
Not the PDF I'm thinking of, but just googling the numbers I remembered, here
one example:

[https://www.floridahospital.com/sites/default/files/finance_...](https://www.floridahospital.com/sites/default/files/finance_part_i_revenue_hib_november_20131.pdf)

> In 2012, beneficiaries of Medicare and Medicaid received nearly 60% of the
> clinical services provided by Florida Hospital (as measured by charges)vi.
> However, payments from these government programs represented just 40% of
> Florida Hospital’s total net revenuevi . In comparison, private payers
> received 30% of the care provided by Florida Hospital and represented 56% of
> its total net revenuevi

And the next paragraph:

> hospitals such as Florida Hospital have no ability to negotiate the payments
> from the public payers – Medicare and Medicaid – that pay for the majority
> of the clinical services provided. This poses a tremendous financial
> challenge for hospitals because these payments do not cover costs. In order
> to overcome these shortfalls, hospitals negotiate higher rates from private
> insurance groups. For this reason, continuing cuts to Medicare and Medicaid
> payments create an unsustainable business environment and put undue
> financial pressure on private payers

(The common response to this is that we need to increase funding to Medicare.
While it's true that Medicare happens to be underfunded, that doesn't actually
address the structural problem. Because Medicare has the ability to change
their reimbursement unilaterally[0] while it has to request additional funding
from Congress, these two will _always_ be out of sync).

[0] the word 'negotiate' is often used here, but since hospitals are
essentially legally required to accept Medicare patients, it's no more a fair
negotiation than the negotiation you have with Comcast over your bill. You can
squeeze a few extra dollars out of them if you fight, but at the end of the
day, Comcast has all the power, so they can - and do! - price-gouge.

------
drivativ
One way this industry may get nudged significantly (disruption is too strong a
word and not exactly a great thing when dealing with peoples health) is to
approach it from the outside the system and come at it from the consumer
health angle. Yes, it is far more limited in many ways as you can't build a
system a hospital can integrate but there is still a lot that can be done.

20-30 years ago, if you had a problem, you went to a doctor and that was about
it. Now, people are more likely to choose to (or forced to by cost) seek
alternative practitioners or at least partially take matters into their own
hands (independent research, dietary and lifestyle changes, etc). These will
usually be people who are not really getting helped by the system and are
probably facing issues where lifestyle is a big factor (autoimmune issues,
diabetes, obesity, etc). If you can successfully help that group of people
where the system has failed to, then you may start to see some real changes as
most people ultimately will (eventually) gravitate to what actually works
(yes, I am an optimist).

Of course, as another commenter mentioned, we tend to be terrible at doing
things now to benefit our future selves, but I still believe technology could
play a big role in helping with that and the current options, like wearing a
fitbit, are barely scratching the surface, mainly in that they aren't yet
doing much to prove their benefit to the consumer or obviously help them day-
to-day. That is a really hard task when health changes occur over long
timespans but at least it is just hard-hard, not EMR/politics-hard.

~~~
ScottBurson
Maybe something like this?
[https://www.patientslikeme.com/](https://www.patientslikeme.com/)

~~~
drivativ
I have used them and they are definitely on the right path but they haven't
yet got past the point of just showing a lot of graphs and comparative
statistics, etc. As always, it comes down to translating data to useable
knowledge, which we as an industry are obviously trying to figure out across
pretty much all verticals

~~~
kgrin
My understanding is that PLM very much translates to useable knowledge - just
for the pharma and PHM folks who mine the backend (which is how they make
money). Notably, this is all quite above-board: it's not a "secretly mine
people's private medical details" situation, it's "overtly mine people's
private medical details in order to help find treatments for their rare
disease"...

~~~
drivativ
You are right about that - and I think they are doing something really good
(and props to them for being really up-front about how they operate) but
unless they can really do something to help patients day-to-day, is seems the
participation rate will probably always be small and inconsistent, which means
a smaller, less-complete data set that will yield less accurate and useful
results.

Again, I like the goal and I did try them but it is not a good user experience
or particularly helpful on the individual level so even doing it
altruistically really didn't last. To get that kind of rich dataset, you need
the user to be highly engaged which means they are really getting something
out of it and using it for the primarily selfish reason that it helps them.

Having now had a lot of experience dealing with the medical system as related
to complex and chronic diseases, I still find myself really surprised by how
little the "consumerization of x" movement has impacted it. Per point of the
original article, I shouldn't be. The massive bureaucracy, the regulatory
capture, and the general politics of the industry are so all-consuming that
there is little time or energy left over for the patients. (disclaimer: yes,
there are a ton of amazing individuals working in the industry but even they
are, unfortunately, really handicapped by the system itself)

------
5706906c06c
To think that your startup can "disrupt" an industry that has the spending
equivalent to that of the GDP of an entire country is a fool's game. Most need
to focus on longevity versus strategizing a quick exit.

Also, I worked for one, been part of the contract negotiations and have seen
at first hand the difficulty many face trying to deal with providers and
payors.

Shameless plug, I'm available for HIPAA consulting in San Francisco. I'm a
former InfoSec officer.

~~~
msrpotus
Could I talk to you about a project I'm developing? It's marketing solutions
for healthcare practices, ideally connected to EMR and IT systems. Would love
to hear your thoughts and advice.

Email is in my bio.

------
siavosh
The biggest issues I've seen haven't been legacy/technological challenges, but
almost completely political/incentive/motivation reasons on the part of
hospitals wanting to build interfaces for many practices. On the part of
vendors, many systems Nextgen/Allscripts/GE etc, can often charge an
exorbitant amount to build and maintain the interfaces.

Even if a practice/vendor is savvy and deep pocketed enough to get past the
politics and expenses, then you're at the whim of the competence of the
interface teams which can range from incompetent to good, with the average
being on the lower end. I've often seen something that should literally take a
couple hours, take a year to get completed, if ever.

There are bigger initiatives taking place to try address some of these
interoperatibilty issues, namely Health Information Exchanges (HIEs), although
their economics remain unproven.

It's not all gloomy, I can honestly say that in the last 5 years, anecdotally,
the hurdle to building interfaces feels like it's getting less and their
sophistication and capabilities are getting higher.

------
webjprgm
No discussion about APIs in health care EMRs would be complete without
mentioning HL7's new FHIR protocols: REST-ful web service endpoints for HL7
health data. It makes developing applications with these standards much
easier.

But that's only one piece. You need business relationships to even connect to
the EMR in the first place. I think the problem with breaking into this
industry is: (1) Huge incumbents with tons of cash who have shown they will
spend a lot of money to smear each other, buy out smaller companies, or just
implement the new feature in their own system. (2) Excessive government
regulation which makes it hard to play in this area legally and makes everyone
afraid to work with you.

I had a couple friends pitch me a medical-related startup idea a few years ago
and I declined. They didn't last long before some bigger player came and
implemented their idea thus stealing their customers.

Also, the article mentions reinventing the wheel of integration libraries.
Having open APIs will not magically solve all problems. It mentions Kareo and
says they are building out their own EHR. THAT is reinventing the wheel. An
EHR is mega-huge. It has tons of modules and for the main vendors takes 18
months to 2 years or so to configure it to the satisfaction of all parties. It
sounds like the advocated world is to have lots of small "open platform"
companies re-invent the wheel by making a new EHR module-by-module but with
different startups inter-operating instead of locking each other out. You
realize that all the major vendors today started like that? They were all
first one module and gradually added more. Why do you think hospitals tend to
buy the integrated software to replace myriads of independent legacy systems?
If you can't fully understand that and articulate why your "open platform"
would be better then you're going to fail.

~~~
lbhnact
FHIR is probably the best hope that we've got. I am biased of course, but I've
bet a few years of my life on it. :)

Happy to help anyone learn more about the spec @medhacker

[1]
[http://www.annemergmed.com/article/S0196-0644(15)00226-7/ful...](http://www.annemergmed.com/article/S0196-0644\(15\)00226-7/fulltext)

~~~
angersock
FHIR is gross and overdesigned, like everything else in this moribund
industry.

~~~
nradov
Instead of complaining, feel free to propose a better alternative. The HL7
standards development process is very open.

However usually the complaints about health IT complexity come from people
with a lack of domain knowledge. The industry is irreducibly complex. Attempts
to drastically simplify the IT systems and standards are doomed to failure
since they lose the ability to cope with many common real world situations.

~~~
angersock
The industry's _irreducible complexity_ is killing people every day, and
bankrupting the survivors.

The fact of the matter is that the gatekeepers blocking improvement (which
really only is attainable through simplification and standardization) are
going to keep doing so until they die or are payed off.

We've spent 30 years building up a morass of incompatible and tailored systems
and then training all the administrators that this is somehow normal and
acceptable.

------
jseliger
I'm a grant writer and have worked for numerous Federally Qualified Health
Centers (FQHCs) and a smaller number of hospitals. From their perspective, EMR
and related systems have tended to cost at least as much as they've saved.
Some of them have seen the vendor jousting Sung describes and have experienced
all sorts of vendor fatigue and vendor lock-in.

At the same time, FQHCs and hospitals are facing CMS requirements that dictate
increasing EMR usage. This effort has had... some setbacks, let's just say.
And what Executive Directors are willing to say off the record is not pretty:
[http://seliger.com/2015/10/25/meaningful-use-regulations-
cms...](http://seliger.com/2015/10/25/meaningful-use-regulations-cms-hrsa-
fqhcs-and-the-stalled-push-to-electronic-medical-records-emrs).

~~~
toomuchtodo
Why doesn't the federal government build an EMR system and require its use as
a condition of accepting Medicare payments?

Sure, I'd expect a terrible process and result previously (such as the mess
healthcare.gov was when rolled out), but I have a lot more faith with the USDS
and 18F in place.

~~~
samstave
They did. VA pioneered emr...

OpenVista by medsphere is based on Vista, the gov emr...

All emr companies are walled gardens.

In 2009 I built the first mobile HL7 compliant client for the iPhone which was
emr agnostic and could work with any emr -across an esb... But all emr
companies shunned us because they wanted to protect their walled gardens. At
the time hospitals shunned us because they didn't believe the iPhone was a
good enough device (big enough screen) to be usable...

We built integrations into a number of systems... But couldn't get traction at
that early stage. So we open sourced it through medsphere...

Dr chrono came along and took different tack which was to make an actual
emr...

After working with so many hospitals and these systems I basically gave up...
The system is pretty broken and the artificial barriers to entry are pretty
lame.

~~~
floatrock
> HL7 compliant client... which was emr agnostic

In my experience, there's no such thing. HL7 is a spec in only the loosest
sense of the word. Half the time you had an 80-character console output dumped
into the "freetext" fields. Then there's all the codes used for different
drugs, tests, admission/discharge (plus differentiating when they're
standardized or user-entered with appropriate typos).

Point is, all the costs were really in the integration. Getting access to the
HL7 streams wasn't bad once you got far enough in the sales cycle. Once you
had it, it was a one-off project to parse the specifics of the messages. And
that was just for a read-only analytics system... trying to generate
compatible messages to feed back to the EHR is a whole other beast.

That's the challenge getting into this space if you're a web or cloud
engineer... you come in with the mindset that "oh, HL7 is a messaging
standard, I'll just read the spec and use it." In practice, there's an
infinite amount of variability. You really need to treat each hospital as it's
own one-off integration, plus all the politics needed to get access to the
messages in the first place.

~~~
toomuchtodo
That's exactly why I'd want to tie a nationwide EHR/EMR system to Medicare
reimbursements. In this case, not only must you drag the horse to water, you
must force it to drink.

~~~
floatrock
Obligatory xkcd: [https://xkcd.com/927/](https://xkcd.com/927/)

~~~
toomuchtodo
Touché.

------
paxtonab
It's not just the lack of API's that makes it hard for digital health
startups, a big hurdle is the perceived lack of security of a cloud based
solution in regards to health care data.

A friend of mine works for a digital health startup, and the majority of the
RFP's they receive automatically disqualify them if they have anything hosted
in the "cloud", so they are forced to buy and maintain all of their own
servers.

In addition to these costs (which could already be considered prohibitively
expensive) they have to use enterprise versions of proven ETL and BI tools for
the perceived added security benefits (i.e. they can't use open source).

~~~
dankohn1
I believe this is out-of-date. Our healthcare startup has passed in-depth
security reviews from multiple huge carriers, and we operate in the cloud and
use tons of open source. (We're hiring Rails devs!)

It is a meaningful effort to be HIPAA-compliant, that prevent us, for example,
from using lots of cool SaaS services. The bigger issue for us is that each
integration still has customizations associated with it, because of a lack of
agreement about what fields mean.

------
Skeletor
At drchrono (#1 iPad EHR on the Market, YC W'2011) we are building a very open
API that has an open door policy to our customers and other digital health
startups.

If anyone is working in the digital healthcare space we'd love to work with
you. You can get access to and build on our JSON API in 1-2 days. Sign up
here: [https://drchrono.com/api](https://drchrono.com/api)

Here is a youtube video we shot with a startup that built on our API:
[https://www.youtube.com/watch?v=HBCIzuXEH44](https://www.youtube.com/watch?v=HBCIzuXEH44)

~~~
whereswaldo
My dad's practice uses drchrono. It looks like the API usage is still in it's
infancy. Can't wait to see more companies take advantage of it!

------
Sherri
I respectfully do not agree with John's statements.

1) You can do an easy light integration with the right IT shops just using for
example on EPIC: Wellconnect, Oauth, and whitelisting servers on both sides.
This takes three days and provides much of what most providers require.

2) Like stated at the recent Healthtech conference, no one should try to come
into digital health without a decade of healthcare experience at least to
understand the challenges, drivers, political, regulatory, clinical,
technical, and macro financial.

Just my respectful but diverging opinion.

Best,

Sherri (CEO at Medigram)

~~~
Sherri
Weconnect

------
syed99
Regulations, Big Pharma and Legacy Software will all take years to change,
changing the behavior of an industry is usually pioneered by a few and in
medicine that's pretty tough.

All is not lost though, startups that make software for healthcare are slowly
taking hold of the market, but all those startups that have been killed off in
the process have made a change for the newer ones to get this far.

------
mgkimsal
"This kind of behavior by incumbent vendors leaves a lot of young digital
health startups at risk of not being able to scale fast enough before their
seed rounds dry up."

And the incumbent vendor would say ... "so what?" Why would they care that
young startups can't gain traction? What's in it for them? Pretty much
nothing, from what I can see.

------
c-slice
EHRs are starting to open up more. EPIC (largest EHR vendor in the US by
market share) just opened an API for some types of medical data. AllScripts
and Athena also have open-ish APIs. 5 years ago none, and I mean literally
zero, of the EHRs had APIs.

~~~
ndonnellan
Practices on EPIC are still fundamentally non-networked, so even with an
"API", you can't scale your product from one practice to all of them without
some amount of non-trivial integration.

I work at athena and we're dogfooding our API for an increasing number of
products/components as it's an easy way to both decouple internal services and
improve the API for our partners. From my lowly, uninformed position as a
developer, we're growing the number of partners as fast as our team can
support at this point.

~~~
markolschesky
That's true on the one hand. On the other hand, Athena wants a significant
chunk of your profits to connect to their API. At least HL7v2 interface were
one-time, scale everywhere from a cost model.

------
CurtMonash
When the cost of adopting your technology is vastly higher than the price you
charge, you're usually screwed.

------
Animats
_" Another well-established vendor created a partner program under the guise
of wanting to disrupt the EHR market (one in which they had significant market
share), then later rejected our application because, they said, it was
competitive with one of their modules."_

Now, where have we heard that before, in the mobile device space?

------
andy_ppp
Yes, the old buying closed source software being shit for companies eh.
Surprising.

------
hitekker
Articles like this make me wonder about Oscar Health.

~~~
tzier
Oscar Health is actually an insurer. They're trying to win by (a) better
marketing and (b) using tech (like free fitness tracker) to reduce their loss
ratio.

I've heard their innovation was also in pre-paying facilities for services.
The collection rate for facilities from insurers is abysmal, so Oscar can
negotiate a substantial discount by paying up front. Same idea as if you go to
an MRI facility and offer them cash up front - they sometimes give discounts
up to 75%. (Note: not 100% sure Oscar does this, I heard from investor and
don't have time to research.)

~~~
srunni
_What Oscar Is Up Against_
([http://go.theinformation.com/152dc2](http://go.theinformation.com/152dc2))

> After two years in operation, the financial trajectory is becoming clear,
> both in terms of the growth and the costs. In New York, the company
> projected a sevenfold increase in premium revenue next year to $399 million
> from 2014. But it also projects a loss of 12% of premiums, equivalent to $47
> million, according to regulatory filings.

...

> Oscar’s losses stem from two sources: higher medical costs as a percentage
> of premiums than rivals, and higher administrative costs, both of which are
> traditionally problems of scale in the industry.

> In New York, it projected that 91.5 percent of premium revenues would be
> eaten up next year by medical claims costs, among the highest projected
> ratios in the state. That leaves little left over to pay for administrative
> costs, estimated to be 17 percent of premiums next year, or taxes and fees.
> Included in administrative costs are the company’s engineering and marketing
> costs.

> History says insurance companies need at least 200,000 to 300,000 members in
> a state to be viable, according to Ash Shehata, a partner in KPMG’s health
> care practice; Oscar had 38,000 members in New York and New Jersey as of
> June 30, with plans to expand to Texas and California this year.

...

> But Oscar believes it can succeed as a sustainable and profitable business
> with only 80,000 to 100,000 members per state, according to a person
> familiar with the company. Though scale is important to contain
> administrative costs, the person said, Oscar’s plan is to avoid playing the
> big insurance company game of using size to negotiate lower claims costs
> with providers. Instead, it will curb claims costs by partnering closely
> with select providers to exchange data.

'Partnering closely with select providers' is probably the same thing you're
referring to - pre-paying facilities for services.

~~~
Mz
Why did they start in New York? In order to do business in New York, an
insurance company has to be headquartered (incorporated) there. (Edit: No
other state requires this.) And New York is expensive.

This sounds dumb to me.

~~~
srunni
They probably started in NY because most of the founding team is living
in/near NYC, according to a document filed with the NY DFS
([http://www.dfs.ny.gov/insurance/exam_rpt/x9475o13.pdf](http://www.dfs.ny.gov/insurance/exam_rpt/x9475o13.pdf)).
It also states that "The Company is a wholly-owned subsidiary of Mulberry
Health Inc. (“Mulberry”), a Delaware Corporation."

Perhaps they thought that the administrative costs stemming from operating in
NY wouldn't make/break the company - it's whether they can substantially
reduce the claims costs that will really determine the outcome. And if they're
from NYC, the founding team probably had preexisting contacts in the local
medical institutions, which made it easier to form the partnerships that are
key to making Oscar's business model work. One of the founders is Joshua
Kushner
([https://en.wikipedia.org/wiki/Joshua_Kushner](https://en.wikipedia.org/wiki/Joshua_Kushner)),
whose family is well-connected in NYC (for example, his brother's father-in-
law is Donald Trump).

~~~
Mz
The insurance giant I once worked for also has a wholly-owned subsidiary in
New York. This is probably a common tactic for coping with the ...quirky New
York law concerning "No insurance company can sell insurance in our state
unless you incorporate in our state."

I know something about the history of the insurance giant I worked for. I know
that their success has a lot to do with one of the founders having been a
lawyer by trade and making strategic choices concerning things like where to
found their headquarters.

I have trouble fathoming doing something less strategic while hoping to break
into such a highly regulated industry, basically.

Anyway, thank you for replying. Have an upvote.

