
Healthcare - llambda
http://www.avc.com/a_vc/2011/11/healthcare.html
======
absconditus
I have worked on healthcare software for the last decade. Healthcare
technology is really not something that one can understand from the outside.
It is also not an area where web startup knowledge is as applicable (eventual
consistency is entirely unacceptable, any caching of data must be very precise
to avoid showing stale data to users and is generally not done, all sales to
hospitals and most physician groups are "enterprise" sales). There are many
different standards for data transmission, but none of them are required and
most people see them as more of a recommendation. Non-technical people are put
in charge of technical projects.

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.

<http://www.epic.com/>

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.

<http://www.intersystems.com/>

~~~
zdw
Epic's software looks and (according to the doctors that have to use it) works
like a bad 1990's database program written in Access. I work with a hospital
that has it implemented. It's inflexible crap, where their idea of someone
using it on a tablet is "get one with windows, or here's a RDP session you can
get to through a VPN". One doctor I know said it took him 17 clicks and both
reading help and contacting the help desk to enter simple information, which
turned out to be in a totally nonintuitive way.

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.

~~~
absconditus
As bad as Epic's software might be, the rest of the software in the industry
is worse.

~~~
tomh
Interesting side note about InterSystems - I interviewed there a few times
about 10 years ago, and the first step was a written exam in Mumps (the
programming language). Turns out it's popular in the healthcare space, being
used in both InterSystems Cache and VistA, the open-source medical records
system used by the Veteran's Administration:

[http://stackoverflow.com/questions/256876/tips-for-
learning-...](http://stackoverflow.com/questions/256876/tips-for-learning-
mumps-m-cache)

------
OstiaAntica
Education and health care are both dominated by government as the single
largest player in the marketplace. The U.S. government actively sets the
number of doctors, the types of procedures that can be covered by insurance,
and dominates market spending through its Medicare, Medicaid, and VA programs.
And if you aren't on a government program, the tax code forces you into a
employer-provided insurance ghetto.

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.

~~~
MJR
First, most Americans fall outside Medicare, Medicaid and the VA programs. The
government currently does not regulate individual/employer coverage. I would
not characterize the entire private insurance industry as an "employer-
provided insurance ghetto" - what does that even mean?

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.

~~~
OstiaAntica
It is a common tactic for people invested in a broken status quo to dismiss
critics as "not understanding the complexities". Which insurance company or
regulator do you work for? I've worked on health care policy professionally, I
assure you I understand the issues.

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.

~~~
10100101001
Listen, you don't understand the complexities...

~~~
10100101001
Is humour not allowed?

~~~
bdr
It's not _forbidden_. It's just rarely considered worth the space. I hate to
say "lurk more", but you are new here, and you don't yet understand the
complexities.

------
cletus
Personally I believe the problems with healthcare and education are largely
the domain of government to fix.

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.

~~~
jberryman
> Also, litigation is a problem for health care. We all pay for outrageous
> punitive damage awards.

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.

------
dmk23
The problem with venturing into healthcare is dealing with highly regulated
industry and wrong incentives for most of the players.

"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.

~~~
mjbellantoni
"[...]the ones who control real money (doctors, hospitals, insurers and
pharmas / device makers) are highly suspicious of outsiders."

And each other.

------
notJim
The baffling thing to me about healthcare in the US is that there are a number
of models[1] from other nations that have desirable characteristics, and yet
everyone is the US seems to think it's this huge problem that is brand new and
that no one has ever looked at before. It should be well known by now that
most developed countries spend less money on healthcare and get higher
coverage rates and better outcomes. Surely the sane thing to do would be to
research those models and figure out which one seems the best fit to us and
then adapt it. I'm not opposed to innovation, but our approach to solving the
healthcare problem seems seriously fettered by a bad case of not-invented-here
syndrome.

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?

------
chintan
Speaking from a Web/Healthcare IT startup experience: The BIGGEST challenge is
that your buyer, user and payer are 3 different entities. Every budding
healthcare entrepreneur wants to "disrupt" this somehow, but eventually almost
everyone gives up and they either die or become yet-another-enterprisey
software company that everyone loves to hate.

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.

------
buff-a
_When we look at healthcare, what's wrong with it, and what needs to happen to
fix it, we can't see as clearly how the web, technology, and large networks of
engaged users can impact healthcare in a positive way._

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...](http://www.macworld.com/article/161397/2011/07/fda_regulations_for_ios_apps.html)

[2]
[http://www.opensecrets.org/lobby/top.php?showYear=2010&i...](http://www.opensecrets.org/lobby/top.php?showYear=2010&indexType=i)

[3] <http://news.ycombinator.com/item?id=3219909>

~~~
marshallp
This is so true. The AMA and FDA are really the enemies of the public,
countless suffering has occurred because of them.

~~~
disgruntledphd2
And yet we haven't had another thalidomide scandal since the FDA introduced
mandatory clinical trials for new treatments.
<http://en.wikipedia.org/wiki/Thalidomide>

I'm not saying you're entirely wrong, just that its not a simple as you make
out.

~~~
marshallp
people have looked at this before, the net effect is negative, (sorry no
sources off-hand)

