
Why Silicon Valley Is Running Scared From Health Care - waxymonkeyfrog
http://www.theatlantic.com/business/archive/2011/09/why-silicon-valley-is-running-scared-from-health-care/245534/
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cantastoria
I think another factor is that it's really, really hard to get your products
into hospitals. Most hospitals are part of large networks and can't make
independent purchasing decisions. The entire network has adopt your product in
many cases. So you're looking at low-volume, high touch sales that have a long
cycle. Not to mention all the regulatory crap you have to deal with and the
coming 2.3% excise tax on total revenue that medical device manufacturers have
to pay thanks the Health Care Reform bill.

It's easier to just make a Groupon clone and call it a day.

~~~
famousactress
With over a decade building products that are used in them, I'd agree but it's
even worse than that. The sale is so abstracted it's nuts. Purchasing
decisions are made by group-executives, for hospitals, for users (doctors,
nurses, pharmacists, patients).

The distance between the users and the buyers is awful. I think it's easily
the largest problem in getting quality innovative products into the hands of
acute-care clinicians.

~~~
patrickwiseman
I think IT and devices are two different problems entirely. Most of the
healthcare groups I've worked with have their IT purchasing decisions made by
the IT department with minimal input from the senior staff or medical staff.
The IT departments are making their decision based on begin largely
underfunded and are trying to implement any solution that requires the least
amount of effort on their part because of labor cost savings. Which is why you
don't have too look very hard to find high cost solutions with terrible
interfaces for physicians but decent interfaces for IT administrators.

Medical devices have mostly been vetted by physicians and provided to the IT
department who tries to discern what works well in their current network. All
the fat cat decides is a yes or no to the entire proposition. It's a people
system, sales isn't about convincing one person its about convincing many.

The largest problem is always in getting innovative products into the hands
users. With IT its no different than normal and with medical devices you have
to make disclosures to the FDA because of patient safety considerations, but
this paperwork isn't particularly difficult.

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kkowalczyk
There are 2 things that bother me about this article.

1\. They say US has the best (most advanced) health care technology but not
the most affordable or even effective (in that Americans don't have the
longest life expectancy). They should at least mention that it raises the
question: what good is having this technology if most people can't afford it
or it's not more effective than technology available elsewhere? Shouldn't we
care more about making existing technology more affordable and effective
rather than chase the latest technology gizmos?

2\. They say that the problem is that health care technology development is
halted due to less VC investments that are diverted to web startups. At the
same time they claim that medical tourism is on the rise because people can
get more advanced treatment outside U.S. That squarely contradicts their claim
that U.S. health care technology is most advanced and hints that the problem
is primarily regulatory (i.e. FDA approval process takes longer than such
processes in other countries) and not just lack of funding.

~~~
philwelch
Americans also have an atrocious diet and don't walk or ride bikes anywhere.
There's only so much medicine can do if you eat and drive yourself into
obesity, diabetes and heart disease.

At least before 9/11 and the increasing paranoia over foreigners, the US was
actually one of the leading destinations for medical tourists, particularly
wealthier ones.

~~~
wisty
Americans also have poor black people stuck in urban ghettos, which hurts
their statistics.

Until poor black students have a good chance of getting a good education
(which is hard when all the middle-class students flee "black" schools,
leaving schools full of low socio-economic status students, creating big
negative peer effects - teachers can't teach if they spend all their time on
crowd control, and students don't learn if they don't have positive role
models), you I doubt you will get any respectable demographic statistics.

I could talk about how certain educational reforms would improve education at
a low cost, but there's no reason to trust they would work. What would work is
large federal grants, based on low SES student numbers, to attract the high
SES students to not flee, and to improve outcomes for low SES students. Start
at kindergarden (in a few randomly chosen regions), and then work up if it
works.

I'd like to see US health statistics disaggregated by income. I still doubt
they are great, though.

~~~
ams6110
There was a program on one of the PBS channels recently, it might have been
Frontline, where they explored the statistics, and showed that wealth and
lifespan were correlated, and as the "wealth gap" has widened in recent
decades, so has the "lifespan gap."

I was only half-watching, but as I recall the study attributed this not just
to wealthy people's ability to pay for better health care, but also to a
tendency for wealthy people to feel more "in control" of their lives. A poor
person is likely to be more fatalistic. If he gets sick he will not feel that
he has any control over the situation. He will have a lower tendency to seek
treatment. A wealthy person is used to being in control of everything in his
life. He will be more proactive about his health care, and seek treatment
sooner if there's something wrong.

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krschultz
My senior design project was for a medical device company. Five of us worked
our ass off for 4 months to come up with a machine that would assemble parts
of a biomedical device. At the end our system worked great, and it clearly
would have saved the company tens of thousands of dollars a year in wasted
product. Everyone at the company was very excited about it, and they planned
to use it on the actual factory floor.

It was going to take 2.5 years for the FDA to approve it. In the meantime, it
sat on a shelf waiting and waiting and waiting.

With timelines like that, nobody can accomplish anything without billions and
billions of dollars.

~~~
bmj
This. If your hardware/software requires FDA approval, quick and dirty is NOT
an option. And, I think unless you are know that domain (that is, the FDA
approval process), you are likely to just give up because of how
difficult/time-consuming it can be.

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reasonattlm
The best thing that the software / information management community could do
here to massively disrupt the whole ball of wax is to make medical tourism as
easy, intuitive, well-reviewed, and transparent as travel for other reasons. A
lot of rationale for this can be found here:

<https://www.opencures.org>

[https://www.opencures.org/content/open-cures-speed-
clinical-...](https://www.opencures.org/content/open-cures-speed-clinical-
development-longevity-science)

Doing this shouldn't be (as) hard, and it certainly doesn't require you to
become another cog in the the bloated regulatory command and control
structures that's hamstringing the pace of progress in medicine. There should
be greater competition between regions in provision of medicine and strictures
on research, and helping to make that happen is a noble goal.

~~~
VladRussian
>to massively disrupt the whole ball of wax is to make medical tourism as
easy, intuitive, well-reviewed, and transparent as travel for other reasons.

well, considering how Google was hit for advertising Canadian pharmacies, you
wouldn't want your medical tourism review/info startup be under US
jurisdiction.

~~~
jjtheblunt
Wasn't the issue they were knowingly advertising illegal goods, which happened
to be what you wrote, but the important part was illegal?

~~~
VladRussian
>Wasn't the issue they were knowingly advertising illegal goods, which
happened to be what you wrote, but the important part was illegal?

i'm a little baffled by your statement. The same drug produced in another
country - illegal to advertise/sell in the US. The same medical procedure
performed in another country - do you think it is legal to advertise/sell it
in the US? IANAL, lets suppose that it is technically legal right now. How
fast the Congress can close that loophole once it starts threatening the
health care industry profits \- bear in mind that there is the same really
great "public interest" reason here of protecting public from dangers and side
effects of services by low quality, cheap, cost cutting foreign quacks non-
licensed by US medical board.

~~~
mrkurt
Foreign generics are illegal to import in the US because they violate patents
held by US companies. Advertising an illegal import is one thing, but it's
unclear how legal it would be to advertise something like "Come visit India
where you can get generic Singulair while you're here!"

That said, dentists in Mexico aren't necessarily violating any US laws by
doing business there, and you can't import dental work either.

~~~
wisty
Exactly. It's illegal to import those drugs. It's _not_ illegal to go to
another country to get treated.

I'm not a lawyer, and this isn't legal advice, but I'd imagine the only way
they could stop you is by passing a new law, and it would be very
controversial to try. Existing legislation (and stuff that can be done within
the existing framework) is less controversial - bureaucrats and politicians
will just say "it's the law, and I may not personally agree with it, but
that's just the way things work". You can't say that if you are introducing a
new law.

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waterside81
Not sure I agree with the 3 reasons stated but I'd add a 4th: the politics of
the health care system makes it a people problem, not a technology problem.
The technical solutions to "fix" health care exist (EMRs, Big Data solutions
etc.) however the political capital is often lacking in environments where
it's all about covering your own ass.

Having had experience in deploying a web app in the VA, I can personally
attest to the lack of competence at the executive level at large hospital
institutions.

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tonywebster
'Disrupt' has an entirely different meaning when you're working in healthcare
or government, where there's an intimidating culture of politics, status quo
and big money. Actually, those sectors are probably the ones that need
disrupting the most.

There's two distinct things here: medtech/biotech and software. The former is
riddled with patents, government approvals, waiting periods and stonewalling
by the very hospitals and insurance companies that are supposed to want
healthy people, etc. Software is easier: an easier EMR (they exist) might
remove complexity in daily life for medical professionals, but I'm waiting to
see a startup make an impact in the way of meaningful doctor-patient
relationships, especially outside of a static, single clinical visit.

~~~
VladRussian
>'Disrupt' has an entirely different meaning when you're working in healthcare
or government

if it has any meaning at all there. You just can't provide an alternative
government (like better police, tax collecting, military or child protective
services ... :) or other official monopoly protected services (law, medicine,
...) for it is just illegal (ie. they are protected by the real threat of
government's violence).

Look at Uber which even didn't try to provide an alternative cab service, they
only tried to provide a partial alternative _to_ cab service which is official
monopoly (again - protected by government's violence, and yes, Silicon Valley,
especially new generations of it, doesn't deal well in the realm of violence)

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run4yourlives
> _"But today, this system is in collapse, jeopardizing the very foundation of
> what has made the U.S. healthcare system the envy of the modern world"_

I'm pretty sure there are no modern western nations that "envy" the US
heathcare system as it stands. I know that in Canada it is viewed as something
slightly more sinister than Satan himself. (To our own detriment, admittedly)

------
aubergene
"U.S. healthcare system the envy of the modern world." I greatly prefer the
UK's NHS, the US system is an expensive nightmare.

~~~
hugh3
Anyone who doesn't have extensive experience with both is poorly qualified to
comment, I think.

There are great things and lousy things about the US healthcare system. In
terms of the people and the facilities, nothing is better. But the financial
and administrative side of things can be a nightmare.

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bh42222
The last paragraph of that article is prophetic. Large regulators almost never
shrink, or become smarter, or more efficient. At best they tend to grow very,
very slowly - at best.

We (high regulation) are going to experience many fewer unwanted side effects
from medical innovation. We are also going to have less medical innovation.

Other places (with low regulation) will have a lot more people suffer form
unwanted side effects of new medical treatments, devices, drugs, etc. But they
will also have a lot more treatment options, and a lot cheaper treatment
options.

All other things being equal, where would you like to live?

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jswinghammer
You can probably generalize this and bit and say that capital is currently
flowing to activities that are expensive. In this case the activity that
everyone is trying to "fix" is marketing. It's insanely expensive to market
products and services. Reducing costs there would free up resources to go to
things like biotech or whatever else people would rather capital go towards. I
try to stay value free in my judgments on this topic so I'm not really moved
by this to begin with.

I realize that there is a lot of money spent on health care but that money is
spread among a lot of different activities so it's not something a startup
could target and hope to fix on a large scale.

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healthtech
Regulation is a killer, I've seen it in action. Just today I was running the
numbers on a major SW development project for the health tech firm I work for
and basically concluded our whole $40M R&D investment is going to have a
massive negative NPV.

Why? Because of delays due to regulation. Regulation required more developer
time and resources, which definitely put a dent in our projects financials.
But the real killer is that it delayed us getting to market by almost a half a
year and the results of the slowdown and inefficiencies in development are
causing us to roll out a lot more slowly.

So I am too painfully aware of the effects of regulation on health technology.

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startupcomment
Are the factors that the author describes serving to concentrate innovation in
large pharma and large device manufacturers?

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shithead
Fifty years ago, a 'harmless' sedative was withdrawn from the market because
babies were being born without arms or legs:
<http://en.wikipedia.org/wiki/Thalidomide>

Once bitten, twice shy.

