Healthcare is one industry that many technologists and entrepreneurs have either overlooked or discounted for a multitude of reasons. The bureaucratic nature of the stakeholders in the industry (hospitals, physicians and patients) is a headache to deal with for a startup with no money, switching costs from old technologies to new ones are often expensive for doctors and difficult for startups to overcome, and the regulatory environment/politics for each country is very different which poses many problems when a company tries to scale beyond their home borders.
There has never been a greater need for innovation than right now in healthcare. The deficit in the U.S. is in large part due to a troubled healthcare system. Healthcare costs account for 18 percent of the U.S.’s GDP compared to 10 percent among other developed nations. Furthermore, the country is still feeling recessionary symptoms and Obama is calling on the American entrepreneurial spirit to be the one that lifts the country to flourish once more, exemplified by his We Cant Wait initiative that commits $2 billion to startups over the next three years. Entrepreneurs are starting to disrupt healthcare in order to lift its strain on the economy.
Ryan Howard, CEO and founder of San Francisco-based Practice Fusion, is a prime example of an entrepreneur who recognized and took advantage of this opportunity. He founded Practice Fusion in 2005 as a web-based electronic medical records solution for physicians and hospitals. What has been historically provided for upwards of $40,000, Practice Fusion manages to provide for free and physicians across the country are adopting it rapidly, with over 100,000 physicians have transfered their records to their system. Howard says that the real “silver bullet,” once Practice Fusion has data for 100 million human patients or more, would be direct engagement with consumers — that is, analyzing medical records to offer people personalized health information and advice. “WebMD has been successful, but they don’t own the market,” Howard said in an interview. “If better content came out tomorrow, people would go search that content.”
Opportunities in this space aren’t limited to B2B companies either. Frank Moss, director of the M.I.T. Media Lab, predicts a “technology-driven revolution in consumer health.” These solutions will attempt to decrease health costs by integrating into consumer’s everyday lives and encouraging healthier habits. Massive Health is an app that aims to help people take control of their eating habits, crowdsources a rating on how healthy a user’s meal choices are, and keeps track of their diet. Consumers can also manage their healthcare costs and insurance providers in one place now with startup Simplee. Incubators such as Rock Health out of Silicon Valley are also beginning to pop up to enable startups in this space.
Many of the innovations in this space will be in the form of companies that decrease the downstream costs of bad health habits, which is particularly important for developing countries where technology can impact the quality of life for many. Doctors are often vastly outnumbered by the amount of ailing patients and in using technology to increase the efficiency of these visits, doctors can see many more patients who previously wouldn’t have access to them. MedKenya is in private beta, and will increase access to medical information via mobile phones to Kenyans, while Medic Mobile helps rural doctors increase the efficiency of their time through an SMS coordination system.
Many criticisms of this space stem from an inability to identify scalable and sustainable business models. However as technologies become more sophisticated this should change and investors are beginning to recognize this fact as well, and 77 percent of VCs expect investment in healthcare IT to increase next year. While there are many challenges facing entrepreneurs tackling this space, the opportunity to create a highly profitable business that contributes to society positively has never been greater.
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