Why Big Tech Failed at Healthcare

The princess. She did an MD/PhD at Stanford

Once upon a time, there was a princess. She went to Stanford and studied medicine and then did a PhD in computer science after getting her MD.

Her father, the king; said “go out and do something useful with your life”.

The princess said:

“I will change the world and make a mobile personal health record that will empower patients by connecting them seamlessly with their healthcare providers’ EHR using FHIR and package it in a mobile app with a beautiful UX for Apple IOS. Patients will be able to share and engage on Instagram”

The queen told her:

“I don’t understand a word of what you said dear, but if it makes you happy — go for it. Just remember — you are an only child and we would love to see successors to the throne by FY 2022. No pressure — but your Dad and I will not be around forever”.

And so it was.

The princess raised some seed money from the royal family office, hired some developer friends from school and a year later launched her app — Royal Clinical — the mobile service that puts in charge of your personal health.

They did all the right things. The used industry standards. The connection between the provider electronic health record (EHR) and Royal Clinical used FHIR (Fast Healthcare Interoperability Resources) standard APIs as defined by the Argonaut Project. They supported data types for allergies, immunizations, lab results, medications, procedures, and vitals out of the box.

The created a seamless connection with the EHR using OAuth 2.0, which allowed users to authenticate using their Google Account and create a persistent connection to the EHR APIs. The Royal clinical app periodically connects to the EHR APIs to pull in any new health records and notified the user when new records are available.

After 3 months — they had 300 downloads. She was dismayed. People are not signing up for my dream. I must be doing something wrong. So — she went out and bought the Lean Startup book and read it and said:

AHAH — I need to do some experiments and ask people what they really want

So she hired Lucifer and they started doing Zoom sessions with people and Lucifer would ask them:

What do you really want in a mobile app for your personal health?

People said — the app is really beautify, but I don’t really want to filter pictures of my shingles on Instagram.

Other users said — umm, this is very cool, but you know, I haven’t been in my doctor’s office for 5 years (unless you count a checkup before the New York Marathon) so there isn’t much to see.

Other users said — when I started getting a fever 3 weeks ago, the app couldn’t help me because my provider’s EHR doesn’t have any data points on low-grade fevers in my health record. So I googled — and it turns out I don’t have Corona. So it’s a really cool app but it’s not really what I need right now. If the app could measure my temperature and give me a quick go/no-go — that would be really useful.

And so she became unsure that the notion of a beautiful mobile UX for Kaiser’s EPIC system was going to change the world.

So she called up one of her professors at the Stanford business school. (she did an MBA while she was doing her internship because her Dad, the king, said it might come in handy some day.

The business school professor said:

The answer is simple. Let’s analyze what the failure of Microsofts Healthvault means for the future of ehrs

  1. Microsoft shut down HealthVault Nov 2019. HealthVault was Microsoft’s attempt at a personal health record system.
  2. The downfalls of HealthVault included its focus on traditional health records over dynamic and patient-acquired data, its lack of integration with many popular wearables and other smart health devices and its limited social and sharing capabilities. Electronic medical records are an extremely small part of the overall picture of a person’s health today. These records are primarily kept and utilized for the purposes of insurance reimbursement.
  3. While the service launched with prominent partners including the American Heart Association, Johnson & Johnson and Allscripts, HealthVault suffered from many of the same issues that felled its competitor Google Health.
  4. Google Health’s personal health information service was introduced in 2008 and ended three years later because of low user adoption. Ironically, one of the services suggested by Google when their own record system wound down was HealthVault.

To the chagrin of doctors, electronic medical records are not leveraged for health optimization. Without genomic data, mobile telemetry, health behavior data, and patient-acquired data, today’s electronic medical records are close to worthless for both the provider and the patient.

So the princess googled again and came up with this picture from https://www.statista.com/

There are 249M connected wearables today in China, India and the US alone

And she said — AHAH. Maybe we should start validating data from privacy-preserving contact tracing and give people the ability to make up their own mind. With our beautiful UX and some anomaly detection — I bet we can make something people need — not just what we want.

And so it was.

Why Big Tech Failed at Healthcare was originally published in The Startup on Medium, where people are continuing the conversation by highlighting and responding to this story.

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A startup that raised $175 million to fix primary and urgent care is still struggling with what its CEO called the 'most complex' problem in healthcare

Summary List PlacementSome of healthcare’s problems are so complex that even the most well-funded startups struggle to fix them.
Carbon Health cofounder and CEO Eren Bali found out as much as his company tried to make prices for doctor’s visits, routine procedures like blood tests, and comparative prices for diagnostic tools like MRIs and x-rays transparent for patients, a feat that sounded simple at first but quickly ballooned into a much larger, systemic problem.
In a Twitter thread posted on December 27, Bali ran through the challenges he and his team had identified in trying to create a menu of sorts for different procedures and treatments for Carbon Health patients.
In the end, he ultimately said the fix lies with insurance companies — not healthcare providers — to fix the way patients and clinics are expected to pay for healthcare in the United States.
“The problem is on the payer side,” Bali told Business Insider. “The payer systems are old and antiquated, and that’s opaque to providers. We are doing all we can on the provider side.”
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Calculating prices ahead of visits proved difficult
Carbon Health serves a wide variety of patients with its urgent and primary care services. It offers booking through an app, and also added virtual visits to any patient seeking care but hesitant or unable to go into one of its physical clinics.
Ideally, Bali said, Carbon would be able to show patients the costs of these services upfront so that the doctor and patient can decide on the best course of treatment together, but hasn’t made as much progress as he would like.
Some relatively new healthcare entrants like Walmart have similar ambitions in making shopping for healthcare just as easy as shopping for groceries. Patients can find Walmart’s cash prices online, such as a primary care visit that costs $40.
Carbon Health has developed a system that works well for patients without insurance, Bali said, because pricing is more straightforward. It created a data analysis tool that looks at different inputs such as existing conditions, Carbon’s cost of service, and other factors to provide an up-front cost to uninsured patients, Bali said. For example, Carbon charges uninsured patients $195 for a primary care sick visit and $69 for a virtual visit, according to its website.
But it was when that same system was trained for patients with insurance that things started to unravel, Bali said. The calculated costs for patients with similar backgrounds, insurance plans, and symptoms only matched 40% of the time, Bali said.
“We can’t explain the difference,” Bali said.
Insurance companies are built on out-dated systems
Part of the variance can be explained by how complex insurance plans are, Bali said. Each plan is essentially unique to the individual that has it, and coverage can range widely even among similar plans offered by the same insurance company.
That’s not something that even the most sophisticated data analytics model can fix, Bali explained. If healthcare providers like Carbon want to tell patients how much they can expect to pay for a visit and associated procedures, insurance companies need to update how they bill both patients and providers.
“It’s driven around the inadequate system,” Angela Miles, head of revenue cycle at Carbon Health, told Business Insider. “We need to rebuild that from a payer standpoint to get to a more modern standpoint.”
More complexity leads to increased costs
Startups like Oscar Health are already attempting to bring insurance companies into a more modern model, Bali said, but larger companies have yet to shift in a meaningful way.
Those that do change, albeit in a more superficial way, actually make the problem worse by making it even more complicated, Bali said, because the added complexity adds time, which adds costs.
“A lot of work that goes towards decreasing healthcare costs is making the system more complicated,” Bali said. “My theory is that things that drive increased cost in healthcare is due to increasing complexity because you can’t be transparent and compete on price.”SEE ALSO: The founder of a healthcare venture fund that just raised $200 million shares why she wants to back founders that are building businesses for their communities
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The founder of a healthcare venture fund that just raised $200 million shares why she wants to back founders that are building businesses for their communities

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Chou O’Keefe said she anticipated keeping up the pace in 2021, writing more checks to companies she believes are reimagining what it’s like to be a healthcare patient in the United States. In Define’s first $87 million fund, she backed a wide range of digital health startups, including LGBTQIA+ primary care startup Folx and in-home care provider MedArrive.
She said to expect more of the same coming from Fund II, with consumer-focused healthcare startups taking center stage over other companies that want to sell services to hospitals or insurance companies. The firm’s thesis formed around backing companies that use technology to reimagine the patient’s experience of healthcare was successful enough in Fund I to earn a vote of confidence in Fund II, Chou O’Keefe said.
“We haven’t seen our strategy shifted, it’s more that the time to market has really shortened,” Chou O’Keefe said. 
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“The make-or-break of digital health is the commercial side of the business,” Chou O’Keefe said. “That’s something that is so critical, and when I started Define the lack of sector-focused early-stage players was a window of opportunity for us because these entrepreneurs need help to build. It takes a village to change healthcare for all of us.”
Chou O’Keefe is betting that founders want to build for their own communities
Chou O’Keefe will write checks from $1 million all the way up to $15 million, depending on the company’s needs. As a former Livongo board member and current Hims board member, she said Define can lead funding rounds that require the active board support, but ultimately leaves that decision to the entrepreneur. 
“Entrepreneurs recognize the oil from water here,” Chou O’Keefe said. “There are people that can partner with you and build these companies with you, but the lessons learned from tech don’t apply in the healthcare space.”
Her investment strategy is in part a bet on authentic founders, she said.
She is particularly interested in supporting the entrepreneurs that are building solutions for their own communities because that perspective can be a differentiating factor that contributes to a company’s success.
Of Define’s 12 portfolio companies, four are founded and led by women, one of the many communities Chou O’Keefe feels has been left out of high-level healthcare business decisions in the past.
“It’s important we have women founders and CEOs in this space because we make the decisions, and it’s really the right business decision as well,” Chou O’Keefe said.SEE ALSO: The 26 billion-dollar startups to watch that are revolutionizing healthcare in 2021
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