Breaking the innovation logjam in healthcare

I have argued that innovation is declining in many industries, including pharma, but in the rest of healthcare, I’m seeing an explosion of innovation. We have software that reads and diagnose images, apps that can take a picture of your face and evaluate your health, sensors that can see you stumble through walls, glasses that take doctors notes and provide advice, and companies working to grow new organs and attach mechanical arms to your brain. This innovation is coming from the usual sources (academia and industry), plus thousands of startups and hundreds of spinouts from established healthcare providers. However, these fragments of an amazing future are having a difficult time reaching the market. There’s a logjam on the way to customers, and technology is piling up behind it.

The problem: Institutions move much more slowly than people

Most people get health advice from “providers”, big organizations that employ doctors and such. That creates a problem, because these big organizations move quite slowly. It’s hard to manage a hospital network that has tens of thousands of employees, hundreds of thousands of customers, and provides thousands of different types of services. Just running the operation the way it exists now is so complicated that these organizations can only absorb and implement a small number of changes per year. It’s a classic problem of B2B sales (business selling to large businesses) that it takes the recipients two years to buy and deploy any new technique or technology.

In contrast, a human can download a new app and try it out in five minutes. Adoption by consumers (B2C adoption) is vastly faster than organizational adoption. In most industries with rapid innovation, there is some B2C channel. Consumers buy smartphones and apps directly, and it doesn’t take long to roll out a new one.

If we want to break the innovation logjam, we will need to find a way to deliver new technology and technique directly to consumers. We need a B2C channel.

What can we deliver to consumers?

Typically, a product that is sold directly to consumers is targeted at a “persona”, a consumer with a specific type of need. In the health business, consumers have personas like “healthy person seeking fitness”, or “mother with kids”, or “caring for an aging family member”, or “diabetic”, or “being treated for cancer X”, or “managing cardiovascular problems”… etc. This corresponds roughly to a service line at a full service healthcare provider.

Each of those personas will want a “solution”. The solution could be in the form of a specialized clinic — that’s how dental clinics and fitness centers work — but it could also be provided in a scalable technology package. That package would probably include:

These solutions must be highly automated because the must be inexpensive. Consumers usually don’t buy expensive health care directly. But, they will pay modest amounts for good health advice.

Where do we get these solutions?

There are companies selling this type of solution for big populations. For example, Virta bills itself as a “virtual clinic” to suppress type 2 diabetes at $400/month. However, this type of “solution” packaging for a complete persona is not quite what most of those startups and spinouts are producing. What they are producing are more like fragments of a solution. Someone needs to pull together and integrate the pieces.

Fortunately, there is a LOT of raw material to integrate, coming from the technology backlog. And, in another piece of good news, this product can be produced and distributed with global economies of scale. Healthcare providers are different in every country of the world, with different regulations, and different management, and different funding. This means that B2B sales have to be local or country by country. However, consumers are all very similar. Each persona will have similar concerns in any country. So, B2C products can be both produced and distributed globally.

In another piece of good news, vendors of this type of product do not have to mount a huge marketing effort to find individual customers. They can go directly to employer-sponsored health plans and pitch their costs savings. They can also go to providers for distribution. The managers that run big providers are searching eagerly for ways to reduce their dependence on doctors, who are often unavailable when patients need advice. They would be happy to add solutions that can provide a consistent customer experience for all of those times when a doctor is not present.

SaaS entrepreneur/engineer. Founder of MAXOS, Real World DeFi. Previously founded Assembla, PowerSteering Software, on team at SNL Financial.

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