Healthcare is too big and complicated for one company to solve. A whole ecosystem of best-in-class companies must come together, all focusing on their one slice of the problem, and figure out the best way to work as a team—as a true Digital Health System—to streamline healthcare, make healthcare easy for people and companies, and grow their businesses. To that end, Union Square Ventures and I are co-hosting an inaugural one day workshop for digital health companies to meet, define a shared vision, understand aligned incentives, and work as a coalition to advance our companies. This is an intimate workshop producing actionable next steps. This isn’t a conference.
Today, all of our companies are independently working on our one tiny slice of the big healthcare morass.
And it’s ridiculously hard working within a deeply entrenched industry that fights anything but the status quo. There are companies trying to tackle things like:
Convenient, streamlined access to doctors
Reducing the cost/personalizing medications
Reducing the cost/increasing the quality of predictable procedures
Reducing the cost/increasing access to tests and their results
Reducing the cost and increasing the quality of a company’s healthcare spend
Helping people manage their chronic health issues
Helping people pay/manage their healthcare spend
Helping companies navigate their options
Creating standardized health data
We’ve all got our own vision, our own sales team, our own technology, and our own growth strategy. We’re all passionately giving our precious time and energy to fight the same fight. We’ve all learned a ton— what works, what doesn’t, and who are the best partners to help us grow. We believe that by coming together and forming a coalition with a joint vision, and identifying opportunities to jointly execute, while preserving our own independence and success, we, as a coalition, can maximize our effects and build bigger, stronger businesses. By forming a coalition and formalizing a unified vision, we all win.
Creating a true System means learning about other companies solving other slices of the problem and identifying opportunities to support one another and work together as seamlessly as possible.
To that end, Union Square Ventures and I are organizing an inaugural one day workshop here in NYC to define a vision for the future of affordable, accessible, effective, and efficient healthcare.
Goals for Workshop #1
Get leaders from all of these digital health companies in one room to meet and learn about each other
Collectively design and define the ideal patient experience we’d like to see exist as a System and codify this vision
Identify initial opportunities to collaborate
Agree on a private member communication channel (slack, email list, etc.)
Decide the date for Workshop #2
Goals for the future
Identify opportunities to integrate technology and/or share resources
Brainstorm opportunities to expand the market for all partners
Identify opportunities to upsell and/or cross-market
Identify shared best practices
The event will be co-hosted by Andy Weissman from USV and Dr. Jay Parkinson from Sherpaa. Over the last few months, we’ve identified ~30 exceptional companies we believe should attend this initial gathering. Attendees will be builders— CEOs and/or strategic/operational executives from these exceptional companies. This event will be a combination of invitations and applications to attend. Submit your application here.
Your company must be an established company that’s solving a hard healthcare problem with widespread need.
We assume, if you’re attending, that everyone knows why healthcare is broken. We will ban all talk about that topic so we can strictly focus on our solutions, rather than problems.
This is a private event. There will be no press and no sponsors.
December 8, 2017 from 9:00 am to 5:00pm.
Union Square Ventures
New York, NY 10010
The last day of my residency was June 30, 2007. The iPhone was released June 29, 2007. I’ve seen the world change and have dedicated my career to contributing positively (hopefully!) toward this change. I’ve spent the last 10 years building web apps (Hello Health, Sherpaa) and mobile apps (Omnio, Sherpaa). I also carefully observed the successes and failures of other attempts to revolutionize healthcare as much as the rest of our world has been changed by location-aware computers in our pockets. I surely haven’t cracked any codes, but here are my observations. Many of these are generalities and all probably have exceptions, but, in general, I think they’re true. It’s also my humble attempt to define the limitations of tech/apps/mobile on the health of our population.
Retention is bad
Across the board, there is a less than 5% chance of routinely using a mobile app 1 month post-download. I suspect adoption is worse in the health category. Most people are “nonadherent” to meds. Ninety-five percent of people are non-adherent to apps.
Most consumers don’t download apps
The majority of smartphone owners do not download apps beyond what are pre-installed.
Forums aren’t companies
Many tools that entrepreneurs and investors view as “companies” are actually Facebook Groups (chronic disease forums or Reddits around how to treat your sinus infection that won’t go away). For many patients, the value companies add with their partnerships with Big Pharma do not outweigh the convenience of finding a Facebook group dedicated to their issue. Plus, you don’t have to learn Facebook. It’s something you’re already comfortable with and, most importantly, you’re constantly logged in.
Consumers pay for health, not medical
There’s no precedent for getting individuals to pay for a medical app vs. a health app (and create a profitable, sustainable company that’s not dependent on VCs). The money has to come from somewhere, so it’s either:
Ads and/or Big Pharma
A sponsorship with a big company
Figuring out how to take a small slice of a traditional healthcare transaction.
VCs with no obvious/realistic exit for the company
Remember: when you’re not paying, you are the product being sold.
People do not pay for medical because everyday people are not used to spending their own money on medical. Health is food, exercise, yoga, wellness, Whole Foods, cycling, etc.. Medical is pills, scalpels, and doctors. They are worlds apart and have little to no interaction. In fact, there’s even some hostility from both sides.
Apps/services that people pay for:
7 Minute Workout
Yoga (Yoga Studio App for $4.99)
Privacy concerns are theoretical
The vast, vast majority of people do not care about privacy if giving up their privacy benefits them in the smallest way. Just ask Google or Facebook.
Motivation is literally everything
Once sufficiently motivated over time, then you search for the right tool/app. Motivated people will do irrational things, like actively track their calories for a year to lose 100 pounds. This is why health sells (Nike, Equinox) and medical (any hospital brand anywhere) does not. Motivation via powerful branding that resonates with the aspirations of normal people is something people will pay for.
Apps are tools to solve problems
If you don’t have a problem or you don’t believe you have a problem, you don’t need a tool. I organize my apps based on problem to be solved
When you’re reading this lost of problems solved, think about how this applies or could apply to healthcare (it probably won’t):
Help me work better (email, calendar, slack, etc)
Entertain me passively (YouTube, Netflix)
Actively entertain me (Choose any game you want)
Help me communicate with people I know (messenger, WhatsApp)
Help me create information (twitter)
Connect me with new people (probably for sex) (Tinder)
Give me news (NYTimes)
Give me real-time events (twitter)
Connect me with an IRL service (uber, seamless, etc.)
Help me figure out where I am (maps)
Help me find something around me (Foursquare)
Help me decipher something (calculator)
Help me buy something (Amazon)
Save me money
Help me do fun healthy things (exercise, yoga, Runkeeper, Strava)
Help me create something visual or aural (Camera, GarageBand)
Help me find and do fun things (Facebook Events)
Very, very few people say help me do medications and talk to random doctors and get procedures better.
Exceptions: people with daily or weekly needs, like diabetes.
Apps vs. usage frequency
There are two kinds of problems with tools and it relates to time/frequency:
Tools to solve a daily problem (Mail, Instagram, Lyft, Facebook)
Tools to solve a weekly/monthly/quarterly problem (Flixster, OpenTable, Shazam, Kayak)
Tools to solve a yearly problem (TurboTax, ZocDoc)
People visit doctors, on average, 2.7 times a year. They fill medications every few months. And they get procedures every decade.
The less frequently you use the tool to solve the problem, the more it will cost someone, maybe you, to acquire you.
Spending money in healthcare is weird
People’s health spend is out of their control because the most expensive thing in healthcare is your doctor’s pen. Keep this in mind as you’re thinking about slices companies can take out of the transactions in healthcare.
Here’s how much the working age population spends on healthcare.
And here’s what they spend on, from a medical standpoint:
Doctors don’t like change, they like money
Very, very few doctors want to do extra work beyond what they can bill in their offices (things like communicate with their patients outside the exam room). Even the young generations who are reasonably tech savvy. Remember, today’s youngest medical student was born in 1996, two years after Amazon was born.
Out of the 600,000 docs practicing in America, ~800 of them are powering the video visit services like TelaDoc, Doctor on Demand, American Well, etc. Just like uber and lyft, doctors have no brand loyalty. If they’re offering their services, they’d rather get paid than philosophically support one video service over another.
People like simplicity
The most usable, delightful apps are single function apps (instagram, Snapchat, weather, Messages, etc). What health/medical single functions are there?
Your medical data is only cared about when it’s not there
The vast majority of people do not care about their medical data enough to do anything about it, until they experience a situation where having their health data would be helpful or game-changing. If they’re the enterprising sort or a VC, this changes their life and they attempt to build a company to solve the problem only to realize a funding round (or two or three!) later that the problem isn’t solvable with technology. If they’re not an entrepreneur, they get frustrated and look at healthcare as antiquated and backwards, hurting the brand of healthcare in America and contributing to the rise of alternative professions/beliefs which fall in line with more eastern options (yoga) and less science (anti-vaxxers).
Also, the complexities of picking and choosing your own data and sharing it with the right person/entity is ridiculously challenging. Imagine if Facebook went belly up and you could export all your data and then import it into some other private company, how many people would be able to do that?
Active health data collection is a myth
Anything involving active (vs passive) recording of data is not adopted meaningfully over time (Fitbit and any wearable). It’s adopted, and public companies are created from the concept, like Fitbit, but also 95% of their devices are in a drawer 3 months after purchase.
Apps are about joy
They entertain you (Instagram) or make your life easier (Lyft). Diseases are not joyful (in fact, it’s a heavy sadness that we eventually get used to and deal with) and it’s very difficult to make something that makes living with them easier. If it’s work or feels like work, you’ve lost the joy of apps.
The best apps connect humans
The most successful apps fulfill a social need and serve as a fun way to connect or observe other people. Kind of obvious, but the social side of apps cannot be understated. But, diabetics wanting to connect with other diabetics and share knowledge is finite as Jane the recently-diagnosed diabetic gradually learns to manage it and, over the course of a few months, her diabetes becomes her new normal.
People DO NOT want to be nagged
That’s why we don’t live with our in-laws anymore. End of story. That’s why medication reminders are fun for about 16 hours and then forcefully turned off.
As a rule, if you are a wearable company and you can’t figure out how to go B2B to get someone else to purchase your product on behalf of their employees, you’re competing on brand, pedometer-level boring data points, and fashionability. And that’s racing to the bottom real fast (see how Xiaomi overtook Fitbit recently?). Also, pivoting toward medical-grade data will take you out of the consumer category and into the much, much more expensive and much, much more limited use cases.
Although there’s been a ton of money thrown into the digital health space, the effect digital health has had on our population’s health is unknown. There are use cases where it’s likely had a positive effect. And then there are data that suggest mobile computers in our pockets have significantly contributed to deaths. We have to be prepared for the standard scientific findings where the outcomes are either:
And, at this point, it’s up in the air, despite the investments in time, money, and people. I’d wager that point solutions for highly engaged people have made a positive difference, but that’s a tiny percent of our population.