Today’s tech, by nature, is designed to optimize a user’s experience, streamline processes, and do it as inexpensively as possible. Lyft, Uber, Airbnb, you name it. That’s the point of technology.
Tech has revolutionized the world because a user cares about these things and entrepreneurs can now easily build services that unlock whole new ways of doing things.
So, what does this mean for healthcare?
First, we have to define “users” in healthcare. To simplify and idealize things, there are just two— doctors and patients.
What do patients want? Convenience, access to expertise, and inexpensive care.
What do doctors want? They want to treat disease well, be appreciated for their expertise, and maximize their revenue.
Both want exceptional care.
But they have opposite financial interests.
With other industries, the market will work its magic to find the perfect point at which cost and quality enable massive growth. That’s how capitalism works. Think uber and Lyft and surge pricing and all that.
But there’s a wrench thrown in healthcare. There aren’t two forces. There are three. The patient user has relegated all of their interests (from paying $5 for a generic medication to $1M for their cancer treatment) to a third party who also has their interests— predict next year’s expenses and adjust premiums accordingly to maximize profits for shareholders. As long as people continue paying their premiums, they have no incentive to work on your behalf to enable inexpensive expertise.
So, how do you inject tech, which, by nature, does more, easier, and for less money for users into an industry that has no incentive to do anything for you for less money?
You can’t. Because patient users have no buying power, the only “users” that truly exist in this $2.5 trillion dollar a year industry are doctors and insurers. And that’s why there’s no possible route forward for healthcare tech companies looking to satisfy the goals of patient users. The goals of patient users are financially antithetical to the goals of both doctor and insurer users. So, what would have to happen for tech that meets the goals of patient users to scale. It’s just one simple thing:
Insurers would have to place patients over profits.
In capitalism, this is impossible. The market doesn’t have a soul. It doesn’t have a humanistic vision. It doesn’t have a sense of justice or right and wrong. It’s simply profits and margins. Investors and customers get to decide what exists. Except the customers of health tech are insurers and providers. That’s why I would never invest in nor support tech companies that try to meet the goals of the patient user. The financial success of these companies depends on the market having a soul. It surely can, at a small, confined scale. That’s why you get companies like TelaDoc and ZocDoc and Circulation.
ZocDoc makes it easy for you to schedule an appointment. That’s a nice to have for you. They streamline getting an appointment. But they primarily work to maximize appointments and revenue for doctors. They want you to see more doctors, faster, and easier.
TelaDoc makes it easy to get pink eye treated. But because they lose money on every visit and will continue to do so, the industry uses TelaDoc and the rest as a miniscule investment to appear hip and innovative and tech adopters. They also exist, in a very small way, to maximize revenue for doctors.
Circulation plugs in to Lyft and Uber to transport patients to doctor appointments. They make no bones about the value they add to their customers (hospitals and doctors).
So, that’s why I have very little hope for health tech. Because investors know they have to have a business case in an established, defined market, money will continue to flow into health tech that will continue to serve just two of the three “users”— doctor and payor customers. They will ignore the patient user. I call this the round peg/square hole tech strategy because tech’s nature is to do more, easier, for less money for all users. The expectation of tech in this strategy is to completely screw over the patient and extract as much money from them as possible.
But that’s not to say I have no hope for health tech. It just has to play by different rules. It must serve only two users— the patient and the doctor. It can’t serve patients, payors, and doctors. If you turned over your interests to a third party to purchase uber and Lyft and Airbnb on your behalf and this third party also tried to extract as much money out of you as possible, neither of these three would have gotten traction. If there are two unified federally-organized groups (payors and doctors) joining forces to try to maximize revenue from a small, disorganized set of individuals looking to do more for less, the two organized forces will always win out over the one, especially when patient users are:
- Infrequent users (we average 2.7 doctor visits per year, not 2.7 uber rides per week)
- Still not aware nor care enough en masse that payors don’t serve their interests
This is Sherpaa’s strategy. There’s no obvious path. There’s no established business case in an established, defined market. You need to slowly show customers the vision and a totally new potential and then effectively execute on that potential. We don’t work with traditional insurers because we know their incentives. We work with self-insured companies who want to do the right things for their employees and spend the right costs, not the most costs. And we work with patients to ensure they spend the right money on the right care. And we work on behalf of both parties to drive down revenue to established providers, who are charging unfair, obnoxious prices simply because that’s the market rules of the healthcare industry. Hence, why we don’t work with hospital networks. They’re terrified of patient-centric things that would reduce their revenue. So we have to create a new market, which is slower and more unpredictable, but it will inevitably win out with enough persistence because the status quo is a slowly sinking ship.