What Health Care Needs Are Some Zombies

Kim BellardFinally, some good health care news: according to Accenture, half of digital health start-ups are going to fail within two years.

No, really: that's the good news.

Accenture projects that funding for digital start-ups is going to boom over the next few years, reaching $6.5b annually by 2017.  Their analysis categorized four key areas of funding from 2008 - 2013: infrastructure ($2.9b), treatment ($2.6b), engagement ($2.6b), and diagnosis ($2.1b).  They stress that the start-ups that will succeed will do so by combining capabilities across the four areas, such as by use of integrated Social, Mobile, Analytics, Cloud and Sensor technologies ("SMACS").

This boom shouldn't come as much of a surprise.  For example, use of physician virtual visits is predicted to double by 2020, and I wouldn't be surprised if that prediction is too low.  The Wall Street Journal recently profiled several start-ups that are trying to be a "Uber for health care."  As the founder of one of those start-ups, RetraceHealth, told the WSJ, "Once you've had pizza delivered, you rarely go pick up pizza again."

There is a lot of low-hanging fruit, and maybe even some pizza, in health care that digital health start-ups could help us pick off.

Accenture concludes:

All stakeholders—payers, providers, IT vendors, life sciences, pharma and industry newcomers—will need new strategies to respond to inevitable digital disruption and its potential to dis-intermediate target patients, health consumers and members. Traditional healthcare organizations must develop ways to be relevant to the new health consumer, by encouraging and embracing, rather than resisting, digital
healthcare start-ups.

All that is well and good, and probably, to some extent, even true.  So where are the zombies?

The trouble is, a lot of those start-ups aren't going to make it.  Of some 900 start-ups that Accenture looked at, 51% had received less than $50 million between 2008 - 2013 -- and hadn't received any funding in over 20 months. Maybe they're not receiving more funding because they've, somehow, become spectacularly profitable, but more likely they've become what Accenture calls zombies.  They're dead but they don't quite know it.

Accenture views this as good news for several reasons.  One is that the start-ups have a pool of innovative talent who should be attractive to other health care organizations.  The start-ups may be acquired less for their products or their technology than for the people who created them. 

And, of course, some of those products or technology may have value.  Those 900 zombie start-ups had, by Accenture's count, 1,700 patents, some of which could take off in the right hands, especially if paired with the right array or complimentary technologies and a wider built-in customer base.

Big technology companies -- Apple, Google, Microsoft, etc. -- have relied on the strategy of buying start-ups to gain access to their talent and patents.  Down-on-their-luck companies like Blackberry or Kodak still have a 'treasure trove" in their patent portfolios that can keep them afloat or make them more attractive for an acquirer.

Accenture mixes metaphors by recommending that health care organizations be "like vultures circling prey" when it comes to the zombie start-ups.  I.e., "innovative enterprises will swoop in on digital health start-ups to capture relevant and at-the-ready resources."  (I haven't seen vultures attacking zombies in any horror movies, although shout-out to George Romero about the idea).

The trick, of course, is what to do with a zombie start-up.  I'm not an expert on the zombie genre, but I know that usually you either kill them or they kill you -- or turn you into a zombie.  Making them work for you is harder to do (except maybe in voodou movies, but that is a whole other metaphor).

It's not enough to pick up some innovative people and their ideas.  The organization has to be open to, even eager for, change, and change is something that many health care organizations often do grudgingly (or only if significant impacts on reimbursement are involved).

A recent op-ed in the New England Journal of Medicine, by David A. Asch, M.D., and Roy Rosin, M.B.A., "Innovation as a Discipline, Not a Fad" is on point.  While their examples didn't address acquiring zombie start-ups, they do speak to the necessary mind-set: how can we, as an organization, act faster and test more ideas less expensively.  It is exactly the kind of attitude Accenture is urging.  Zombie start-ups offer one way -- not the only way -- towards that end.

A caution to this call for innovation comes in a post in MobileHealthNews by Bradley Merrill Thompson, a lawyer who specializes in FDA and other regulatory matters.  He recognizes the need for health care to change, applauds Uber's business model and technology, but casts doubt on carrying their analogy too far into health care.  Uber has a somewhat reckless attitude towards regulatory barriers, believing they don't apply and/or are outdated, and Mr. Thompson doesn't think this is the way to go in health care.

He gives five well thought out reasons for his caution, which I won't rehash here, but I do want to comment on two of his statements:

  • "I’ve been doing this regulatory work for 30 years, and in that time I can honestly tell you that very rarely is a good idea illegal."
  • "Laws are there for reason, and in the case of healthcare that reason often includes protecting patients from harm."

I'm not so sure I can agree with those, or his conclusion that we shouldn't be a little more reckless about our innovation.  I worry that too much of health care's regulatory structures are to protect providers, or the medical-industrial complex, rather than patients, and that those structures can make good ideas -- ideas that are good for patients -- illegal, or at best so difficult to comply with that they might as well be (see, for example, posts on the cartel-like behavior of state licensing boards or our crazy-quilt approach to medical education

Health care providers have historically stubbornly resisted being measured, and it is telling that a recent study in JAMA Internal Medicine which looked at 16 national collections of performance measures found that only 7% addressed overuse.  The authors concluded that the measures may implicitly endorse the "more is better" attitude so prevalent in our health care system. 

Whatever happened to "first, do no harm"?
So when it comes to protecting patients from harm, to doing what's best for the patient, yeah, maybe a (metaphorical) zombie apocalypse wouldn't be such a bad thing.  Maybe they can infect health care with some new attitudes.

What Health Care Needs Are Some Zombies was authored by Kim Bellard and first published in his blog, From a Different Perspective.... It is reprinted by Open Health News with permission from the author. The original post can be found here.