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Keep wasting your money, Silicon Valley venture capitalists

Silicon Valley is at it again.

Last week, digital health accelerator Rock Health unveiled its new offices, and from the news coverage, it seems as if it’s creating an image as much as incubating startup companies.

According to Xconomy, “a big crowd of investors, executives, and other life science industry insiders took time away from JP Morgan to attend the grand opening of Rock Health’s stylish new headquarters in the Mission Bay neighborhood of San Francisco.” And stylish it is.

“Rock Health’s kitchen and community gathering space includes a Cirque-du-Soleil-style swing,” Xconomy reported. Because, you know, incubating companies that will fix a broken $2.8 trillion industry with their “solutions” requires a little avant-garde spectacle à la Québécoise — or perhaps Las Vegas. Having been at the Digital Health Summit at International CES in Sin City myself a week earlier, I was happy to see more focus on substance than style in the meeting room, if not in the exhibit hall.

© Bruce Damonte/Studios Architecture

I bet that swing cost a lot of money. So did the design, since Xconomy saw fit to identify the architecture firm. (For that matter, so did I, but only to give proper credit for the photo.) In an industry where a third or more of spending is wasteful — completely irrelevant to care and probably preventable — according to a 2012 report in Health Affairs, are such frills really necessary? I’m certainly not blaming Rock Health here. It’s the investors who are throwing away their money.

In opening the center, Rock Health reportedly dubbed Mission Bay the ‘United States’ New Digital Health Hub.'” That’s a bold statement. There certainly is a lot of potential there, but, as the person who identified San Diego as “a leader in mobile healthcare” back in January 2010, I still see more substance and tangible results in Southern California than in Northern California. For that matter, the Boston area could make a strong case, as could New York City. Smaller but healthy communities have popped up in places like Madison, Wis. That’s fine, competition is good.

However, I’ve seen more failures in Silicon Valley than anywhere else. But does that stop Silicon Valley’s No. 1 media cheerleader, TechCrunch, from declaring, “VC’s Investing To Heal U.S. Healthcare”? No, it does not.

No flame-out has been as spectacular as that overhyped vaporware known as Google Health. Google is back at it again with its VC arm, but this time the Internet giant seems to have a direction and a clue. Maybe.

As TechCrunch reported, “Google Ventures is addressing the nation’s healthcare dilemma with investments in companies like the physicians’ office and network One Medical Group, which raised a later stage $30 million last March. At the opposite end of the spectrum in December 2013 Google invested in the $3 million seed financing of Doctor on Demand, which sells a service enabling users to video chat with doctors.”

Google appears to be scrapping the torturous direct-to-consumer route in favor of going where the money actually is, from third-party payers and from providers, newly incented under the Patient Protection and Affordable Care Act and private reform efforts to work more efficiently and better coordinate care.

On the other hand, it’s been less than two weeks since Stephen Colbert made fun of Doctor on Demand. (Health 2.0 boss Matthew Holt commented on that post that it was “Kind of unfair that Doctor on Demand get the publicity when American Well and a [scad] of others have been doing this at scale for years.” He was right, but, hey, Google.)

Google Venture General Partner Dr. Krishna Yeshwant told TechCrunch the real motive behind all the VC money flooding into healthcare. “As an entity it is where we’re spending 17 percent to 18 percent of GDP, so any one segment is tens of billions of dollars,” Yeshwant is quoted as saying. “Increasingly you’re seeing IT investors who have a fine sense of disruptive opportunities enter the market.” In other words, it’s all about the Benjamins.

But do they understand that healthcare doesn’t work like any other industry? I’m not so sure. And I haven’t even addressed the bigger questions of privacy, data stewardship, interoperability and workflow.

As you prepare your hate mail for me, check out this site, “What the F*** Is My Wearable Strategy?” (NSFW). Refresh the page for more hilarity, but be forewarned: some of the ideas may hit close to home.

You’re welcome.

January 20, 2014 I Written By

I'm a freelance healthcare journalist, specializing in health IT, mobile health, healthcare quality, hospital/physician practice management and healthcare finance.

Things change pretty fast in health IT, don’t they?

Yes, things do change pretty fast in health IT. I realized this over the past couple of weeks when I updated my database of contacts by scanning and categorizing about 300 business cards I’ve collected over the past 2½ years. (I really let things pile up this time. Now that my desk is reasonably clean, I hope I never do that again. I can claim extraordinary circumstances in 2012, but that only accounts for one year.)

What really struck me, in addition to the amount of time I let this slide, is the number of new categories I had to create in the database and the number I had to modify. My contacts go back to when I started covering healthcare in October 2000, and I’ve had a card scanner for at least 10 years. I had “PDA” and “ASP” as two of the choices until I changed them to “smartphone” and “SaaS” within the last couple of years.

Here are a few terms that are new in my database since I last did a thorough update, probably early in 2011:

  • accountable care
  • analytics (as opposed to data mining)
  • business incubator
  • remote monitoring

I also can’t believe I didn’t have CIO as a category until this month.

Some of the changes reflect a shift in what I’ve covered, but some terms are pretty new. Did you know what accountable care was prior to 2010? Were there many business incubators or accelerators in healthcare before Rock Health started up in 2011? I don’t know of any.

By the same token, when was the last time anyone talked about a PDA, an ASP or RHIO? Perhaps it’s just been a change in semantics, but the real change has been in the technology and the focus of healthcare executives. (Come to think of it, some of the tags on this blog are a bit out of date. I’ve been blogging since 2004. You get the picture.)

On another note, thanks to Healthcare Scene guru John Lynn, who hosts this blog for me, for, without my prompting, promoting the fact that I’m cycling 100 miles in an event called the Wrigley Field Road Tour on Sunday, Aug. 25, for the third year in a row. The ride supports an organization called World Bicycle Relief, which provides specially made bikes to remote villages in Africa so people who are otherwise without transportation can get to school and jobs. It also benefits Chicago Cubs Charities, which funds a number of youth programs in the Chicago area. (The ride’s co-founders are World Bicycle Relief founder F.K. Day, whose family owns bike component maker Sram, and Todd Ricketts, whose family controls the Cubs.)

Within the last two weeks, I suddenly got a surge of donations from people within the health IT community, and I couldn’t figure out why. Now I know. If you’d like to help, here’s my fundraising page.

One unexpected donor was Todd Stein of healthcare PR firm Amendola Communications. I’d be remiss if I didn’t mention that he is fundraising to help offset medical expenses of a colleague whose 3-year-old son faces surgery for a brain tumor. From that page:

Kathy C., a friend and colleague (who has always been the first to help but the last to ask for help and so wants to remain anonymous) is a single mother of three children all under the age of 7. Her 3-year-old son “James” was recently diagnosed with a brain tumor.

The surgery will cost hundreds of thousands of dollars. Unfortunately, Kathy has a $10,000 deductible on her health insurance plan and stands to pay out of pocket costs that are estimated at three times that amount. James is going in for the first of a series of surgeries this week and paying tens of thousands of dollars in medical expenses is a hardship for anyone, especially a hard working single mother of three young children.

Please keep Kathy and James in your prayers and give whatever you can to support their urgent need. Just giving up a daily coffee for one week and giving that amount would make a world of difference.

And now, it’s just about 5 o’clock here in Chicago, so please enjoy your weekend.

 

 

August 16, 2013 I Written By

I'm a freelance healthcare journalist, specializing in health IT, mobile health, healthcare quality, hospital/physician practice management and healthcare finance.

Counting the health IT accelerators

Have you noticed all the digital health “accelerators” and “incubators” out there? I count the following, in alphabetical order:

In addition, the USC Center for Body Computing has announced plans for its own incubator/accelerator in Los Angeles, but we continue to await details.

That’s a lot. Is it too many? We have seen plenty of failures in digital health entrepreneurship over the years, in no small part because too many companies don’t understand the unique economics of healthcare, particularly in the U.S. With the possible exception of fitness products, direct-to-consumer simply does not work in healthcare because most of the expenses are paid for by third parties. (I’d argue that wellness and fitness are distinct from traditional healthcare anyway because healthcare really does focus on sick care.)

At least one report from the California HealthCare Foundation backs up my belief that the DTC focus is a recipe for failure, one reason why health accelerators probably have it harder than their counterparts in other industries.

June 4, 2013 I Written By

I'm a freelance healthcare journalist, specializing in health IT, mobile health, healthcare quality, hospital/physician practice management and healthcare finance.

CNN highlights health apps, clinical intelligence

CNN hasn’t exactly shined of late with its coverage of the Boston Marathon bombing and its aftermath, but the embattled news network got my attention by airing a segment on cutting-edge health IT over the weekend. (Actually, credit goes to Scott Anzel, CEO and co-founder of MDconnectME, one of the three companies featured in the short video.)

MDconnectME makes an app intended to keep people up to date with short, secure messages when their loved ones are in surgery. I actually wrote about Philadelphia-based MDconnectME for MobiHealthNews last fall, after clinicians at Mount Sinai Medical Center in New York found that the app worked well for keeping frazzled family members up to date on patients transferred there when other Manhattan hospitals closed in the wake of Hurricane Sandy.

Also included in this report are Flatiron Health, a clinical intelligence platform for cancer care that’s backed by Google Ventures and LabCorp., and Mango Health, an app supported by Rock Health to encourage medication compliance through a rewards program.

Watch the video here:

You also can see

April 22, 2013 I Written By

I'm a freelance healthcare journalist, specializing in health IT, mobile health, healthcare quality, hospital/physician practice management and healthcare finance.

Will Healthbox launch offer true innovation, or just more flash?

Those who fail to learn from history are doomed to repeat it, or so the saying goes.

My controversial piece on Silicon Valley missing the point of healthcare last summer doesn’t seem so controversial now, as I recently got some validation from others closer to the action than I am. First, reDesign Mobile analyst Rocky Agrawal wrote in VentureBeat that Silicon Valley might be “too smart for their own good,” building products more suited for highly educated techies than for the masses. Last week, former Apple and PepsiCo CEO John Sculley suggested at the Digital Health Summit at 2012 International CES that technology for its own sake is rather useless if you don’t understand the market you’re targeting.

“”The thing that is missing is getting the people with the domain expertise aligned with the people with technological know-how to turn ideas into branded services,” Sculley said, as I report in InformationWeek Healthcare and in tomorrow’s MobiHealthNews.

After raking Rock Health over the coals in my commentary last summer, I offered qualified praise to the San Francisco-based investor/business accelerator for healthcare start-ups last month on this blog. “I was pleasantly surprised to see that the majority of the 15 companies are aimed at either healthcare providers—an important constituency largely missing from the first Rock Health class—and on treatment of truly sick patients.” I wrote.

“I never thought I would say this, at least not before the end of 2011, but kudos to Rock Health for making a real effort to figure out the complex healthcare industry and to add some substance to what heretofore had been all style.”

Tomorrow, I am planning on attending the kickoff event for Healthbox, a similar healthcare business accelerator that differs from Rock Health in at least one key way: it is not in Silicon Valley, but right here in down-to-earth Chicago. Does that make a difference? Well, the kickoff isn’t at a hotel ballroom or Healthbox’s office, it’s in an artsy space called the Ivy Room, in the heart of River North, an area usually populated by more tourists than locals.

I sure hope I’m not in for an over-the-top extravaganza that will highlight cool, direct-to-consumer apps with a snowball’s chance of catching on with the entities that actually pay the bills for healthcare. I want to believe there’s something real here, which is why I’m giving up at least a couple hours of my time to see the presentations. Please tell me that Chicago isn’t becoming a Silicon Valley clone, but rather the hub of health IT innovation it could be.

For what it’s worth, here is the list of companies scheduled to present tomorrow: UnitedPreference, DermLink, SwipeSense (“a comprehensive hand-hygiene solution,” whatever that means), The Coupon Doc, CareWire, Iconic Data, PaJR-Patient Journey Record (helping hospitals avoid 30-day readmissions, possibly making it a Big Deal), CareHubs, Corengi (linking diabetics to clinical trials) and PUSH Wellness. I see real potential in at least four of those, possibly more.

 

January 18, 2012 I Written By

I'm a freelance healthcare journalist, specializing in health IT, mobile health, healthcare quality, hospital/physician practice management and healthcare finance.

Rock Health seems to be learning

My first impression of healthcare startup incubator/accelerator Rock Health was not a favorable one. I wrote in MobiHealthNews last July that the San Francisco-based organization founded by some hotshot, young Harvard MBAs demonstrated “yet another example of Silicon Valley arrogance.” I said that Rock Health was mostly targeting the young end of the market with cool, fitness-oriented apps, not the elderly and chronically ill who account for the bulk of the nation’s $2.5 trillion annual healthcare spend. That group wants things that are easy to use rather than fun and hip.

Needless to say, I was not invited to Rock Health’s Christmas party. I did share a quick “hello” nod with Managing Director Halle Tecco when I saw her in a meeting room at the mHealth Summit last month, though.

Even then, I wondered if Rock Health had changed its attitude at all, seeing that even the executives were outfitted in company t-shirts in the buttoned-down world of (just outside) Washington, D.C. (I once had a Capitol Hill press pass early in my career. The rules require members of the media to conform to the same dress code as members of Congress. That means a coat and tie for men, while women have to have jackets if they choose to wear slacks. An unwritten rule of D.C. in general calls for women to wear stockings if they go with a skirt, even if it’s 95 degrees and humid, which it frequently is in the summer.)

Today, though, I saw a clear sign that Rock Health is starting to learn from its earlier mistakes. MobiHealthNews reported on the incubator’s class of 2012, and I was pleasantly surprised to see that the majority of the 15 companies are aimed at either healthcare providers—an important constituency largely missing from the first Rock Health class—and on treatment of truly sick patients. One startup, for example, helps people being treated for breast cancer prepare for doctor visits, while another produces an EHR for home-health agencies. Good stuff in my critical eyes, though really, enough with the social networking to get people to exercise. There are too many of these platforms and apps already.

I never thought I would say this, at least not before the end of 2011, but kudos to Rock Health for making a real effort to figure out the complex healthcare industry and to add some substance to what heretofore had been all style.

December 20, 2011 I Written By

I'm a freelance healthcare journalist, specializing in health IT, mobile health, healthcare quality, hospital/physician practice management and healthcare finance.