How strategic VCs prime health care startups for success (VB Live)


Health care is being disrupted by innovative tech solutions — but having the right venture capital partner can make or break success. Join this VB Live event to learn how VC partnerships can help you navigate through the regulations and complicated nature of health care, and get your startup thriving.

Register here for free.


The health care market is changing constantly, and the broad-sweeping challenges are stacking up for all stakeholders, from patients in the waiting rooms to health care providers, administrators, and institutions. It’s a highly regulated ecosystem, fragmented across providers and hampered by misaligned solutions. But every one of these changes and challenges presents opportunity.

Health care tech innovators are poised to profoundly transform the health and welfare of every partner and participant they touch — and realize huge returns for every success. Health care is an industry ripe for disruption.

But in health care, there Continue reading "How strategic VCs prime health care startups for success (VB Live)"

a16z Podcast: Revisiting the Gene

The complete sequencing of the human genome is one of the most powerful examples of technology and science in action: We’ve gone from needing $3 billion and over 13 years to read a single human genome to today, to where …

The Top 16 Tech Policy Developments of 2017

This year, we saw a transition of presidential administrations — and all of the accompanying policy and bureaucratic reshuffling that inevitably comes with such a change. Issues of innovation and tech policy have remained front and center, with the Trump …

“Customer First” Healthcare

The subject of the “consumerization of healthcare” has been around for many years. Most frequently people use this phrase in association with personal technology devices (heart-monitors, exercise accessories, sleep monitors, etc) that allow consumers to take direct control of their health information. There is however, a more important trend that relates alternatively to the consumerization of the “business” of healthcare. While other industries often speak of being “customer centric” or “putting the customer first,” the U.S. healthcare system rarely thinks of the patient as a customer. One could go even farther, and suggest that the U.S. healthcare market is the least customer centric of any customer service industry.

David Goldhill, in his enlightening book Catastrophic Care, declared:

“…a guiding principle of any reform should be to put the consumer, not the insurer or the government, at the center of the system. I believe if the government took on the goal of better supporting consumers-by bringing greater transparency and competition to the health-care industry, and by directly subsidizing those who can’t afford care-we’d find that consumers could buy much more of their care directly than we might initially think, and that over time we’d see better care and better service, at lower cost, as a result.”

David makes a powerful assertion — allowing the patient to rise to the forefront and to be truly be seen as a customer — will lead to not only more satisfied patients, but patients with better medical results and much lower costs. This would be a remarkable three-way victory. The good news is we are already headed down this path. The combination of new technologies, data availability, information transparency, shifts in insurance coverage, regulatory reform, and consumer frustration has set the stage for a new era of healthcare service in the U.S. where the patient truly comes first. This powerful trend will gain momentum as it builds, will reshape the current landscape, and will result in the launch of many new and exciting companies.

One overt sign of a lack of traditional market forces is any industry where basic customer service is not a requirement to stay in business. If you asked 100 people to name a place where you frequently wait, even when you are on time for your appointment, how many would say the doctor’s office? The consumer has come to accept waiting at the doctor. We are so numb to the pain, that we rarely object or complain, and the doctor’s indifference to the consumer’s time is so common and widespread, that it is a frequent meme in jokes and cartoons.
Other U.S. industries, once subject to far less competition, have been forced by the market

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Challenges in Healthcare Innovation

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The U.S. spent $2.6 trillion on healthcare in 2010; this is expected to double by 2020. Why so expensive? And why has healthcare been so resistant to the innovations that could bring costs down; why is …

Most Doctors Have Little or No Management Training, and That’s a Problem

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Nicholas Blechman for hbr

Rising pressure to achieve better medical outcomes with increasingly limited financial resources has created an acute need for more physician leaders. Several studies (including this one) have shown that doctors want to be led by other doctors; they trust physician leaders to make the right decisions about redesigning health care delivery and balancing quality and cost. Fair or not, they believe it’s harder for leaders without clinical expertise to see how cutting costs impacts quality of care.

Yet most doctors in the U.S. aren’t taught management skills in medical school. And they receive little on-the-job training to develop skills such as how to allocate short- and long-term resources, how to provide developmental feedback, or how to effectively handle conflict – leadership skills needed to run a vibrant business.

A popular way of bringing physicians up to speed is to elevate them into management roles

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a16z Podcast: Taking the Pulse on Bio

This conversation between the members of a16z’s bio team — including general partners Jorge Conde and Vijay Pande; Malinka Walaliyadde; and Jeffrey Low (the interviewer) — takes a quick pulse on where we are with when bio becomes more like …

Is M&A the Cure for a Failing Health Care System?

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Paul Taylor/Getty Images

The U.S. health care system is begging for disruption. It costs way too much ($3.3 trillion last year) and delivers too little value. Hundreds of millions of Germans, French, English, Scandinavians, Dutch, Danish, Swiss, Canadians, New Zealanders, and Australians get comparable or better health services for half of what we pay. For most Americans, care is not only expensive but is also fragmented, inconvenient, and physically inaccessible, especially to the sickest and frailest among us.

It should come as no surprise, then, that when titans of our private, for-profit health care sector — like Aetna, CVS, UnitedHealth Group (UHG), and DaVita — strike out in new directions, stakeholders react with fascination and excitement. Could this be it? Is free-market magic finally bringing Amazon-style convenience, quality, and efficiency to health care? Are old-guard institutions, like hospitals and nursing homes, on the verge of extinction?

The answer, frustratingly, is

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a16z Podcast: Scaling Healthcare

No matter how grand a vision for a particular industry, disruption in practice is hard. This is especially true in industries like healthcare, which have long been resistant to software-driven change. But sometimes you can innovate within the bounds of …

Substitute Doctors Are Becoming More Common. What Do We Know About Their Quality of Care?

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William Whitehurst/Getty Images

A little-known fact about health care is that hospitals frequently hire substitute doctors – or, as they are called in the profession, locum tenens physicians (from the Latin for “to hold the place, to substitute for”) – to temporarily cover for doctors who are vacationing, sick, attending conferences, or on leave for other reasons.

In the United States, which first started using locum tenens in the 1970s, demand for these temporary physicians has quietly exploded over the past 15 years – and the number of U.S. physicians working as locum tenens has risen steadily from an estimated 26,000 physicians in 2002 to 48,000 physicians in 2016, or approximately 5% of the physician workforce.

At the same time, there has been concern over whether locum tenens physicians provide lower quality care compared to permanent staff. Particularly in the UK, which relies heavily upon locum physicians, concerns about their

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What the CVS-Aetna Deal Means for the Delivery of U.S. Health Care

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Carol Yepes/Getty Images

The landscape for the delivery of health care in the United States is changing, but the traditional care-delivery players are not the change agents. The recent announcement of CVS’s $69 billion deal to acquire Aetna brings an insurer together with a large network of primary care providers: CVS has built more than 1,100 Minute Clinic locations inside its pharmacy stores in 33 states and the District of Columbia. Also, Optum a division of UnitedHealth Group, the largest health insurer in America, has quietly amassed a group of medical providers over 20,000 strong, and on December 6, UnitedHealth announced plans to acquire DaVita Medical Group for the $4.9 billion. DaVita operates nearly 300 medical clinics, 35 urgent-care centers, and six outpatient surgery centers in California, Colorado, Florida, Nevada, New Mexico, and Washington.

The ramifications of such deals for traditional care providers typically dominated by hospitals is going

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Transforming Health Care Delivery to Increase Value – SPONSOR CONTENT FROM SIEMENS HEALTHINEERS

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Increasing value in health care is a top priority for health systems, payers, and policy makers across the globe, as health care costs continue to escalate and consume an ever-greater proportion of national expenditures. Toward that end, policymakers have introduced value-based payment models that reward quality and efficiency, in contrast with the traditional fee-for-service model, which incentivizes volume. The U.S. Centers for Medicare and Medicaid Services (CMS) has said that by 2018 it wants 90 percent of its payments tied to value. From bundled payments to accountable care organizations, value-based payment models incentivize providers to deliver high-quality care—efficiently.

To reorient themselves around value, health systems must rethink how they deliver care. Creating greater value requires a multi-pronged approach. Improving access to care, increasing workforce productivity, optimizing clinical operations, and managing population health are important—and interrelated steps. Four key outcomes to transforming healthcare:

  • Lower entry barriers and increase geographic reach to improve access to care
  • Increase workforce productivity by optimizing the skill set of your workforce while shifting routine work away
  • Reduce waste and unwarranted variations with automated and standardized workflows to optimize clinical pathways
  • Identify and stratify patients by disease severity to manage population health

New research conducted by Harvard Business Review Analytic Services and sponsored by Siemens Healthineers examined the methods used by various health care providers such as Cleveland Clinic, Geisinger Health System, the Martini Klinik, Mercy Virtual, and Johns Hopkins Medicine.

Many of the organizations that were included in the study employ three distinct methods:  1) The Lean methodology— a set of operating philosophies that help create maximum value for patients by reducing waste and wait times 2) High-reliability organization (HRO) principles and 3) Systems engineering, aided by technology and data analytics to improve outcomes and efficiency. Whatever their approach, the providers shared a common goal of excellence and efficiency in patient care—and a willingness to innovate to get there.

Sustaining Results Achieved Through the Lean Methodology

Brandon Carrus, a senior partner at McKinsey & Co. who specializes in Lean, notes that only about 30% of Lean quality-improvement projects see results sustained beyond three years. What distinguishes the percentage that succeed, he says, is that they focus on enterprise-wide transformation, take account of interdependencies, and strive to improve the entire continuum of care from the patient’s perspective. He points to the approach taken by a large, not-for-profit, integrated health care delivery system in the U.S. that manages a population of over 1 million unique patients including several hundred thousand members in their health plan.

Under a renewed mandate from its CEO, the organization implemented a Lean transformation across the enterprise, with the goal of improving care outcomes, the patient experience, and access. There was a heavy focus on cross-functional collaboration in engineering solutions focused on delivering value to the patient, which ran counter to the traditional management approach organized around functional units and clinical departments. Access increased on the level of 10,000 specialty visits per year, wait times dropped 20-40%, quality outcomes increased across most clinical categories, and total economic value created totaled over $60 million per year.

HRO Principles and Patient Safety

Several healthcare organizations interviewed emphasized their reliance on practices that define high-reliability organizations (HROs), especially as related to patient safety. HROs are high-risk organizations that manage to be safe and reliable, such as nuclear power plants and naval aircraft carriers. With medical error accounting for as many as 250,000 deaths yearly in the U.S. alone, improving the safety and reliability of health care delivery is critical. “HROs are agile, adaptable learning systems that respond well to the unexpected,” says Kathleen Sutcliffe, Bloomberg Distinguished Professor at Johns Hopkins University, whose work studying wildland fire fighting is foundational to the field. Their high levels of safety and reliability are based on five practices:

A preoccupation with failure. HROs are alert to any failure, however small, because deviations can result in tragedy—and always aware of what could go wrong.

A reluctance to simplify. Complexity is a given in HROs, and they do not go for easy answers when a problem arises.

Sensitivity to operations. Front-line workers are in a better position to recognize problems than executive leadership, and HROs welcome their input on how to improve.

Commitment to resilience. In an ever-changing environment, HROs continually look for potential problems and innovative solutions.

Deference to expertise. Expertise matters more than authority for HROs, which recognize that on-the-ground workers may well know more than their leaders.

Managing Population Health for Value With Technology and Data

Managing population health relies on data and analytics to identify patients in need of care and predict disease progression, prognosis, the likelihood of hospital admission or an emergency department visit, and more, allowing earlier intervention.

Geisinger Health System, a large integrated health system with 500,000 subscribers to its health plan, is applying robust analytics to its patient data. “We look at care protocols for a certain disease, say coronary artery disease, then identify care gaps. Same with diabetes. Close those gaps, keep them as healthy as possible,” says John Kravitz, its chief information officer. More and more, predictive analytics are used to identify patients likely to visit an emergency department or have a hospital admission, so that health care providers can take steps to deliver appropriate care and prevent escalation or inappropriate utilization. “We have more data than at any other time, and data is the means to improving the health and well-being of populations,” says Jonathan Weiner, professor of health policy and management at the Johns Hopkins Bloomberg School of Public Health.

Predictive tools model and forecast individuals’ health over time using data from medical claims, electronic medical records, and demographics like age and gender, stratifying by risk— for instance, likelihood of a hospital admission in the next six months—and identifying patients who would benefit from focused care management.

“Like a lot of health systems, we were taking a largely reactive approach to health care. By focusing on population management, we are proactively identifying patients who need services and reaching out to them,” says Dr. Nirav Vakharia, associate chief quality officer for population management at Cleveland Clinic. Predictive analytics allows Cleveland Clinic to match resources to need and has produced overall improvements in outcomes, including a reduced number of emergency department visits and hospital admissions.

What’s Ahead?

Without a doubt, health care is getting more complex—and expensive—and those trends won’t end. An increasing disease burden among the population, a predicted shortfall of physicians, and ever-growing costs invite forward thinking health care organizations to look for ways to deliver greater value as they deliver care. And that requires optimizing for quality and efficiency both at every step of the way, for value is a function of both.

Lean process improvement, predictive analysis and HRO principles have guided many of the efforts described here, allowing healthcare providers of all ranks to fully contribute to and deliver safe, reliable health care. But the real game-changers are technology and a treasure trove of data to drive continuous improvement, with the patient as the ultimate beneficiary.

Healthcare transformation calls for less expensive and excellent care. That is why it is our mission at Siemens Healthineers to enable healthcare providers to achieve better outcomes at lower cost by expanding precision medicine, transforming care delivery, improving patient experience, and digitalizing healthcare.

To learn more about what organizations are doing to transform the healthcare process read the full report by clicking here.

 

Taking the Pulse of Health Care Transformation – SPONSOR CONTENT FROM SIEMENS HEALTHINEERS

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Large-scale transformation is confronting healthcare. With providers striving for better outcomes at lower costs, the first half of this century will be seen as a turning point in the worldwide development of efficient, outcome driven, and more personalized healthcare service delivery.

In a new survey of 613 global health systems executives and consultants conducted by Harvard Business Review Analytic Services and sponsored by Siemens Healthineers, 91 percent said that great opportunity lies ahead for healthcare because of the disruption offered by new technologies and new business models. These disruptions hold the promise for providing better outcomes and more value, the respondents said, while changing the dynamics of healthcare.

Over the next three years, these healthcare leaders said digital technologies will have significant impact on their organizations Which tools and capabilities will prove disruptive? Mobile devices/patient apps were cited by 75 percent, advanced analytics by 66 percent, and unified communication/ collaboration

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The Ezra Klein Show: VC Bill Gurley on Transforming Health Care

In November of 2015, I posted a tweet that declared Benchmark was interested in discovering Internet healthcare investments. Our firm has had the good fortune to invest in many two-sided networks that used information aggregation, supplier aggregation, and user generated content to attract and inform consumers and resultantly disrupt and change different industries. Examples of such companies include Yelp, OpenTable, GrubHub, 1stDibs, DogVacay/Rover, Zillow, and Uber. It only seemed logical to us that the same opportunity should exist in healthcare. Most people are aware that healthcare spending in the U.S. has risen to 17-18% of GDP and is grossly out of line with other comparable nations. Additionally, all of us that have been consumers of the U.S. system are blindingly aware that numerous inefficiencies exist in the system. Simply put, there is amble room for improvement. So if Internet and mobile technologies can be used to change real estate or transportation, why not healthcare?

Over the next two years, I looked at many healthcare IT investment opportunities – I went “all in.” It’s worth noting that our primary focus was on technologies that aided and improved primary care, which is about half of the U.S. market in terms of revenue dollars (there is no question that digital tools will successfully impact specific acute diseases/disorders, but it’s our intuition these are best left to 100% focused HC investors). At first, this deep dive proved frustrating. The more we learned, the more we realized how much we did not really understand. The U.S. healthcare system is confusing and complex. Eventually, however, we gained our footing and developed a mental model for the industry and a framework for where opportunities do exist. We also discovered what we believe is a large and investible trend/theme. In May of this year, Ezra Klien, who is remarkably informed and intelligent on the topic of healthcare, was kind enough to include me on his podcast to discuss and debate my learnings. That podcast is included here along with a transcript.

 

 

Ezra Klein:  Hello and welcome to the Ezra Klein Show, a podcast on Vox Media Podcast Network. I am Ezra Klein and my guest this week is Bill Gurley. Bill is a general partner at Benchmark, one of Silicon Valley’s really legendary venture capital firms. He is one of Silicon Valley’s legendary venture capitalists. He was named the venture capitalist of the year in 2016 at the TechCrunch’s annual Crunchy awards. He’s been an early investor in Grubhub, OpenTable,Uber, and Zillow and all kinds of things. A very, very smart guy, a very thoughtful guy. We’ve been talking recently because he’s been thinking a lot about healthcare.

They’ve recently made Continue reading "The Ezra Klein Show: VC Bill Gurley on Transforming Health Care"

How to Reduce Primary Care Doctors’ Workloads While Improving Care

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HBR Staff/Reza Estakhrian/Getty Images

Not long ago, many services such as tax accounting were delivered episodically and in-person, as most health care still is today. Periodically, a client and accountant would meet, review financial materials and status and, at the end of the encounter, make an appointment for the next meeting. Increasingly, in-person accountant visits have been replaced by phone or web meetings and do-it-yourself software like TurboTax. There is still a need for accountants and face-to-face meetings, but typically accountants now require such visits for only the more complicated cases that can’t be managed with software or a call.

Health care has proved resistant to a similar transition, although everyone would benefit. While some aspects of care clearly require doctor and patient to be in the same place at the same time, many demonstrably don’t. Nonetheless, even those parts of care that could be freed from the doctor’s office

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5 Ways U.S. Hospitals Can Handle Financial Losses from Medicare Patients

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Jorg Greuel/Getty Images

Intense pressure from the $719 billion Medicare program on the finances of U.S. hospitals promises to worsen in the years ahead. To prevent an already bad situation from getting worse and possibly even threatening their institutions’ viability, leaders of hospitals must take action in five areas: using analytics to identify ways to improve profitability, curbing the costs of corporate services, tightening the purchase and use of medical technology, developing standard clinical protocols for treating conditions, and pushing physicians to adhere to them.

The losses of U.S. hospitals from treating Medicare patients escalated sharply in 2012, when Congress included Medicare in its budget sequester, and they have remained high since. About three-fourths of short-term acute-care hospitals lost money treating Medicare patients in 2016, according to the Medicare Payment Advisory Commission (MedPAC), an independent agency established to advise the U.S. Congress on issues affecting the Medicare program.

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The CVS-Aetna Merger Hinges on One Question: What Do Consumers Get Out of It?

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Markus Brunner/Getty Images

The proposed merger of CVS and Aetna will test what it means today to create value in business. Shareholders may gain, but will consumers? The Department of Justice (DOJ) will be setting important case law with its treatment of this vertical merger. And, in the end, we consumers will learn if these kinds of mergers are, literally, good for our health.

The crux of the matter is whether vertical mergers — between a buyer and its supplier — are better for consumers than horizontal mergers between two sellers. In the health care arena, horizontal mergers seem to have run their course: The proposed mergers of insurers Aetna and Humana, and of Cigna and Anthem, were challenged by the DOJ and withdrawn, as was Walgreens’s proposed acquisition of Rite Aid. Among hospitals, too, consolidation may have peaked. In Boston, Partners Healthcare was blocked from acquiring three large suburban hospitals.

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What Mentors Wish Their Mentees Knew

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Marion Barraud for HBR

The mentor-mentee relationship is a tango between a more senior person and a junior one. Just as in dance, coordination and orchestration between parties is necessary for grace and success. And while we and others have written about what makes the ideal mentor, comparatively less attention has been given to the other partner. This gap is unfortunate because, like mentorship, menteeship requires specific behaviors — without which the mentee’s success may be threatened. In this article, we outline six habits of ideal mentees and provide anecdotes and views from our combined years of academic experience. While we focus on the relationship in academic medicine, the takeaways apply to most any field.

Clarify what you need. “I need a mentor” is a plea often heard in the hallowed halls of hospitals, especially academic medical centers that serve as the training grounds for future physicians. As academic physicians,

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Listening Is a Lost Art in Medicine. Here’s How to Rediscover It

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Aaron Tilley/Getty Images

William Osler, often called the father of modern medicine, famously advised his students: “Just listen to your patient; he is telling you the diagnosis.” A century later, clinicians and health system leaders started tuning out the patient’s voice, turning instead to electronic health records and the latest care protocols to manage their most complicated and high-need patients. We believe it’s time for an urgent and strategic reset. The factors that lead people to become our nation’s costliest are complex. But they call for, at the start, the simplest intervention: listening.

According to the National Academy of Medicine (NAM), “High-need individuals are disproportionately older, female, white, and less educated. They are also more likely to be publicly insured, have fair-to-poor self-reported health, and be susceptible to lack of coordination within the health care system.” Overall, these patients make up just 5% of the patient population, but

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a16z Podcast: Putting AI in Medicine, in Practice

There’s been a lot of talk about technology — and AI, deep learning, and machine learning specifically — finally reaching the healthcare sector. But AI in medicine isn’t actually new; it’s actually been there since the 1960s. And yet we …