The future of healthcare
August 16, 2018
After I left Microsoft in 2010, I read a bunch about healthcare (Innovator's Prescription, Health Care Turning Point, etc.). It seemed like big change was imminent and that healthcare would be a good place to work. I came back to this topic recently—eight years later—and it feels like things haven't moved an inch.
One thing that did change: about a year ago, I noticed all these new health tech companies had popped up: Clover Health, Jif, Amino, now Oscar. It was pretty clear the VC "money spigot" had turned on a year or two earlier, and research confirmed my hunch: Benchmark (a noted VC firm) publicly declared they wanted to invest in health in 2015, right on schedule for me to notice these companies starting to get publicity around 2017. Digging deeper, I found an interview between Benchmark's Bill Gurley and Ezra Klein. The interview is a great high-level overview of the issues facing healthcare in the US. Klein and Gurley see the world pretty differently, but agree we aren't on a good path.
A few things I've come to believe:
- Whatever the solution, we can't afford the system we have today. Medical bankruptcy is a big problem, and employers are trying like hell to wiggle out of paying insurance premiums, which are eating wage growth. Per Catastrophic Care, Americans spend almost 20% of their lifetime income on healthcare, but don't realize it because it's paid by employers and through taxes, not by people themselves.
- Healthcare is a huge laggard in IT investment because the forces that push other industries toward that investment (demand for convenience, supply chain management, CRM) are absent.
- The economic model of many healthcare offices is fee-for-service. Like other professional services (law, architecture), doctors are pushed to spend as much time possible on things that are "billable"—procedures—and less on charting and followup, which aren't directly reimburseable.
- If you believe change is coming (I do), I think it will come in one of two flavors, and which depends on politics. The hard-left Sanders/Ocasio-Cortez option would be pure single-payer, which the AMA and other medical unions will fight, because they'd earn a lot less income. I would prefer a market-oriented system with greater emphasis on price transparency and efficiency; we might get this if the gig economy continues to take off, pushing more people to buy their own insurance. Either is better than what we have today.
A parting note: this is the real damage of the Trump presidency; arguing over strippers and hush money instead of reforming Medicare. What a waste.