In my brief time as an angel investor and future healthcare IT entrepreneur, I’ve noticed that there just aren’t that many true technology entrepreneurs in healthcare. It’s well known that healthcare is way behind in terms of technology innovation and adoption, so this is a problem. I know for sure it’s not because of a lack of market size. Pick just about any sub-market of the overall $2.5 TRILLION dollar healthcare industry and you’ve got a market worth tens of billions (which is bigger than most markets entrepreneurs choose to focus on these days). I’ve encountered a bunch of MD’s-turned-entrepreneurs, or MD’s doing a startup on the side, and they all know medicine well but not really technology. A few of them are able to start disruptive companies, but healthcare is noticeably missing those “garage tech startups” that shake things up and the techie entrepreneurs behind them (who are often very young). There are of course exceptions, including a few “MD/programmers” who remarkably learned how to code and also somehow managed to get their MD, but they’re rare.
So what’s behind this? Why aren’t more of the super-smart young entrepreneurs coming out of college choosing healthcare as their industry to build a startup? In my opinion, it’s because of a few reasons: (1) healthcare as an industry has a reputation for being “highly regulated”, (2) it’s really hard to learn the ropes, and (3) the key people in the industry aren’t that approachable (many of them are busy saving lives) and/or are hard to find. I’d also argue it’s unfortunately not currently “sexy” to start a healthcare IT company like it is an Instragram or Pinterest, but hopefully that changes as there are some big outcomes that don’t take 25 years to develop. I’m going to go into each of these three problems real quick based on my recent experience, as I think it is very important that we foster and encourage more tech entrepreneurs to focus on healthcare instead of building some marginally useful consumer app.
Healthcare has a bad reputation for being highly regulated. Yes, it’s true that the government regulates certain parts of the healthcare industry. And honestly, they should for certain things like drug safety, patient confidentiality, insurance providers, etc… But for the most part, these regulations either don’t apply or are easily surmountable for a healthcare IT startup. In general, all you’ll run into would be the HIPAA regulations around dealing with patient data if that’s something you have to do, but that’s a well-known and defined problem to deal with. So, I don’t buy that as an excuse unless you’re starting a new health insurance company or something like that. Perhaps there is a business opportunity in starting something like AWS for healthcare IT companies, whereby you productize the hoops a healthcare IT startup would need to jump through onto a platform that is usage-priced.
The people aren’t as approachable or easy to find. This is important to solve, as the way you learn an industry and build early partner/customer relationships is via networking. I heard this going into the industry, “when they’re not saving lives, doctors are generally too arrogant to spend time with people who aren’t doctors.” This unfortunately isn’t entirely inaccurate for many doctors, but there are some who couldn’t be more willing to spend time with prospective healthcare entrepreneurs, it’s just really hard to find them (you’re also not only going to meeting with doctors). I feel advantaged being a successful second-time entrepreneur who is able to get meetings more easily, but that’s the problem. It shouldn’t be the case that only successful second-time entrepreneurs can get the meetings, we need to lower the walls and open the doors. That’s why I like what some of the healthcare-specific incubators like Blueprint, Rock Health and HealthBox are doing to create “mentor networks” that bring key opinion leaders and industry stakeholders in the same room. I think over time it will be important to make sure the industry mentors get something out of the process too for it to persist. But we need more than incubators, we need a change in mindset of the healthcare industry stakeholders. I wish I knew how to do that quickly.
It’s really hard to learn the ropes. I’m not gonna lie, this part is hard and that’s a big problem. This isn’t about knowing medicine and needing to spend 8 more years in school, it’s about learning how the industry operates and why. The ad tech industry was generally easy to learn, either because of available blogs/online resources or people willing to walk you through things. It took about six months to get our heads around that industry at a high-level. In terms of healthcare, it’s really confusing and there’s no good place to start. There are payers, providers and patients, and multiple variations of all three. Then of course there is the government who is also a payer. Figuring out how the money flows and how all of these people interact with each other is super confusing. I’m a fan of what a few of the healthcare-specific incubators are doing with some “pre-incubator” initiatives like industry education for prospective entrepreneurs where anyone can show up and learn. I think in general, the industry needs to invest more energy into education outreach to entrepreneurs at universities, perhaps via sponsored classes or programs, or the government could create a program like what Todd Park did with opening up health data to opening up knowledge of how the system works (i.e., a more basic problem). Perhaps some successful healthcare IT entrepreneurs can teach a class online and post their notes about the industry. I know I’ll do that if we’re actually successful in this industry.