An update on tech and business in healthcare, every other week

#44 - The Sound of Cardiologists Everywhere Screaming

Apple’s EKG is out, AWS is going to fix EMR, and the medical school business model is dead

Things That Happened

The sound of cardiologists everywhere screaming. The Apple Watch EKG feature went live this week. Consumers seem to love it, while physicians are less enthusiastic. Want to scare a cardiologist? Show her this

Expanding Circles. Oscar Health is adding a new service tier to its small employer insurance offering. Circle Plus is an upgrade to the standard Circle plan, and includes expanded provider choice. Oscar’s narrow-network plans are one of their key strategies for containing costs, so this could indicate they’re finding it difficult to court employers to their plans. Most healthcare consumers associate the quality of a health plan with the breadth of choice of in-network providers and the size of the deductible, so offering a costlier plan with more choice may be enough to convince employers, and their employees, that Oscar is a viable option for employer-sponsored insurance.

Rideshare Healthcare. Lyft hired Megan Callahan, the former Chief Strategy Officer at Change Healthcare, to run their healthcare business. Given her experience at Change, Callahan is an expert on the billing and revenue side of healthcare. And that’s why Lyft, and other ride-share firms, are so interested in the area of non-emergent medical transport; much of it is billable to insurance companies. And even when it isn’t directly reimbursed, it’s still well worth it for a physician to provide transport when it earns them a visit fee they wouldn’t have seen if the patient didn’t show up for the appointment.

More reason to stare at your phone. Researchers at Stanford designed a machine learning algorithm to detect depression using video recorded from a conversation with a physician using a smartphone. While it’s still very much in the research phase, it’s demonstrative of the reality that our smartphones are, and will be, excellent diagnostic sensing tools. 

Share it on Facebook. The initial products of the FastMRI collaboration between NYU medical school and Facebook have emerged in the form of an open sourced set of MRI data and baseline machine learning models. Facebook claims in their blog that it’s the largest MRI data set ever open-sourced. 

Psychiatry in Aisle 5. Walmart, continuing their inexorable march towards healthcare dominance, is piloting an in-store behavioral and mental health clinic in a single store in Texas. The clinic is focused on less complex mental health diagnoses, and will refer patients to standard mental health practices should they require more complex care. It’s essentially the same model Walmart is already employing with medical care. 

Robots giving you medication? Pillo, the automated pill dispenser slash chatbot, is now available for purchase. The major question Pillo’s executive team should be sweating is whether Pillo offers an experience superior enough compared with PillPack and an Amazon echo dot ($30 total cost) to justify the huge price delta. Pillo starts at $500, and has a $40/month subscription fee starting in year 2. 

Things Worth Understanding

Last week Amazon Web Services announced a new HIPAA-compliant service that employs deep learning to interpret and structure physicians’ notes. 

In tangible terms, AWS Comprehend Medical will take physician visit notes and output a structured list including, according to the AWS blog post, “patient diagnosis, treatments, dosages, symptoms and signs, and more. “ Should it work as advertised, and for the purposes of this piece we’ll give AWS the benefit of the doubt, this would allow physicians to return to taking notes as they please and not concern themselves as much with the formatting and structure of their EMR.

It almost sounds too good to be true.

EMRs are a huge problem point for physicians. They’re time consuming, difficult to navigate, and pull physician focus away from patients. When there’s 15 minutes to complete a patient visit, it’s a zero-sum game, and the EMR is winning. 

Comprehend Medical isn’t the first solution to the problem. Atul Gawande explored a number of fixes in his recent piece in the New Yorker: medical scribes who are trained to take notes for the doctor live during the visit, and even an elaborate system in which the visit is recorded and transmitted to a physician in India who creates the medical notes, then sends them back to the physician. Those are fine as band-aids, but they don’t scale. 

Comprehend Medical has the potential to make the interface layer of the EMR user friendly by allowing the user to dictate the terms on which information is inputted rather than the other way around. It’s similar to the promise of the voice interface - you should be able to ask Alexa your weird question, and the burden is on Alexa to figure out what you want. The machine must learn how to respond to your input, rather than the user learning how the machine likes input. 

What’s more interesting here is that it seems AWS has found a way around one of the major strategic problems facing big tech companies as they enter healthcare.

Most tech giants - Facebook, Amazon, Apple, Microsoft, Google - have been built using user experience as their key strategic focus. When shopping at a competitor’s website is as easy as clicking to the next tab, Amazon has always had to focused from top-to-bottom on the customer experience. In healthcare, where consumers have diminished agency to make purchasing decisions (because of information asymmetry, and because they often don’t directly foot the bill), user experience isn’t nearly as much of a wedge - if consumers aren’t the ultimate deciders, then you don’t have be as concerned about keeping them happy. Thus tech companies’ greatest strategic advantage, and the central thesis around which their operations are organized, doesn’t hold true in healthcare. 

One would think that EMRs, which are primarily used by physicians, would need to win physician approval to gain customers. The worst kept secret in health IT is that EMRs are billing systems first, and clinical record keepers second. As the multi-million dollar contracts for hospital EMRs are being negotiated it’s quite obvious from the outcomes that user experience is not a major factor in the decision. 

With Comprehend Medical, however, Amazon has found a way to so dramatically improve user experience for physicians that it can, in fact, act as a wedge. It’s not just that Comprehend will make the physicians’ life easier, but that it will make them happier, more efficient, and could even help health systems avoid expensive intermediary solutions like scribes. 

If Comprehend ends up being the blockbuster it could be, it will put Amazon in a position to dictate the market. They could use it was the killer-feature exclusively available on an AWS electronic medical records, or they could simply sell it as a service to existing EMR players as a way to lure them further into using AWS as their complete platform. Given EMRs are headed in the direction of more customization for different specialties, AWS might be avoiding this product headache and positioning themselves as the common foundational infrastructure on which all EMRs are built. 

Things To Read

“The key to a successful recovery after illness may be a less stressful, more supportive, more humane experience during the hospitalization.” Austin Frakt wrote this week in the NY Times how hospital standard operating procedures like regular vitals checks and blood draws get in the way of patients’ sleep. Consider this another side-effect of the fact that patients’ aren’t the hospitals customers; health plans are. 

#43 - Another Brick in the Wal

Humana picks greens over the mart, Verily lost its contact lens, and more from the last two weeks in healthcare

Things That Happened

Another Brick in the Wal. Earlier this year Walmart and Humana seemed locked in an acquisition dance. Now Humana appears to have found greener pastures. WSJ reported this week Humana and Walgreens are talking about exchanging equity stakes in each other, tying their fates together and settling the question of just how Humana will position itself in the new world of vertical insurance integration. 

Maybe Walmart got everything they wanted from Humana when they hired Sean Slovenski, Humana’s head of innovation, to come to Bentonville to lead their health unit. 

Screen time. reSET, the digital therapeutic application from Pear Therapeutics and Sandoz, is now commercially available. The mobile app is approved to treat substance abuse and addiction, and requires a physician’s prescription to download and use. 

Lost contact. Verily and Novartis announced they’ll be stopping work on their glucose-monitoring contact lens after finding the technological challenges too great to warrant continued attention, especially given the other potential applications for their contact lens technologies. Some have snickered at the announcement as an example of big tech’s hubris and inability to find continued success in healthcare. But that’s a shortsighted view. Failure is inherent in innovation. Nevertheless, Alphabet, Amazon, Microsoft, and Apple are the four most valuable companies in the world right now, and they’ve all stated their intentions to get into the industry in one way or another. It’s only a matter of time. 

OK Google. Google’s health unit is bulking up. After luring Geisinger’s David Feinberg to lead the charge, Google is amassing his troops. DeepMind, the UK-based Google acquisition focused on deep learning, has split off its health team to report directly to Feinberg. It’s further evidence that Google wants to start getting serious, and less experimental, about its efforts in healthcare. 

HIPAAWS Amazon Web Services has expanded the number of machine learning services they offer that are HIPAA compliant. These include speech-to-text transcription, translation, and text analytics. 

Twelve leads? Hold my beer. AliveCor’s two-lead EKG device was found to be similar in efficacy to a standard 12-lead EKG in a trial. Yes, this trial was partially sponsored by AliveCor, and it was bounded to treating patients with a type of myocardial infarction, but it’s still interesting that a device I can purchase for $99 (retail) and run with my phone is competing with a legitimate medical device. This sort of innovation, where devices are made vastly less expensive and more portable, is the sort of technological change that begets process overhaul. 

Between this EKG and Butterfly’s portable ultrasound, the number of diagnostics physicians can quickly perform with tech carried in their lab coats is expanding. 

Things To Read

“Health care requires 770 full-time workers per $1 billion of revenue collected, compared with 100 workers in other industries.” This is just one of the many interesting nuggets surfaced in an Econofact report examining the role of administrative costs in the healthcare system. 

Up and to the right. Austin Frakt unraveled the various factors at play in determining why America spends vastly more on prescription drugs than other wealthy nations last week in the NY Times. Hint: It’s the prices. Read his piece to understand exactly why, and how it got this way. 

“We have done over 50,000 sessions of data collection which is almost 100,000 hours of data being collected.” That’s Apple's fitness director Jay Blahnik quoted in Axios. They got a look at Apple’s extensive and expensive health lab where they’re doing lots of secret stuff to develop better fitness and health products. 

“The analysis showed that the price of an average hospital stay soared, with prices in most areas going up between 11 percent and 54 percent in the years afterward” This comes from Reed Abelson’s latest look at hospital prices in the wake of consolidation in the NY Times. 

It makes perfect economic sense that consolidation of supply would increase prices. It’s compounded in its effect by the fact that insurance companies - the aggregated purchasing power that should combat increased supplier power - aren’t terribly interested in actually reining in costs

Amazon's Basic Care over-the-counter drug offerings grew 19% month over month.” The basic care line includes the same generic store-branded OTC drugs like acetaminophen and omeprazole that you’d find in any Walgreens or CVS. Meg Bryant summarizes the analysis on this and Amazon’s other moves in the OTC and prescription drug space. 

Rest Unassured. In his latest disturbing inquiry into standard insurance industry practices, Marshall Allen looks into the duplicitous reimbursement protocols for CPAP machines. Patients are monitored for usage and denied payment for failing to achieve arbitrary metrics, and are forced into rental agreements that value devices at multiples of the retail price. 

This environment where value is out of whack with pricing, and where every player in the value chain points the finger up or down to explain predatory practices, is sadly widespread in American healthcare. It makes it that much easier for reporters like Allen - he could point his investigative energies at almost any condition or treatment and find similarly misleading and flawed payment practices at play. 


Thanks for reading The Healthcare Handout, a bi-weekly update on tech and business in healthcare from Isaac Krasny. Criticize, praise, hire, or otherwise get in touch with Isaac via isaac@healthcarehandout.com, or on twitter @isaackrasny

And remember, this machine runs on sharing. If you found this newsletter informative or thought-provoking, give it a boost by sharing with a friend or colleague. Or share a testimonial.

#42 - Rearranging Alphabet 

Alphabet unifies health efforts, CVS wants to be prime, and more from the last two weeks in health and tech

Things That Happened

Feinberg goes west. David Feinberg, CEO of the Geisinger Health System, will reportedly be taking a job at Google “running healthcare” for the company. It seems this means that Feinberg will be coordinating strategy for all of Google’s health-focused projects, while ensuring communication and collaboration with these projects and Verily and other Alphabet health ventures. Feinberg becomes the latest in an increasingly long list of hospital CEOs getting jobs at tech companies with healthcare ambitions. 

Healthy collaboration. Ahead of Feinberg’s arrival, Alphabet is already taking steps to promote interconnectedness among its many disparate health projects. They’re holding a two day conference to pull together people working on all their health units. It seems, given Feinberg’s hiring and this sort of superficial unification of health efforts, that Alphabet might have some worries about their relatively scattered focus in healthcare. 

33 and maybe. 23andMe received FDA clearance to include section on their genetic reports indicating the status of 33 genetic variants that are associated with the efficacy of about 50 drugs. The clearance came with some pretty serious caveats, including that this is not intended to indicate drug efficacy or advise patients which drugs to take. They might as well have said it’s ‘for entertainment purposes only.’ 

Texting good news. 98point6, a telemedicine company with a focus on asynchronous text messaging (instead of video chats), just raised a $50 million series C round. While telemedicine is certainly a hot area for venture investment, 98point6’s text-based solution is far more in line with what patients want (to not be constrained by physicians’ schedules) and helps physicians better manage their own time as well. 

$2,019. Pfizer has indicated they’ll return to their regular schedule of price increases in 2019, after abating price changes for the second half of 2018 at President Trump’s request. 

CVTest. CVS is testing a membership model that comes with discounts and free delivery on both prescriptions and things purchased online. While Amazon has a much-vaunted logistics operation, it’s important to remember that CVS, Walmart, and Walgreens have untapped potential in their retail locations - namely using them as micro-warehouses and fulfillment centers. This is essentially what Instacart has done for grocery by layering a delivery operation on top of extant inventory. Amazon is racing to build a pharmacy operation to run through their logistics operation, while these chains just need to add a credible last-mile delivery service to their already operating pharmacies. 

Athenawealth. Responding to an HHS request for comments on anti-kickback laws, Athenahealth suggested changes to the laws that would allow doctors and hospitals to pay each other for patient health data. This certainly would be an interesting approach to smoothing the transfer of patient data, it’s always tricky, especially in healthcare, to unfurl the web of incentives to discover what sort of behavior new incentives would promote. 

Also, Athenahealth may finally have a buyer. Or two. 

Things To Read

“I’ve come to feel that a system that promised to increase my mastery over my work has, instead, increased my work’s mastery over me.” Atul Gawande dives into the problem of electronic medical records and their deleterious effect on physicians. While you may think you’ve read this story before, Gawande goes deeper than just complaints about face time with patients and ruminates on the nature of technology, process, systems, and group actions. This piece is botha survey of the current state of embrace of medical software, but also an important consideration of the role of technology in work. 

“A study of radiation oncologists found that only 5 percent thought that they might be affected by gifts. But a third of them thought that other radiation oncologists would be affected.” Aaron Carroll writes in the NY Times about how there are two problems with conflicts of interest: they are fairly widespread among physicians, and more troublingly, physicians seem to think they are above their influence. 

For three months’ supply the savings of $13,500 more than covers the $500 reward and transportation, typically less than $300 per person.” This is from a program implemented by a public employee health plan in Utah, who finds that for many treatments it’s far more cost effective to not just send patients to Mexico, but to pay them a cash reward to do so. 

While this is a particularly newsworthy example, healthcare has seen similar programs before. One prime example is SmartShopper, a service acquired into Vitals, that offers patients cash incentives for using the service to select providers that offer lower cost care. In a market where prices are highly differential and quality metrics are hazy at best, there’s opportunity for arbitrage, and plenty of money left over to incentivize patients to play the game. 

“We estimate conservatively that excluding coverage of pre-existing conditions results in 38% lower premiums relative to ACA-compliant plans.” The mechanisms by which short-term health plans save money are readily apparent, but the Kaiser Family Foundation dissects them to understand where the savings are coming from, and what policyholders are sacrificing for lower premiums. 

“I imagined us creating a Smart City of Privacy, as opposed to a Smart City of Surveillance.” That’s Dr. Ann Cavoukian, a privacy expert who recently resigned as a consultant for Sidewalk Labs in protest over their expansive data gathering policies. Sidewalk, an Alphabet subsidiary, is planning to build a prototype smart city in a Toronto neighborhood. 

Privacy will be an important issue as large tech firms, especially those who generate revenue through gathering user data, enter healthcare. It seems the predisposition for data gathering is baked into Alphabet’s DNA. What does this mean for Sidewalk spin-out Cityblock Health? And for Verily, and Google’s internal health tools? I expect privacy issues will be a core point of contention as Google gets more directly into healthcare. 

health care is still eating the economy, and that’s still cause for alarm.” Columnist Noah Smith examines the macro trends in health spending for Bloomberg and confirms that, yes, it’s really that bad. 

What color is your drug? Jacob Bell takes a look at how drug manufacturers - and their branding consultants - choose which color their pills will be. There are certainly heady waves of marketing bullshit, but perhaps some actual benefit to varied pill colors when it comes to compliance and safety (but that’s not why they choose the colors they do). 


Thanks for reading The Healthcare Handout, a weekly update on tech and business in healthcare from Isaac Krasny. Criticize, praise, hire, or otherwise get in touch with Isaac via isaac@healthcarehandout.com, or on twitter @isaackrasny

And remember, this machine runs on sharing. If you found this newsletter informative or thought-provoking, give it a boost by sharing with a friend or colleague. Or share a testimonial.

#41 - Spooky Thermometers and Disappearing Medical Records 

Private equity loves dermatology, a thermometer tells companies you’re sick, and more 

Things That Happened

Sharing illness. The NY Times reported this week that Kinsa, a wifi-enabled personal thermometer, sells aggregated location data that helps advertisers target places with higher levels of fever for ads for items like household disinfectants and medicines. In reality, the anonymized data isn’t putting anyone at risk, but it’s a strong reminder that privacy conscious consumers must have their guard up at every turn. And companies must remember that privacy is a trade-off: is it worth sharing my data with advertisers to be able to automatically track my temperature on my phone, or would I be okay with a traditional thermometer instead? 

Express shifts. Express Scripts will be opening their network to mail-order pharmacies. While the company has largely fulfilled mail-order business using its own pharmacies, it will now allow external mail order pharmacies to fill prescriptions (if they’ll agree to Express Scripts’ contract terms, of course). This could be signaling a shift in the Express Scripts business model following the successful merger with Cigna, or it could be nothing. We’ll have to wait and see. 

Generic support. Civica Rx, the non-profit generic drugmaker created by a consortium of health systems, seems to be the darling of Capitol Hill according to STAT

Buy one, get one doctor visit. Walmart, Doctor on Demand, and RB (Reckitt Benckiser) announced a collaborative program this week that offers a free telehealth visit with Doctor on Demand when purchasing some RB products (e.g. Mucinex) at Walmart. If you’re taking this as a signal of Walmart’s increasing healthcare ambitions, keep looking. This seems to be coming from Walmart’s merchandising department and not from its health transformation team. It’s a safe bet RB and Doctor on Demand got together and approached Walmart on this, rather than Walmart initiating the program as part of their larger healthcare strategy. 

Bezos’ choice. Amazon has started selling an exclusive brand of home health devices called Choice. The devices, which include a blood pressure monitor and blood glucose meter, are produced by Arcadia Group, who have a similar arrangement with Walmart for their ReliOn brand. See the full Amazon lineup

Thin-Skinned Doctors. Dr. Sailesh Konda’s paper on the corporatization of dermatology, specifically the rapid influx of private equity ownership into the specialty, was removed from the Journal of the American Academy of Dermatology following an outcry from dermatologists. It would seem much of the outcry came from those who have had their practices purchased by private equity firms. 

Whether new capital interest in medicine is an inherently bad thing is a much larger conversation. One thing that is certain from this episode: medical journals and associations are a reflection of their members’ interests, and so these journals may not be a reliable source of analysis and information, especially on the business side of things. 

Tesla gets healthy. Elon Musk revealed that his company operates its own medical clinic for employees. Is this a sign that Tesla is exploring the possibility of getting into clinical healthcare? No. And the same can be said of Apple’s AC Wellness and Amazon’s employee clinics. 

Things To Read

It can be challenging to get your medical records from your provider. This has now been verified by a study at Yale where researchers contacted hospitals, acting as the legal caregiver for a patient, and inquired about the process of getting copies of medical records. Only 53% of hospitals forms’ indicated patients could actually get their complete records, and many of the hospitals set policies that violate HIPAA. Kaiser Health News summarized the study

It’s like David and Goliath, but David has a $3 billion slingshot. Peter Loftus profiled John Arnold, the Houston hedge fund billionaire who has given up trading futures and now focuses on applying cash to fix America’s pharmaceutical cost explosion. He’s helped fund Civica Rx, as well as research into drug effectiveness, and groups that lobby in Washington on behalf of patients unable to afford their drugs. 

Continuing her blog series investigating the state of healthcare, Union Square Ventures associate Naomi Shah this time addresses business model innovation. For those well-versed in healthcare there’s likely no new information here, but Shah’s categorization schema is interesting, as is getting to see the world of healthcare through the eyes of venture capital. 

Pharmacists should be more tightly integrated into medical care. Sachin Jain lays out his case for relying more on pharmacists both as a point of contact with patients, and as a member of the care team determining treatment plans and medication decisions. While his argument is rooted in the shortage of primary care physicians, it’d be sensible to integrate pharmacists even with an abundance of physicians as so much of managing chronic care is based on pharmaceuticals - it doesn’t make sense to have the pharmacist external to the medical decision making process. 

Another way digital health is different from mainstream tech. Joseph Smith, a digital health CEO, writes about how his company recently completed a 30-month randomized controlled trial showing the efficacy of their virtual rehabilitation assistant. It’s an interesting look into the significant trade-offs made by going down the path of performing a clinical trial, and why it’s an increasingly necessary step for digital health firms. 


Thanks for reading The Healthcare Handout, a weekly update on tech and business in healthcare from Isaac Krasny. Criticize, praise, hire, or otherwise get in touch with Isaac via isaac@healthcarehandout.com, or on twitter @isaackrasny

And remember, this machine runs on sharing. If you found this newsletter informative or thought-provoking, give it a boost by sharing with a friend or colleague. Or share a testimonial.

#40 - The $1.8 Billion Toddler

Devoted's big raise, NY might challenge CVS-Aetna, and more from this week in healthcare

Things That Happened 

Devoted Wealth. Todd and Ed Park, DJ Patil, Bob Kocher, and the rest of the team at Devoted Health are such a dream to investors that they announced this week they’ve raised a $300m series B and started enrollment on their first Medicare Advantage plan. And CNBC reported they’re doing so at a $1.8 billion valuation. They’re a unicorn while being just 19 months old, and before they’ve earned a dollar in revenue. This is either a once-in-a-generation company, or a sign of overly exuberant venture capital. Either way, it’ll be fun to watch what happens. 

UHC PHR TBA. UnitedHealth Care is planning to launch a personal health record for its members. I’m convinced that most people will one day use a PHR to view their clinical records and log their health tracking data, but I’m not sure it makes sense for that PHR to be tied to a health plan. Health plans come and go as we move and change employers. This could be one reason Apple’s externality to the system is actually a benefit in the PHR game - a consumer’s relationship with his iPhone has nothing to do with his employer or location. 

$931 million. That’s how much a group of compounding pharmacies and their telehealth conspirators tried to bilk out of insurance companies. They have been indicted. Even when it comes to fraud the numbers always seem to be bigger in healthcare. 

HackCare.gov CMS reported this Friday evening that they’ve detected “suspicious activity” on the agent & broker portal of healthcare.gov. 75,000 individuals’ files were improperly accessed. 

PhRMA makes a reasonable point. In anticipation of regulations requiring drug advertisements to include the list price of the drug, PhRMA has announced their plan to voluntarily feature list prices for drugs on a website. It would also include what a patient is likely to have to pay for the drug. Their point: the list price is meaningless as nobody actually pays it. They’re not wrong. 

The Empire State Strikes Back. The New York State Department of Financial Services is signaling they might block the merger of CVS and Aetna’s New York businesses because the DOJ didn’t do enough to protect consumers when approving the deal. 

Things Worth Understanding

My first job in healthcare was working as an analyst at a strange little startup. Our goal was, for those elective procedures with the right economics, to help providers better manage their capacity through offering discounted pricing at times of the day and week that were usually much slower. This would create a two-sided marketplace where patients could find discounted prices for elective procedures, and where providers could gain more business simply by changing pricing and hours. 

This was right when the notion of the lean startup was taking hold. While our office was in a sleepy commercial park off a busy highway in Northern New Jersey, we decided to act like one of those fast-moving Bay Area startups. 

We built a consumer-facing website where customers could see a list of providers and their pricing ranges, and request appointments. We’d be notified once a customer placed a request, and then we’d pick up the phone and get in touch with the provider to book an appointment at the requested price. 

While the company floundered fairly quickly for a variety of reasons, my time there gave me a chance to become intimately acquainted with the relationship of technology to innovation. More specifically, I learned not to confuse business model innovation with technological innovation. 

I watched as, in relatively short order, we were able to launch our service without building more than a basic website. We were able to deliver on our two-sided value proposition, filling exam rooms and getting patients cheaper care, without building a complex system or hiring an army of software engineers. Our value was delivered without inventing anything other than a new process for connecting patients and providers. 

The problem, as I’m sure you see it without me spelling it out, was that our manual, phone-based process wasn’t going to scale. There’s no way the small matchmaking fee we took for booking an appointment would cover the labor cost of doing the work to set it up. There wasn’t enough meat on the transaction for us to take a big enough bite while leaving enough to keep the other parties coming to the table. That’s where the tech comes in. 

Technology enhances processes. It can take processes we’re already doing, automate them to reduce or remove human labor, and make things generally faster and more efficient. It can transform variable cost into fixed cost, enabling business models that were previously economically inviable. Once we’d built a system that could automatically match patient demand to provider capacity, our business would be able to scale as quickly as we could feed it customers and suppliers. 

This may seem patently obvious, but it’s important to remind ourselves that in a world that prizes tech above all else, you have to first create the model, then apply tech to automate your way to it being viable. You can’t simply throw technology at utterly broken systems and hope everything starts to work as it should. 

This is especially important in healthcare because the system is especially broken. Electronic Health Records haven’t done anything to make physicians’ lives easier because all they do is reinforce a system that wasn’t working well in the first place. Conversely, you can look at solutions like Sherpaa, which uses technology to enable a 100% virtual and asynchronous relationship with your primary care doctor, but hasn’t taken off because it exists outside of our existing payer-provider ecosystem. 

Introducing technology into a broken system will only perpetuate and magnify systemic failures. You have to fix the system first, then introduce technology to make it sing. 

Things To Read

Does the CVS-Aetna merger really deserve all this scrutiny? Not really, if you’re okay with all the other large corporations that have already vertically integrated. Josh Barro examines vertical mergers in healthcare, noting that they can even sometimes end up benefitting the consumer. 

At a basic level the explanation of how these mergers actually help patients is similar to that of an Accountable Care Organization: by combining payer with provider, the payer gains more control and greater incentive to optimize service utilization and the cost of delivering care. I’d be more interested in seeing this responsibility growth occur in terms of time - how would a payer’s incentives change if policyholders were on 5 year contracts instead of 1 year contracts? 

“61% of digital health companies that start B2C end up pivoting to B2B and selling to insurance companies, employers, hospitals, or other healthcare providers.” Paul Yock explains how mainstream tech’s standard-operating-procedure of iterative product development and a healthy consumer obsession can actually serve as a hindrance in the world of healthcare. The difficulties flow from the fact that in healthcare the standard functions of a consumer - selecting a product, using a product, and paying for a product - are actually completed by three different parties: providers, patients, and payers. 

How much money does pharma send to Washington DC? Sydney Lupkin and Emmarie Huetteman explore pharmaceutical companies’ campaign contributions, PAC donations, patient advocacy, and lobbying spends in this piece in Kaiser Health News. KHN also has this handy database where you can easily see how much money your Congressman or Senator took from pharma companies, if you’re interested in that sort of thing.  

“What is the difference between 300 apps on the app store versus a digital therapeutic?” That’s Pear Therapeutics CEO Corey McCann asking what I’m sure he hopes will one day be a rhetorical question. Digital therapeutics companies are creating software tools designed, and FDA approved, to treat specific behavioral and mental health conditions. But they must regularly sell themselves as something beyond the slew of wellness apps that fill the app store. A helpful mental model suggested by McCann: digital therapeutics are to wellness apps what pharmaceutical drugs are to dietary supplements. Read more from Jonah Comstock’s coverage of the Digital Health Innovation Summit. 

“researchers report that by testing the 1.28 million samples contained in a consumer gene database, they could match 60 percent of the DNA of the 140 million Americans of European descent to a third cousin or closer relative.” Technology is enabling researchers - and others - to glean deeper information than previously possible from genetic databases. Read Paul Raeburn’s piece in Scientific American for more on how you can be found in a genetic database even if you’ve never volunteered your DNA. 

The rumors are true: Medicare actually is more efficiently administered than private plans.  But if Medicare For All were to come to fruition, policyholders might find the services they receive lacking compared with private insurance plans. Austin Frakt unpacks Medicare’s economics for the NY Times.


Thanks for reading The Healthcare Handout, a weekly update on tech and business in healthcare from Isaac Krasny. Criticize, praise, hire, or otherwise get in touch with Isaac via isaac@healthcarehandout.com, or on twitter @isaackrasny

And remember, this machine runs on sharing. If you found this newsletter informative or thought-provoking, give it a boost by sharing with a friend or colleague. Or share a testimonial.

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