Five Questions on Innovation, Health IT, and Biotech for Lux Capital’s New Venture Partner Richard Foster

Xconomy New York — 

On April 26, New York-based venture capital firm Lux Capital added two new partners: former CIA director James Woolsey, who will focus on energy investments; and Richard Foster, a former McKinsey & Co. partner who will help Lux identify new business opportunities in life sciences and healthcare IT.

Throughout his career, Foster has been on the frontlines of innovation in emerging industries. At McKinsey, he co-founded a high-tech practice in the 1970s, a chemicals group and healthcare unit in the 1980s, and a private-equity practice in the 1990s.

Foster has also written two books on innovation, Creative Destruction: Why Companies That Are Built to Last Underperform the Market—And How to Successfully Transform Them (Broadway Business 2001), and Innovation: The Attacker’s Advantage (Summit Books 1986). I asked him about innovation, life sciences, and health IT, and how he plans to deploy his experience to help Lux identify the right investment opportunities.

Xconomy: Healthcare IT will be a new direction for Lux. Why do you feel this is a good opportunity?

Richard Foster: We’re not going to be able to run a healthcare system unless we actually have a system, and that will require a lot of IT. Many older doctors don’t use computers—they don’t want to use computers. I don’t know of any medical school that has technology as part of its curriculum. But the younger docs are all very tech savvy, so I believe it’s all going to change.

Imagine if the airlines had no IT. That’s where healthcare is now. It’s a very large opportunity with hundreds of parts to it.

X: How important was the healthcare reform legislation and other government stimulus actions in terms of increasing entrepreneurial interest in health IT?

RF: It has been tremendously important. The national coordinator for health IT is giving doctors incentives for purchasing new systems. That will result … Next Page »

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One response to “Five Questions on Innovation, Health IT, and Biotech for Lux Capital’s New Venture Partner Richard Foster”

  1. Even with stimulus incentives and a demographic shift in attitudes towards computer use, the stats on technology adoption and data security in primary care are pretty scary. I saw some survey results from AMA this past March that found that 30% of all physician practices lacked anti-virus software, and 35% lacked firewalls, including for systems storing patient data. On the one hand, there’s this very high barrier to adoption – PCPs just don’t have the time (at current reimbursement rates) to trial, implement and train staff on new systems – at least until HITECH started offering $44,000 per physician. On the other hand, some of the most direly needed solutions in this area are shockingly low tech. It will be interesting to see how HIT companies try to build in greater value for the physician office after the HITECH funding window has passed.