Healthcare Industry Concepts Rise from the Grave


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get them thinking better about treatment plans. Kind of worked, mostly didn’t. Many of these companies still provide this information, except they realized that they needed actual business models for that whole prosperity thing to work and that advertising was not likely to be a robust enough source of financial sustenance for the long-term in most cases. Today WebMD, ADAM (recently acquired by Ebix), and others garner the majority of their revenue from activities other than engaging consumers and they have been joined by a plethora of other information-rich websites hosted by a myriad of hospitals, insurance carriers, e-health companies. Perhaps most importantly, there has been a widespread recognition that the availability of information alone does not prompt consumers to get truly engaged in taking care of themselves. Rather, there need to be clear and compelling financial and other incentives to do so. By marrying information, personalization and financial incentives, the new generation of companies (some of which started as different companies with the same names) is exploring interesting new ways to engage consumers in their own health care. We are seeing an explosion of Health 2.0 style companies focused on this very thing. Maybe too many such companies, in fact. I suspect there will be a significant winnowing-out of these new entrants as new ideas facilitated by new technology are tested.

6. Healthcare Information Technology (“HIT”) is what we call it now. It was, for a while, called “e-health” back in the 1990s. VCs rushed like lemmings to fund companies, now long dead, which focused on providing a wealth of Internet-based services to physicians, hospitals and consumers (see above). The healthcare field, previously dominated by huge companies like Perot Systems and HBOC (now part of McKesson) was suddenly being pecked at by the underdogs (now the dead dogs) of the early Internet (remember the original MedScape or When that bubble burst, e-health investors may as well have been wearing a scarlet “A” for “A former success story.” Healthcare partners were bounced from venture firms like LeBron James’ basketballs. It became very uncool to invest in healthcare-related information technology through the early 2000s and no one was buying it anyway. Physician practices and hospitals made it pretty clear that they had no intention of investing the billions of dollars necessary to facilitate the adoption of technology that, in their view, had no clear value proposition to their organizations. But wait…you’ll pay me to install technology? Adopt an electronic medical record system (EMR) and I’ll get tens of thousands of dollars? Hey, that sounds a lot different. With the advent of the ARRA stimulus money and the concomitant passing of incentives to adopt (and penalties for failure to adopt) EMRs and other provider-focused technologies, the story has changed. Once again it is cool to be an investor in HIT (the term “e-health” has gone the way of the dinosaurs). I have actually had several life science VC firms ask me about how they can break into this area, which they have previously shunned like lepers. What a difference a law, backed up by cash, makes.

There are many other examples of the old becoming new in healthcare. Physicians using tablet computing was a short-lived craze in the 90’s; once a failure, now an iPad revolution. The strange newness of online shopping made PlanetRx and failures even while on-line shopping is widely accepted now, 10-12 years later, as an adjunct to bricks and mortar brands. Even the concept of federally-driven health reform itself is a revisiting of an idea that was hotly debated in the Clinton era–the simultaneous comeback of healthcare reform and Hillary Clinton may or may not be coincidental! Depends on whether you’re a conspiracy theorist or a realist, I suppose. Anyway, the point is, as they say, the more things change, the more they stay the same. One can only hope that getting a healthcare do-over is the pathway to learning from history and not to just repeating it.

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Lisa Suennen is a managing director with GE Ventures and former managing member of the Psilos Group, as well as the co-author of Tech Tonics: Can Passionate Entrepreneurs Heal Healthcare With Technology? and author of the blog Venture Valkyrie. Follow @venturevalkyrie

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4 responses to “Healthcare Industry Concepts Rise from the Grave”

  1. Susan says:

    I agree with most of what you have written. We are thinking of purchasing software that will enable us to perform EHR for our clients. My question is, could we benefit from the proposed EHR subsidies retroactively?

  2. Hestia says:

    Excellent article; your point about accountable care organizations and medical homes is exactly right. Most communities can’t support such organizations that the number of clinical executives who can manage such organizations is vanishingly small.