Theres a lot of entrepreneurial energy in the Bay Area, but Im always surprised at how much of it is directed towards health care. As Apothecary readers surely recognize, if we were to rank sectors where the government lies ready to crush the entrepreneurial spirit, health care and education must lead the list.
So, I was excited to have wrangled an invitation to the UC Berkeleys Haas School of Business annual Business of Health Care Conference, a day-long event held last week. This years conference, the sixth, titled Entrepreneurial Solutions to Health Care Challenges, assembled a high-profile group of entrepreneurs, scholars, and investors.
The most informative panel that I attended addressed Venture CapitalPositioning Health Care Startups for Success, moderated by Rebecca Lynn of Morgenthaler Ventures. The panel comprised Missy Krasner, also of Morgenthaler Ventures and the former Google executive who launched the now defunct Google Health; Lisa Suennen, a co-founder of the Psilos Group (perhaps the longest-standing pure-play healthcare VC); and Jeff Tangney, former president of Epocrates and founder of Doximity.
Key take-aways from the panel discussion were:
- Digital health is where the opportunity lies, but both healthcare investors and IT investors bring unhelpful biases to this new sector.
- Although the Bay Area crowd is loathe to hear it, some of the best new health IT businesses are in places wed shunlike Michigan or Nashville.
- Some digital-health entprenreneurs think they have a business, but they only really have a product. Nothing wrong with that, but youve got to sell it, not fund it.
- Theres a surplus of consumer-targeted digital innovation. (If I see one more start-up promising to help me count calories on my iPhone or Facebook how many miles I biked today, Ill scream.) VCs are more likely to invest in digital health start-ups that target businesses. (But be ready for a hard slog. Hospital bureaucracies are infamously resistant to new ways of doing business. However long you think it will take you to sell your new product to a hospital, add a year.)
If theres one area where I believe the panel to have been too optimistic, it is the adoption of health-insurance exchanges, a key feature (or bug) of PPACA. This is something about which Ive written a heck of a lot (here), and the New York Times Robert Pear has a recent article describing how states are neglectingor even actively resistingthe federal governments efforts to establish PPACAs health-insurance exchanges. There is no real business opportunity in these exchanges: The likelihood of their being up and running by 2014 is slim to nil. (Private exchanges, like Ive written about before, are a different matter.)
Unfortunately, you cant expect consistently excellent presentations at such a packed conference. The low-water market was a panel on Nurturing Life Science Innovation in Tumultuous Times. I was expecting a heated discussion about lots of issuesincluding the increasingly sclerotic Food and Drug Administration. Theres a boatload of research (the topic of my next article) from different sources, which hold the FDA responsible for much of the recent failure in biopharmaceutical innovation. But the folks on the panel could barely be roused to speak about thisor anything else. It was a lost opportunity, especially as Ive heard two of the panellists give excellent presentations at previous conferences.
Always energizing, informative, and entertaining, Daniel Kraft, MD, gave the closing keynote. A physician who flies F-16 jets in his spare time, Dr. Kraft runs a program called FutureMed at Singularity University. If you want to learn about a future handheld deep CT-scanner that a paramedic can use on a person suffering chest pains, then send the image into the cloud for immediate analysis, so that the cardiac surgeon knows where to insert a stent before the patient arrives at the ER, youve really got to see Dr. Krafts presentation.
|John R. Graham is Senior Fellow at the Independent Institute.|