What’s Holding Back Healthcare Innovation in the 21st Century?


This article was originally posted on Huffingtonpost.com

The much heralded convergence of healthcare and technology innovation has led to some incremental advancements, but it has not quite yielded major breakthroughs. While many other industries have been upended by new developments in hardware, software, and procedures, the healthcare industry seems to be progressing at a snail’s pace. Is the healthcare revolution fading out, or are we just ahead of massive change?

The negatives are plain to see. Some estimates have put the venture capital lost on healthcare at $40 billion. High-profile failures like Theranos put a spotlight on the healthcare industry’s inability to make the leaps in technology we’ve marveled at in other fields like mobile and computing. While many strides have been made recently, it often feels as if there have been no truly life-changing innovations.

The largest factor that limits healthcare is government regulation. For obvious reasons the sector needs to be regulated closely, but the current system makes innovations in consumer healthcare, drug development and many other areas slow and overly costly. Federal and local law can spur new developments for the greater good, or impede development in certain vital areas. Either way, a great deal of progress can end up depending on friendly legislation, which is hardly the ideal condition for innovation.

Even when trying to promote advances, bureaucracy can get in the way. Regulators in the FDA and the Patent Office are blamed for stifling innovation, rightfully so in many cases. For the most part, governmental interference is a tricky field to navigate, frequently making difficulties in introducing new tech challenging to overcome.

One often forgotten factor differentiating healthcare from say consumer/retail is that it’s not just a matter of producing and distributing the next greatest healthcare product. In many healthcare segments there is intense market fragmentation such that the larger number of players sometimes have opposing goals — this can translate into complicated (not to mention highly regulated) distribution paths. Prominent doctors or hospitals, which frequently have lobbying firms at their disposal, may block or sidetrack promising technologies if they upset the status quo.

I am not negative here — there are plenty of hospitals and doctors doing the right thing, but even in the best of circumstances, healthcare tends to be an industry cautious about change. Those who hope to make large scale changes in the healthcare industry are faced with a complex field of competing interests, which is never a simple task to manage.

Another significant barrier is funding. Even a seemingly sure thing will often struggle to raise capital in the early stages, requiring flexibility and patience that many startups simply do not have. A great idea can die out in the early stages, keeping the market stagnant. Also, innovators must deal with insurance providers to see that their product will be eligible for reimbursement, without which it’s extremely unlikely to be integrated into the health system.

The utilization of new technologies within healthcare often depends on the insurance providers’ assessment of its necessity. The insurance industry reviews the costs in terms of direct reductions in spending due to integration, so a long-term cost reduction will not necessarily be appreciated if it means a short-term rise in spending on the new technology. Without their approval, the chance for innovations to be funded is next to zero. For direct to consumer healthcare, assuming that it is not blocked by the FDA, there is now a black cloud hanging over the funding opportunity (see Theranos, again.) Areas such as big data and innovations around insurance itself are coming into healthcare, but for many companies insurance providers can be the ultimate arbiters of their fate.

Consumers have also been more active in demanding accountability from medical providers, resulting in service providers who can be wary of integrating new technologies. Since the providers are paying directly for the new tech while consumers pay indirectly, this creates additional obstacles for those hoping to revolutionize health technology. Cost-effectiveness and long-term safety must be proven in concrete terms before approval is given. This is, of course, in addition to the efficiency and safety requirements needed by the FDA and other regulatory agencies.

With all these daunting impediments to progress in health tech, there are still many promising innovations in the pipeline. Keeping within the current medical framework is assuredly difficult, but not impossible.

The ongoing success of Medtronic, a leader in robotic surgery after branching out from implantable pacemakers, is one demonstrative story. Instead of expecting the industry to bend to their expectations, Medtronic leadership worked directly with surgeons who would be using their technology, helping the company identify procedural problems before any regulatory agencies would. Once safety and effectiveness were proven in trials, insurers were satisfied with their potential.

Medtronic is not the only company turning potential obstacles into advantages. Advancements that take care to integrate themselves into existing frameworks will find it easier to gain the trust of consumers. New medical applications have taken hold in the third world, where mobile phone subscriptions are growing exponentially. Communication between doctors and patients has proven to be the greatest leap in healthcare tech in this century so far, with those in need able to reach out and get help faster than before.

This revolution in communications also provides a wealth of data for new innovators to use. Resulting large-scale improvements in healthcare are mostly yet to be seen, but the possibilities remain tremendous. I am still very bullish on healthcare in the 21st century — we just need to get over the regulatory hurdles, funding gaps, insurance bias, and risk aversion, with the major scandal here and there. The first 17 years of the 21st century have belonged to mobile, but when we look back from 2050 or 2100 healthcare is likely to be one of the defining sectors of our lifetimes.