Welcome to the New Era of Healthcare
Medicine’s “iPhone moment” has arrived, and the way we take care of ourselves is about to change forever because of it.
On January 9th, 2007, Apple founder Steve Jobs stood onstage at the annual Mac World conference in San Francisco and held up the future for everyone to see.
In his hand was the original iPhone, which Apple was unveiling that day. Fourteen years later we know the profound changes the device would bring about. It would launch a revolution in content, commerce and community (not to mention create several trillion dollars in market cap). People had been talking about the promise of mobile technology for years, but it wasn’t until that moment — the arrival of the iPhone — that those promises started to become real.
The two of us — Hemant is a Silicon Valley entrepreneur and investor, Steve runs a large East Coast health system — believe that Covid-19 is healthcare’s iPhone moment. Over the last 10 months, as the pandemic has turned everyone’s life upside down, patients and healthcare providers have been rapidly adopting services like telehealth and virtual care. Those services were available before the pandemic, but Covid-19 has suddenly made them feel indispensable.
The coronavirus will one day be behind us, but the changes that are taking place in medicine are here to stay. We’re on the cusp of a brand new age of healthcare.
The Era of Health Assurance
This new approach to healthcare is called health assurance, and it differs from traditional healthcare in a few significant ways:
1. Health assurance puts consumers first.
In most industries, the concept of first understanding, then delivering, what the customer wants isn’t radical. But it is in medicine.
A couple of years ago, the two of us were at a dinner with some really smart people from the healthcare world. But after a while, we noticed something: as they discussed the future of care, they were mostly talking about themselves. The hospitals need to do this. The insurance companies need to do that. No one ever mentioned people. What do patients really want?
When you think about it, the answer to that question is actually pretty simple: most people just want to be healthy and live their lives. The “product” they want is health. Even if they have an underlying condition, their goal is to thrive without having to think too much about their care.
Companies in the health assurance sector understand this and start by focusing on what people want. Then they create the best consumer experience possible.
Take Livongo (now part of Teladoc), a health assurance company whose mission is to help people with chronic conditions like diabetes live better and healthier lives. Under the traditional healthcare paradigm, people who have diabetes typically have four visits per year with their primary care physician, during which the doctor tries to assess how they’re doing. The problem with that approach? For starters, there’s the inconvenience for the patient of having to take time off from work, arrange for childcare, drive to the doctor’s office, and wait around for their physician. But an even bigger issue is that diabetes, with its rapid changes in blood sugar levels, is a real-time disease. You might be fine on those days when you see your doctor, but in between visits you could end up in the ER.
Livongo took a different approach to care, equipping its members with a device that measures their blood glucose in real time, sends that information to the cloud, then uses AI to assess how the patient is doing. If something looks off, a patient instantly gets a “nudge” on their phone suggesting they drink a glass of orange juice or take a walk around the block. Or they’ll get a call from a coach who talks to them about what’s going on.
Livongo’s real-time approach is a more effective way to manage diabetes, and it lets patients live their lives without having to continually think about their condition. They know Livongo’s got them.
Given all that, it’s no surprise that Livongo’s customer-satisfaction ratings are up there with those of Amazon and Netflix, two other companies people love because they’ve created great consumer experiences. This sort of customer reaction is inspiring entrepreneurs to tackle staid consumer segments across the board, including healthcare.
2. Health assurance focuses on bending the cost curve.
This will be a surprise coming from a venture capitalist and a health system CEO, but we believe the size of the healthcare market is too large. In fact, the goal of health assurance isn’t to spend more money on healthcare, it’s to keep people healthy while spending less.
One of the main reasons our current system is so expensive is because it’s not really focused on healthcare at all. Anyone in the healthcare industry will tell you that they’re really in a “sick care” industry designed primarily to help people only after they’ve developed problems.
That’s not the fault of patients or doctors; it’s how the current system is built. The not-so-secret dirty little secret of our current healthcare system is that almost everyone makes more money when people are sick. And that’s also why the system has been so hard to reform. It’s hard to get big institutions excited about changing something when their revenue depends upon not changing it.
Health assurance bends the cost curve in a couple of ways. First, it focuses on keeping people well, delivering basic healthcare before manageable problems like diabetes become hard-to-manage — and expensive — problems like advanced heart disease. Second, health assurance uses technology — virtual care, cloud computing, AI — to deliver services in a way that’s cheaper, more efficient and more convenient for everyone. That includes doctors and hospitals, which, under a health assurance approach, can be freed up from mundane burdens to focus on critical problems and saving lives.
The savings with the health assurance model can be significant. Take diabetes, one of the diseases Livongo focuses on managing. Currently there 30 million people in America who have diabetes, and the cost of treating them tops $350 billion per year. With an approach like the one Livongo uses, experts estimate we can save more than one-third of that cost.
3. Health assurance wants to bring about change responsibly.
At the heart of health assurance is the concept of using technology and data to transform healthcare, driving down costs while improving outcomes.
But the two of us, and other people in this sector, are aware that transformation has to be done responsibly, especially with people’s health and personal data on the line.. The typical Silicon Valley approach of moving fast and breaking things won’t work when it comes to healthcare. In fact, it didn’t work with social media, and we’re paying the price for that. With healthcare, the stakes are even higher.
That means we need to create minimum disruption as healthcare evolves. We need to understand that delivering care isn’t just a technology problem — it requires human empathy. We need to give patients ownership of their data. We have to think through workforce transformation responsibly. And we need to create a new system that doesn’t just make the wealthy healthier — it has to help everyone.
The two of us came together a couple of years ago in the spirit of partnership we think is critical to building a health assurance system. Steve’s health system, Philadelphia-based Jefferson, was an early customer of Livongo, which Hemant’s company, General Catalyst, had invested in. Steve found that Jefferson’s patients loved Livongo’s service and that it helped them manage their conditions. Patients were happier, Steve’s costs were less for that population, and the broader vision he has for Jefferson — “healthcare with no address” — went from philosophy to reality.
Since then, our two camps have partnered in more ways. Steve has been advising some of the health tech companies, such as Color, that Hemant previously funded. We’re both invested in and helping to build an ambitious health-assurance tech platform, Commure. And we’ve partnered to launch a new company we hope will lead to the digital transformation of healthcare. We believe this collaborative approach is the right one: In order to succeed, companies need both the DNA of a tech firm and the DNA of a healthcare provider.
Over the next 20 years, the organization of care online is the biggest opportunity that exists. And because empathy and human beings are crucial to providing care, no one company is going to capture everything. You’re going see dozens of billion-dollar companies emerge.
When he unveiled the iPhone in 2007, Steve Jobs welcomed everyone by saying, “Thank you for coming. We’re going to make some history together today.”
Jobs was right about that. In the wake of Covid-19, we’re going to make history again.
