MedCity Influencers

Forget Fair-Weather Healthcare: Disruptors of This Industry Are Already in It

Companies built for other businesses are attempting to offroad their skills into a brand new field. These fairweather healthcare players are unprepared for the terrain. Meanwhile, the true disruptors of this industry are already in it.

A Formula 1 racing car is no joke. It’s purpose built, at great cost, at state of the art facilities with wind tunnels to improve aerodynamic performance and speed. The goal is simple: to win on tracks like the iconic Silverstone. It would be dangerously pointless to take an F1 car to the desert, smashing it through sand and into rocks, and expect it to perform the same. But today in healthcare, a host of new entrants and stakeholders is doing exactly that.

Companies built for other businesses are attempting to offroad their skills into a brand new field. These fairweather healthcare players are unprepared for the terrain. Meanwhile, the true disruptors of this industry are already in it.

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A Deep-dive Into Specialty Pharma

A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.

When you hear newbies and big tech brands hyping AI, for example, delivered via ChatGPT, Microsoft, and others, as a way to transform healthcare, listen up. The bluster is a giveaway. Sure, some applications of the technology will make the current mess of a system feel better, by pre-filling forms and surfacing information faster. But AI won’t replace doctors. It can’t “fix”healthcare. Those who say it will are advocates of PR, not proof.

The work of healthcare today requires a business model, investor base, product strategy and pool of talent purpose built for the job: for the rough off-roading, not the smooth asphalt. The good news is that there is a cohort of proven companies ready for the ride, and already changing how healthcare is done. They’ve been combining human and technological ability for a while now, sagely mixing clinical care and data, EQ + AI, so the right people get the right insights on behalf of patients.

These are clinically-led businesses with real experience, and real data to back up their claims. They are not behemoth brands from sectors outside the industry. They’re Oak Street and Agilon, focused on primary care for Medicare. They’re specialty-focused companies – for instance, fertility expert Progyny.

There are others. Some are public, some aren’t yet. All are successful and have been pressure-tested by Covid. They know good intentions, and inventions, aren’t enough. They know, too, that there’s a difference between promise and proof. Remember when we got excited that a watch might minimize the risk of stroke? And when door-drop pill delivery looked as promising, and easy, as paper towel delivery? Today the death rate for stroke is higher and home pharmacy is used by very few. For the new to be successful, it needs to be connected to a larger, coordinated whole.

When healthcare is only a portion of a different kind of business, one-off experimentation can seldom advance beyond beta, and fractional interest in the healthcare industry leads to failure. For one, the metrics make no sense. You can not superimpose measures from a vastly different business and expect to accurately gauge success in healthcare. Average revenue-per-customer layered over the cost-per-square-foot of store space, for example; this measure rigorously prioritizes volume and works for retail, but is precisely what healthcare needs to jettison. Still, we continue to watch big brands blithely buy and break otherwise well-positioned healthcare companies. See, lately, primary care clinics. Consider CVS and Oak Street Health, Amazon and One Medical.

Time horizon matters too. If a company’s shareholders demand short-term quick wins, there’s going to be friction. For one, healthcare customers don’t want a transactional mindset (that’s the opposite of care). More to the point, real outcomes in healthcare require time to produce and measure. Simply put, healthcare takes longer to pay off — lots longer. Wall Street may not warm to that. Businesses accustomed to transactional work, with visible short-term results, will continue to struggle in this longitudinal industry.

It takes more than an acquisition to become an adept care deliverer. It takes proven expertise and nuanced understanding of current healthcare workflow, to change how a patient experiences care and the outcomes that care produces. New entrants tend to tout convenience, rather than provide deep, longitudinal experience. By contrast, those that support the current system remain in pole position with their clinical-first mindset across access, delivery, payment and experience.

The ones to watch are high-growth stage attacker companies that have (and keep getting) the highest-caliber talent. This is talent steeped in industry knowledge, eager to change things, optimistic about the opportunities provided through cutting edge technologies and, not incidentally, loathe to work at an old school health behemoth or a new-entrant company for whom healthcare is a hobby.

These companies are splicing together in-person and virtual care, ridding us of arbitrary divisions and instituting a newly efficient type of care, liberated from geography. They are connecting behavioral health to primary care, at last, bringing parity to mental care along with physical, erasing care gaps as well as stigma. They are answering the many questions and filling the many gaps between our clinical needs and benefits reality by navigating people carefully through both. They are advancing affirming care, access, and equity already for marginalized populations.

Lasting change will come from within, from the hard, ongoing work of the brands and people who know healthcare is not a part-time job. They understand that just because a company comes up with a way to do something that’s new and cool doesn’t mean people will actually use (and pay for) it. Healthcare is, in the end, like health. It demands deep, sustained attention. Truly disruptive companies are the ones, engines already purring, that are focused entirely on improving patient experiences and clinical outcomes, daily.

Photo: Getty Images, Eonren

Bob Kocher is a Partner at Venrock and focuses on health tech and services investments. He currently serves on the Boards of Devoted Health, Virta Health, Aledade, Lyra Health, Need, Sitka, Accompany Health, and Premera Blue Cross. He is a Board Observer at SmithRx, Stride, Suki, and The Public Health Company. Additionally, he is an Adjunct Professor at Stanford University School of Medicine and a Non-Resident Senior Fellow and Advisory Board Member at the Leonard D. Schaeffer Center for Health Policy and Economics at USC. He also serves on the Advisory Board of the National Institute of Healthcare Management (NIHCM). Prior to Venrock, Bob served in the Obama Administration as Special Assistant to the President for Healthcare and Economic Policy on the National Economic Council, as a Partner at McKinsey & Company. Bob received an undergraduate degree from the University of Washington and a medical degree from George Washington University. He completed a research fellowship with the Howard Hughes Medical Institute and the National Institutes of Health, and went on to complete his internal medicine residency training at the Beth Israel Deaconess Medical Center and the Harvard Medical School.

Owen Tripp co-founded and grew the startup that has become Included Health, today’s first integrated navigation and virtual care company. He previously co-founded and grew into the global leader in online reputation and privacy management, and before that held leadership positions at eBay and Accenture. Owen got his BA with honors from Trinity College and MBA from the Stanford Graduate School of Business. He’s one of the World Economic Forum Global Technology Pioneers, Goldman Sachs Top 50 Builders + Innovators, and Rock Health Most Beloved CEOs. He’s regularly voted a top CEO by employees on Glassdoor.

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