FORBES: Opportunities For Entrepreneurs In Health Care

By  Todd Hixon, Forbes, Contributor

JULY 28, 2014 – As we head to the beach to recharge the batteries, it’s a good time to reflect on what has changed in U.S. healthcare since last summer, and what opportunities lie ahead for entrepreneurs and investors. [Disclosure: New Atlantic Ventures, in which I am a partner, has an investment in Qliance, one of many companies mentioned in this post.]

Garrison Bliss MD of Qliance and Chairman of the Direct Primary Care Coalition (DPCC)

Garrison Bliss MD of Qliance and Chairman of the Direct Primary Care Coalition (DPCC)

Our $3 trillion health care economy is morphing as we watch, driven by intolerable cost levels, consumer activism, digital technology, and health care reform. The past year brought some of the biggest milestones:

• The public exchanges launched. It was a classic government FUBAR, but the federal exchange eventually worked, and some state exchanges actually worked well. Eight million people signed up, exceeding the goal (1).

• More quietly, private exchanges have become significant: online benefits purchasing sites sponsored by employers or health insurers.

• Medicaid expansion happened, in about half the country anyway. The number of people without health insurance in the U.S. declined by 20%-25%, due largely to Medicaid expansion plus the exchanges. I doubt this expansion will be rolled back, and I expect that over time the “red” states will come to the table in one way or another. Managed Medicaid is expanding rapidly, and while the impact of this is not yet clear from national studies, insiders tell me that the opportunity to both save cost and improve health status is large.

• Providers have come to realize they are risk-bearers. At conferences this year I repeatedly heard leaders from the provider side say that bearing risk is the future and it is here now. This takes many forms: ACOs, penalties for readmission of Medicare patients, risk-sharing agreements with insurers, bundled payments direct from self-insured employers, etc. This has profound consequences for health insurance markets: why channel everything through insurers, when the providers bear much of the risk, and many employers bear risk too?

• Quantified self is now a major meme: FitBit and Pebble are doing well. Apple AAPL +0.66% and Google GOOGL -0.11% announced enhancements to their mobile OS products that support gathering and processing of health information.

• Primary care medicine is born again. Concierge medicine (OneMedical) and Direct Primary Care (Qliance, Iora) are booming. Major drug chains (CVS, Walgreens) are offering basic primary care in-store, and CVS showed it is a serious healthcare company by stopping sales of tobacco products. Nurse Practitioners and Physician’s Assistants are stepping up to fill the primary care provider shortage.

• And some key, established trends continue: consumers continue to be more exposed to the cost of their health care: e.g., the number of people with “high-deductible” health plans grew to 17.4 million. Healthcare data is finally becoming electronic, and a healthcare “data cloud” is emerging slowly. Health systems continue to consolidate and purchase physician practices at the regional level. Medical service prices continue to rise, but utilization has been down in recent years, keeping the growth of overall spending in check.

the marketing md tetreault

What does this mean for entrepreneurs and investors? Obviously there are more opportunities than I can describe. Here are a few I think are interesting.

  • Creating price and supplier-option transparency for health care consumers is still a huge opportunity: the health care system remains rife with honeypots,  oligopolies, and plain old inefficiency. Supplying the data (e.g., CastLight) was phase I. The next step will be providing actual purchase opportunities and facilitating transactions.
  • We are at the beginning of a transition from employer sponsored health benefits, which most Americans have now, to benefits purchased on exchanges with various subsidies from government and employers (2). Entrepreneur-employers will like this, because most don’t want to be a part time health benefits director. Private exchanges and their underlying software (e.g., ArrayHealth) are phase I. There is much more work for entrepreneurs to do here to enable this transition, e.g., Benefitter which helps employers navigate this transition.
  • Self health measurement is proliferating, and this will increase when the Apple and Google mobile health data platforms roll out starting in the fall, but “quantified self” is mostly disconnected from medical practice. There is need for products that produce information that doctors consider clinically valid, and for solutions that integrate health status data with medical provider processes and the doctor-patient relationship.
  • The big Boomer cohort is retiring, and many are fairly IT savvy. Older people want intensely to stay at home as long as possible, and avoiding institutionalization saves cost. A whole spectrum of products and services could enable this. It’s why I’m bullish on the driverless car: it will give old folks mobility and dignity when they can/should stop driving.

What opportunities do you see?


  1. Some of these people may drop out by failing to pay premiums; those data are not in yet.
  2. I am assuming that the Supreme Court will continue to support the ACA and strike down the current challenge to ACA subsidies that is based on the ambiguous wording of key language in the statute.


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