Will software "devour" the healthcare industry ?

In 2011, Marc Andreesen, one of the world's most renowned investors, wrote an essay that has become legend. Originally published by The Wall Street Journal, the text carries right at the beginning a phrase that has become a mantra for today's technology industry: "Software is devouring the world." Then, paragraph after paragraph, he gives examples of companies that are disrupting various industries, such as Amazon, Netflix, Apple, Pixar, LinkedIn, and Google.

Further on, Andreesen says that "healthcare, in my opinion, is the next fundamental software-based transformation." This sentence, however, did not become as famous as the previous one - possibly because, more than a decade later, healthcare remains stagnant. So far, software development for the sector has advanced in some isolated respects, but most of the market remains unchanged.

It is surprising that Andreesen saw this transformation as imminent right around the time that his mentor, the brilliant James Clark (who is still revered as one of the fathers of Silicon Valley), gave up his dream of "using the power of computing and the Internet to revolutionize the healthcare industry by eliminating its inefficiencies and inequities and improving it for the new millennium" by selling the remains of his company, Healtheon, to medical content provider WebMD.

“The problem is not individuals, it is the system which fails both patients and those who have to pay for health systems,” OECD’s Mark Pearson

Every year, about 1,073 billion euros or 8.0 % of GDP in 2020 is spent on health care in the EU alone. The inefficiencies are huge. We know that at least 20% of the spending, about 200 billion euros, is pure waste. ?"By waste, we do not just mean things that can be done better, we mean things that do no good at all, or are actually bad for patients." told Mark Pearson, a senior official of the Organisation for Economic Cooperation and Development. So, if we have this immense opportunity, why does health care, in general, operate on archaic models?

On the one hand, the difficulties in healthcare are no different than in other industries: fragmentation, complexity, and failures in the transfer and use of information. But there are three other aspects that are unique.

First, the healthcare industry is highly regulated and systems vary from country to country, requiring local solutions, something quite unusual in the technology industry, which tends to be global in nature. The "made in California, shipped worldwide" approach doesn't work here.

Second, thorny regulation is also a challenge for access to data, which resides in multiple systems, sometimes beyond the reach of the typical tech player.

The third part of the problem is misalignment. A feature almost unique to healthcare is the triple agent decision system: patient, physician, and carrier must always be in sync for the industry to function.

Healthcare needs software to correct the fragmentation and information gaps. Clark and Andreesen understood this. But software doesn't do it alone: it takes a strategically positioned player to access relevant data and bring the misaligned ends together.

A health tech startup will one day be the "biggest company in the world," according to two investment partners with venture capital firm Andreessen Horowitz.

The technology has developed to such an extent that it is now possible to build a digitally enabled platform that uses software as a kind of "glue" to fix the fragmentation and gaps in communication. To be effective, the system needs to design a change agent strategically positioned in the healthcare value chain. In a recent article, Daisy Wolf and Vijay Pande, two Silicon Valley investors, took a chance on the design of such a figure. "Our bet," they said, "is that the healthcare giant of the future will not be one of today's large technology or healthcare companies. It will be a company with consumer-obsessed health technology DNA that reimagines what care might look like."

Healthcare is probably the industry with the greatest amount of blank space in the economy. There is unlimited room to improve the customer experience and build great companies in the process. Our expectation is that we will soon see these new players offering better engagement, robust clinical outcomes, and unmatched economics.

In fact, we are already seeing some movement in this direction, which is still incomplete. There are some small startups acting in niche early adopters. But the dynamics are relentless. In the book Crossing the Chasm (2021), Geoffrey Moore teaches us that few projects will "cross the chasm," "scale the tornado," and grow to eventually bring disruption to healthcare. We are on the verge of that revolution: software will devour healthcare. It's time to get ready for the big feast.

At Tech2heal we are obsessed by patient engagement and medicalstaff automation in order to create a new collaborative and holistic way to deliver healthcare.