Seven Differences Between Healthcare & Other Industries

I am increasingly meeting several people across the start-up scene and in the more traditional oak-paneled private equity houses where healthcare is right at the top of discussion. One question that comes up often is : Why this industry is different? And thats why, these quick pointers here, for the relatively new to the industry.

ONE,  Regulation. And even more regulation. Should you be launching a new product, then enter with an understanding that a traditional clinical trial lasting several years may have a probability success range of 0-1. It is true that other industries face regualtory burden too (for ex: think a new aircraft model), but nothing comes close to the time & the level of scrutiny in healthcare (yes, real-time evidence will change this, but it is still WIP). That's why, either have have deep pockets and strike off words like breakeven and hurdle rates OR rather look towards healthcare services (and not products) as your respite.

TWO, Archaic practices only matched by even more archaic processes. Common sense improvements that other industries have made in pooling back end resources/non-essential services and in building economies of scale are considered leading-edge in healthcare. To understand this, look no further than a typical procurement process in a healthcare setting.  This may be an opportunity should you have the resources to set this correct or a major frustration if you assumed that healthcare was like any other industry.

THREE, Industry complexity with payment, delivery, consumption & choice; completely segregated from each other in many cases; which leads to wide incentive mis-alignment across the value chain. Yes, value-based-care is often discussed over coffee and several networking events (over a tipple of your choice), but even the definition of what exactly is meant by value differs wildly. Precisely because of that many often confuse 'quality improvement' as just another check-mark exercise. That's why who you target for your solution and basic questions like who is the customer vs who is the user vs who will pay; is an incredibly important question. So pls, spend a lot of time brainstorming on this.

FOUR, The real user of the service is not looking forward to the consumption of the goods. To understand this, just ask yourself; when did you last look forward to that visit to your dentist? Unlike buying a car or availing an experience (vacation or a even a cup of coffee) which we often look forward to, healthcare is an undesired commodity, and a little bit like going to the police or using a lawyer.

FIVE, Problem of transparency & of asymmetric-information for the consumer of service. Compared to the 'system', the healthcare user usually knows very little. To elaborate, several years ago, your truly got the first highly over-priced (a highly irrational economic decision) trench coat, only after understanding exactly what was needed, what each firm was charging and after knowing the 'perception hierarchy' of various sellers. This kind of transparency of needs and break up of costs are extremely tough to get in healthcare. Don't believe me? Just try asking for a break-up of costs for  any specific surgery, before availing it. You may be lost in codes & costs which differ for each payer, region and payment structure. As consumer forces gain traction in healthcare, this simple information should be a major opportunity, but needs an unbelievable amount of complex meandering around.

SIX, Non-standardised processes with much waste. Healthcare continues to be a local commodity, where apparently simple processes like discharge process vary wildly across setting. In Aviation, Pilots have been reaping benefits of using check-lists for several years now; but healthcare continues to be held hostage to the old traditional way of doing things. Is it any surprise then that 'things left in patients' are one of the all avoidable medical errors (total 250,00 - 440,000+ each year in the US alone, depending on who you ask)

SEVEN, Mind the 'digital' gap across the industry & within the user base. Nurses & Clinicians (including yours truly again) generally get very limited or no training to embed digital technologies (outside of traditional medical devices) to then improve the decision making. Yes, the industry has retrospective medical audits; but the culture of improving decisions in real time by collaboration involving digital is still extremely limited. The obsession with transactional data capture tools is not translating into leveraging 'automation' to take off the day to day drudgery for non-essential work. Things are changing but the slope could be steepened for sure!

These are interesting times to be building or reforming healthcare. Change is imminent. The only question is, who will make it happen. And who it will happen to.

Thank you for reading this far. Should I have missed anything, pls do add up..

Disclaimer: The opinion expressed in this piece are my own and do not reflect any standings of my present or past employment. Any errors in this work are my own alone.