Plenty of startups are trying to “solve problems” however, many are merely reducing inconveniences. The bigger problems we face remain unsolved.
Walking on the streets of San Francisco or while sipping a cup of coffee at Peet’s, you would likely hear some startup conversation. Hundreds of events focused on startups happen in Silicon Valley every day. Tens of companies start every day and many more get funded. Everyone is chasing a unicorn. We see how we could sit at home and order food, get pizza delivered to our home, buy furniture online, and get a better burrito or a cup of organic coffee. While these are all great, there are some critical necessities that lack innovation.
During this heated primary debate season, healthcare is often a topic of conversation. How often do we question why healthcare is so expensive though? Is it the device, pharmaceutical, or wages of service providers? Instead of asking the real questions to make healthcare affordable, politicians only care about how to pay for the very expensive care. They have repeatedly talked about bringing prescription drug costs lower. Even if this is reduced to virtually zero, healthcare would still be ridiculously expensive. Why does a visit to a doctor cost hundreds and why is it almost impossible for a patient to understand their medical bill or insurance benefit explanation?
When we purchase any product or service in the United States, consumers have the ability to see the costs before they order the product or service. Healthcare is a rare opaque industry that thrives on customer unawareness, insurance dependency, and someone else paying the bills if the customer does not pay for the service such as in the case of an uninsured or an illegal alien visiting the hospital. Healthcare and adjacent industries including their service providers are almost recession-proof. The question is whether this creates a sound business model that benefits the customers.
Routine doctor’s office visit which lasts less than thirty minutes (with less than five minutes of doctor’s time) is billed $500+, dental cleaning $500+, and heart surgery $100K. Delivery of a baby that very skilled women in developing countries practice inside the home, hospital charges $150K+. In what way a doctor or hospital is justified to charge over $150K to the skilled two women who deliver the babies of an entire village in Africa or South Asia? The point is, that baby delivery is definitely not expensive. The same devices, doctors, and medicines are used outside of the United States; yet the cost there is definitive and cheaper. For example, for an open heart surgery, a well-respected hospital in India with US-educated doctors would quote $10K. What makes the same treatment 10X+ more expensive in the US? There must be solutions.
Some companies such as Forward Health are helping people get preventive care. While early detection is a great service, It’s still not a replacement for insurance or the unforeseeable situation when you have to visit a hospital. Definitive pricing would certainly bring some certainty to healthcare insurance underwriting. In healthcare, the conversation has to be shifted towards “affordability” with or without insurance.
Another serious problem that Silicon Valley is facing is the lack of competition in big tech. Most startups have one exit strategy: sell to one of the large big techs. We rarely come across companies taking on the big tech or at least promising to challenge the big techs. Promising startups are acquired by big techs before they become serious challengers, forced to sell by shareholders or get copied in case they refuse to sell such as Snapchat. Their vast lobbying power makes them immune from anti-trust issues. As a result, the big techs are becoming bigger. The worst part of this is that it is driving innovation down. Entrepreneurs are not encouraged to start a potential challenger or present an alternative business model that poses a threat to big tech.