Disruptive Innovation Coming to Healthcare - Valor HealthTech Corner

Hello Valorians! We continue forward with Valor Health Tech Corner this week and hope you enjoyed our first installment on Machine Learning as a Surrogate for Efficient Care. I’m pleased to introduce you to our next featured Executive, Mike McGuire, with Jellyfish Health. We plan to explore the emerging Medical Economy in the coming months, and Mike’s blog on “Disruptive Innovation Coming to Healthcare” is the tip of the spear. Enjoy!

- Drew Ramsey

Mike is the Chief Sales Officer at Jellyfish Health. He has over 35 years of experience building, managing, and selling successful healthcare information technology companies. Mike’s successful exits include the interface engine company that built Cloverleaf Healthcare.com to Quovadx. Mike helped Don French the owner of Vertisoft, LLC, an EMR company, sell the company to Optio Software. Mike also participated in selling Optio Software to Bottomline Technologies. All of those exits were valued at over $200M. Prior to joining G2 Works, Mike’s roles ranged from Regional Sales manager to VP of Sales to World-Wide VP of Sales to COO, and finally CEO. He’s worked in Fortune 500 companies’s IE., McAuto, McKesson HBOC, ACS, Allscripts to mid range companies like Healthcare .com and Optio Software down to start-ups like Vertisoft and Holon Solutions.

Disruptive Innovation Coming To Healthcare

Harvard Business School Professor Clayton Christensen defines “disruptive innovation”, as the products or services that supplant incumbents because they are more convenient, more affordable, and more accessible. The process usually begins with a new player, targeting an overlooked portion of the market, and ends with redefining an entire industry. Think Uber… Are we in healthcare headed for just that scenario? With the election of 2016 now behind us, and a new administration headed to Washington, what should we or would we like to see emerge as the “new healthcare” model? I live in Dr. Tom Price’s congressional district, and have watched him evolve over the last 12 years as a staunch advocate of the doctor/patient being in the center of whatever our re-imagining system moves toward. I have a few suggestions for the good doctor.

If you go back to the definition of “disruptive innovation”, the concepts of convenience, and accessibility are part of that definition. These concepts are really about time, the doctors and mine. We humans have conquered space with our technological prowess. Time, however is different story. Time is finite; 60 seconds in a minute; 60 minutes in an hour; 24 hours in a day; 365 days in a non leap year. While we can’t make more time, we can certainly use it more efficiently. The disruption in healthcare will be around how everyone’s time is better utilized.

An article authored by Princeton economist Alan Kruger, which I recently read, states that the time patients spend getting healthcare should be reflected in the way we calculate health care expenditures. Time you spend interacting with the healthcare system could be used for other more productive and pleasurable activities. Kruger calculates that Americans over the age of 15 collectively spend 847 million hours waiting for medical services. If you count all health care related activities including time to travel, wait time, exam and treatment time, taking meds, obtaining medical care for others, and paying the bills associated- the average American spends 1.1 hours a week on health care. Folks like me, over 60, spend twice the time as those between the ages of 15 to 16. Women spend 80% more time on health care activities than men as they are more inclined to take care of the extended family.

Kruger claims that if we just value all peoples time at the average hourly wage of production and non-supervisory workers ($17.43), we Americans spend the equivalent of $240 billion on health care just in our time. If you do not include patient’s time we’re under counting by 11% the real cost of health care. Failing to account for this time makes our system look more productive than it actually is. The time that we spend seeking, receiving and paying for health care services is just as real as the other dollars spent.

So if time is money, how do I re-imagine the system to support these economic realities while understanding that the established patient/ doctor relationship has to fundamentally change? We have moved from the traditional medical model,

“What is the disease and how do I fix it”, to the current patient centered model, “What is my patient’s unique illness and how do I help them”. We now need to move toward an ecosystem health model where we ask, “Why is this patient here are how can I prevent others from having the same illness”. While the subtleties in approach may seem inconsequential, the impact is profound. When you include the local ecosystem, the aspect of the community you live in now comes into play. Like the old expression Tip O’Neill, former Speaker of the House use to use, “all politics are local”, even if the implications are national or international. Simple fact, so is healthcare. The new healthcare system has to be built from the ground up not from the top down.

The good news is that the infrastructure is in place; we have to re-align incentives (value vs. volume), and get a handle on the regulation regimen. This year some 20,000 pages will be enacted as law for the medical community at large, many overlapping and contradictory. The Stark laws alone make some forms of alternative payment approaches difficult if not impossible to implement. The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), which represents the fix for how Physicians get paid for treating patients is 300 pages long. Right behind it followed 1000 pages of how CMS intends to implement the Act. I want my doctor treating me not trying to figure out how he or she’s going to get paid!

There’s an opportunity here if the folks in government at the federal, state and local level, can step back, and connect with the private sector. Unleashing the entrepreneurial spirit of business, both large and small can, and will make a difference in the speed of change. Unleashing doesn’t mean unbridled. That said, we’ve created more hurdles for transforming ideas into successful products. As a society, we have become risk averse. We Americans are pushing the frontiers of knowledge. And while our intellectual property is piling up, our productivity since the year 2000 is slipping.

In the Quality movement there’s an axiom that goes we need to FAIL FORWARD FASTER. Capital to succeed is not our issue. Our issue is can we get out of our own way? Can we overcome our need to be perfect with our need to be improving? Re-imagining our healthcare industry is not about ideology. Re-imagining is about putting the patient, the patient’s family, and the physician back in control of the healthcare decisions impacting lives regardless of income. A nation as rich as we are should settle for nothing less.


Mike McGuire

Mike is the Chief Sales Officer at Jellyfish Health. He has over 35 years of experience building, managing, and selling successful healthcare information technology companies. Mike’s successful exits include the interface engine company that built Cloverleaf Healthcare.com to Quovadx. Mike helped Don French the owner of Vertisoft, LLC, an EMR company, sell the company to Optio Software. Mike also participated in selling Optio Software to Bottomline Technologies. All of those exits were valued at over $200M. Prior to joining G2 Works, Mike’s roles ranged from Regional Sales manager to VP of Sales to World-Wide VP of Sales to COO, and finally CEO. He’s worked in Fortune 500 companies’s IE., McAuto, McKesson HBOC, ACS, Allscripts to mid range companies like Healthcare .com and Optio Software down to start-ups like Vertisoft and Holon Solutions.