Wednesday, January 3, 2007

clinical innovation, implementation not ideas, Twenty Clinical Innovations to Build Patient-Doctor Trust: Fourteenth in a Series

Start-Ups: “In the final analysis, it is implementation, not ideas that count

In the title, I am quoting Norbert Goldfield, MD, a practicing physician in Springfield, Massachusetts. Norbert is also medical director of 3M’s Medical Information Systems in Wallingford, Connecticut. He is considered an expert in analyzing physicians’ practice patterns and in how to best implement Payment for Performance Programs (P-4-P).

Over the years, I have been involved in a number of health care start-up companies. I have watched some fail, some succeed. I have formed ideas what works, and what doesn’t. I have met entrepreneurs, angel investors, and venture capitalists.

Entrepreneurship and innovations are the life-blood of the American health economy, the central theme of my book Innovation-Driven Health Care: 34 Key Concepts for Transformation (Jones and Bartlett, 2007).

I agree with Dr. Goldfield it is implementation, not bright ideas, that count. Giving substance to a start-up, turning to seasoned entrepreneurs, growing it, building a management team, taking it to market, listening to customers, learning when to turn it over to managers, assembling an advisory board, accessing capital, and deciding when to be acquired, takes a disciplined and risk-aware team.

After the physician practice acquiring debacles by MedPartners and PhyCor in the late 1990s and the dot-com collapse during that same period, venture capital interest is returning to the health care field.

This is fed by the realization that health care may be a central engine that may ultimately drives 25 percent of the U,S economy (Gina Koala, “Making Health Care the Engine That Drives the Economy,” New York Times, August 28, 2006). The fact that the U.S. government, which isn’t going out of business soon, despite political rhetoric to the contrary, funds 1/2 to 2/3 of U.S. health care hasn’t escaped the attention of venture capitalists (Daniel Gross, “National Health Care? We’re Halfway There, New York Times, December 3, 2006).

According to Peter F. Ducker in Innovation and Entrepreneurship: Practice and Principles (Harper and Row, 1986), a new venture or startup requires.

1.A focus on the market – What is the opportunity? How can the new venture organize itself to best take advantage of new and unexpected markets, quickly and efficiently, before a competitor does?
2.Financial foresight and planning for cash flow and capital needs ahead. New ventures tend to “burn cash” quicker than originally thought because quick growth demands cash.
3.Building a top management team before the start-up needs one and before it can afford one. This requires experience in the field, belief in the ideas, and relationships.
4.A founding entrepreneur who must decide his or her role, area of work, and position within the company.

These four requirements are old hat to seasoned start-up entrepreneurs but not to doctors with bright ideas. To begin with, doctors may not have the $10 million in assets usually required by banks for a loan for a high-risk startup. Doctors may not know where the various sources of capital, which may include:

•Private equity
•Regular banks
•Investment banks
•Business valuation
•Corporate Finance
•Venture capital
•Open source funding
•Angel investors

Venture capital

Because of strict requirements venture capitalists have for potential investments, many entrepreneurs seek initial funding from angel investors, or family members, who may be more willing to invest in highly speculative opportunities. In addition, concern among venture capitalists has grown since the boom collapse. Also there is a "funding gap" between friends and family investments, typically in the $10,000 to $250,000 range, and amounts most Venture Capital Funds prefer to invest, generally in the $2 to $5 million range.

Health care now represents 16 percent of US GDP and is a major market of new venture investing. In recent years, biotechnology, medical device, and health care service investments have represented between 25 to 30 percent of all venture capital funding.

You may be asking: what does the foregoing have to do with building patient-doctor trust? To begin with, doctors are closer to patients than anyone else in the health care sector. It is doctors who may be the first to recognize what patients need most. Doctors may be ones with the “bright idea” – a surgical tape or staple, thermometers inside the ear or on the forehead, an orthopedic screw or device -- that may lead to a start-up, to a new venture, a new investment opportunity that makes a difference in quality of patients’ lives.

If you are an entrepreneurial doctor out there, I would concentrate on ideas that lower costs, offer more convenience, provide greater comfort, or more consistent and documented quality, or effective patient education about procedures or chronic conditions, or on devices or drugs that promise relief of symptoms or even cure of common chronic diseases.

Examples might be:

•establishing cutting-edge clinics in underserved areas;

•creating two-way wireless communication units between doctors and their home-bound patients;

•setting up physician-franchises in retail outlets, inventing implantable devices to relieve or monitoring diabetes, Alzheimer’s, or Parkinsonism; rerouting nerves to correct erectile dysfunction, loss of bladder control, neuropathies, or even quadriplegia;

•“unbundling” hospital services into separate decentralized free-standing specialized facilities;

•“bundling” bills to cover all services – hospital, physicians, and rehab – for a given disease episode so consumers know in advance exactly what they are paying for;

•developing “smart cards” containing patients personal health information, x-ray and scanning images, electrocardiogram image, that can be “swiped” at the point of care;

•small mobile heart and pulmonary units containing databases for precisely evaluating fitness, disease status, response to therapy, and prognosis information such a chances of hospitalization and even sudden death.

•any mechanical or electrical device that makes the work of physicians easier or solves some common clinical problem.

Possibilities are endless, but they will all require entrepreneurial and innovative discipline and know-how to take advantage and organizations or individual customers who are willing to pay

1 comment:

Unknown said...

hi richard,

i'd like to bring you into our studio to interview you about Innovation-Driven Health Care the next time you are in NYC. our site is

you can reach me at peter at cervieri dotttt com

take care,