Taking a Stab at Cost Disease

There is something strange happening in America right now. Prices for everything are going up, but the related quality is not following.

This is happening everywhere. Education costs far more than it used to, but test scores aren't improving, and job prospects for the educated aren't markedly better. Housing costs have similarly outpaced inflation.

If you're not familiar with the phenomenon there is a fascinating and well-cited take on it on Scott Alexander's blog, Slate Star Codex, here:

One of the areas of concern is healthcare. Health care costs are skyrocketing, but the quality of healthcare has not improved. If anything, it's fallen.This is why Alex Newman (a San Francisco serial entrepreneur) and myself have embarked on a fascinating journey through the healthcare system, and we've come up with something we think is remarkable and unique to help solve it.

Although we don't believe we've found for certain the cause of the healthcare cost explosion, we do have some pretty good hypotheses. We've been in California for decades and are steeped in the culture of rapid iteration and solving the Hard Problems of the World. So why should we not solve this one?

Are we serious? Quite. We've built an expansive doctor network spanning multiple continents, have consulted with some of the best minds in the industry, and have formed some interesting partnerships with some of the other early leaders in the space. Yes. We are going to reel in the healthcare cost explosion.

Let's delve into the particulars a little.

Building a Team

Alex has spent the past 8 years working in the big data space and advising medical startups. He is on the advisory board of more than one[4]. He has already forged several partnerships with established related companies and has guided our analysis of the field thus far. As the CEO, he will apply the lessons learned, forge further lucrative partnerships, and navigate the complex regulatory aspects of this field.

I've spent the past 7 years pushing the limits of the analytics space. I've spent the past 15 years pushing the limits of the size and capabilities of high-volumes web sites. I've taken on the challenge of being our CTO and will build the infrastructure to make a platform that contains most of the doctors and patients of the world. This is no small task, but I've done it a few times before, and I can do it again.

Both Alex and myself have managed globally-distributed teams building complex products, and we've begun collecting a massive group of international doctors, nurses, advisors, and technical workers. We have sourced from our own professional networks and gotten brilliant UI/UX and infrastructure help so that we can provide a world-class and simple experience to our customers.

How Do Others Solve the Problem?

Both Alex and myself have analysed our previous fields to discover patterns in our competition, both successful and not, to inform our past successes. We've begun to apply this rigour to our chosen niche in the medical field, and we have noticed some trends.

On the surface, these are the same trends other startups in the space have also noticed. For example, there is no good data around medical cost[1]. To get this data, one needs to collect it oneself. So we're going to build the product to pull this data set and use it to guide our business direction carefully. However, we must take heed of those that have come before: this is not an effort to be undertaken without careful planning.

Many startups attempt to solve the problem with a single large outlay of cost to collect as much good data about hospitals, doctors, and all the surrounding related services together to give to the patient. This provides them with an extensive, provably-correct, well-formed set of data. Its value lasts approximately 2-6 months, when a large enough portion of it becomes invalid due to the rapid change in the field. In other words, it is a great way to spend a few million dollars without having anything to show for it a year later. As far as we can tell, this has been the predominant business model of our direct competitors[2].

Another angle oft-tried by the competition has been to take gathered data and present it to the customer without any curation or context. There is a lot to a medical experience outside of knowing how much a procedure costs. There are safety concerns. Trust issues. The entire experience must be accounted for. Many of our competition have simply thrown data at customers and let the customer try to work out the details.

We have decided to take another approach, suggested to us by David Weekly, a Silicon Valley luminary: start small and focused, then use what we learn to iterate and improve. What does this look like? We collect a bare minimum of data (a few weeks) for a few thousand dollars, then get started. Does this sound familiar? If you live in California, it should. It's startup 101. That's how everyone does it.

Why Startup 101 Will Succeed

So why do we think we are going to succeed doing what every startup in the past 10 years in Silicon Valley has done, where these other very well-funded startups in the medical space have failed[3]? More-precisely, why have they failed? I believe there is a hint to be garnered from a piece of advice given to us by someone early in the venture. The advice: get a medical doctor to be our CEO. This seems like obvious and excellent advice, and in fact, we spent some time considering doing this, before we surveyed the wreckage of our competition.

One thing we noticed is that much of our unsuccessful well-funded competition were headed up by doctors, medical lawyers, and insurance luminaries. But we feel the value a startup can add to the medical space is not additional medical, legal, or arbitrage skills. What a startup can add to the medical space is looking for the hard problems, quick iteration on promising (albeit often incorrect) solutions, and crowd-sourcing expert knowledge. It is certainly true that we will work with doctors, lawyers, and insurance luminaries. We have employed the help of all three sorts! But we should let them do what they're good at, while we concentrate on what we're good at.

What we will now do is help tie together several of the larger medical startups and produce a cost reduction across the entire industry. If we are successful enough, perhaps one day we will be able to apply the lessons we've learned to education, housing costs, and other problems suffering from Cost Disease.

Thank you for reading, and I'll see you on the healthy side!

Footnotes

1. Medicare publishes medical costs for the USA. Some countries, such as South Korea, also publish their costs. They are a good start, but leave a huge variety of factors to the imagination of the consumer, including things like quality of care and convenience of location.
2. There are dozens of business models, with varying levels of success, none of which seem to approach sustainability. Feel free to contact us if you'd like to discuss this in detail.
3. Note that we aren't just generic medical. We are specialising in a particular part of the field we feel is particularly under-served, mostly due to the poor performance of previous competitors in the field. There are dozens of medical startups in related fields that are successful, and we will be partnering with several of them, because we need to stay focused like a laser on a small part of the problem.
4. The previous draft mischaracterised Alex Newman a little bit, giving the impression he's exclusively in the bio/medical field. This is incorrect, it's his obsession, but he has been working with hard tech.