Silicon Valley Is Too Focused On Taking the Easy Path in Health Care (cnbc.com)

Silicon Valley investors are increasingly looking at health space, but they are mostly eyeing for opportunities on the fringes of the traditional health care system to avoid long and complicated regulatory cycles, an analysis on CNBC shows. As a result of this, these start-ups will not help low-income and chronically ill patients who need innovation most. From the article: Founders often talk about about how challenging it can be to break into the multi-trillion dollar medical sector. Health care startups face regulatory hurdles, long sales cycles and a high burden of proof -- and that means it can take more than a decade to make a return. As a result, many venture-backed entrepreneurs are looking instead at opportunities on the fringes of the health care system, such as cash-only health services that don't require insurance or tests and apps that aren't regulated by the U.S. Food and Drug Administration. For tech investors, these opportunities hold the chance of an outsized return in five years or less. That often valuations on par with consumer Internet start-ups. [...] Many entrepreneurs acknowledge this, but justify their approach by promising to focus on more at-risk groups once they've nailed the product.

Comments

Brilliant

[stephenmac7]

They've figured out that the regulations they're always pushing for make it near-impossible to compete with established companies and hurt innovation.

Re:Brilliant

[cayenne8]

They've figured out that the regulations they're always pushing for make it near-impossible to compete with established companies and hurt innovation.

Yep....

I think the reply to them is pretty much, "Duh".....

That's the way it is with overly onerous regulations...it ONLY helps the big guys that can afford to fund a full department dedicated to only the regulation and documentation side of the business.

It is understandable in some respects, due to this being medicine...lives can be affected by errors, but the regulations aren't just targeted at direct patient interaction...but many other things.

It does bring up, however, questions as to how some parts are SO over-regulated, yet direct patient contact items, like heart regulators, insulin and other drug pumps are able to be put out there, without even *basic* encryption, so as to protect patients from being literally hacked, and possibly killed.

Re:Brilliant

[elrous0]

While I might normally be inclined to agree with you, I have to point out that regulation in the healthcare industry is there for a very important reason. When you're dealing with human bodies and human lives, you need a very carefully regulated system to prevent someone's mistake from turning into a disaster that costs a lot of lives or causes a lot of harm.

For example, those annoying regulations that require extensive clinical trials and testing of new drugs are there for a very good reasons. They're in place to prevent disasters like what happened in West Germany and the UK in the 1950's, when the drug Thalidomide was okayed for sale without adequate testing.

Re:Brilliant

[Kohath]

It's not so much regulations. Health care needs regulations. It's that US regulators are notoriously bad at it. My friends in the medical device business do most of their work in places like Germany and other Northern European countries because the regulators are strict, but they do their jobs predictably and in a timely manner. They shun the US because the regulators are sloppier and everything takes forever in the US.

Re:Brilliant

[MightyYar]

Regulations are good and necessary to a free market, but established players tend to get regulations which are not good or necessary for a free market tacked on. Governments get in on the action to try to extract money and craft perks for their special interests. Sometimes the unnecessary regulations are simply the result of well-meaning officials who think they are improving upon what a free market could deliver, but in reality have the effect of freezing the state of the art.

Re:Brilliant

[interkin3tic]

It is understandable in some respects, due to this being medicine...lives can be affected by errors, but the regulations aren't just targeted at direct patient interaction...but many other things.

Just to be clear, interactions with the patient are only a tiny slice of what can kill a patient. Making sure a drug companies' formulation facilities are bacterial-free is pretty far removed from patient interactions.

If you're making a test blood poisoning, that's never going to be put into a patient. You want to be sure the raw components are bacterial free though obviously or else the tests are going to be useless and doctors won't know if they're facing blood poisoning or something else. To make sure the raw components are bacterial free you want the facilities to be bacterial free. If you find bacteria, you need to shut down production while you sterilize everything. That's a huge cost.

If you're trying to start selling a cheaper test and you get a report saying you need to shut down production for a week, any sane business is going to say "Hmm... that will kill us... is it REALLY necessary to shut down if we have three bacterial colonies on a single plate? Lets talk to the undergrad who reported the test, ask him if he really wants everyone to lose their jobs? 'Isn't it maybe possible you accidentally sneezed on the plate?'"

Easy to justify: you know your facilities are clean, you spend a shit ton of money cleaning them. And that's just like the doors! That's not even the production vats! No way is the whole thing contaminated. Plus these aren't even going to go into people... You do testing of all the lots of blood tests, you'll know if they're compromised... And besides, any doctor worth his salt is going to be able to identify SEPSIS without a %100.00000000 accurate blood test, it's so common! Fire the kid and ship it.

Regulations are necessary especially when it's not directly interacting with a patient. Yes they are huge barriers to efficiency, granted, but healthcare is simply not a place the free market works at any level. The end result is not sales, it's literally life or death. Society simply does not tolerate that. Investors who get into healthcare and deceive themselves into thinking it is a free market deserve to lose their money. Politicians and pundits who try to reform healthcare towards "free market" are deceiving themselves and or the public, and deserve to be thrown out of their jobs hard. If they try to exempt themselves from such "free market" solutions while subjecting everyone else to it, they deserve literal crucifixion even if they do claim it's just a reconciliation loophole they'll totally close later.

the problem... INVESTORS....

[starblazer]

I bet you three fiddy that Silicon Valley wants to tackle these problems, but its the INVESTORS that control the pocketbooks of Silicon Valley that don't want to take the risk on. The long game, pfffft, what's that? Humanity? Pffft!

Most startups seem focused on weeding out the weak

[xxxJonBoyxxx]

Most of the "health" startups seem focused on weeding out the weak, as in "let X voluntarily track your activities and single you out for unaffordable health premiums if you aren't young/healthy/kid-free enough to meet our wearable device targets." So yes, if it seems that the chronically ill are being pushed off the map, well it's by design.

Re:The future is in offshore data processing

[jeff4747]

I sent my genome to a server in eastern europe to get a detailed health report because the FDA won't let 23andme present all of the information.

That's largely because the information 23andme wants to present has not been proven to be true.

So....fuck the system for trying to prevent 23andme from lying to you, so that you don't go on a medical vacation to treat a disease you don't actually have.

Makes perfect sense.