Where Jonathan Bush Hit the Nail on the Head

June 24, 2013
An opinion piece from Jonathan Bush, the CEO, President, and Chairman of the Board of athenahealth Inc. recently caught my attention. Bush was advocating for better venture capital investment in healthcare IT and made a pertinent point about how fee-for-service models of reimbursement have stifled innovation.

An opinion piece appearing on the website Techonomy.com recently caught my attention. Jonathan Bush, the CEO, president, and Chairman of the Board of Directors at the Watertown, Mass.-based EHR software company, athenahealth Inc. strongly advocated for better investment and entrepreneurship in healthcare IT, similar to the themes of a speech he gave at TEDMED this past year.

What Bush essentially wants is for the private healthcare IT enterprise world to do better in free market investment and innovation. The government, he notes, puts up $30 billion under the Health Information Technology for Economic and Clinical Health Act (HITECH) to encourage innovation. Furthermore, he notes, there is much larger venture capital (VC) funding in other healthcare sectors—biopharmaceuticals, medical devices and equipment—than in healthcare IT, which according to the Austin, Texas-based Mercom Capital Group was nearly a half a billion in the first quarter of 2013, and 1.2 billion total for last year.

“To be sure, the healthcare IT sector is not just suffering a shortage of capital. There is a dearth of entrepreneurs and innovation here too,” Bush writes matter-of-factly. He says health IT gets ignored by investors for three reasons—healthcare consumers don’t shop, the government (the biggest payer in healthcare) stifles innovation, and service, quality, and competitive pricing aren’t rewarded.

Points one and two deserve consideration. The recent move from the Centers for Medicare & Medicaid Services (CMS) to release charge information from hospitals across the U.S. showed us how little we as consumers understand about pricing in healthcare. That hospital charges how much? And the one down the street charges what? So when Bush says, hospital consumers don’t shop, he is basically right. It’s not like shopping for a new TV or smartphone, the choices aren’t as transparent. Hopefully, this will change in the future.  

As for point two, Bush isn’t the first person, nor will he be the last, to say that the biggest buyer in the healthcare market has not prioritized supporting innovation. He is not the first, nor will he be the last, to say the government has prioritized “minimizing the scenario of maximum regret: the audit, the lawsuit, the death.” Nor is he the last to say, the government rewards caregivers for a “narrowly defined set of activities,” which he says limits their “appetite for innovation and thus for entrepreneurial services.”

In fact, Bush had a sharp criticism of HITECH himself in a notorious February article published in The New York Times. Bush has also made his point on this topic well stated in other interviews. This is an interesting point, and while I get where he is coming from, I’m not sure I totally buy-in.

However, it’s really the third point from Bush that got my attention:

“By and large, doctors continue to be paid based on how many services and tests they provide. They are not commonly incentivized to compete on price and quality, and there’s no obvious way to display that information for shoppers.”

Innovation and reimbursement have to be a two way street. It’s only when providers will be reimbursed for better outcomes that the need for innovation will be an undeniable market force. In this environment, the best will rise to the top. That’s how Bush explains it and I agree whole-heartily. The best will need find ways to reduce cost and improve care quality, and it’s through innovation where this can happen.

We’ve seen time and time again at Healthcare Informatics when a large provider has invested in an innovative technology that has improved the quality of care and lowered costs, it has been used again. Shannon Hospital, the third place winner of our Innovation Awards back in March is a good example of this.

You’ve heard of vicious cycles, this is the opposite. This is a beautiful cycle. The more this concept comes to life, the better innovations we’re going to see.

Thoughts? Feel free to leave comments below or respond to me on Twitter by following me at @HCI_GPerna.

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