Stanley Feld M.D.,FACP, MACE
Society is in the midst of an electronic revolution. Innovations in hardware and software have created greater shifts in our economy than the assembly line, mass transportation and electricity. We ain’t seen nothing yet.
The potential for economic growth as of result of this revolution is unimaginable.
Current business models have crumbled and have been replaced by software driven companies. Software driven companies are cheaper to run and have created innovative and easy to use products and services for consumers.
Marc Andreessen, founder of Netscape, has a tremendous handle on this revolutionary change. So does my son, Brad, and his good friend Fred Wilson.
Marc Andreessen wrote an excellent article in the WSJ on August 20th, 2011 entitled, ” Why Software Is Eating The World.”
“More and more major businesses and industries are being run on software and delivered as online services.”
Almost all industries have been affected. The hardware and software revolution have overturned many industry’s business models.
Brad Feld wrote a perceptive blog today defining some of the changes to be expected in the near future. He also warned of incumbent and political abuses to the technological advances that are being made by entrepreneurs.
My hope is Congress will be unsuccessful in restricting these freedoms. There will be many more industries that will be disrupted by innovative software in the coming decade.
“Over two billion people now use the broadband Internet, up from perhaps 50 million a decade ago.”
Marc Andreessen expects, “at least five billion people worldwide own smartphones, giving every individual with such a phone instant access to the full power of the Internet, every moment of every day.
Amazon.com is a dramatic example of a company that has used innovative software to transform an industry. Twelve years ago Borders was the king of stick and brick booksellers. Borders had an effective software book distribution system for its increasing number of bookstores.
Amazon, with software that distributed books directly to the customers ate Borders’ lunch. Borders thought on-line book sales was non strategic. “People like to touch books before they buy them.”
How wrong can one be? Using the same software Amazon now sells everything at a lower price than most retail stores and on-line companies. Its software decreases overhead and in turn consumer prices.
Consumers are not stupid. They want the best product at the lowest price. Amazon produced and consumers responded.
Big box stick and brick retail stores that took over the local mom and pop businesses will fail unless they became hybrids.
The old business model bankrupted Borders.
Amazon didn’t stop there. Its Kindle digitized books and delivered them instantly at half the price to consumers with a greater margin for Amazon.
This demonstrates the genius of innovation. The creative uses of innovative software are staring us in the face daily. Most industries have a Blind Spot.
The existence of those people who want to touch the pages of books is fading fast. Jeff Bezo saw this Blind Spot.
Netflix copied Amazon with DVD movies. It destroyed Blockbuster. Netflix then switched from physically delivering DVDs by mail to both delivering DVDs and on-line downloads.
It would have worked if they put the consumer first. Netflix infuriated consumers with its pricing. It almost immolated itself. I do not think Netflix will recover unless consumers perceive that they are first.
Amazon, using a more sensible model, is going to take over the on-line movie business. Blockbuster, now owned by Dish network, doesn’t have a clue about the needs of consumers.
Dish, Direct TV and Cable are trying to adjust to the rapid pace of software innovation. I do not think they can because they are bogged down in bureaucracy.
They are simply not entrepreneurial.
This brings us to Apple, Steve Jobs and the entrepreneurial spirit. Steve Jobs turned the music industry on its ear with ITunes, the smart phone industry on its ear with the IPhone and the computer industry on its ear with the IPad and the Mac Book Air.
His method was to use innovative software that made the appliance work for the consumer. He does not make the consumer suffer as Microsoft does with constant software freezes.
He kept his eye on the consumers. He put the consumer first. It served his vested interest well.
Before is died he made a statement in which he said he finally figured out television.
Google is a close second to Apple but Google is hampered by a growing bureaucracy.
“The great incumbent software companies like Oracle and Microsoft are increasingly threatened with irrelevance by new software offerings like Salesforce.com and Android (especially in a world where Google now owns a major handset maker).”
I could mention many more companies that have served as disinter mediators of incumbent businesses by software innovation. These innovations have resulted in vast improvements in value to consumers, decreased costs and economic growth.
Why hasn’t healthcare in the U.S. been the beneficiary of this software revolution?
The reasons are clear to me having practiced Clinical Endocrinology for 30 years.
Healthcare is an industry with a gigantic Blind Spot. There is a good reason for healthcare’s Blind Spot.
Software developers in the medical space do not know who their customers are. Their customers are patients and physicians and the patient/physician relationship. The customer is not the government, the healthcare insurance industry or hospitals.
Once this is understood the software revolution in medicine will begin.
The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.
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Great comments everyone.
Thanks
Stanley Feld M.D.,FACP,MACE
Posted by: Stanley Feld M.D.,FACP,MACE | January 28, 2012 at 09:44 AM
Stanley - I couldn't agree more. This is the reason why the kernel of my startups architecture is opening a rich communication channel between physician and the individual (most of us don't think of ourselves as "patients"). I was fortunate to have founded Microsoft's health business many moons ago and play a role in the shift from mainframe to client-server based systems. However, this shift is not only a big architectural shift but the fundamental healthcare delivery model must shift as well. The biggest driver, for better or worse, is the shift that is happening from the "do more, bill more" reimbursement model to one that is focused on value and outcomes.
I can't think of a more exciting time to be in the field. There is a wave of disruptive innovation that isn't fully recognized right now -- Gibson's quote ("the future is here...it's just unevenly distributed") is apropos. One great example is Direct Primary Care -- see http://www.delicious.com/chasedave/DPCArticles for more. There's more where that came from.
Great to see experienced MDs blogging like this, btw!
Posted by: Dave Chase | January 08, 2012 at 05:13 PM
I really enjoy this post. I totally agree with this statement:
"Software developers in the medical space do not know who their customers are. Their customers are patients and physicians and the patient/physician relationship. "
This is why I started Umbie Health and we are launching Umbie DentalCare. I think the key is making the patient/physician relations easier will help improve healthcare.
Thanks again for the post!!!
Posted by: Jeremyhamel | January 08, 2012 at 05:12 PM
Outstanding blog post dad. And I think your punchline is completely correct - the healthcare software innovators should focus 100% of their energy on the patient and the physician (their customer). That would quickly transform everything in the healthcare supply chain.
Can you imagine what would happen if the government subsidized Borders and Barnes & Noble? Yup - pretty easy to see that they'd be doing fine and "bookstores would be classified as a public good." What nonsense.
Posted by: Brad Feld | January 08, 2012 at 12:55 PM