Jonathan Bush, the outspoken CEO of Watertown, Mass.-based electronic health record vendor athenahealth, is not impressed with the current levels of venture capital funding flowing into health information technology startups. He actually considers it "tragic," he writes in a new opinion piece published this week in Techonomy.
Citing Mercom Capital Group's 2013 first quarter report, which revealed that almost half a billion dollars was raised in the sector, Bush says the funding "pales in comparison" compared to the federal government's health IT investment--$30 billion under the HITECH Act. He adds that VC funding for biopharmaceuticals, medical devices and other healthcare services has been larger.
To Bush, there are three main reasons why health IT is getting the "short shift" from investors, the first being that healthcare consumers don't shop.
"Shoppers are engaged, eager, and willing to snatch up new products as quickly as they hit the shelves," Bush writes. "Would the iPhone have come to market if consumers didn't have choice and deep pockets? The same economy is not at play in healthcare."
Second, Bush says, the biggest buyer--in this case, the government--stifles innovation.
"The government rewards caregivers for a narrowly defined set of activities, limiting their appetite for innovation and thus for entrepreneurial services and technology," Bush says.
Lastly, Bush says, quality and competitive pricing aren't currently being rewarded. His tips for healthcare innovators in overcoming obstacles and attracting more VC money?
- "Do good and do well" in being more than a bright idea and actually try to improve patient care
- Get noticed, Bush writes. It's all in how a product is pitched
- Serve the market of many buyers--the healthcare market and audience is expansive
He urges game designers to look toward healthcare-themed applications, instead of iPhone games.
"If you're a game designer, put aside the mad birds and flying bricks for a second and work on one with needles and bandages," Bush says.
According to Mercom, VC funding levels for healthcare technology for all of 2012 totaled $1.2 billion.
To learn more:
- read Bush's piece in Techonomy