New York City: a health-tech hub by 2020?
Sunday, December 18, 2011 at 11:44PM 
Photo: Flickr / Moriza
Two of the biggest growth trends over the coming decades are health and technology, the epicenters of which are generally considered to be Boston and Silicon Valley respectively. So, is it even reasonable to ask whether New York can be a ‘health-tech hub’ by 2020, as a number of people have been doing recently? For this discussion, health tech is considered a loosely defined term that incorporates health IT, mobile health and many of new consumer-empowered solutions connected with the ‘Health2.0’.
Anybody who’s spent much time with the New York health care system will have reason to be skeptical of any claim for global leadership in this area. I’ve spent a bit of time observing the machinations of some of the big hospitals here, and each have some of the smartest, nicest staff and physicians one could ask for. However, I’m left reeling by the mind-numbing inefficiencies and sky-high prices. Almost invariably there are long waiting times, the need to fill in countless paper forms with largely similar information on each visit, and a shuttling through a maze of corridors and departments to fit into processes designed for the hospital first, physician second and the patient a distant third if that. I don’t want to single out hospitals, it’s just they’re the most obvious manifestation of a system stuck in a belief that bigger is better, grappling with bloated operational scope and business models from the past century, or maybe the one before that. I’ve heard first hand from a friend who earns a good salary and has a gold-plated insurance policy, of the litany of medical errors done to her in relation to some hospital visits over the past couple of years, ranging from having bits of medical equipment left in her, being stranded in a wheelchair 4 feet above the street in a broken ambulette, being inundated with a torrent of both trivial and confusing paperwork (for example a $2 bill for a surgical sponge) and most alarmingly being lost in a corridor for over an hour after a surgery and waking up to find a creepy hospital orderly paying her too much attention. Happily at least she could afford the bills not paid by her insurance; they would have bankrupted others less fortunate.
The outlook is not all grim. Many of things that went wrong for my friend could have happened in big hospitals across the country. According to the NYC EDC, New York is the second largest recipient of NIH funding ($1.3bn annually), boasts 100 VC firms investing in life sciences, has the largest bioscience workforce and has 57 hospitals and nine major academic medical centers. There is a lot of good material to work with.
This post (an extended one, in honor of the Christmas season) starts off looking at the emergence of global competitiveness among cities, and then explores some ways in which the business of health is changing, before identifying some recommendations for making New York a health tech hub, that build on its considerable assets.
1. Cities: a new battleground for innovation
Competition between cities is not new, but is certainly heating up. With more than 50% of the world’s population, and growing, lives in cities, they are the vehicle for managing our civilization. As the world becomes flatter, skilled, and not so skilled, workers are more likely to move towards the most interesting opportunities, and as Richard Florida and others have pointed out, luring the ‘creative class’ delivers big payoffs.
I’ve recently come across a number of innovative emerging models that are specifically catering for the emergence of cities as innovation hubs. European innovation company Living Labs Global have launched their Global Awards, acting as a platform for 20 cities putting out a call for innovative solutions to some of their thorny problems. And, TED has just announced its Cities 2.0 initiative, in which it will focus its annual prize on the very real challenge of coming up with new ideas for cities. In addition, a number of cities are on their own crusade, to position themselves as the next cluster (London’s Silicon Roundabout being the latest addition) and jumpstart the virtuous cycle in which talent attracts more talent.
One of Silicon Valley’s greatest assets, Paul Graham suggested a few years ago that to make a tech hub you just need ‘rich people and nerds’.
What nerds like is the kind of town where people walk around smiling. This excludes LA, where no one walks at all, and also New York, where people walk, but not smiling. When I was in grad school in Boston, a friend came to visit from New York. On the subway back from the airport she asked, "Why is everyone smiling?" I looked and they weren't smiling. They just looked like they were compared to the facial expressions she was used to.
If you've lived in New York, you know where these facial expressions come from. It's the kind of place where your mind may be excited, but your body knows it's having a bad time. People don't so much enjoy living there as endure it for the sake of the excitement. And if you like certain kinds of excitement, New York is incomparable. It's a hub of glamour, a magnet for all the shorter half-life isotopes of style and fame.
Nerds don't care about glamour, so to them the appeal of New York is a mystery. People who like New York will pay a fortune for a small, dark, noisy apartment in order to live in a town where the cool people are really cool. A nerd looks at that deal and sees only: pay a fortune for a small, dark, noisy apartment.
The growth of both nerds and rich people populating the tech scene in New York in the past few years shows that perhaps nerds like different things, or the scope of a nerd is moving beyond computer science, and encompassing new areas, such as finance and fashion. And maybe even health.
2. Skating to the puck: Ten trends shaping the future ‘business of health’
Before asking how a city will be a leader in a space eight to ten years from now, it’s worth having some hypotheses about what that space look like. Similarly, asking today’s business leaders what they want will almost certainly miss the priorities for the new companies yet to be born, or the pivots yet to be made. The following is a selection of driving forces, drawing upon some trusted guides, such as the Future Agenda and Clayton Christensen’s the Innovator’s Prescription, which will be bearing down on the business of health (with a focus on the US) over the next few decades.
From reactive sick-care, to proactive well-being. With health threatening to take up to 30% of the nations GDP by 2030, personal accountability will become not just nice to have, but a requirement. Leroy Hood’s 4Ps is based on the idea of systems not symptoms, is a good place to start: Personalized, Predictive, Preventative and Participatory. Smart, genome-enabled knowledge that will drive timely, personal and collaborative behavior – sounds reasonable, right? The World Health Organization defines health as ‘a state of mental, physical and social wellbeing’. This is the starting point for the paper, Reframing Health, which suggests individuals should play a larger role in the design of their own well being. Ultimately this all means that health becomes a much bigger conversation with more players involved, in particular the individual themselves, and their day-to-day behaviors.
Managing and avoiding ‘diabesity’. With diabetes consuming 5% of GDP, managing obesity and a corresponding rise in diabetes risk will become a priority for society.
Aging populations. Breakthroughs will be needed for products and services to meet the needs of the aging population, in particular dementia / Alzheimer’s. There’ll be a surge of demand for anti-aging therapeutics, aging-in-place technologies, new monitoring and communication options and care giving services (btw, you can follow these at the author’s blog, Aging2.0).
Personalized medicine. Increasingly smart genomics combined with super-rich individuals will result in individuals leading efforts to find elusive cures for their own health conditions. Already today the second largest funding sources in the US for autism and dementia (outside the NIH) comes from private billionaires - James Simons and Richard Rainwater respectively. Other financiers, Dinakar Singh and Michael Milken are also among the small number of people having an outsize impact on the medical research, and ultimately health care. These business-minded folks force new collaborative approaches and a results-orientation on a research establishment too often siloed and disconnected from real world (patient) cycle-times.
Rise in the mobile, and quantified, self. With 64% of current 25-34 year olds owning smart phones, according to a new Nielsen report, (and over 53% of the population in general), critical mass is being reached with the expectation of mobile access to services, as it was reached ten years ago with online services. This will create a positive reinforcement loop, increasing availability. These devices will increasingly be making use of the data exhaust they generate to help people track and manage their life, and health. Efforts such as the Quantified Self, currently seen as niche, will be early indicators of mainstream behavior.
Gamification. Mobile in turn will be the next, and even more powerful platform, for games that have proven so popular on consoles and PCs. Gamification is becoming ubiquitous, with health one of the most lucrative. Given that 80% of health budgets are spent on chronic diseases, many of which require long-term behavior change, look for the emergence of many novel areas around gaming. This report is a good primer, pointing to a number of companies making a credible impact; a portent of things to come.
Fragmentation of pharma companies’ product lines. There will be fewer blockbuster drugs, as genomic discoveries moves research away from broad based treatment of symptoms, to specific cures of diseases with target groups of individuals, not populations.
Specialization of care facilities. Massive hospitals have excessive overhead, and focused care facilities, such as the Aravind Eye Hospitals stand to deliver optimized and therefore higher quality care, for less. We’re already seeing this in the US as Walmart gets more serious about retail clinics, which have grown rapidly over the past few years. Vested interests have limited these practices to low-end services (and long term care hospitals), but that may change as costs become unsustainable. Correspondingly, medical tourism will increase. Self-insured corporations are already today offering inducements for employees to go abroad for surgery, and the today’s high quality, lower-cost procedures already include, dental work, cosmetic surgery, eye operations and even heart surgery.
Generics moving up-market. As the Innovators’ Prescription points out, generics companies are forming a classic disruptive strategy, and moving up the value chain. Without the legacy overhead and mindset of pharma companies they are able to deliver proprietary drugs for up to 40% cheaper than pharma company. Traditionally shunned, these generics companies are growing fast, and looking for friendly environments from a regulatory and IP perspective.
Nutrigenomics. The boundaries between biotechnologies, pharmaceuticals will be increasingly blurred, as we start to understand more about the impact and interaction of nutrition and the expression of genes. This will result in among others things, the growth of weird and wonderful foods from across the world, and the necessary logistics systems to accommodate this.
Of course all these won’t spring fully formed into being by 2020, some will still be edge cases. But the direction is clear. What we’re talking about here is setting the groundwork for a plan for the next decades from 2020, taking us through the middle of the 21st century.
3. Recommendations for developing a health tech hub, New York-style
A health hub would be a center of innovation, and a test bed for new practices to emerge. The goal here should be to be the best in the world, not just the US. I think Paul Graham pretty much had it right with his simple recipe with two ingredients, but let’s add another layer of detail, to make four elements of a vibrant health tech hub.
Talent
Attractive place for the right kind of skilled (and sometimes also unskilled) employees to want to come and work and live.
Access to capital
Easy access to capital at all stages from early startup to late stage. Money that is both plentiful and delivered by teams that are insightful and well connected.
Breakthrough technologies and research
I’d separate out hard-core new technology, in particular that able to generate new IP, from talent (above), which Graham bundles together under geeks.
Supportive regulatory environment
This is particularly important in any discussion around health care, which is that much more highly regulated than the tech sector in general.
The following suggestions generally incorporate a number of the above elements, and range from very specific to broader issues about making New York a healthy place to live and work.
1. Introduce new high deductible/ high-savings insurance models as a platform for new business model innovation
This would require working with insurance companies to develop new models of high deductible insurance together with high savings accounts. New York could lead the country, indeed the world, in facilitating the development of new models that more directly tie premiums to lifestyles. Part and parcel of this is a move from gold-plated corporate health insurance perks and reduction in the fee for service models. So far, the private sector efforts made in this area have been limp. A friend of mine told me he was offered $200 back from his insurance company (Oxford) on an annual basis, only after he’s been able to prove (via a letter that he had to get from the gym) that he’s worked out 100 times. The gym fees and premiums for his family of four amount to $22,000 annually, meaning he’s been offered an incentive of less than 1% to live a healthy life. Hardly going to nudge him out of bed in the morning. I expect that the New Yorkers are generally fitter than most, and will be happy to try ‘fairer’ allocations that better reflects their lives and economic reality.
Innovative business models could emerge, with companies taking a chunk of the savings generated by the introduction of new models (a Blue Zones city saw health costs drop by 49%). The work of Harvard Prof/ wunderkind Roland Fryer in introducing incentives for education could be repurposed for community health care; giving overweight patients $5 for each pound they shed on an annual health check would probably end up being a financially prudent move (and it’s harder with your weigh-in to steal someone’s paper to get an A).
2. Change the law to make self-diagnosis easy, and embrace the ‘Quantified Self’
As individuals take charge of their health, the guaranteed growth area is diagnostics, in particular new consumer models for diagnostics. Think of high street Starbucks-type clinics where you go in for a checkup and tune up – gym meets doctor’s office. Unfortunately, as I learnt to my disappointment when I tried to sign up to get a battery of tests done by directlabs, New York state is one of the few in the country in which they are not allowed to operate. So every other state thinks that their citizens are grown up enough to get their blood drawn and to receive the results, but not NY? We’re really starting this one on the back foot.
3. More city health data available to developers
NYC’s BigApps competition already challenges developers to come up with new applications and services that make use of City data, and Health.Data.Gov is opening up health data at the national level. But how about taking this much further than others have gone before, drawing on New Yorkers’ famous fondness for direct communication? Let’s have better access to data about health outcomes in individual doctors’ offices, 911 calls by type and by geography, health violations in restaurants and even pay and remuneration data available. Entrepreneurs are gluttons for knowledge, and data is their high fructose corn syrup.
4. Open up research arms to personalized medicine programs
Despite the global meltdown, Wall Street still has more than its fair share of multi-millionaires; they’re just keeping a lower profile. Here are the natural benefactors for those looking to generate new personalized medicine initiatives. Milken’s annual Partnering for Cures event is a natural platform for New Yorkers putting together personalized medical consortias to share notes. People with great wealth want the best in the world, and put serious cash to work when they find them. However, there’s also value in having the experts on the doorstep, and there are many great researchers here that may not be getting the exposure they could have to these individuals. For example, how many billionaires are working with NY Stem Cell Foundation, whose work on stem cell based cloning was just named Time magazine’s #1 Medical Breakthrough in 2011? The city could run a service that provides information about what NYC resources are available, and which research universities are working on what kind of programs, relevant to people engaging in personalized research.
5. Commit to making New York the best place in the country to grow old.
New York’s intensity encourages a mixing up of income and age areas. Aging ghettos in sunshine states don’t encourage others to come with their families or set up businesses. Creating the best city to grow old in requires managing a large number of factors including the environment, infrastructure and also availability of innovative products and services.
6. Train a new cadre of community health workers to be mobile proficient
In addition to focusing on luring the highly skilled mobile workers to the city, this initiative could also have an impact with high long-term unemployment in the city, but training up a new group of people to be community outreach workers. This project would use smart phones or tablets as data capturing devices and in so doing provide higher job satisfaction and self-esteem to the workers.
7. Subsidize healthy food, levy a punitive tax on unhealthy food
New York really is a food-lover’s paradise; few cuisines are underrepresented, or not available to a decent quality at varying price points. There are plenty of alternatives if the city ignores the food-industry lobbying and bans egregious processed food with minimal nutrition content. For 2012, the Michelin Guide awarded stars to over 60 restaurants. Some health tech apps and services of the future will connect individuals to the best places to eat, and again there is no doubt some data the city has that could lubricate this. Also, how could the city make it easier for local, organic farmers to get access to NY residents?
8. Create a standing citizen advisory panel on health care innovation
Don’t trust us innovation consultants, or worse, corporations with a specific solution to sell. Ask the users themselves what they care about. We need to celebrate consumer champions – is 1% a discount for consumers going to do anything? How big a discount do we need? I don’t know, but this kind of answer could be reached with a consumer panel. It’s important that the voice of the consumer doesn’t get lost amidst the cacophony of change – after all, they’re the only constant here. New Yorkers are a highly educated and opinionated citizenry, who are not afraid to tell anyone who’s listening how they feel. They’d jump at the chance.
Most of these ideas would take a combination of cross-disciplinary cooperation between government agencies and private sector players at a number of levels. It turns out that that’s the kind of thing that Mayor Bloomberg and his teams have been doing rather well over the past few years, so why not embrace this as a worthy goal?
Hopefully some of these will resonate, happy to hear your perspectives. Meanwhile, wishing you all a happy, and healthy, holiday break.
health tech, innovation, new york in health, innovation
Reader Comments (2)
Health articles are attracted with the readers. I think you should expand your description here on this blog site. So that visitor can get more info about health from this posting. Really informative posting. I doubt it’s an exclusive reason why people don’t get comments, but it definitely could be one cause. I just checked my settings to be sure.
Thank you for sharing your article...:)