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Rooting for Schumpter’s Gale

Dec 28, 2021

By KIM BELLARD

Not familiar with Schumpeter’s gale?  You may be more familiar with the term “creative destruction.”  Schumpeter’s “gale of creative destruction” is the inevitable “process of industrial mutation that continuously revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.”  

We need a Schumpeter’s gale in healthcare.

What made me think of this was the news that Tik Tok became the most popular internet site in the world, surpassing even Google.  It reminded me that things sometimes do change; perhaps there is some hope for healthcare after all.

If you missed the news about Tik Tok – perhaps you were too busy on it or too busy ignoring it – it came last week in Cloudflare’s Radar 2021 Year in Review. Tik Tok was a fairly distant 7th a year ago, well behind leader Google and #2 Facebook, but shot up in 2021. Tik Tok has gone from being simply silly short videos to a force in social justice, the job market, celebrity status, and mental health.  It plays a role in Gen Z/Gen Y’s lives that Facebook desperately wishes it did.  Facebook’s demographic issues had been well known, but Tik Tok surpassing Google?  

That’s the kind of change I wish we saw tech bringing in healthcare.

The dominance of “Big Tech” – a.k.a., Alphabet/Google, Amazon, Apple, Facebook/Meta, and Microsoft – is oft-discussed, and usually lamented, but we have to keep in mind that such dominance is typically transitory.  Twenty years ago Apple was an also-ran, Google was trying to be an also-used, and Facebook had yet to be invented.  Amazon had a market capitalization under $4b. Microsoft was still Bill Gates’ company, not the open-source, cloud-based, subscription-oriented company Satya Nadella pivoted to within the last decade.

In twenty years, maybe within ten years, that list of Big Tech companies will look very different.  Maybe it will be Web3, maybe the metaverse, maybe quantum computing or AI, or even something few of us have even heard of yet, but new waves will come and will bring new tech giants.  That’s why Apple is investing in “face computers,” Facebook is transitioning into Meta, and Google has a “moonshot factory.”  Those efforts and others may help keep them relevant, but the barbarians, so to speak, are still coming. 

Go back twenty years, on the other hand, and the big hospitals/hospital systems are pretty much the same.  Same for payors, pharma, medical device companies.  There have been mergers and consolidations, but the dominant companies then are mostly the dominant companies now – only more so.  That’s not how it is supposed to work.  That’s not how it works in tech.

In last week’s “On Tech Newsletter” in The New York Times, Shira Ovide flatly says “technology won.”  She explains:

Tech is more like a coat of new paint on everything than a definable set of products or industries. Health care is tech. Entertainment is tech. Schools are tech. Money is tech. Transportation is tech. We live through tech.

Technology is also in a liminal phase where the promise of what might be coming next coexists with the complicated reality of what is happening now.

You can certainly make an argument that “health care is tech,” and that much of that transition has happened in the last twenty years.  We have widespread electronic health records, minimally invasive surgeries, new types of cancer treatments, all sorts of 3D printed objects, CRISPR, greatly improved prostheses, VR treatments and training, and, of course, more types of digital health efforts than even today’s venture capitalists can throw money at.  

It’s all very impressive, but you’d get a lot of argument that our nation’s health is better as a result, that our experiences in the healthcare system are better as a result, or that our healthcare is any cheaper as a result.  None seems true. Tech, in healthcare, is a bolt-on; it adds costs, it removes more of the human touch, and it does not fundamentally reshape the healthcare system. 

Unlike the actual tech industry, tech in healthcare serves to further cement the position of the incumbents, not displace them. It doesn’t make the healthcare experience new, it just makes it seem “newish.”  TikTok is not going to dethrone Epic or The Mayo Clinic. People in healthcare aren’t too scared of the “what’s next” in tech.

Much has been made of the record-setting 2021 for digital health investments — $28b, which was double 2020 – but when I look at them I still don’t see an Uber or an Amazon, a company that is trying to break an existing industry.  I see a lot of innovators who think they can remedy some pain points, but within the existing system, and I see investors who mostly want their slice of the $4 trillion healthcare sector.  

I want to see tech innovators who look at our healthcare system and think, hmm, there’s too many people and places doing too many things for too much money – and, often, too late, after there is a problem. Who wants to bring the cost structure down, not 5-10% but to 5-10% of our current levels. Who wants health to be an ongoing process managed in our daily lives.  Who wants health tech – and the resulting healthcare — to be ubiquitous, invisible, and largely autonomous. Who doesn’t think we need to rely on millions of highly trained healthcare professionals (and whose training, in fact, becomes one of the cost problems in the healthcare system). 

Tik Tok would understand that. 

With all due respect, I’m not sure that David Feinberg, for example, would. People who have spent their professional lives in the healthcare system can often see how to improve it, but not to fundamentally reshape it, and almost never how to bring creative destruction to it.

I’m not expecting Tik Tok to revolutionize our healthcare system – but ByteDance or WeChat, maybe. An AI company?  Of course. A synthetic biology or nanorobotics company?  For sure.  By contrast, what CVS, Walmart, even Amazon are trying to do in healthcare are interesting, but, honestly, they’re like helping us hear the orchestra on the Titanic better: OK, but that’s not really the problem.  

If we recognize the healthcare system in 2050, if some Schumpeter’s gale hasn’t blown the current version away and replaced it with something truly new, we will have failed.   

Kim is a former emarketing exec at a major Blues plan, editor of the late & lamented Tincture.io, and now regular THCB contributor

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Article: thehealthcareblog.com

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