There may be 90,000 healthcare-related smartphone apps on the market right now, but that doesn’t mean it’s a bad time to be in the business of making healthcare-related smartphone apps. On the contrary, says veteran healthcare executive Bill Zeruld, the market has never been better.
“Some of these applications are interesting, but only five of them represent 15 percent of all downloads,” Zeruld says. “All of these thousands of others are not being used.”
To Zeruld, this discrepancy means there is a huge market out there for someone who wants to launch a health technology company and do it right. However, he says, getting into this unique business is far different from any other field and requires a different approach.
Zeruld is leading the “Tigerlabs Digital Health Boot Camp” Monday, February 10, through Monday, March 3, at the Tigerlabs business incubator, 285 Nassau Street. The seminar includes eight one hour, 15 minute sessions, plus networking/celebration events before and after the course. For more information, search for the Tigerlabs boot camp on eventbrite.com, or visit www.tigerlabs.co. The cost is $500, $300 if you register before Friday, January 31, and $200 if you are a full-time student.
The host and the boot camp are a nice fit for each other. Tigerlabs is a business incubator started by a venture capitalist who had mentored the Princeton University Entrepreneurship Club (U.S. 1, March 6, 2013). Tigerlabs Ventures, launched in November, is a six-month digital health accelerator program that helps companies with capital, services, and mentorship. The incubator is currently accepting applications to be part of its healthcare technology program.
This is the time: Zeruld has a lot of advice to give over the course of those eight sessions, the most important of which is that many factors are converging to make now the best time to get into the business. “There has been no better time in our history to make a leap,” he says. “In 2013 there were $2.2 billion invested in healthcare IT and digital health, up significantly from the prior year. Technology is now accessible on more platforms as more and more people get smartphones. The government activities, such as the ACA, have put more people in the healthcare system, putting strains on the system,” he says. Add to that government financial incentives for healthcare providers to move to electronic health records, and you have what Zeruld calls a “magnificent” opportunity.
However, there is a reason that those 90,000 apps have not crowded out all possible competition. Many businesses, Zeruld says, fail to understand the deeply screwed-up nature of the healthcare marketplace. “People can create all sorts of technological solutions, but they won’t work if they don’t understand how they will be applied in the context of healthcare.”
It’s insane: “The biggest difference between healthcare and other industries is a misalignment of incentives,” Zeruld says. “You have patients like you and me who have historically not had to think about cost factors because we’re not the primary payers of it,” he says. “You don’t have a real history of patients who are disciplined in thinking about cost and quality measures since they’re not the ones paying for it. A second example is that providers have historically been paid based on volume, or quantity of services, but not quality.”
In most industries, customers want to pay less for better quality, but that’s not the case in healthcare, where customers don’t care about price and have little way of knowing the quality of the care they are going to receive. Zeruld notes that the Affordable Care Act, which came into effect this year, aims to address many of these problems, and is encouraging payments based on patient outcomes.
Healthcare technology has a big role to play in this field, Zeruld says. A good healthcare information app could help patients find providers who provide high quality care and weed out ones with bad reputations. “Startups are playing in this arena, gathering data and making it available so people like you and me can compare specific physicians based on quality metrics,” he says.
Personal health: Zeruld sees an opportunity for apps that help people avoid the need to visit hospitals at all. “Mobile toolkits allow people to track their own activities, track their behaviors and their diets, and communicate with their providers,” he says. “This whole M-Health arena is going to be huge.”
The first half of the boot camp will be all about the healthcare industry, and explain how it all works so that would-be entrepreneurs can navigate the landscape. The second half will be more general business advice, from how to build a team to how to raise capital to market strategy to legal considerations.
“We’re bringing in people, successful entrepreneurs, who do this all day and who can talk about what they have learned,” he says.
Given Zeruld’s background, it seems almost inevitable that he would go into the healthcare business. He was raised in Plymouth Meeting, Pennsylvania, where his mother was an insurance administrator for a doctor, and his father was an accountant in the health insurance industry. “We had dinnertime conversations on these topics,” Zeruld says.
Zeruld has seen all sides of the industry that he’s giving advice on. Most recently, he was a senior executive with Premier Inc., a healthcare improvement alliance of about 2,900 hospitals and 100,000 other healthcare providers. Before that, he was an executive for US Pharmacopeia, a nonprofit group dedicated to healthcare improvement. He has an MBA from Wharton.
Zeruld is proud of the work he has done aimed at improving the way the healthcare industry delivers services. He hopes the new generation of businesspeople training at Tigerlabs can carry on that work until the healthcare system isn’t quite as dysfunctional as it is now.
“I think the system is broken. It has worked for a lot of people, but I wouldn’t call it an effective system, because it doesn’t work for everyone,” he says.