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Stating the blindingly obvious, Healthcare is huge. And so is the market to “disrupt” and “revolutionise” the sector (and any other buzz-word adjective you can throw at it).
Generally the world looks to the United States for the massive movers and shakers in healthtech and when they fail, they fail big and hard, whether they acted immorally or just could not crack the market. Given a common stat bandied around that 98% of “digital health startups” in the US fail, the amount we hear about is still minimal.
Below are some cautionary tales and catastrophes to bear in mind given the surge in healthcare tech in Australia:
The mother of all healthcare technology frauds, if you google “healthcare startup fraud” or any similar phrases to that effect, and Theranos appears as every single listing for the first ten pages (at least).
The fraud was big and involved, but essentially 19-year old founder Elizabeth Holmes embarked on a decade-long journey, wowing the most respected media in the world as well as some of the richest, influential men in America to invest in Theranos.
The big claim was that their finger-prick blood test could determine more outcomes than ever before and need just 1/100th to 1/1000th of the blood currently needed. In reality at one stage they were using a competitors adapted machine behind closed doors and putting real people at risk that used their product.
The result? The game eventually ended and the one-time $9 billion valued company recently, finally, officially shut up shop.
The most comprehensive record of the saga is the book Bad Blood by journalist John Carreyrou. So much so that a Hollywood movie is currently in the works based largely on the book.
Founded in 2006 by Rishi Shah and Shradha Agarwal, this Chicago-based company did not have a product that would “change the world”, but it was popular.
Outcome integrated digital screens into Doctor’s offices across the country and sold ads and showed education for patients. They did not raise any outside investment until 2017 and went from first gear to fifth by attracting almost $500 million. With this came “unicorn” status, a valuation of over a billion dollars, $5.5 billion to be exact.
The party did not last long when later that same year it was revealed Outcome had lied about their performance to investors and advertisers. And anyone knows you do not lie to the world’s real leaders, Goldman Sachs and Google. Or do you promise huge returns to big pharma like Pfizer, only to see them not even come minutely close.
Lawsuits followed and after having to cough up huge sums to settle them, the future has been described as an “uphill battle” to regain trust and become a successful, commercial company - now that’s an understatement.
If any organisation was going to take on electronic or personal health records successfully, then one of the world’s top five technology companies would be a good bet.
10 years ago the vast majority of the world did not even know what cloud services were, let alone had control of their health records (we are STILL working on that). And Google were asking us to volunteer our most intimate and personal challenges.
Perhaps Google inhaled their own fumes too much for too long? Founded in 2008 it was wound up just three years later in 2011. Expect them to come back with vengeance very soon.
HealthSpot
In comparison to the rest of the developed world, Telehealth and telemedicine have been adopted in the US at reasonable levels for some time. HealthSpot took advantage of this and added a fairly rare twist.
Instead of focusing on providing a desktop-based program for Physicians to use or acting as a service provider with employed Doctors themselves, they built kiosks in public areas such as malls and pharmacies and patients.
Founded in 2010 and then absorbing almost $44 million of venture capital and debt financing up to January 2015, the service still only averaged 10 patients per day per kiosk. Add to the fact that a patient could not just turn-up to use it but instead had to pre-book and it really was not telemedicine on demand. With such low customer engagement it closed abruptly with truckloads of dollars going up in smoke.
CareSync
Despite planning to double its staff in late 2016, just 18 months later the company was kaput. After raising almost $30 million from private investors the reaction was one of shock.
CareSync was based out of Tampa, Florida, and targeted its services on Medicare (US) patients, assisting consumers and enterprise customers to manage their medical records. This included a subscription fee to keep personal medical records up to date but also free appointment planning and medication reminders.
Once the company ceased to trade insiders revealed spending was reckless and ferocious, not keeping up with customer subscription fees.
Aware of any big healthcare tech fails we missed? Or have a topic you would like Doctology to cover? Get in touch by email at terry@doctology.com.au today.
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