Venture capital is adapting itself to the new startup landscape
Henry Doss, Contributor
“That we must all die, we always knew; I wish I had remembered it sooner.” – Samuel Johnson: Letter to Joshua Reynolds
This interview is the third in a series with Dr. Brad Stuart, a physician and leader in advanced care innovation. In the first interview – here – we discussed the current state of health care in the U. S. and how we might approach innovation in the overall health care system. In the second – here – we discussed the critical role that accountable care can play in driving innovation in delivery, payment and quality. In this third installment, we are talking about the outsized role that advanced care plays today from both a cost and patient experience perspective, and how we might change our approach to advanced care.
Henry: You have frequently talked about advanced care as the most important area of health care for the future. Why is that?
Dr. Stuart: Well, let’s start by defining “advanced care.” When we talk about advanced care we are talking about people with one or more chronic diagnoses, who are resistant to treatment and who are experiencing declining function and poor prospects for recovery. People with these kinds of illness are entering a gray zone between treatable and terminal illness. I think we are called to do two things in this world: We absolutely must create a more compassionate and effective approach to delivering care to those who are in this stage of life, and we must begin to understand and better manage the cost of advanced care.
Henry: That makes sense, of course. But how do you manage to talk about “costs” when you are dealing with human suffering and personal tragedy? Doesn’t that come across as being a little cold-hearted?
Dr. Stuart: You are exactly right. The advanced care conversation is a difficult one. Think about this: Advanced illness is not a sexy conversation topic. The quickest way for me to clear the room at a party is to tell people what I do for work. Advanced illness is fraught with emotional baggage. It’s very hard for people to talk about. But, ironically, it’s this very difficulty that makes it prime territory for innovation.
Henry: Before we talk about innovation, talk a little about just how big this advanced care challenge is.
Dr. Stuart: It’s probably bigger than you think, both in terms of human impact and in terms of cost. Let me just hit the high points. Over 25.0 percent of the entire Medicare budget is spent in the last year of patients’ lives. Over 30.0% of this is concentrated in the last month prior to death, and 80.0% of that is in the hospital. In the Medicare population, 5.0% of all beneficiaries account for half of the costs. And a very large portion of this 5.0% is made up of people with advanced illness who are cycling in and out of the hospital. So, in the world of advanced care, we have a substantial increase in expenditures, an increasing burden on Medicare, and a less-than-ideal patient experience. That seems to be an obvious place to start making dramatic changes.
Henry: OK, now I think we’re ready to start talking about innovation! What kind of changes do you see coming in advanced care, and how are those changes going to affect patients?
Dr. Stuart: Let me start where we should all start. We should understand that in advanced care, we are talking about helping people, not patients, get the most out of every minute of life, to support the incredible human capacity to adapt to even the hardest things, to take advantage of the American desire for autonomy. Advanced illness places terrible burdens on people afflicted with it. But even the frailest, sickest senior in a bare-bones slum apartment is not thinking of herself as “sick” or “dying”; she is thinking about living. Our job in advanced care is to support her living needs, at home and in her community.
Henry: OK. That sounds great and right and good. But how do we do this and at the same time begin to deal with a cost model that is spiraling out of control? Can we afford these idealistic goals?
Dr. Stuart: This is the great part about innovations in advanced care. We can both improve the patient’s experience and begin to reduce costs significantly, at the same time. And all that’s really required is a change in perspective, a paradigm shift. There are just a few conceptual barriers between us and significant innovation, and those barriers are all in how we think about advanced care, not what we do in advanced care.
Henry: There’s that paradigm shift thing again. So, you believe that we just need to change how we think about advanced care in order to drive the changes we need?
Dr. Stuart: Very much so. Let’s start with the first barrier. The real problems in advanced illness aren’t medical; they are problems with life. For example, research shows that 75.0% of heart failure readmissions are due to non-medical factors. People lose their prescriptions or can’t afford to get them filled. Others have no idea they should cut back on their salt intake or they’ll get overloaded with fluid. Still others have no one to help them manage their affairs. When their heart failure gets worse and they lose their breath at 4 AM, there’s nowhere to go but back to the ER, and hospital admission follows. An effective, innovative advanced care approach can avoid that by anticipating problems, providing support, and bringing medical treatment to people where they live. Obviously, it’s better for everyone if that crisis never happens.
Henry: This sounds to me like we are talking about the hospital as the problem, that instead of hospitals, we should have more home-based care.
Dr. Stuart: Yes, but let’s be very clear here. It’s not the hospital that’s the problem; the problem is people with chronic or advanced illness going there when they really don’t need to and don’t really want to. It’s going to the hospital at a stage of life when that is precisely the thing you should not be doing.
Henry: But still, everyone does go to the hospital. Why is that and what could we do about it?
Dr. Stuart: The problem here is simple. Many of our clinical and business models in health care are just upside down and the way we deal with advanced illness is more so than many other areas. Let’s look at repeat admissions to the hospital for advanced illness. Surveys show consistently that over 80.0% of seriously ill people would rather be at home near the end of life, not in the hospital. So, a big part of dealing with advanced illness in a more cost-effective and compassionate way is developing models that deliver at-home care, and that help those with chronic illnesses stay out of the hospital and out of recurring treatment cycles. Doing this can have a major impact on the quality and cost of care for the whole population: Quality, because these people want and need support where they live, so programs that supply this support automatically increase their well-being and quality of life. Cost, because our data show that the great majority of people with advanced illness will decide not to go back to the hospital if they are given the means to avoid it. On top of that, there are a couple of bonuses. First, Medicare saves a lot of dollars. Second, ill people have free choice.
Henry: So, we save money, the ill person’s well-being and quality of life is preserved and the choice becomes the individual’s – so no “death panels!” With that in mind, any closing thoughts on advanced care?
Dr. Stuart: Just this. We do not ever have to sacrifice quality of care in service to reducing costs. I strongly believe that real innovation in healthcare delivers a better experience at lower cost — both at the same time. In the end, I think we will find innovation and improvement in the simple notion that healthcare is something that is person to person, human to human, not just a professional fighting disease. I think we have lost that to some degree in modern healthcare, and we need to get it back.
Dr. Brad Stuart is one of those practitioners on the cutting edge of reform. He has more than thirty five years of experience in internal medicine, palliative care and hospice, and is a nationally recognized innovator in healthcare. He has devoted a lifetime of work to improving clinical and economic outcomes in medicine, by focusing on “dignity, choice and responsibility.” He is co-founder and CEO of ACIStrategies. He will be sharing his thoughts on healthcare issues at the upcoming Global Innovation Summit in San Jose, California.
We’re proud to announce a growing list of sponsors for Global Innovation Summit + Week! Microsoft’s Bing is sponsoring “design labs” for prototyping solutions to the hardest global systemic challenges. Our newest sponsor is the United Nations Foundation, which seeks to foster global entrepreneurship. Additional sponsors include the City of San Jose, USAID, e-Estonia, Kauffman Fellows Program, DLA Piper, SVForum, BayBio, Licensing Executives Society (Silicon Valley), and many others.
We are welcoming the world! Attending corporations include General Electric, Oracle, Disney,Mitsubishi, Daimler, Microsoft, Honda, AlcatelLucent, Intuit, SingTel, Qualcomm, Accenture,Swisscom, Telecom Italia, and many others. International executives, entrepreneurs, and policymakers are coming from Nigeria, Colombia, Belgium, Brazil, Estonia, Egypt, Chile, France, Italy, Sweden, Dominican Republic, Peru, Mexico, Malaysia, Saudi Arabia, South Africa, New York, Washington, and more.
THE BIG PICTURE
Why We Start Up Startups
Victor Hwang, CEO of T2 Venture Creation, from Forbes
On the surface, entrepreneurs seem motivated by a desire for money, excitement, purpose or freedom. But there are more profound instincts at work that drive innovation — ones that rely on the same cooperative ability of humans beings that has enabled us to thrive as a species on planet earth. Read more here.
U. S. Healthcare Innovation Demands A Paradigm Shift
Henry Doss, Chief Strategy Officer of T2 Venture Creation, from Forbes
An interview with healthcare advocate Brad Stuart, who takes on the assembly-line approach to medical care that has stifled innovative management models and is ill-fitted to address the rise in chronic diseases. Read more here.
Is the Age of Efficiency over?
When it comes to solving the world’s problems, innovators must shift the focus from efficiency to effectiveness. Read more here.
Moral Obligation in Business Law
The Houston Chronicle
A company’s primary obligation is to maximize profits, right? T2 Venture Creation’s Victor Hwang takes on conventional wisdom, demonstrating the importance of morality in the age of innovation. Read more here.
All Together Now: What Entrepreneurial Ecosystems Need to Flourish
A ‘World Startup Report’ finds similar qualities of trust and social capital among dozens of far-flung innovation ecosystems. Read more here.
THE LATEST NEWS
Washington Area Pops onto Tech Radar as Alternative to Silicon Valley
The Washington Post
The nation’s capital has a lot to offer startups, including predictable workdays, a growing mass of young companies eager to form partnerships, and plenty of raw engineering talent. Read more here.
A Berlin-based e-commerce “clone factory” called Rocket Internet is putting the power of imitation to work in 50 countries around the world. Read more here.
Africa’s Innovative Spirit: Taking on the World
GE’s ‘Innovation Barometer,’ which surveys senior executives around the world, reveals disparate innovation trends among African nations. Read more here.
Study Supports View that Canada Is an Innovation Laggard
The Wall Street Journal
Lack of government support, R&D investment, and risk-taking hurts Canada’s startups. Read more here.
By Gideon Long, BBC, Santiago
From Venezuela’s oil, to copper from Chile, Argentinean soybeans, bananas from Ecuador, Mexican silver, and timber from Brazil – the vast region is blessed with a fabulous array of commodities the world wants and needs.
But Latin America has been less good at exporting ideas. When it comes to entrepreneurship and innovation, the region has a poor record.
While the countries of the Organisation for Economic Co-operation and Development (OECD) spend an average of 2.4% of their gross domestic product (GDP) on research and development, in Chile and Mexico – the only two Latin American members of the club – the figure is 0.4%. In other countries of the region it’s even less.
But this is all starting to change.
“Until recently, entrepreneurship in Peru was a question of survival,” says Gary Urteaga, a Peruvian entrepreneur. “People started their own businesses because they couldn’t get a job. They’d sell sandwiches in the streets and wash cars.
“But now, for the first time, people are choosing to be entrepreneurs. Read more here:
Victor W. Hwang, Contributor
My mission: to design ecosystems that nurture innovators & dreamers
Pause for a moment. And ask yourself some simple questions you probably don’t think about every day. Why do we build companies? Why do we innovate? Why do we care about creating new inventions, products, and solutions, when we could simply leave things as they are?
These are questions that I think a lot about. On the surface, the answers might seem deceptively easy. For instance, some people want to make money. Others like the thrill of the hunt, like a form of legalized gambling. And others like the independence, the freedom.
But those answers seem incomplete to me. If you’re an entrepreneur, you already know there’s more. There are much easier ways to make money. There are much easier ways to get a thrill. And there are much easier ways to feel independent. Therefore, we innovate and build companies for reasons that are deeper.
I am lucky to see a lot of the world through my work. In particular, I get to observe a lot of entrepreneurial ecosystems. It’s not just an academic pursuit. I think this issue matters a lot. In most parts of the world, they don’t build new companies fast enough, so unemployment often metastasizes like a cancer. They don’t innovate fast enough, so standards of living creep slowly downward. What I’ve discovered is that the underlying essence of innovation has a universal quality. This is true whether you’re building a startup in Silicon Valley or running a family business in a Latin mercado, Asian alleyway, or Main Street in America.
Here’s what I’ve concluded. The desire to build ventures, devise solutions, and bring ideas to life is core to the human condition. Underneath it all, wecreate because we care about things. We build because we believe in what is possible. We innovate because we are inspired by others around us. When entrepreneurship and innovation don’t thrive, after you strip away everything on the surface, it’s always because people somewhere, for some reason, have stopped caring, stopped believing, or stopped being inspired. I’ve observed this phenomenon everywhere. It’s always the same.
Theologian Reinhold Niebuhr once said: “Nothing that is worth doing can be achieved in our lifetime; therefore we must be saved by hope.” He might also have said that nothing worth doing can be achieved by a lone individual; therefore we must create together in teams. That’s what startup companies are. They’re just human beings working together to do meaningful things. Building innovative teams is the only way to solve the problems that really matter.
When we talk about innovation ecosystems, therefore, we simply mean environments where it’s easier to build the needed relationships to achieve common aspirations. Ecosystems are powered by cultural norms that accelerate the human dynamic of bonding and building together, namely diversity, connectivity, trust among strangers, willingness to experiment, and a pay-it-forward mindset. If you think about it, this is actually quite profound. It means that soft things create hard economic value. It’s a new paradigm for our economic lives. And it provides a new model to govern our societies, manage our companies, and create communities together.
Why do I write these things? Because the new paradigm is right under our noses, but is still largely invisible. What’s missing is a way for the builders of ecosystems to convene together, share lessons learned, and create practical methods to design ecosystems more effectively. To make the invisible visible. That’s the reason we started the Global Innovation Summit. (Brad Feld’s been a fantastic supporter and advisor.) The event is a celebration of the spirit that gives rise to vibrant entrepreneurial ecosystems. It’s a place for the builders of ecosystems to get together in person, connect with each other, and create a new set of tools, frameworks, and case studies together. Last year, we had 49 countries participate. The next Summit happens on February 17-19 in Silicon Valley. I financed the whole thing last year on my personal credit card, and it’s not been easy, to be honest. But it has to happen. I hope you can participate.
If you’re not into conferences, we also feature lots of free or low-cost activities. We call it Global Innovation Week, and it runs February 17-21. A group of organizations are hosting over 20 events throughout the region related to ecosystem building. There’s also an “indoor street festival” on theArt of Innovation, featuring over 30 creative artists and performers, sponsored by the City of San Jose as its official welcome to the world.
I hope you can join us for this celebration of the ecosystems that drive entrepreneurship and innovation. Ultimately, we start up startups because it is what human beings do. Entrepreneurs and innovators in the trenches already know certain truths intuitively, deep down inside. Handshakes are more durable than contracts. Altruism is more efficient than selfishness. And silly things like trust and dreams and love… they actually do power the world.
Victor W. Hwang is a venture capitalist and entrepreneur in Silicon Valley. He is Executive Director of Global Innovation Summit + Week (February 17-21, 2014), an event focused on catalyzing systemic innovation across companies, communities, and countries.
Henry Doss, Contributor
Sit down before fact as a little child, be prepared to give up every conceived notion, follow humbly wherever and whatever abysses nature leads you, or you will learn nothing. – Thomas Huxley
I have been talking with Dr. Brad Stuart on the topic of innovation in healthcare. This is the third installment in that series. Our topic in this conversation is “accountable care” and the implications this movement has for cost control, for quality of care, and for fostering innovation. In the first part of this series,here, I set up the health care issue as one that is as much about paradigms and conversations as it is about medicine. In the second, here, I talked with Dr. Stuart about what he sees as some of the more critical high-level challenges in health care and his views about what we as a country should focus on as we continue our work to improve health care delivery.
Henry Doss: Let’s start at the beginning. Just what is “accountable care”?
Dr. Brad Stuart: At it’s very simplest, accountable care is bringing all of the parts of a health system into one carefully integrated delivery process, focused on outcomes, not treatments. And even though that sounds so very simple in the saying, it is really revolutionary in medicine. In fact, I believe very strongly that the change to the accountable care business model will be the biggest large-scale health system innovation in the United States since Medicare was created in 1964. And it will drive some remarkable innovations.
Doss: It does sound pretty simple, and long overdue. And, in fact, kind of obvious in a way. What exactly is so revolutionary and innovative about this change?
Dr. Stuart: Our clinical and business models in health care are upside down and there is a growing sense that we need to change things — quickly and significantly. As a consquence, all of healthcare in the U. S. is undergoing a revolutionary paradigm shift, on a number of fronts. Accountable care strikes at a foundational, fundamental flaw in how we view medicine. The way we deliver health care today is really a 19th century model, grounded in assembly line mentalities and piece work payment systems. In a very real sense, we are not paid or evaluated on the basis of patient outcomes, but on how well we deliver bits and pieces of the health care model. Think about it like this: It doesn’t matter whether a patient lives or dies, gets better or worse, is helped or not: As long as a test or a procedure is done, a payment follows. So, naturally, we tend to focus on doing the “pieces” well, but not paying a lot of attention to the whole human being.
Doss: All of this sounds a little insensitive to the patient. Do you see health care as essentially not operating in the best interests of patients?
Dr. Stuart: Absolutely not. In fact, I strongly believe that the vast majority of health care practitioners, as well as all the great people involved in the business of delivering medical care, are conscientious, highly motivated, caring people. The challenge is the delivery system, the business model, not the individuals operating inside that business model. That’s why I think we need to focus on changing the business model more than anything else. I think the medical community and the patient will be better served in this new model. And I think both will find it liberating.
Doss: What has to happen, structurally, for accountable care to have this kind of impact?
Dr. Stuart: Again, this may sound a little oversimplified, but it’s really just a matter of changing your point of view. In the accountable care model, we will move from paying for volume to paying for value. Doctors will have to stop doing whatever procedures and tests they can think of, billing for them, and getting paid whatever they charge. Instead, they will be accountable for the health and well-being, as well as the healthcare costs, of the population they serve. Healthcare will no longer be about seeing one patient at a time and forgetting about the rest. Providers will have to think about their community. They will no longer get paid by the piece. And if we change our outcomes from volume to value, from piecemeal to holistic, I’m convinced we will see revolutionary innovations in how we deliver care.
Doss: It sounds to me like the critical piece of this change involves shared risk.
Dr. Stuart: Yes, it does. Remember, outside of accountable care, almost all the financial risk is held by the health insurance companies, Medicare and Medicaid. They pay all the claims submitted by hospitals, doctors and everyone else who touches the patient. This hides the real costs from patients, who feel they’re entitled to all the treatment they want in return for their health insurance premium. Still, patients and families wind up paying for things that aren’t covered by insurance, which in turn causes about 60 percent of all bankruptcies in the US. But, in the accountable care model, patient and provider (and patients and communities) agree to operate in a shared-risk model. And the bottom line is that the further the system moves in the direction of risk sharing, the more important savings will become, and the more providers will invest in and support innovation.
Doss: How is it that structural changes in the health care business model will drive innovation?
Dr. Stuart: Well, for one thing, a business model change of this magnitude is highly disruptive. It will force the health care community to realize that the way forward is very likely just the opposite of what they’re doing now. This creates huge opportunities for innovation in healthcare. It will force us to do a complete 180 degree turn in our thinking about some of the most basic things in health care. I’m pretty sure that a great deal of innovation will come from that level of disruption and volatiity.
Doss: Can you give me an example of something that might be innovative coming out of this paradigm shift?
Dr. Stuart: Let me give you an example of something that needs to be disrupted in this shift. In my view, thinking about people as patients is a loser. “Patient-centered care” has become a mantra of health care reform. It sounds like a great idea, but it’s got a fatal flaw. Whenever I hear reformers and planners talking about “patient-centered care” I know they’re not talking about patients at all. They’re really talking about providers. They’re talking about things like how to design a new medical office building so patients will have a nice experience when they come in to see their doctors. But the conversation is really about the office building. It’s not about people and their real-world needs. If we are deploying accountable care thinking, this fundamentally flawed paradigm is going to be disrupted — to good ends, I think.
Doss: Next week we are going to talk about your area of professional interest, advanced care. How does the challenge of accountable care relate to the challenge of innovative delivery of advanced care?
Dr. Stuart: Again, it’s about changing the way you think about delivery. To provide accountable care and live to tell the story, doctors and hospitals have to radically change their approach. Providers are used to sitting still and waiting for patients to bring clinical problems to them to solve. We are passive. So as people with chronic illness get sicker, they have no choice but to call 911 and show up at the hospital. This is the costliest possible way to treat patients, and the closer people get to death, the more this “care” looks like cruel and unusual punishment. The accountable care model will help us to fundamentally rethink and re-engineer the way we deliver all of medicine. But I think the biggest potential impact is in how we deliver advanced care.
Next week Dr. Stuart will be talking about innovation in his field of advanced care. Dr. Stuart has more than thirty five years of experience in internal medicine, palliative care and hospice, and is a nationally recognized innovator in healthcare. He is co-founder and CEO of ACIStrategies.
When first starting out, most entrepreneurs are so obsessed with perfecting their product or service, they don’t have much time to think about company culture. Big mistake. Many founders don’t realize the importance of a shared vision or values until much further down the line — sometimes when it is too late.
As an entrepreneur, it is important to instill values and ideals earlier in the game, so as your business grows, these ingrained standards stay with the company.
Here is how to begin to develop a positive culture right off the bat.
The leader’s role in growing culture.
Founders make decisions based on their values but these ideals may not always be apparent. Once you’ve established core values, you need to communicate what’s most important to you and keep everyone on the same page. Talk about the culture consistently so people know you are committed to living those ideals.
As your company grows, don’t make the mistake of assuming your culture will naturally spread with it. Eventually, your culture will need to shift from something you actively teach and enforce to something your whole team takes part in.
Here are a few tips on creating a collaborative atmosphere:
Be vulnerable. Don’t act like you have all the answers.
Determine your values as a group. Talk to your first few hires and give them input on your values as a company. These people are going to make a huge impact in shaping the future direction of your company.
Identify culture champions. These are team members who embody the company’s values and are enthusiastic about spreading your mission. Empower them to keep the culture alive from within your company.
Institutionalize the culture. Put systems in place to make sure your culture is scalable and can grow with the employee count. In your hiring process, strive to give multiple people an opportunity to provide input on whether or not a candidate is the right fit.
Keep traditions. Don’t take away things that matter most to employees, including rewards, professional development and quirky social events. Read more: http://www.entrepreneur.com/article/230907#ixzz2qxkWY6Vq