One of the first figures in healthcare technology is making a comeback.
In 1997, Jonathan Bush founded a women’s health and maternity care clinic called Athena Women’s Health, but changed hands less than two years later to build practice management and billing tools for physicians like Athenahealth. Over the next 20 years, Athenahealth became a major provider of electronic health records and medical billing technology with more than 100,000 providers using the company’s tools by the time Bush stepped down in 2018 amid a lengthy takeover bid from Elliott Capital Management, the hedge fund. run by activist investor Paul Singer.
After three years out of the game after being “completely canceled” as he puts it (at the time of his expulsion from Athenahealth, reports were circulating about his treatment of female employees And his ex-wife), Bush returned to the healthtech game late last year and founded Sister Health, which aims to create a shared health data platform designed to be used by the growing number of digital health companies. Last year Zus brought a Series A round of $34 million of funding led by Andreessen Horowitz to build out his vision. Bush spoke to londonbusinessblog.com about the shift taking place in healthcare that he hopes to capitalize on, how healthtech’s founders can succeed as VC finance contracts, and what he thinks about Amazon’s acquisition of OneMedical.
What do you see as a shift in healthcare? How are digital companies challenging established health systems and what are the opportunities there?
[With] traditional caregivers, their care is connected to their geography and their referral patterns are connected to other people in their environment. The hospital itself can only serve the people who can drive there. They are in a local battle for a deep, vertical monopoly.
With the pandemic and the continued evolution of the idea of shared software tools like Twilio or Stripe, there are also thousands of companies born and raised during the pandemic to use our new adoption of digital-first [experiences] to do much of the care better. Not by playing a vertical monopoly game, but instead saying, “I’m going to take one scary thing — anxiety, prediabetes — and crush it nationally.”
These new companies don’t care about vertical monopoly. They have no plans to even have an exam room, let alone a lab, pharmacy, operating room, imaging center. This new class of businesses, combined with a new class of tools and adoption of digital-first [healthcare] so good, maybe better, made a window – and that got me back to work.
What does Zus Health want to help these digital health companies with?
Every PowerPoint slide in every conference at every academic medical center in the history of time since PowerPoint was invented asks, “Why don’t we have a common health record, or at least why don’t we have interoperability?”
[Part of it is that] medical records are designed for the primary use of defending payment. It’s actually not what you would write or ask to treat someone optimally. You could scroll around and find some useful shit and use your intuition to put the rest together, but it’s really built as a data backup to get a claim paid, so there’s a lot of frustration.
When a patient arrives somewhere, 90% of what happens is about shit that’s already happened elsewhere – just mapping out tons that need to be done before anyone can offer you anything, and all that shit is blown up. Duplicating is expensive.
The old health care providers don’t want to know about the other stuff, and they wouldn’t mind duplicating it because they probably have their own pharmacy, imaging center, or lab. Those guys want [expand their scope and keep that patient pool], so they really don’t want to share data with anyone else. They really don’t give a shit what goes on far away from them.
[But now there is] this new class of companies that on their most selfish day like to share data because they don’t make money from it; they can’t win by controlling your referral patterns beyond what they target. They bring the most important thing you need to take up that tired old PowerPoint slide, which is a business case. By being very focused they would have a better product if they knew what else is going on [with a patient] without having to pick it up yourself.
It turns out they all need about the same thing [tool kit]-you need a CRM stack, and it must be HIPAA compliant, and it must be secure, and you must be able to attach documents. These companies spent the most expensive capital they’ll ever muster — that first round — to build it.
Zus says to these companies, you’re not going to win by getting the basic patient data—everyone needs that—and you’re not going to win by doing patient relationship management. I’ll get you all that shit cheap and good – all API first, so no one behind the scenes will know it’s Zus.
The Sister dream is not to be a star. It goes from a waterboy to a powerful waterman. And that’s where that ends. We just want to be the driving force behind a thousand great companies, and if we can make that sexy, a lot of sexy things will happen upstream from us.
Among those newer companies you’re talking about building new models is One Medical, which does primary care in a different way. What do you think of Amazon acquiring One Medical?
As traditional healthcare adopts an ever deeper vertical monopoly, increasingly at odds with consumer interests, and as medicine itself becomes increasingly subspecialized, the need for a hyper-intelligent (always-on) layer that meets only hospital is mandatory, finally comes into its own.
The outdated practices of most health systems lack the technology or other sophisticated information management needed to be readily available when questions and concerns arise. Yet most early digital health solutions lack a deep understanding of the patient. Amazon/One Medical includes both. The problem they will face is consumer alignment. While Amazon has been able to keep its true North Star increasingly “closer to the customer”, One Medical has had to seek payment from one hospital provider over another. This channel that conflicts with consumer interests will be very difficult to smooth out as the market heats up.
You’re no stranger to healthtech, but now you’re a founder again at an interesting time – VC investment in digital health is declining. How did you approach building Zus in this environment and what advice do you have for other founders?
Start with general tools – don’t reinvent the wheel. Rent the wheels and then build something unique on them. When capital was plentiful and there was no restriction, you could be as sloppy as you like and still look good as long as you got customer growth and some sort of clinical results that experts agreed were real. Not true anymore.
You have to show long-term value, and if you’re wasting a lot of money on shit that isn’t unique, you can’t show it. Quickly get to the thing that no one else has and spend all your R&D, design and product time on that and hire everything else, at least until you reach breakeven or some sort of operational stability. That might be obvious advice, but during this last orgy of almost free capital, people forgot, and a lot of young people started businesses without ever knowing that was a thing, and they’re about to have a huge bucket of water. on their mind to explain it to them.
I’ve seen in a very short time how this digital health space goes from a world where people don’t even know what VC is, to people who think VC is a human right. It probably won’t go back to zero — “I’m sorry, son, but venture capital isn’t really for healthcare” — but something like “venture capital isn’t really for companies that don’t plan on making money one day.”
Financing is one hurdle for new businesses, talent is another. How is it different now to get top talent in healthtech than when you started?
When I started with Athena, there was really a renaissance of people discovering that the Internet could do more than college blogs and jerky porn, and all of a sudden there were all these possibilities, but nobody thinks about healthcare. [We asked ourselves,] what should you do to trick brilliant young people into actually using their skills and putting them into healthcare? A big part of building Athena was that arbitration — getting some extraordinary people who otherwise wouldn’t have been found in healthcare.
Just like we were trying to attract young, smart people into healthcare technology in the late 90s, 2000s, now there’s a whole bunch of people who are kind of existentially restless while they’re at work. [tech job]. It doesn’t feel right to make the algo better this month, but historically, if you go into health care, you’re going backwards. Now we hope we can say it’s not dirty what you’re working on, and the tools here are just as cool, the scale is just as grand.