Silicon Valley, Coming Soon to a Clinic Near You

In recent years, healthcare startups have seen a significant increase in interest from investors and venture capital firms in Silicon Valley—and for good reason. Healthcare has long been an industry in need of disruptive innovation, occupied by corporate behemoths and subject to monopolistic activity. These industry practices have contributed to ballooning health costs for Americans, who have not experienced commensurate increases in quality of care or access.

In comparison to traditional tech startups, healthcare enterprises generally have a much more arduous path to market due to the entrenched positions of existing companies as well as the need to satisfy multiple stakeholders and regulatory bodies. Obtaining FDA clearance, in particular, is an extremely capital-intensive and time-consuming process. A 2010 study by Stanford researchers found that over 75% of the costs incurred when taking a medical device to market were related to satisfying regulatory hurdles through the PMA, or pre-market approval, process1. These impediments have been echoed by some of the largest figures in venture capital, including Marc Andreessen, who remarked in a 2015 Fortune interview that government regulation remained the largest hurdle to healthcare innovation2. While stringent regulation is certainly necessary to maintain a high standard of care for the patient or reliability for a provider, many view the clearance process as inefficient, bureaucratic, and even unpredictable1.

For startups that manage to survive this intense regulatory scrutiny, however, the payoffs can be immense, and Silicon Valley’s increased interest in such companies reflects an increasing awareness of this. Silicon Valley Bank’s 2016 Mid-Year Report showed that investment in medical startups increased approximately 40% from $7.5 billion in 2010 to $10.5 billion in 20153. The reasons for the increased interest in the sector are grounded in the size of the market opportunity—healthcare is undoubtedly a need for every individual and fitness has become commodified, as evidenced in the growth of the athleisure and fitness tracking industries. Moreover, chronic conditions including heart disease, obesity, cancer, and diabetes afflict nearly half of all Americans. Growing disenchantment with the current state of healthcare, too, is creating a greater willingness for patients to consider novel solutions and technologies. These conditions have created tremendous incentive for startups looking to make healthcare more accessible and affordable or to improve the entire spectrum of care—from diagnosis to treatment to follow-up4.

Indeed, virtually every dimension of healthcare faces an impending tsunami of innovation. From a macro provider standpoint, Big Data is being utilized to glean important healthcare metrics from hospitals and care centers nationwide to both improve procedures and optimize efficiency in healthcare institutions. At the endpoint of healthcare delivery, digital health has emerged as a nascent industry connecting patients with personalized clinical data on their mobile devices. Digital health services will increase accessibility to health information, potentially improving patient well-being and compliance with provider-prescribed regimens as well as increasing health literacy. The trend toward ever-increasing portability of medical devices also bodes well for continuous monitoring via remote sensors, allowing data to be sent to smartphones for instant access.

Evidently, a significant portion of innovation in healthcare has arisen from the use of smartphones as a platform to purvey health data in a two-way manner between patient and provider, or simply for home use. As the greater technology market shifts toward wearables and virtual reality, a commensurate movement will also be observed in startups that uncover novel ways to utilize these technologies in a healthcare context. As such, it could be argued that many of the most visible changes in healthcare will indirectly come from technology companies. Apple recently released the ResearchKit and CareKit software frameworks to cater to medical researchers and entrepreneurs. ResearchKit, a tool that “lets medical researchers gather meaningful and robust data”, and CareKit, an app module which “lets you better understand and manage your medical conditions”, point toward the impending blurring of the lines between patient and consumer. Apple will undoubtedly continue its attempts to break into the consumer healthcare industry, though it is certainly not the only tech firm doing so. In July 2016 Fitbit announced it was partnering with research platform Fitabase to integrate personal healthcare data, likely from future iterations of the Fitbit, into healthcare systems5. Philips has also encouraged consumers to “imagine a future where individuals are enabled to measure multiple vital signs and educated to understand how lifestyle choices affect their body and their health” through its Healthsuite app, which connects to the company’s own smart watch, blood pressure monitor, thermometer, and scale6.

Translating this consumerist mentality to healthcare can be advantageous in that it brings an aggressive innovation mindset to the industry, but there remain snags—some ingrained within Silicon Valley’s culture—that firms must solve to find success. Crucially, these companies must ensure that they treat their users with greater regard for their privacy than many social media and tech companies have thus far. Many tech-turned-healthcare companies have come to realize that healthcare differs from traditional technology products in a critical aspect—trust. The public remains wary of engaging with services which may jeopardize their private health information or their well-being to advertisers, and rightfully so. In the name of population health and disease management, the patient becomes commodified. Often, when an online service is free, the customer is the true product.

It is still far too early to tell if the benefits of the integration of consumer technologies into healthcare outweigh the potential negatives, but it will be inevitable over the long term. Perhaps even more important, however, will be the need to continually update and improve healthcare regulatory bodies and legislation to keep up with innovation as well as de-risk the path to market to encourage new entrants, and consequently, novel technologies. Public discourse on the topic must be promoted and all parties involved in this evolution must place patient well-being and privacy at the forefront of their priorities, whether they are an electronic health records startup employing thirteen, a personalized healthcare firm of three hundred, or a health insurance company of five thousand.


1“Medical Device Makers Spend Millions to Meet FDA Rules.” MedCity News. Breaking Media, Inc., 30 Mar 2017. Web. 25 June 2017.

2Primack, Dan. “Brainstorming with Marc Andreessen.” Time Inc. 10 Apr. 2015. Web. 25 June 2017.

3Norris, Jonathan; Schuber, Paul. Healthcare Investments and Exits Mid-Year 2016 Report. Santa Clara: Silicon Valley Bank, 2016. Web. 6 Jun 2016.

4Durfee, William K., Iaizzo; Paul A. Medical Device Innovation Handbook. Minneapolis: University of Minnesota, 2016. Web. 6 Jun 2016.

5Comstock, Jonah. “Consumer Health Tech Companies Are Moving Increasingly into Healthcare.” MobiHealthNews. HIMSS Media, 18 Aug. 2016. Web. 10 July 2017.

6Comstock, Jonah. “Philips Announces Suite of Connected Health Devices.”MobiHealthNews. HIMSS Media, 08 Sept. 2015. Web. 10 July 2017.


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