What's missing from HBR's healthcare Gold Rush metaphor?

By Jonah Comstock

JONAH_COMSTOCK_HEADSHOTA recent column in the Harvard Business Review says that two kinds of business strategies will dominate in the gold rush-like healthcare economy of the future: Goldminers and Bartenders.

"The Goldminer strategy will typically involve vertically integrated players (large institutions like insurers, hospitals, and physicians’ groups) creating medical value by better managing the health of the heaviest users of healthcare: the 30 percent of patients with complex conditions that comprise 75 percent to 80 percent of all medical spending," authors Sundar Subramanian, Carl Dumont, Christoph Dankert wrote.

"...The Bartender strategy represents a much more dramatic transformation. In this approach, new entrant companies (often players from outside healthcare—retail, software, electronics, and apparel) focus on empowering and creating a better experience for consumers by providing detailed, personalized health information and advice."

The article contends that the Bartender approach is going to be more lucrative than the Goldminer approach because it's more fundamentally disruptive -- Goldminers are providers using new tools to do what they've always done, whereas Bartenders are disruptors fundamentally re-envisioning healthcare.

"[Bartenders] will fundamentally restructure the flow of money in healthcare — and create enormous medical value in the process," they write. "A forthcoming Strategy& study of profit pools in the future US healthcare value chain found that applying the Bartender model could reduce healthcare spending by $400 billion a year by 2025. That is nearly three times the reduction we saw in a scenario in which Goldminers dominated."

The point, in general, is a good one, but it oversimplifies the emerging digital health market and fudges some of the details. For instance, many of the examples HBR uses of Bartenders -- including WellDoc's BlueStar and Sentrian --  aren't cut off from the medical establishment at all but are prescription services offered exclusively through providers or payers, respectively. WellDoc spent many years to progress its BlueStar digital diabetes management offering through the various regulatory and payment hurdles that pharmaceutical products go through. It shares plenty of the characteristics ascribed to Bartenders, but it's also taking advantage of the established protocols of prescription medicine.

Correction: An earlier version of this article incorrectly stated Sentrian's customers were providers instead of payors.

AliveCor might be closer to the mark of a Bartender: as the company adds more and more FDA-cleared algorithms that can diagnose things like atrial fibrillation without the need for a cardiologist, and finds itself on more retail store shelves through its Omron partnership, it's coming into its own as a Bartender. But it's important to remember that the technology began its life as a prescription-only offering that sent its ECG readings to a real, live, human cardiologist for interpretation, and still functions that way for many of its users.

The distinction is blurrier than HBR makes it out to be. One way or another, most of HBR's bartenders are still making tools used by providers to manage populations -- the supposed domain of the Goldminers. Part of this is a result of regulatory necessity. Direct-to-consumer products that drive meaningful health outcomes without involving doctors are a tricky proposition to get through the FDA. Assuming you can convince providers of your digital health offering's value (admittedly a challenge in and of itself), working with providers is a much safer, easier road for a startup, and it's still the most straightforward way to get effective health technology into the hands of patients.

New technologies will change the doctor-patient relationship, and put more power in the hands of the patient. The Harvard Business Review is right about that. Hopefully they'll even cut out some of the unnecessary aspects of a doctor's workload; conditions that can easily be treated with over-the-counter medications, or chronic condition management that can be facilitated with an app or self-tracking tools. But new technologies won't cut the doctor out completely, and even Dr. Eric Topol (whom HBR quoted in their piece) says that.

"We have doctorless patients for a lot of the diagnostics coming, for a lot of the remote monitoring coming," Topol said in a keynote last week. "But we need doctors more than ever for the treatment, the oversight of that data, the guidance, the expertise, and the wisdom."

But maybe the biggest omission the article makes is a whole class of companies that stand to make more money than the Goldminers or the Bartenders. The usual metaphor one hears with regards to gold mining compares the miners not to bartenders but to pickaxe sellers -- the folks who travelled west and set up shop selling miners the necessary tools of their trade, and often made more money doing that than digging for gold.

Digital health has no shortage of pickaxe sellers right now -- companies like Validic that create the HIPAA-compliant backend data pipes that connect new health sensors to EHRs and analytics platforms, companies like IBM Watson that provide a computing engine for hire that tackles different big data problems in healthcare, or companies like PatientsLikeMe that sell large data sets full of patient-generated insights to pharma companies, healthcare providers, or anyone else with an interest.

New, big ideas in healthcare require whole new infrastructures and technical capabilities, so in addition to Goldminers and Bartenders, the emerging digital health Gold Rush needs Pickaxes, too.