Healthcare Innovation: Separating Hype from Reality
A U.S. federal jury on Jan. 3 2022 found Elizabeth Holmes, founder of the now-defunct blood-testing startup, Theranos, guilty of four counts of fraud and conspiracy related to investors. Theranos was once the darling of the tech-VC innovation world, being hailed as a revolutionary diagnostic technology in healthcare. Marc Andreessen was well known for comparing her to Steve Jobs and blocking critics of Theranos on Twitter. Ground-breaking reporting by John Carreyrou for the Wall Street Journal put a pin to the ballooning hype and Theranos went from being valued at $ 9 billion in 2014 to being liquidated by Sep 2018. A bestseller book, a movie, a documentary, several podcasts and tons of news/media publications have tried analysing what went behind the scenes. While there are several aspects to the Theranos saga, the one angle that stands out is the culture of hype that has been an unfortunate feature of innovation, especially in healthcare.
What is hype? why does it happen? are there any easy ways to identify hype and perhaps more importantly how can we mitigate/resist hype? Here’s my attempt to answer these questions.
Why is healthcare innovation prone to hype?
While there is an overall trend of overhype in technology innovation, I find healthcare innovation, and more specifically digital health, to be more prone to hype. Here are some features of digital health innovation that contribute to the hype culture-
- Changing needs and emerging trends: Several aspects of healthcare products, services and delivery have remained unchanged over several years. Incumbent organization have taken advantage of this inertia to not invest in healthcare and/or keep the entry bar quite high. Several newer trends in health and wellness have emerged including changing demography, emergence of new diseases, changing nature and demand of existing diseases and finally the increasing pressure on healthcare expenditure have all led to healthcare being considered as a field ripe for disruption.
- Complexity and specialisation: Healthcare products and services, by nature, are complex and demand multi-disciplinary expertise. Even experts in the field may not grasp the mid- and long term effects of a new innovative idea. This can lead to overtly positive expectations from a breakthrough that is ill-understood.
- Nature of innovation and intellectual property: Several aspects of emerging innovations are typically protected by intellectual property rights and many times start-ups and innovators use this to hide the lack of real substance and proof of effect.
- Measuring outcomes and surrogates: Due to the nature of diseases and their life-cycles, it can take years and sometimes decades to understand the real benefit of a healthcare product/service. This has led to establishing several surrogate outcome measures, which in turn have been broken down into components that can easily be measured and extrapolated. This works well to get innovative concepts faster to market; however early successes, not being followed up for real outcomes, can easily lead to hyped expectations.
- Investment culture and Fear of Missing Out (FOMO): As seen in the Theranos case, start-ups like to evangelize an outsized vision of how big their company will grow. Venture capital firms won’t take meetings with founders who don’t take big swings. An exciting and robust technology is generally only part of the picture in creating a successful life science business. As H.Holden Thorp describes in Science, when venture-backed companies grow, investors usually insist on “milestones” that show the steady improvement of the technology. The temptation to misrepresent the progress increases with each step.
If the technology is not actually advancing, then the executives in the company are committing greater and greater acts of fraud. There is also a burden on the investors to carry out due diligence on the claims, but they only have financial and not criminal liability.
- Conflicting priorities for incumbents, disruptors and regulators: As Issie Lapowsky says, fast growth and overexposure can be tricky for any young company to navigate. But when that company dictates people’s health decisions, it can be downright dangerous. Instead of raising the money to prove the concept, as so often happens in the frothy tech industry, inventors of medical technology are tasked with proving their worth first. However it also means that breakthrough products/services can take far too long to reach the mainstream and that large pharmaceutical companies with money to spend get to dictate which technologies are worth the investment. That the tech world would want to apply the “move fast and break things” motto to medicine as well as software makes sense.
Alix summarizes it nicely in her article- ‘When hype is harmful: why what we think is possible matters’-
Different sectors and groups end up relying on their perceptions, expertise, incentives, and biases to determine what is and isn’t possible. The same ‘breakthrough’ may be perceived as ‘snake oil’, or ‘a panacea’, or anywhere in between.
Not all hype is bad, but there are limits
Expectations about new, innovative concepts and ideas help create excitement, thereby attracting risk-taking disruptors to the field. This has happened several times in various healthcare use cases including often neglected fields with high entry barriers including tele-medicine, biotech and even several diagnostic applications.
This excitement in turn can help generate the required funding into ‘edge’ cases. It can also help induce new partnerships and scenarios which would be difficult to forge in a ‘non-hyped’ setting.
However the line between plain old marketing, ‘good’ hype and then ‘bad’ hype is quite ambiguous and can have detrimental impact on the innovation ecosystem. Constantly exposing investors, payors and users to hyped ideas can drown out other voices which are rationale and can have real impact. Hyped/overmarketed innovations obviously lead to ‘wastage’, of money, resources and lost time and sometimes such ideas can lead to long ‘winter’ seasons where particular innovation projects/concepts can go through long periods of disinterest.
We can use some easy rules to separate hype from reality
Here’s my list of questions that I often ask to understand a new innovation and it’s real potential
- Is the title/abstract idea itself questionable? This is more about gut feeling and intuition and needs a bit of practice to come to better conclusions.
- Do you find the claim exaggerated? without providing much evidence?
- What kind of on-the-ground evidence available? Or is it more anecdotal? is supporting raw data available?
- Does the innovation claim to be a ‘one-size-fits-all’ solution?
- Are there negative findings that go against the hype? How are they explained?
Too-good-to-be-true, overtly shiny and positive ideas without much of real ground-level evidence supporting the claims should typically point to some level of hype. This can easily be confirmed by innovations that tout to be working in all kinds of conditions and settings-this is quite difficult to achieve in especially in most healthcare processes.
Alix also provides additional questions, more in terms of technological breakthroughs, which I found useful in hype vs reality context-
- Who benefits from the world believing that this breakthrough is real?
- In what contexts could this technology be effective and appropriate? What do we need to learn before we can know whether it is effective and appropriate in a given context?
- What research in social, historical, or technical fields has been carried out, and what does it tell us about the likelihood that this breakthrough is being accurately characterised?
- Do companies or procurers of technology explain which use cases it is good for, and which it might be less good for?
- Who has the most to lose if the technology is hyped and prematurely rolled out?
It is essential to keep on top of ‘hype vs reality’
If you are part of any innovation journey, whether as a founder, investor or a leader/project team member thinking about new ideas in your business, it is essential to keep abreast on the latest innovation arcs and have tools to separate hype vs reality so as not to fall into the FOMO traps. Here are some tips (credit to Ilya Robchin, Bloomberg LP)-
- Stay informed: Create a Managed Fire-hose of Information- the best first step to separate hype vs reality is to update our current knowledge, know what’s happening in the field of choice and know what questions to ask. This should help in establishing credibility, managing information flow and communicate effectively. Some channels to do this effectively can be through idea-sharing communities, forums and conferences as well as internal team workshops.
- Meet new ideas at your own pace!-to beat the Hype Cycle, an easy way would be to meet new ideas before they meet you. This would mean discussing new ideas, using the firehose mentioned above, within your ecosystem early on that gives you enough opportunity to form opinions of these new ideas.
- Start forming your own opinions: Once you start your explorations into new ideas, we should start forming our views and opinions. It is ok to have a ‘wrong’ opinion to start with; however, absence of opinion would expose us to more hype! If you reach a decision through your opinions early enough on the hype curve, you will have enough time to re-evaluate, refine and adjust your decision.
- Change your opinions!: This is almost as essential as forming initial opinions. Innovation should be an ego-less endeavor. No opinion should survive entirely on first contact with colleagues, customers, partners and ….time!
