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Key takeaways
The Affordable Care Act catalyzed a wave of disruption in healthcare, leading to the emergence of nearly 100 companies aiming to transform it into a consumer-driven market.
As of June 2016, the U.S. healthcare industry boasted eight “unicorns,” with companies like 23andMe, Theranos, and Zenefits achieving valuations over $1 billion.
Healthcare’s complexity and interconnected challenges make it resistant to the kind of disruption seen in other sectors, posing significant obstacles to innovation.
Many startups in the healthcare space have struggled due to underestimating the sector’s complexity, attempting to apply simplistic solutions to its multi-dimensional problems.
SingleCare CEO Rick Bates was recently featured in TechCrunch, where he contributed his opinion on what it will take for “disruption” in the healthcare space, an area traditionally resistant to the disruption that has taken hold in many other industries.
The passage and implementation of the Affordable Care Act created a perfect storm of disruption in the healthcare industry. All at once came massive systemic changes, from the expansion of Medicaid and guaranteed issue to minimum essential benefits and the creation of exchanges.
In the wake of ACA, nearly 100 companies sprang up to fulfill the promise of Obamacare and make healthcare a consumer-driven, retail industry, where old work rules would be broken, novel business models established and new companies could command billion-dollar valuations in a short span of time.
There was a surge of excitement, and, as of June 2016, the U.S. healthcare space had eight “unicorns” (companies valued at over $1 billion), including 23andMe valued at $1.03 billion, Theranos at $9 billion, and Zenefits at $4.5 billion.
But healthcare is a stubborn space. Think of it like a Rubik’s Cube, where every move has a ripple effect, and solving multi-faceted problems is par for the course. In these conditions, innovative models battle strong headwinds—a fact many VCs and founders overlooked as they rushed to build businesses following the patterns of technology-driven disruption that have transformed industries such as shopping, transportation and entertainment. Those companies that approach this three-dimensional problem with only two dimensions—by cutting corners or finding “shortcuts”—have found themselves lost.
To read the full article, continue to TechCrunch.