Tech entrepreneurs tackle health care head on

Tech entrepeneurs who may have started off in social networking, gaming or finance are now turning towards healthcare as their next challenge. Driven by a firm belief in the power of modern day apps, websites and mobile devices to make a difference, and ultimately, by the fact that healthcare and health IT are humongous markets with very big profits.

Joining a growing cadre of doctors and nurses who are pursuing their own apps, tech guys with no background in health are leveraging their own personal experiences with existing healthcare systems to capture audiences and drive new businesses.

There is no doubt that healthcare is a great opportunity for startups. And the Affordable Care Act is driving major funding of the move to digital for things like electronic medical records (EMRs) thereby creating new opportunities for software and applications at every tier of the patient-provider relationship. 

However, it is a fragmented market. There is a great deal of tension between the need to take care of patients for the sake of taking care of them, and the need to see healthcare as a profitable business. Digital health is a big deal as long as it doesn’t end up being an exercise in trivial consumer applications. Ideally, the need is for ways to enable lower cost healthcare and greater patient satisfaction. There doesn’t seem to be much of either on the surface of things.

Driven by a mix of humanitarianism and Silicon Valley’s “move fast and break things” ethos, these digital natives are now seeking to improve patients’ health and fix the nation’s notoriously tech-resistant health care system. “With the last four years of tech trends, whether it’s Uber or Facebook or Dropbox, a lot of tech companies have proven you can disrupt major systems. People say, ‘Hey, what if we apply the same principle to doctors?’ ” said Verstandig, whose San Francisco and Washington, D.C., company tries to instill healthy habits in users by offering motivational tools and rewards. After raising $55 million, Verstandig recently sold a majority stake of Audax to insurance giant United Health.