Santiago start ups competition

It is our pleasure to publish this Guest Post from our friends at Medko, a start-up that “Connects Doctors and Patients Around the World.”  They are living and working in beautiful Santiago, Chile (I think of it as the San Francisco of South America).  They are a part of Start-Up Chile, a program of the Chilean Government to “attract world-class early stage entrepreneurs to start their businesses in Chile.  We hope you enjoy this opinion piece by Aljosha Novakovic, Medko’s CEO, in response to Elisabeth Rosenthal’s NY Times article on Medical Tourism – a provocative piece that received more than 850 comments in less than 24 hours. Pat

Aljosha Novakovic,CEO of Medko, a startup working to create a global marketplace for healthcare services
Aljosha Novakovic,CEO of Medko, a startup working to create a global marketplace for healthcare services

By Aljosha Nokakovic

The expression “you get what you pay for” never quite applied to healthcare. Prices are at historic highs and don’t seem to be going down. The entire industry is tied to political, economic, and even cultural factors that keep prices from going down.

It may sound cliché, but it really has to do with the capitalism driven “for profit” system that we have going in the states. The government is not involved in controlling prices, but a few big players who own the majority of the medical market certainly are; it is in their best mutual interest, to keep prices high. At the end of the day, executives need to maximize shareholder value.

One reason that prices are so high, that is brought up in the recent New York Times article, is that only five companies control one-third of the world’s orthopedic sales volume; three of which share the same headquarters in a small town of 14,000 outside of Indiana. The situation with medical device manufacturers is similar, with the top companies owning the majority of the industry. I agree with Elisabeth Rosenthal, the NY Times journalist, who outlines that there are three steps to the process of keeping marketplace competition to a minimum:

  1. Make small tweaks in implants and devices, and continually patent these changes. Smaller companies don’t have the power to fight these patents.
  2. Mutual collaboration. Is it only a coincidence that the 3 big joint companies share the headquarters in the same small Midwest town of 14,000?
  3. Develop brand loyalty with the KOL (key opinion-leading) doctors. Fancy dinners anyone?

Across industries, the process stays the same,if there are a few players at the top, there will be less variability in pricing. The price of a total hip implant has nearly increased by 300% from 1998 to 2011; the Times article describes this as “sticky pricing,” a result of little to no government regulation (not much we can do here), and no legitimate marketplace competition. Naturally, one solution to remedy this is to increase the number and strength of marketplace competitors; however, as mentioned above, there are huge barriers to entry. The alternative is when there is a change in the amount of demand from patients.  So how does this occur?

One way prices can drop is by the healthcare market expanding and going global. So what does this mean? Myself and the rest of the Medko team believe that stimulating the development of a “global healthcare” market involves using technology to:

  1. Streamline doctor and patient communication
  2. Increase accessibility to healthcare, including to healthcare outside the US
  3. Increase competition in a way that leads to a drop in prices

One example of a startup contributing to the global healthcare market is Watsi, who use the power of crowdfunding to make healthcare accessible to children in Africa. People from other parts of the world can donate money through Watsi so that the parents of the child can afford access to healthcare. Although not as extreme, there are still millions of people in the USA who cannot afford proper healthcare. We believe that by finding a doctor abroad, individuals in the states can not only afford their own care but can collectively drop the price of care in the states.

Medical tourists, people who leave the country for proper medical care, can effectively drop these prices by putting pressure on the monopoly of medical device and joint companies. For a patient, the process is simple, it comes down to selecting the right doctor abroad, and finding a trustworthy provider to handle the logistics. We plan on doing exactly this, with our VIP service, introducing the world to “the smarter medical travel” option.

Obviously, there is no one solution to the ridiculously high prices of healthcare in the states, but we believe a global healthcare marketplace can flatten the market, and as long as we help one case at a time, we know we are making a difference.

1 COMMENT

  1. This seems a very likely scenario. Although the health care seems different than other industry, it really is not that different; it will become global, in various ways. The abundance of self-tracking tools and apps, self-diagnostics, etc. will allow for unprecedented abilities for telemedicine, and medical practice irrespective of geography. As a consequence, a good medical care should become more accessible and more affordable, no matter where one lives and how much money he/she has. This is a great news.

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