What Could Go Wrong: FinTech Vs. Healthcare Covid-19 Crisis Innovation Series

This is the fourth in a series of articles comparing the COVID-19 crisis in Healthcare to the financial crisis in 2008 that led to an industry-shaping boom in FinTech. Find the first article in the series (“Crisis Leads To Innovation”) here, the second (“The Guilty and the Innocent”) here, and the third (“An Innovation Timeline”) here.

My previous articles lay a foundation for understanding the timeline and drivers of innovation following the financial crisis. They present a theory that the COVID-19 crisis allows an opportunity for the healthcare industry to catapult forward- to adopt new innovation by taking a critical look at the status quo. This article will take a moment to examine what might hold the industry back from capitalizing on this rare and apparent opportunity.

“Much of the past year has been deeply humbling for our industry,” Goldman Sachs spokesman Maeve DuVally said in a statement to the Center for Public Integrity in May 2009, during the depths of the financial crisis. “As an industry, we collectively neglected to raise enough questions about whether some of the trends and practices that became commonplace really served the public’s long-term interest.”

This spokesman from Goldman Sachs, a key player in the financial crisis, calls out that their industry did not adequately examine the status quo to ensure they were still suitable for the public’s long-term interest. Even after the worst of the crisis abated, the industry was slow to truly change and only did so when policymakers stepped in.

Following the financial crisis, new regulation was put into place attempting to protect consumers from future episodes. We can expect a similar conversation in healthcare around public health and global health policy, with the most powerful players raising their voices in an effort to keep profit-driving infrastructure the same.

Pharmaceutical companies will say they only take on the expense of R&D because they can make as much money as they do from customers in the U.S. They cannot make as much money anywhere else in the world. Insurance companies will say they cannot manage an unhealthy risk pool at a rate manageable for low-income workers because cost of care is too high. Hospitals will say they need to charge what they do to pay clinicians and deal with inefficiencies in the revenue cycle.

To truly examine the status quo and change a system that has been highly profitable for shareholders and executives for decades would mean less of the pie for those who currently hold the most. There will be heavy, substantial pushback.

All in all, the healthcare industry is ahead of the curve compared to where the financial services industry was in 2008. Some hospitals, health systems and insurers already have established innovation groups. Healthcare technology VC funds have been around for years.

After cofounding and co-directing the MIT Covid-19 Challenge, I can say there is absolutely appetite with established players in the ecosystem for innovation in healthcare. Dozens of clinical partners joined as partners in our series of virtual hackathons, bringing to the table the most pressing issues facing their organizations. They provide insight and help the teams develop ideas during the event, with the hope that at least some solutions could be honed and prepared for proof of concept tests. Hackathons like this are going on all over the world – the desire to contribute to a new, better health system is evident.

However, the venture dollars and products being deployed tend to operate safely within the existing infrastructure of the industry, with the resigned understanding that changing how things “really” work would be an impossible task. “Fixing” what is most broken in healthcare touches too close to policy and regulation for many would-be founders and innovators, who choose instead to write off healthcare innovation entirely.

As we can see from DuVally’s quote above, it is important to take advantage of opportunities to examine the status quo and question whether commonplace trends and practices are in fact serving the public’s long-term interest. For FinTech, that reckoning came with crisis, and the time is now for healthcare to examine its own infrastructure in the same way.

In my next article, I will predict the next wave of healthcare startups likely to take the stage.

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