BY KIM BELLARD

When I first read the reports about some Silicon Valley billionaires wanting to start a new city, I figured, oh, it’s just a bunch of rich white guys wanting to take their toys and go to a new, better home. After all, they’ve seen what’s been happening to downtown San Francisco (or Portland, or Chicago – pick your preferred city).  

Cities these days may be an what one expert calls an “urban doom loop” – struggling to recover after having been hollowed out by the pandemic. These so-called elites probably figured it’s easier to build something new rather than to try to fix what already exists.  And, you know, they may be right.  

Now that I think about it, the same may be true of our healthcare system.

The group, fronted by a mysterious entity called Flannery Associates, has been busy buying up land outside San Francisco for the past five years, spending a reported $1b for some 57,000 acres in Solano County. The proximity of its purchases to Travis Air Force Base had already raised concerns. Believed to be behind the group are a number of well known tech names, including LinkedIn co-founder Reid Hoffman; former Sequoia Capital partner Michael Moritz; venture capitalists Marc Andreessen and Chris Dixon; Stripe co-founders Patrick Collison and John Collison; Laurene Powell Jobs, Steve Jobs widow.

It doesn’t help that earlier this year Flannery sued dozens of local landowners for colluding to drive up prices, or that they’ve been so secretive. John Garamendi, one of the area’s Congressmen, said: “Flannery Associates has developed a very bad reputation in Solano County through their total secrecy and mistreatment of generational family farmers.” 

The group finally went public with its intentions last week. “We are proud to partner on a project that aims to deliver good-paying jobs, affordable housing, clean energy, sustainable infrastructure, open space and a healthy environment to residents of Solano County,” said spokesman Brian Brokaw. “We are excited to start working with residents and elected officials, as well as with Travis Air Force Base, on making that happen.”

Most of the land is currently zoned for agricultural use, so getting permission for residential or other business uses will take some effort, which is why Flannery Associates is planning to meet with local, state, and federal officials. 

The New York Times reported that Mr. Moritz spearheaded the effort in 2017, sending out a note: “He painted a kind of urban blank slate where everything from design to construction methods and new forms of governance could be rethought.” A poll sent out last week to Solano County residents asked if they’d be in favor of a ballot initiative that would “include a new city with tens of thousands of new homes, a large solar energy farm, orchards with over a million new trees, and over 10,000 acres of new parks and open space.”

What’s not to like? 

If this is going to be another enclave of rich people,then I hope it never gets off the ground, after burning off lots of their money (not that they’d miss it). If they’re sincere about having a diverse city, all incomes and racial/ethnic backgrounds, then I’ll be watching closely. They have a chance to build new infrastructure (hint: include robust wastewater monitoring!), ensure safe and affordable housing for all, use renewable energy, design it for walkability, and fill it with plenty of green space. They could hire the good people at Building H to help “build health into everyday life.” And if they really want to impress me, they could even replicate/expand on Stockton’s universal basic income initiative.

But what are they going to do about health care?  What’s the point of building a 21^st century city from scratch only to overlay it with our 20^th century healthcare system — the notoriously frugal Medi-Cal program, scads of employer health plans, and ACA individual plans, not to mention Medicare/Medicare Advantage for any seniors who happen to end up there. There’ll be lots of hospitals and specialists who might see the new city as a great chance to make lots of money from all those private pay patients. It will be our familiar mess.

No, if they want to do this right, they should rethink health care too. Here’s a few ideas they should consider:

Universal coverage: if you live in the community, you’re covered. No exceptions, no opt-outs, no ineligibles.  Think of it as their own group health plan.  They might need some Medicaid and Medicare waivers to do this right, but they should make this the first community where everyone is covered.

Wealth-based funding: everyone should participate in how the healthcare system is funded, but not through the inequitable premium system we’re used to but through taxes on income, wealth, and/or property.  No one should ever be priced out of coverage (or care).

Health, not medical: we always say “healthcare system” but what we mean is our medical care system. It’s built around doctors, hospitals, and other medical professionals and institutions. They’re all part of it, but they’ve become the tail that wags the dog. Nutrition, exercise, sleep, social support, and so many other factors contribute far more to our health. These shouldn’t be ancillary to the new system but integral to it, with medical care what happens only when those don’t suffice. 

Primary care emphasis: the system should focus on recruiting (and retaining) enough primary care physicians (including OB/GYNs and mental health professionals) that waits are nominal, visits aren’t rushed, and primary care is the main locus of care. Forget traditional fee schedules/salaries; make income for primary care commensurate with its value.

Tech enabled: the Silicon Valley folks should love this: the system should be designed around the latest tech – e.g., virtual care. real-time monitoring (e.g., wearables), AI support, and so on, along with proactive Big Data analysis and recommendations. And do better than Epic!

Hospitals: to be honest, I’m not sure there should be any hospitals, at least not initially. Don’t build any big buildings that become capital sinks. Maybe let the Johns Hopkins (or other) experts design a Hospital At Home program that suits the community, keeping people in their homes. Only build physical hospital(s) when the population warrants it, and even then build them as small as possible. And certainly don’t let them employ physicians.

That’s not an all-encompassing list, but it’s a start.

————–

I’m not holding my breath that Flannery Associates will build their new utopia, but, let’s admit it, they have a better chance than they do to create a 21st-century healthcare system. 

Kim is a former emarketing exec at a major Blues plan, editor of the late & lamented Tincture.io, and now regular THCB contributor.

BY MIKE MAGEE

In George Packer’s classic 2013 New Yorker article titled “Change the World: Silicon Valley transfers its slogans – and its money – to the realm of politics,” there is a passage worth a careful reread now a decade latter.

Packer shares an encounter with a 20-something techie critiquing his young colleagues who said, “Many see their social responsibility fulfilled by their businesses, not by social or political action. It’s remarkably convenient that they can achieve all their goals just by doing their start-up. They actually think that Facebook is going to be the panacea for many of the world’s problems. It isn’t cynicism—it’s arrogance and ignorance.”

Packer’s assessment at the time was “When financiers say that they’re doing God’s work by providing cheap credit, and oilmen claim to be patriots who are making the country energy-independent, no one takes them too seriously—it’s a given that their motivation is profit. But when technology entrepreneurs describe their lofty goals there’s no smirk or wink.”

Or, as others might say, “They believe their own bull shit.” Where many of us are currently focused on issues of values, fairness and justice, those in the shadows of Silicon Valley see the challenge to be inefficiency and incompetence, and the solution amenable to technologic engineering.

Back in 2013, a Belarusian immigrant student at Stanford named Evgeny Morozov coined the term “solutionism” for those with unshakeable confidence in hi-tech solutions.  A decade latter, Evgeny is now Visiting Scholar in Liberation Technology at Stanford, and a colleague of Larry Diamond (director of Stanford’s Center on Democracy) who coined the term, “liberation technology.” 

Stanford describes their focus this way: “The Internet, mobile phones, and other forms of ‘liberation technology’ enable citizens to express opinions, mobilize protests, and expand the horizons of freedom. Autocratic governments are also learning to master these technologies, however. Ultimately, the contest between democrats and autocrats will depend not just on technology, but on political organization and strategy.”

Evgeny naturally bridges this world of individual entrepreneurship and public policy.  His current focus is on AGI (artificial general intelligence) and its interface with his original concept of neo-liberal “solutionism.” He believes we have all been sold a bill of goods that technology is inevitable and beneficial, and that it will expand our intelligence and fix our inhumanity.

Evgeny says that it is already clear that the rise of entrepreneurial capitalism and destructive profiteering (let alone massive income inequality and segregation of tech gazillionaires) is altering representative democracy and replacing it with libertarians on steroids.

It is useful to remind ourselves that we’ve been down this road before. For example, it was none other than Margaret Thatcher who said, “There is no such thing as society.” How has that worked out in the post-Brexit period for the UK? 

Were she alive today, she would likely agree with AGI fans that private beats public, efficiency solves social troubles, and adjusting to change is a great deal quicker and easier that addressing core weaknesses in human or societal behavior.

Health tech’s recent “boom and bust” cycle laid truth to the lie that “really smart people” versus venture capitalist corporations are driving the information technology revolution. In the vast majority of cases, in health care and beyond, the “charm offensive of heavily subsidized services” is followed by “ugly retrenchment, with overdependent users and agencies shouldering the costs…”

In 2021, Health Tech managed to break all the records. The digital health market gained 43% more investors than in 2020, with $30.7 billion – a 107% rise – in venture capital. By 2022, the 85 corporations devoted to the field had collective valuations that had tripled to $73 million. 

Were these ideas category-defining? Were they sustainable? Were the investors a source of expertise or wise guidance? Were any of these products driving impactful change that would equitably change the life trajectory of the humans served? Did they lessen the populations fear and anxiety? Did they expand hopefulness and community engagement. Did they make America and Americans healthy?

Not according to Evgeny. He says, “The open agenda is, in many ways, the opposite of equality and justice. They think anything that helps you to bypass institutions is, by default, empowering or liberating. You might not be able to pay for health care or your insurance, but if you have an app on your phone that alerts you to the fact that you need to exercise more, or you aren’t eating healthily enough, they think they are solving the problem.”

Mike Magee MD is a Medical Historian and regular contributor to THCB. He is the author of CODE BLUE: Inside the Medical-Industrial Complex.

Angels we’ve heard from the Cloud on high
Or maybe it was Spotify.

Our health data’s floating hither and yon
Monetized by Google and Amazon.

Gloria, in excessive profits
Gloria, in excessive profits                                                                      

Investors, why this jubilee?
’cause you’ve made us healthy and absent pain?
Is care improved and costs controlled?
Or our data just fuels your capital gains?

Gloria, in excessive profits
Gloria, in excessive profits

Come to Silicon Valley and see
Start-ups whose birth the VC’s sing.
Come adore on bended knee
Promises of health care transforming.

Gloria, in excessive profits
Gloria, in excessive profits

I can’t get Dan Lyons out of my head.

Lyons is the author of Disrupted, the buzzy new book about what happens when a curmudgeonly fifty-ish tech writer gets unceremoniously dumped from a plum role at Newsweek and takes a job as a “content generator” at Hubspot, a white-hot Boston startup selling marketing software.

Best known for creating a “Fake Steve Jobs” blog, and more recently for his work on the writing team for HBO’s achingly funny Silicon Valley, Lyons has a taste for the absurd, and his prologue (excerpt here)–describing his initial experience at Hubspot–is a laugh-out-loud takedown of tech startup culture.

The fun only lasts a few chapters, however (captured perfectly in this review by Erin Griffith), as Lyons hopes to convey a more serious point (conveniently summarized in an op-ed in today’s New York Times): that the excitement around technology companies is largely empty hype, enthusiasm used to sucker naïve young adults to work for peanuts (and candy), and to enrich savvy founders and venture capital investors, and the investment bankers who enable them, at the expense of the gullible mom and pop investors who buy shares of these fast-growing but often profitless companies after they go public.

I read Disrupted with perhaps an unusual degree of interest. Like Lyons, I found my way to tech startups late (mid-40s for me, early 50s for him); like Lyons, I often feel like an interloper, a cultural observer rather than someone who has been coding from the age of three; like Lyons, I have a deeply ingrained sense of “East Coast” skepticism; and like Lyons, I’ve been struck by the excesses associated with startup culture (as regularly discussed in these columns).

Yet I’ve come away from my experiences (disclosure/reminder: I’m chief medical officer at DNAnexus, a health data management company based in Silicon Valley and Boston) with a profoundly different–and far more optimistic–set of conclusions.

First, Lyons argues that technology is more hype than substance. Based on Lyons’s description, it sounds like he worked at a company that hyped its marketing software yet behind the scenes, relied on an army of low-paid call-center workers (and not its own software) to actually generate new business. The entire enterprise seems to be running on the “Mechanical Turk” model.

While there’s no shortage in Silicon Valley of entrepreneurs overselling the promise of their technology (a key premise of Tech Tonics, which I co-authored with Lisa Suennen), there’s also a lot–a staggering amount–of truly exciting technology in Silicon Valley, especially around healthcare, and very creative people trying to figure out how to apply emerging technologies and novel analytics to a range of interesting problems.

Second, Lyons observes that many tech businesses focus on growth not profit, and suggests they are effectively scams aimed at achieving IPOs and extracting money from a gullible market. He calls out Salesforce and Amazon as examples of companies that have public valuations far in excess of what their profits (or lack of profits) imply (to him) they deserve.

While Lyons is not entirely wrong here–there’s been a real problem with young companies chasing growth at the expense of plausible business models–I’m not sure most investors today are as forgiving as he suggests; the ones I know are generally extremely interested in plausible paths to profitability.

It seems especially surprising to call out Amazon in the context of smoke-and-mirror models, as it’s difficult to imagine a more genuinely transformative–genuinely disruptive–company.

Lyons also argues that (back in the Days of Giants) tech companies used to prize talent, but now they value cheap labor instead; the modern tech company, he suggests, is a “digital sweatshop”–only now with candy and caffeine.

Again, there’s an aspect of this that Lyons get right: the frequency and abruptness of staff departures, a disturbing phenomenon I noticed during my first year of tech company work, and which (like Lyons) I continue to find uncomfortable.

But while Lyons explicitly suggests employee turnover reflects the lack of serious interest in talent (and perhaps that was how management at his former company viewed the call-center workers they employed), I’ve seen exactly the opposite–a ruthless interest in finding the very best possible person for each individual role.

While continuously evaluating employees was neither invented in nor is peculiar to Silicon Valley (Jack Welch, anyone?), the small size and high growth expectations of startups creates a heightened sense of urgency to field the best possible team every day. (Less clear: Do startups successfully identify higher performers? What is the cultural impact of the constant threat of replacement, as well as the frequency of replacement, on remaining employees?)

Finally, Lyons tags startups for a litany of workplace problems–“undertrained (or untrained) managers,” arbitrary performance reviews, distinct vocabularies, obsession with personality tests and a tendency to self-mythologize–criticisms that seem, frankly, universal, and in fact feature in almost every workplace book I’ve read, from Martin Kihn’sHouse of Lies (management consulting) to Samuel Shem’s House of God(medicine). (A more interesting anthropology study might be why these patterns are inescapable.)

It has seemed clear for some time that the somewhat smug enthusiasm of Silicon Valley entrepreneurs has irritated the equally smug community of East Coast skeptics (each location used in the Lyons sense, representing not a physical place but a way of thinking); both the New Yorker and the New York Times Magazine have featured a succession of stories arguing basically that Silicon Valley culture–even “disruption” itself–isn’t all that it’s cracked up to be.

In some cases–many cases, perhaps–the skeptics have a point, but it’s also possible that in their determination to believe it must all be a mirage, they are missing not just exceptional technology but also undervaluing important and positive changes associated with its adoption.

Positive changes in the workplace, where there’s now a new focus on agility and problem solving that even large traditional companies such as GE are intelligently adopting. Positive changes in the way we live–from the range of products we can order to the ease of home entertainment to the utility of GPS-mediated navigation. Positive changes in the way information is increasingly democratized, and available instantly to anyone. Positive changes in the way we can connect with expansive distributed communities in a fashion never before possible.

As Susannah Fox, Chief Technology Officer of the Department of Health and Human Services, said last Tuesday–in Boston–“technology is a Trojan Horse for change,” adding (per reporter Jonah Comstock) that the thrust of this culture change is “the democratization of technology development being enabled by the internet.”

No, it’s not all positive–of course it’s not. But even as we point out the failings and satirize the excesses, let’s keep in mind how much remains both hopeful and encouraging about Silicon Valley, and not underestimate the authentic determination of so many here to, yes, make the world a better place–an even better place.

THCB reader and occasional contributor Dave Chase had this to say about Bill Crounse, MD’s recent post “Why the Creative Destruction of Healthcare May Not Be a Good Idea.”

“There is no doubt there are some obnoxious people throwing around arrogant/naive ideas. However, the “creative destruction” and “disruptive innovation” that has been most impactful has come from physician-entrepreneurs. Often, they are the most provocative and hard-hitting in their language.

It seems loosely similar to how the most virulent anti-smokers are former smokers. They want others who they can relate to experience the liberation they’ve experienced.

I wouldn’t assume ill-intent from these MD-entrepreneurs using direct language. They simply were fed up with what they experienced as “broken” and stepped up with approaches that have out-performed.

I’m thinking about the MD-entrepreneurs and innovators who have led CareMore, Nuka Model of Care, Qliance, Iora Health, MedLion, Healthcare Partners, etc. Sometimes to catalyze change, one must use stark, hard-hitting language.

That doesn’t seem like a foreign concept to the many excellent MDs I’ve known over the years. I have enormous respect for any entrepreneur, especially one coming from tradition-bound professions who are willing to stick their neck out and endure enormous personal financial risk.

Bob Margolis shared how his colleagues referred to him as a “communist” and his team-based model as “communism” yet Bob’s org achieved far better outcomes. He had the last laugh when that “communist” sold his business for $4.4B last year.

The comments from these MD-entrepreneurs is they feel they aren’t doing their MD friends any favors by candy-coating what is widely recognized as a system that isn’t close to reaching its full potential.

In contrast, the orgs those MD-entrepreneurs are running are the reigning “Triple Aim Champs” that we should celebrate — colorful language or not. Often the most impactful entrepreneurs aren’t particularly “polite” in their language — Steve Jobs, Bill Gates, Larry Ellison et al called it like they saw it.

What’s wrong with that?”

From childhood most of us remember the sage parental advice on how to deal with bullies–“sticks and stones can break my bones, but words can never hurt me”.

Of course, we all know that words do hurt, maybe not physically, but they certainly take a toll on our psyche.

These days in planning meetings at my own company, in articles I read on the web and at various tech industry conferences, I come across words and language that I know feel hurtful, or are at least disrespectful, to the health industry and the people who work there. I hear cavalier talk about the need to disrupt the healthcare industry.

Some thought leaders even say we will creatively destruct the healthcare industry. Consumers armed with technology will rise up, they say, and disrupt everything about the current state of healthcare.

Now imagine for a minute that you are a hospital executive, a doctor, a nurse or other clinician and you hear people who work outside your industry talking about disrupting or destructing it.

Imagine being told that consumers, patients, and tech companies will rise up and destroy your business.

There you are doing the best you can to make it through each day keeping your hospital or practice economically sound, dealing with the barrage of patients at your door, staying one step ahead of ever-increasing rules, regulations and rising costs, while those who’ve never worked a day in your world tell you they are going to disrupt and/or destroy it.

Even if there is a need to disrupt healthcare (and even many who work in the health industry might agree), nobody appreciates being told by some outsider that they know your business better than you do.

I don’t imagine my colleagues who work at Microsoft (or Google, or Apple, or Amazon) would appreciate being told by a hospital administrator or a doctor that they knew better how to run a tech company, or what ails the tech industry.

Nor do I think that most patients and consumers can really appreciate the amazing complexity of our healthcare system or the unbelievable pressures under which it operates these days.

So, instead of casting stones maybe we should all try to work together. Can we not find a common ground—better health, lower costs, more efficient, consumer-centric models of prevention and care?

Can we not mutually work on solving the current ails of our healthcare system?

Can we not show mutual respect and have the humility to say that perhaps the professionals who work in healthcare know more than we do, or at least know a lot of things about their industry that we must know too if any of us hopes to disrupt what’s bad without destroying what’s good about healthcare?

So the next time you hear someone talk about disrupting or destructing healthcare, I hope you’ll have the common sense to remind them that perhaps they could choose better words, and most certainly they should approach the subject with a far greater sense of humility about that which they do not really know or understand.

Bill Crounse, MD is the Senior Director of Worldwide Health at Microsoft. This post originally appeared on the Microsoft HealthBlog.

Say “employee benefits” and pensions and health care will jump to most people’s minds. Maybe life and disability insurance will pop up as well. But employers in Silicon Valley are going way beyond that. They’re providing housekeeping, cooking, babysitting and a host of other services as perks for their employees. According to The New York Times, here is what some California companies are doing:

At Evernote, a software company, 250 employees — every full-time worker, from receptionist to top executive — have their homes cleaned twice a month, free.
Stanford School of Medicine is piloting a project to provide doctors with housecleaning and in-home dinner delivery.
Genentech offers take-home dinners and helps employees find last-minute babysitters when a child is too sick to go to school.

To hear the employer representatives tell it, companies are providing their workers with services that make it easier to balance home and family life in an age when there are few stay-at-home spouses and work is stressful.

But a more likely explanation is economics.

Can an employer manage housekeeping or home cooking services better than the employees themselves? Wouldn’t it make more sense for the employer to pay higher wages and let the employees decide how to spend the extra cash? It would if taxes didn’t get in the way.

Remember, these benefits aren’t really free. They are an alternative to paying higher wages. But even moderate income families in California can face marginal tax rates that approach 50%. When an employer tries to pay a worker one more dollar, the employee takes home slightly more than 50 cents. Most employee benefits, however, are tax free. That means that the benefit could be worth half its cost and still be a good deal for the employees.

Here are a few more examples of what California companies are doing:

At Deloitte, the consulting firm, employees can get a backup care worker if an aging parent or grandparent needs help. The company subsidizes personal trainers and nutritionists, and offers round-the-clock counseling service for help with issues like marital strife and infertility. Deloitte executives, and other experts, said they believe that such benefits were likely to spread.
At Google, the company has expanded its benefits beyond free meals, dry cleaning and other services on campus to offering $500 to new parents. The company has also arranged for fresh fish to be delivered to the office for employees to take home.
At Facebook, employees can take home a free dinner or, if working late, their families can come in to eat with them, leading to a regular sight of children in the campus cafeteria. The company also pays $3,000 per family in child care expenses, and offers adoption assistance of up to $5,000.

I’m not a tax specialist, but it looks as though almost all these benefits are being paid with pre-tax dollars. And in California the difference between pre-tax and after-tax is large.

Currently, the highest marginal tax rate for the federal income tax is 35%. Throw in a 2.9% Medicare tax and the highest rate for this year climbs to almost 38%. In California, with maximum 13.3% state income tax, the highest rate rises to 51.2%.

Even Californians of moderate means face very high marginal tax rates, since the 9.3% rate kicks in at less than $100,000 of income. Take someone in the 25% federal income tax bracket, facing a 15.3% (FICA) payroll tax and a 9.3% California income tax. The combined marginal tax rate is almost 50%. This means that the individual (and her employer) have an incentive to spend up to 49 cents in order to avoid a dollar of income. California employers are betting that their employees would rather have a dollar’s worth of (untaxed) goods and services in kind rather than 51 cents in cash.

All of this raises two questions: (1) is it good to have marginal tax rates so high? and (2) what tax free benefits would you be willing to forgo in order to lower them?

In the 1980s, leaders of both political parties endorsed the idea of tax reform. That meant getting rid of deductions, loopholes, credits and other tax preferences, and lowering the rates. The idea: we can collect the same amount of revenue without creating perverse economic incentives, including the incentive to avoid realizing taxable income. Everyone agreed that the economic effects would be positive. That agreement led to the tax reform act of 1986. Since then, the agreement has unraveled.

So it’s disturbing to learn that Sen. Chuck Schumer is now against any tax reform that lowers the rates. If tax reform is a Republican — rather than a bipartisan — idea, it is much less likely to get enacted. It is also disturbing to see leading economists reject the idea of fundamental tax reform. In the 1980s, the entire profession was generally favorable toward a move to some kind of flat tax.

A flat tax need not be regressive, by the way. Boston University economist Laurence Kotlikoff and I have proposed a “progressive flat tax,” under which the payroll tax and the income tax would be merged and everyone would face the same rate on all income that is not saved and invested. The only exceptions are refundable tax credits for health insurance and retirement savings. We found that the overall impact was progressive: low-income families come out better than they do under the current tax system.

John C. Goodman, PhD, is president and CEO of the National Center for Policy Analysis. He is also the Kellye Wright Fellow in health care. His Health Policy Blog is considered among the top conservative health care blogs where health care problems are discussed by top health policy experts from all sides of the political spectrum.

Working in the health care space has forced me to give up many hopes and expectations that I had a few years ago. Forgive me for being cynical (it’s an easy feeling to have following the country’s largest health IT conference, as I reported a month ago), and indeed some positive trends do step in to shore up hope. I’ll go over the redeeming factors after listing the five tough lessons.

1. The health care field will not adopt a Silicon Valley mentality

Wild, willful, ego-driven experimentation–a zeal for throwing money after intriguing ideas with minimal business plans–has seemed work for the computer field, and much of the world is trying to adopt a “California optimism.” A lot of venture capitalists and technology fans deem this attitude the way to redeem health care from its morass of expensive solutions that don’t lead to cures. But it won’t happen, at least not the way they paint it.

Health care is one of the most regulated fields in public life, and we want it that way. From the moment we walk into a health facility, we expect the staff to be following rigorous policies to avoid infections. (They don’t, but we expect them to.) And not just anybody can set up a shield outside the door and call themselves a doctor. In the nineteenth century it was easier, but we don’t consider that a golden age of medicine.

Instead, doctors go through some of the longest and most demanding training that exists in the world today. And even after they’re licensed, they have to regularly sign up for continuing education to keep practicing. Other fields in medicine are similar. The whole industry is constrained by endless requirements that make sure the insiders remain in their seats and no “disruptive technologies” raise surprises. Just ask a legal expert about the complex mesh of Federal and state regulations that a health care provider has to navigate to protect patient privacy–and you do want your medical records to be private, don’t you?–before you rave about the Silicon Valley mentality. Also read the O’Reilly book by Fred Trotter and David Uhlman about the health care system as it really is.

Nor can patients change treatments with the ease of closing down a Facebook account. Once a patient has established a trust relationship with a doctor and obtained a treatment plan, he or she won’t say, “I think I’ll go down the road to another center that charges $100 less for this procedure.” And indeed, health reform doesn’t prosper from breaking down treatments into individual chunks. Progress lies in the opposite direction: the redemptive potential of long-term relationships.

2. Regulations can’t force change

I am very impressed with the HITECH act (a product of the American Recovery and Reinvestment Act, more than the Affordable Care Act) that set modern health reform in motion, as well as the efforts of the Department of Health and Human Services to push institutions forward. But change in health care, like education, boils down to the interaction in a room between a professional and a client. Just as lesson plans and tests can’t ensure that a teacher inspires a child to learn, regulations can’t keep a doctor from ordering an unnecessary test to placate an anxious patient.

We can offer clinical decision support to suggest what has worked for other patients, but we can’t keep a patient from asking for a expensive procedure that has a 10% chance of making him better (and a 20% chance of making him worse), nor can we make the moral decision about what treatment to pursue, for the patient or the doctor. Each patient is different, anyway. No one wants to be a statistic.

3. The insurance companies are not the locus of cost and treatment problems

Health insurers are a favorite target of hatred by Americans, exemplified by Michael Moore’s 2007 movie Sicko and more surprisingly in the 1997 romantic comedy As Good as it Gets, where I saw an audience applaud as Helen Hunt delivered a rant against health maintenance organizations. A lot of activists, looking at other countries, declare that our problems would be solved (well, would improve a lot) if we got private insurers out of the picture.

Sure, there’s a lot of waste in the current insurance system, which deliberately stretches out the task of payment and makes it take up the days of full-time staff in each doctor’s office. But that’s not the cause of the main problems in either costs or treatment failures. The problems lie with the beloved treatment staff. We can respect their hard work and the lives they save, but we don’t have to respect them for releasing patients from hospitals without adequate follow-up, or for ordering unnecessary radiation that creates harm for patients, or for the preventable errors that still (after years of publicity) kill 90,000 to 100,000 patients a year.

4. Doctors don’t want to be care managers

The premise of health reform is to integrate patients into a larger plan for managing a population. A doctor is supposed to manage a case load and keep his or her pipeline full while not spending too much. The thrust of various remuneration schemes, old and new, that go beyond fee for service (capitation, global payment systems) is to reward a doctor for handling patients of a particular type (for instance, elderly people with hypertension) at a particular cost. But doctors aren’t trained for this. They want to fix the immediate, presenting complaint and send the patient home until they’re needed again. Some think longitudinally, and diligently try to treat the whole person rather than a symptom. But managing their treatment options as a finite resource is just not in their skill set.

The United Kingdom–host of one of the world’s great national care systems–is about to launch a bold new program where doctors have to do case management. The doctors are rebelling. If this is the future of medicine, we’ll have to find new medical personnel to do it.

5. Patients don’t want to be care managers

Now that the medical field has responded superbly to acute health problems, we are left with long-term problems that require lifestyle and environmental changes. The patient is even more important than the doctor in these modern ills. But the patients who cost the most and need to make the most far-ranging changes are demonstrating an immunity to good advice. They didn’t get emphysema or Type 2 diabetes by acting healthily in the first place, and they aren’t about to climb out of their condition voluntarily either.

You know what the problem with chronic disease is? Its worst effects are not likely to show up early in life when lifestyle change could make the most difference. (Serious pain can come quickly from some chronic illnesses, such as asthma and Crohn’s disease, but these are also hard to fix through lifestyle changes, if by “lifestyle change” you mean breathing clean air.) The changes a patient would have to make to prevent smoking-related lung disease or obesity-related problems would require a piercing re-evaluation of his course of life, which few can do. And incidentally, they are neither motivated nor trained to store their own personal health records.

Hope for the future

Despite the disappointments I’ve undergone in learning about health care, I expect the system to change for the better. It has to, because the public just won’t tolerate more precipitous price hikes and sub-standard care.

There’s a paucity of citations in my five lessons because they tend not to be laid out bluntly in research or opinion pieces; for the most part, they emerged gradually over many hallway conversations I had. Each of the five lessons contain a “not,” indicating that they attack common myths. Myths (in the traditional sense) in fact are very useful constructs, because they organize the understanding of the world that societies have trouble articulating in other ways. We can realize that myths are historically inaccurate while finding positive steps forward in them.

The Silicon Valley mentality will have some effect through new devices and mobile phone apps that promote healthy activity. They can help with everything from basic compliance–remembering to take prescribed meds–to promoting fitness crazes and keeping disabled people in their homes. Lectures given once in a year in the doctor’s office don’t lead to deep personal change, but having a helper nearby (even a digital one) can impel a person to act better, hour by hour and day by day. This has been proven by psychologists over and over: motivation is best delivered in small, regular doses (a theme found in my posting from HIMSS).

Because the most needy patients are often the most recalcitrant ones, personal responsibility has to intersect with professional guidance. A doctor has to work the patient, and other staff can shore up good habits as well. This requires the doctors’ electronic record systems to accept patient data, such as weight and mood. Projects such as Indivo X support these enhancements, which traditional electronic record systems are ill-prepared for.

Although doctors eschew case management, there are plenty of other professionals who can help them with it, and forming Accountable Care Organizations gives the treatment staff access to such help. Tons of potential savings lie in the data that clinicians could collect and aggregate. Still more data is being loaded by the federal government regularly at Health.Data.Gov. ACOs and other large institutions can hire people who love to crunch big data (if such staff can be found, because they’re in extremely high demand now in almost every industry) to create systems that slide seamlessly into clinical decision support and provide guidelines for better treatment, as well as handle the clinic’s logistics better. So what we need to do is train a lot more experts in big data to understand the health care field and crunch its numbers.

Change will be disruptive, and will not be welcomed with open arms. Those who want a better system need to look at the areas where change is most likely to make a difference.

Andy Oram is an editor at O’Reilly Media. This post first appeared at O’Reilly Radar.

Apparently, the secret to Silicon Valley’s success isn’t just the good weather and smart people – turns out, the secret to our region’s entrepreneurial preeminence just may be the way we embrace failure.

According to KPCB life-science (devices) partner Dana Mead – who notes he hails from the northeast — there’s a world of difference between Palo Alto and Cambridge (MA).

In Cambridge, he contends in a recent (and, as always, informative) lecture/podcast at the Stanford Technology Ventures Program, if you tell people your last three businesses failed, “they’ll look at you sideways” and shake their heads, presumably with a mixture of sadness and pity.  In Palo Alto, by contrast, the reaction will be “that’s awesome!  I’m sure your next company will be a world-beater.”

OK – three points:

(1)   Cue obvious throw away comments about what a truly “awesome” time it must now be life-science VC (Bruce Booth’s anticipated objections are noted for the record).

(2)   Agree failure is important – after all, wasn’t it Mark Zuckerberg who originally said “success is going from failure to failure with undiminished enthusiasm?” – oh, wait, that was Churchill.  Perhaps the basic concept here didn’t originate in the Valley — although I suppose it’s possible we’ve done the best job of appropriating it.

(3)   Is there a chance Mead’s actually right here?  This deserves some comment:

On the one hand, I think there’s a mystique in the Bay Area that goes way beyond anything reasonable, and leads to all sorts of outlandish errors of attribution.

At the same time, I’ve certainly seen in large companies how fear of failure absolutely inhibits innovation – and in academia, how fear of failure has led many promising academic physicians to pursue safe but uninspired research questions, rather than questions that were riskier but more important.   As I’ve discussed elsewhere (actually, my favorite piece), it’s likely (and, to me, rather sad and disappointing) that  many of the most successful companies and most successful people (including academics) got there through careful, deliberate, incremental advances rather than via breakthrough innovation.

Certainly, it makes sense that entrepreneurs would benefit from a culture that accepts failure as part of growth.  My question is whether Cambridge is as different from Palo Alto as Mead suggests?

As a relatively recent West Coast arrival who spent more than 20 years in Cambridge and vicinity, and who remains an ardent Red Sox fan – I suspect Mead’s impression is off, and beyond that, I certainly hope it’s not what the Sand Hill crowd is counting on to beat back the east coast competition.

As a Boston resident in the fall of 2004, I had the chance to bear joyful, immersive, witness to what can happen when a perennial favorite counts on historical trends and a sense of manifest density.  The results speak for themselves.

(Now if we can just find a manager….)

David Shaywitz is co-founder of the Harvard PASTEUR program, a research initiative at Harvard Medical School. His a strategist at a biopharmaceutical company in South San Francisco. You can follow him at his personal website. This post originally appeared on Forbes.