Next Things First

HEALTH 2.N0 (More Opinions on Health 2.0) by charlottegee

Our post on Health 2.0 has generated even more feedback. Here’s the latest:

Health care is a very attractive industry for venture investing. There are numerous reasons for this, but in this gloomy economic environment, two are paramount: the inelastic demand for what the industry produces (health!) and the incredible amount of inefficiency gumming up and increasing the cost of care delivery. It is an industry begging for the sort of innovation that early-stage, venture-backed companies can provide.

In this context, the Health 2.0 “trend” is interesting to me. The basic premise is sound: take a successful concept from another industry and apply it to health care. The social media concept has been successful in some other industries, namely entertainment (a la and business (a la Websites like these deliver value primarily around information sharing, providing platforms and distribution for user-generated content and facilitating electronic “networking.”

These are important, relevant services. However, while the excitement about the possibilities is huge, I question the amount of value these Web 2.0 services create for consumers or providers of health care.

What about information sharing, distributing user-generated content or electronic networking creates health care value? Sharing information could be valuable, but in health care accuracy is critical, and there is no verifiability to socially generated content (generally speaking). Electronic connections and networks probably aren’t significant in the context of health care on an individual basis. And how many “amateurs” do we want to hear pontificating about their health, wellness regimens, remedies, etc.

On further examination, isn’t this just “noise” distracting us and diverting capital away from the more fundamental problems and technological challenges of the health care industry? Health 2.0 seems to ignore the mountain of existing systemic inefficiencies – creating a solution without a distinct (or at least a relevant) problem in mind.

Ultimately, I think social media in the health care industry can provide some value in creating communities and support groups. However, as businesses, these generally have a low hit rate and do not have a reliable revenue source or expandable business model.

As a health care investor, I am excited about Health 2.0 only because it is distracting my competitors from the real opportunities in the health care space.

Submitted by Jory Caulkins
SSARIS Advisors, LLC

(If we only knew how he really felt … )


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