Filed under: Uncategorized
Since posting last week about our memories of Rick Carlson, I have been overwhelmed with the response from Rick’s friends and colleagues. Accordingly, I thought it would be valuable to link to The Personal Genome, a blog where Rick would occasionally post. He was working on a regular column there – and TPG posts the rough draft here.
Filed under: Uncategorized
As usual, John Cook is stirring up an interesting debate over at Seattle’s TechFlash blog.
Yesterday, he linked back to a piece I wrote in early January on the need for the government to include support of early stage ventures in the stimulus plan. You can find that thread on TechFlash here. This post generated considerable commentary, including our response:
…many comments ignore the fact that if there wasn’t a substantial capital constraint facing early stage investing there wouldn’t be so many high quality companies starved for capital.
Many of the comments are correct to point out that in some situations angel networks and incubators may better serve the early stage than traditional VCs. Even better, many point out that ‘built to flip’ VCs are not the proper agents to drive recovery/stimulus investing.
However, there are regional and industry specific investment networks and firms that have considerable infrastructure (around process, network and human capital) which could be leveraged to get government dollars to work in the early stage. Each of these groups could efficiently put a fraction of the dollars Friedman references to work ($50-100 million). This would have extremely positive implications for the innovation economy.
Without focus on efforts like this – as well as attention to the stalled exit environment … the outlook for those of us focusing on new start ups and early stage venture is looking increasingly bleak.
John then went out an interviewed many of Seattle’s top VCs and posted this piece on the blog. The tone of the VC community was decidedly negative and we posted the following retort:
…Private equity is moving through an industry wide identity crisis – culminating in this week’s upcoming screaming match over the tax treatment of private equity manager’s carried interest. When all of these managers are heard for the first time, complaining in unison about their tax rate, I fear it will be the nail in the coffin for the reputation of our industry.
This is especially true for venture capitalists – who have been relatively innocent of the abuses of our gluttonous big brothers in buy out funds. However, we certainly have abdicated responsibility for the early stage (and to our investors) as we have rushed to support later stage investments with significant revenue and years of positive EBITDA.
While your panelists are correct to point out that angels have been recently left with responsibility for “filling the funnel” with early stage investments, it is important to note that these angel networks are strapped, have inherent limitations and can not bear the full burden for fueling the innovation sector.
Brad Silverberg is correct in pointing out that start ups can benefit from significant capital efficiency. Technology costs continue to come down and, in this economy, people and space cost considerably less. However, existing VC funds (that some argue are “flush with cash”) are not taking advantage of these market opportunities. And for obvious reasons.
Investors in existing VC funds are not certain to reinvest (and the prospect gets less certain by the week). 2009 promises to be a low point for LP commitments to funds. VCs are incented to keep powder dry and see their existing portfolio companies through the long winter. Accordingly, the few new investments that are made in these portfolios will face intense scrutiny.
This is exactly why additional capital, unfettered by these considerations and guided by experienced venture fund or angel network managers, is so needed.
As Andy Sack points out, changes to fund structures will be needed (especially around management fees – perhaps this is an area to more widely introduce budget based management fees). However these necessary tweaks are no reason to throw the baby out with the bathwater.
Stimulating a resurgence in back-to-basics venture capital (serious value added from roll-up-their-sleeves VC managers) would have a positive impact not only on the economy but also on the public perception of our asset class.
A big thanks to John Cook and the folks at TechFlash for keeping such a relevant and vigorous debate going…
Filed under: health policy, seattle market | Tags: health policy, Rick Carlson, seattle, seattle market
We were shocked to receive the news that our good friend and colleague Rick Carlson passed away last week. He will certainly be missed – as most good friends are – but the impact of losing Rick will run deeper. He was a living reservoir of experiential knowledge of the health care system’s experiment with managed care. He had seen the good and the bad – and was not afraid to point out the ugly, even in his own contributions to the system.
I would often introduce Rick as an architect of the HMO Act and the guy who “named” health maintenance organizations. “I am still living that down,” he’d retort.
Despite his ability to effortlessly list (and list and list) the failings of the current system, he was a close advisor to many of the biggest players in the business. His Rolodex was deep and full of friends – he often counseled me on the importance of actively cultivating and investing in one’s network. He was always early. He always followed up. He said it was because he was Swedish, but I haven’t met any other Swedes like Rick.
He was extremely excited about the changes on the horizon for the health care system – and spoke often of what he called the “Next Health Care Delivery System” where innovation focused on service delivery and treatments were assessed for comparative effectiveness. In the Next System, we would get back to managing the care of patients and use technologies to empower patients with the information they need to take better care of themselves. It was for him the logical extension of what he and his colleagues had attempted to build in the 1970s.
I valued Rick’s professional counsel and was honored when he joined Faultline Venture’s advisory board. He was excited to jump into the activities of the firm – helping communicate the exciting opportunities in the health care market to potential investors and advise early stage companies how to avoid the potholes he had seen. But more than that, he was a wonderful friend. He was one of the first calls I made when we decided to move to Seattle (“Great idea… its the right time”) – and has provided counsel on a range of subjects that he knew well (little local restaurants, great cups of coffee, amazing hiking trails, etc). Rick took an interest in us and we have been so much the better for it.
Many of us will feel the void his loss has left, and not just those who knew him well. It is the loss to the young health care entrepreneur that won’t have the value of Rick’s counsel that worries me most. I’d love to tell him that he was the one that got us into this mess and he has to stick around to help us get out. However, as I survey all the lives he has touched and careers he has influenced and friends who will carry his memory, I believe maybe he’s done just that. Now it is up to us to build the Next Health Care System.
RICK J. CARLSON
Rick J. Carlson, a renowned health consultant and one of the prime architects of the “Health Maintenance Organization Program” (HMO) died of a heart attack on Friday February 13th. Rick, who lived with his family in Aspen for twenty years had an impressive, illustrious and full career. Born in 1940 in Minneapolis, Minnesota
Rick went to St. Olaf College and then went on to receive his JD at the University of Minnesota.
In 1968 Rick joined the Institute of Interdisciplinary Studies (currently Interstudy of Minneapolis, Minnesota) as a research attorney where he drafted the legislation which initiated the health maintenance organization movement across the country. Following this work he was invited to be a Visiting Fellow at the “Center for the Study of Democratic Institutions” in Santa Barbara, California and during his 18 month tenure there he published his first book, THE END OF MEDICINE, which was a seminal book in the health field. His work at the Center on issues pertaining to law and justice led to his writing his second book, THE DILEMMAS OF PUNISHMENT in 1976.
While living in California Rick served as the chairman of the California governor’s Council on Wellness and Physical Fitness and became the first director of the California Trend Report Project. Over the years Rick worked as a consultant to major institutions in the healthcare industry, such as the Blue Cross/Blue Shield Associations of America, the America Hospital Association, the Health and Human Services Administration, the MacArthur Foundation and others. In 1978 Rick authored THE FRONTIERS OF SCIENCE AND MEDICINE and in 1985 co-authored with Clement Bezold THE FUTURE OF WORK AND HEALTH. From 1987 to 1990 he served as President and Chief Executive Officer of NewHealth Centers/PPP Inc which worked in the development and establishment of Primary Prevention Program Centers and state-of-the-art risk assessment systems. In addition Rick was “Of Counsel” to Epstein, Becker & Green, P.C., a law firm with offices across the U.S.. Rick also served as the President and CEO of HealthMagic, a healthcare technology company headquartered in Denver and was Vice Chairman of Age Wave Health Services located in the San Francisco Bay area.
In 1987 Rick co-authored ISSUES AND TRENDS IN HEALTH with Brooke Newman and in 2002 co-authored with Gary Stimeling THE TERRIBLE GIFT, an assessment of the promises and perils of biotechnology.
In 2001 Rick became Clinical Professor Policy Programs Department of Health Services and Affiliate Professor Department of Pharmacy, School of Public Health at the University of Washington, Seattle.
Rick’s enormous body of work was an impressive accomplishment but his absolute greatest achievement in life was as an extraordinary loving, devoted, wonderful father to his four children Blue (Gyorgy), Joey, Josh and Rebecca, and his step-children Nikos and Samantha Hecht.
He will be dearly missed at the Aspen Ice Garden where he spent many an hour proudly watching Blue and Joey playing hockey. And, indeed he will be missed by the hundreds of people he deeply influenced and touched personally.
The date for a memorial service will be announced within a few weeks.
At a time when other firms are scaling back or eliminating health coverage, Wal-Mart has made a serious dent in the problem of the uninsured. New figures being released today show that 5.5 percent of its employees now lack health insurance, compared with a nationwide rate of 18 percent.
UnitedHealth has already spent more than $1 million on three medical home experiments this year. The other two are in Colorado and Rhode Island. But the company says the Arizona pilot is getting the bulk of its money and attention. The experiment will initially involve about 7,000 patients who are the patients of 26 doctors at the seven medical groups.
The cost for Ms. Branch’s basic system, supplied by a health care provider called New Courtland as part of a publicly financed program, is about $100 a month, far less than a nursing home, where the costs to taxpayers can exceed $200 a day. In the two years Mrs. Branch has had the system, she has fallen three times and been stuck once in the bathtub, each time unable to call for help without it.
A study published this week in Tobacco Control found that more than 28 percent of smoking pet owners said information about the harmful effects of secondhand smoke on their pets—exposure has been linked to cancer, allergies, and respiratory problems—would motivate them to try to quit.
A study by Harvard Business School indicates that successful serial entrepreneurs have a 30 percent chance of success in their next venture-backed company. That compares to a 22 percent success rate for entrepreneurs who previously failed and a 21 percent success rate for first-time entrepreneurs.
Posted by CharlotteGee
Filed under: electronic medical records | Tags: electronic medical records
Even if politicans don’t seem to get it, at least CNN shows a thoughtful mastery of the issues (insert sarcastic emoticon here) …
From CNN’s Campbell Brown, Feb. 6, 2009:
President Obama wants to modernize your medical records. It’s part of his stimulus plan. Up next, this influx of technology could lead to an invasion of your privacy. We’re going to show you how.
And then later, the mother of this California octuplets says she’s being singled out. You won’t believe what else she says when we come back.
BROWN: President Obama’s economic stimulus plan includes $20 billion to improve health care technology.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: This plan will put people to work, modernizing our health care system. That doesn’t just save us billions of dollars, it saves countless lives.
(END VIDEO CLIP)
BROWN: The plan is for every American to have his or her own electronic medical record in the next five years. No more of those paper folders your doctor probably uses right now. And it sounds like a great idea, but there could be a pretty disturbing downside and senior medical correspondent Elizabeth Cohen is here to explain exactly what that downside is.
And Elizabeth, first, I mean, talk us through why the big push to make our medical records electronic and then the privacy concerns because, in fact, you’ve uncovered some real holes here.
ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: Oh, yes, and gaping holes that actually had to do with my records which made it especially scary. But here’s the argument.
Basically people are saying, come on, doctors, you got to move into the 21st century. I mean, who uses paper records anymore. Well, most doctors do. It’s hugely inefficient and also using paper records instead of digital records can lead to medical mistakes that can kill you.
So, President Obama says, look, we’re going to do electronic medical records but I’m going to appoint a chief privacy officer and have all sorts of safeguards to make sure that only the people who are supposed to look at your records are looking at your records. And so, some folks are saying, that sounds good, but really will there be enough safeguards to keep these records private?
BROWN: And Elizabeth, you mentioned your own records. I know you are on your health insurance company’s Web site and you discovered something pretty shocking.
COHEN: Right. I was just on this Web site looking around and I thought all of a sudden I was like oh, my goodness. This is a list of every doctor’s appointment I have had in the past 18 months plus, all the doctor’s appointments and lab tests for my husband and for my four children. I had no idea they were there, but here they are.
These are actually my medical records that I stumbled on to, online. For example, right there, that’s my annual mammogram that I had. Then there was my daughter’s pediatrician’s appointments. All of them.
Then there was my billing for my cholesterol test that I had at my annual physical. And Campbell, the really scary thing here is that if I had seen a psychiatrist during this period of time, it would have been on there, too. Right there online, every time I saw him and his name. Continue reading
Installment #11: “Everything’s gonna get lighter, even if it never gets better” – Mates of State
But some experts, including David Brailer, former national coordinator for health IT, note that studies have estimated that it would cost $75 billion to $100 billion to implement EHRs nationwide. These observers also believe it would take up to 10 years to achieve this goal.
[The report] found more than 60,000 people were exposed to hepatitis, and at least 400 people were infected with it in 33 outbreaks linked with blatant safety violations. The report covered the period from 1998 to 2008. Many involved reuse of syringes.
Humana … has promised to adopt machine-readable patient ID cards and, in the process, won the acclaim of the Medical Group Management Association, which estimates the cards could save physician offices and hospitals as much as $1 billion a year.
The share of firms with fewer than 10 workers that offer health benefits has declined by 16 percent since 2001, to 49 percent, according to an annual survey by the Kaiser Family Foundation and the Health Research and Educational Trust, while the rate in larger firms essentially stayed flat.
Posted by CharlotteGee
Filed under: angel investors, economy, innovation | Tags: innovation, long cold winter
The New York Times today added yet another article to the pile of depressing news on how this long cold winter just keeps getting tougher for entrepreneurs and innovators:
Angel investors are the optimistic financiers who give entrepreneurs their crucial first infusion of cash to bring their ideas to life. Now, in the midst of a punishing economic downturn that is sparing few companies, these patrons are cutting back on their bets and threatening the very foundation of the technology economy.
Unlike venture capitalists, angels invest small amounts of their own money — as little as $10,000 and usually less than $1 million — in very young companies. But like all investors, many angels suffered deep losses when the market plunged last fall.
That has left them skittish, investing in fewer technology start-ups and demanding more of those they do consider, leaving founders struggling to find money at the stage they need it most. The slowdown, entrepreneurs and investors say, could stunt the growth of new companies and have long-term effects on innovation.
Rob’s post on TechFlash in January highlighted the negative effects of a downtrodden economy on innovation (eerily similar to the Times article!):
The only good news for companies raising capital has come from high net worth investors and angel networks—but these pools of capital are reaching their limits. They cannot be expected to pick up all of the slack left by venture capitalists. So, as we move into 2009, we expect the companies “waiting it out” will finally launch fundraising efforts—and the demand for capital will significantly outstrip the supply. Angels won’t be able to keep up and the traditional venture community will remain focused on less risky deals and on reserving capital for existing portfolio companies. While I hope to be proved wrong, we are predicting that these trends will lead to continued loss of early-stage jobs and the unwinding of early-stage businesses. Worse, this will have a chilling on our Innovation Economy—shutting down a major engine of economic growth and job creation.
On TechFlash today, John Cook wisely pointed out, also in response to the Times article, that “getting a good read on the angel market is nearly impossible, since it’s a nebulous group of unconnected investors who don’t necessarily share similar philosophies.” He asked blog readers to share their thoughts on the current angel market, and opinions are mixed, surprise, surprise.
Posted by CharlotteGee