Computers are Eating Healthcare

"Software is eating the world" – Marc Andreesen, Andreesen Horrowitz

This quote is predicated by a handful of key assumptions and has a number of wide-reaching implications. First, let’s review the assumptions.

  1. The hardware renaissance continues. Processors and sensors, packaged in systems-on-a-chip (SoCs) will proliferate into most physical goods wherever there’s perceived value to compute.
  2. These computers will run modern, extensible operating systems (Android) as opposed to closed, proprietary operating systems (automatic door sensors at grocery stores).
  3. All of these computers will be connected to the Internet at all times. Thus, every physical device in existence will have effectively unlimited computing power at all times.
  4. Internet connections will be sufficiently fast. It doesn’t matter which end of the pipe does the computing. Thanks, Google Fiber.

If we take all of the assumptions above as inevitable truths, then we can make profound predictions about the fates of a number of healthcare and healthcare IT industries. Every projection below is based on the same underlying premise: companies that develop and sell analog, proprietary technologies will incur higher costs than companies that use commoditized hardware / software components and cloud computing. Those higher costs will be passed onto customers. Ultimately, "your margin is my opportunity."

Every sleep diagnostic clinic in the world will be dead in 10 years. This is particularly ironic because sleep clinics have been booming for the past few years. The entire business model of sleep centers is predicated on buying expensive diagnostic equipment and charging per night of diagnostics. They have enormous overhead: rent, employees, and the equipment itself. Every year, at-home sleep diagnostic tools are improving. They will allow patients to diagnose issues in the comfort of their own homes. Soon we’ll see an online rental market take root to allow patients to rent or share sleep diagnostic equipment. There’s no need to outright purchase any sleep diagnostic equipment, and capitalism dictates that a rental / sharing economy will emerge in place of ownership.

Take the paragraph immediately above, copy it, and change every instance of the word "sleep" to "kidney." There’re quite a few technologies that enable at-home renal dialysis, but the giants that own the dialysis clinics have lobbied CMS and Medicare to make it difficult to reimburse at-home renal dialysis. At-risk, ACO and PCMH delivery models are coming. These reimbursement models, coupled with cost pressures, will eventually force changes in billing rules for blood transfusions so that patients can do conduct renal dialysis in their own homes.

Intra-hospital proprietary hardware, which which includes devices such as vitals monitors, anesthesia monitors, telemetry machines, Dictaphones / microphones, communications devices, large MRIs, etc. In each of these examples (and many others), smaller, natively digital commoditized devices are driving prices down. Most of the legacy technologies can be reproduced in "good enough" fashions at a fraction of the cost using a processor and intelligent software. This concept is the basis of Eric Topol’s "the smartphone physical." The legacy vendors in most of these spaces are enormous and are powered by ruthless and sales and marketing machines. They won’t go away any time soon, but they’ll slowly wither.

Telemedicine undermines one of the major assumptions of humanity of the pre-Internet era: geographic relevance. Certain kinds of care, particularly complex care such as surgery and ICU, will need to be rendered in person. Huge portions of healthcare don’t require this. Cost pressures and supportive reimbursement models will allow telemedicine to blossom in time.

Ultimately, proprietary hardware and software solutions are symptoms of bloated cost structures. It’s reasonable to assert that many of the legacy, analog vendors will embrace the transitions I’ve outlined and accept the new world order in which software has eaten the world. But history dictates otherwise. Accepting the new reality often entails a complete organizational shift in strategy, hiring, operations, execution, and cost structure. Few business leaders can lead those kinds of paradigm-shifting transitions.

P.S. If you’re a CEO of a company in the surviving / winning end of any of these industries, email me. I’d cherish the opportunity to interview you as part of the HIStalkConnect interview series.


Kyle Samani is a healthcare technology entrepreneur who is passionate about healthcare and technology startups.

  • Matthew Holt

    ooh Kyle you are such the optimist….it may amuse you to read JD Kleinke’s review of a very similar piece from Jeff Goldsmith ten years ago in health Affairs

    The one think I learned as a futurist–never put a forecast and a date in the same paragraph!

  • kylesamani


    Yes, I’m an optimist. I can say that the analogy you provide isn’t quite accurate though. Driving physician adoption is a very difficult thing. I’m promoting consumer adoption via dramatic price reductions. Two very different adoption curves.

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