[Baking Typewriter] The Healthcare Industry of the Future: A Different Formula for Success

Explaining the Gap Between Technology and Medical Practice

Market Opens Only When Insurers, Hospitals, Doctors, and Patients Move Together

Helping to Understand the Complex Barriers to Entry in the Industry

"The ultimate goal of any healthcare system is to simultaneously achieve three challenges: quality, access, and cost. The problem is that these three factors are inherently in tension with each other. Healthcare policy researchers call this the 'Iron Triangle.'

We are now in an era where artificial intelligence (AI) diagnoses diseases and digital therapeutics supplement existing treatments. However, the pace of change in actual medical settings lags behind that of technological advancement. This is because healthcare is an industry with a complex interplay among hospitals, insurance systems, decisions made by doctors and patients, as well as regulations and clinical evidence.

The new book, "The Rules of Healthcare Business," by Chiwon Kim, Vice President of Kakao Ventures—who has expanded his career from internal medicine physician to consultant, author, and startup investor—explains the gap between technological advances and what is actually happening on the ground in healthcare.

Even for the same illness, the course of disease progression differs from patient to patient, and causes can vary widely. Once made, medical decisions are often difficult to reverse. Incorrect judgments can lead not only to financial losses but also to changes in bodily function, life, and even the direction of one’s overall existence. This is why healthcare is less about simple “optimization” and more about “regret minimization.”

The author defines healthcare as a "high-risk credence good." Patients cannot simply read medical journals and determine the best treatment themselves. Ultimately, they must trust in the doctor’s expertise and use clinical guidelines, regulatory approvals, and insurance reimbursement as benchmarks to judge the reliability of a treatment. For a new technology to become established in the market, physicians must be able to naturally incorporate it into existing care processes. It must also be proven that such technology can actually improve patient outcomes enough for payers to be willing to cover the cost.

The complexity of the healthcare industry is also evident in the differences between the pharmaceutical and medical device markets. The author explains, "Pharmaceutical companies sell substances, while medical device companies sell procedures." New drugs require massive research and development costs, lengthy clinical trials, and a high risk of failure. Yet, once approved and established as a standard of care, they can be disseminated in relatively similar ways to various hospitals and patients.

In contrast, medical devices need to be truly embedded in the hospital environment. Equipment installation, staff training, and integration into hospital IT systems are all required. Responsible parties and procedural workflows must be clearly defined, making competitiveness about much more than just the technology itself. Training, after-sales support, sales capacity, and networks with key healthcare professionals all play critical roles.

The book also attracts attention with its description of healthcare as both a global and local industry. Every country has differences in regulations, insurance systems, hospital management, purchasing processes, and patient expectations. This is why a business model that succeeds in the United States may not simply be transplanted to Korea or Europe. For a healthcare company, overseas expansion is less about direct translation and more about redesigning to fit new systems and re-contextualizing solutions for different clinical environments.

Big tech’s (large information technology firms) healthcare strategies lead to the same conclusion. Amazon, Apple, and Samsung are not seeking to dominate hospitals directly, but rather are broadening their points of contact with consumers through delivery services, smartwatches, and similar means. However, the author cautions against viewing healthcare solely as a rosy, high-growth industry. "Healthcare is not driven by technology alone. Even with available data, behavioral pathways are needed; even with excellent user experiences, the recognition of doctors and payers is required; even with a platform, a viable payment model must be in place."

Ultimately, this book serves as an introduction for understanding the complex barriers to entry in the healthcare industry. It argues that one must look beyond the question, "How advanced is the technology?" to consider: Who needs to use this, and why? Can it genuinely change patient lives and treatment outcomes? And who, ultimately, will pay for it?

The Rules of Healthcare Business | Written by Chiwon Kim | Cloud Nine | 284 pages

This content was produced with the assistance of AI translation services.