Originally published in Second Opinion, a newsletter for healthcare founders, operators, and investors.

If the United States’ healthcare sector were its own country, it would be the third largest economy in the world. By any rule of capitalism, a market that size should have minted a titan. Software gave us multiple trillion dollar platforms. Retail, search, advertising, even payments each produced a generational tech giant. And yet healthcare has not produced a single $100 billion healthtech company. 

Why? The short answer is that technology, for the most part, hasn’t actually created value in healthcare. It shuffled it, bureaucratized it, and in many cases destroyed it. The longer answer is that might all be changing now.

Repost from LinkedIn.

A clinician finishes a 50-minute session. The member leaves. The clinician opens their laptop and begins the second session: 45 minutes of documentation. They reconstruct the conversation from memory, translate it into billing codes, fill templates designed for auditors, and hunt through tabs to cross-reference previous notes. Then they move to the next patient.

This happens six times a day. More time documenting than treating. It’s not an edge case. It’s the norm.

Show me the incentive and I’ll show you the outcome

Electronic Health Records (EHRs) were never built for care. They were built for billing. The systems designed in the 1990s now stand between clinicians and patients, optimized to capture every action, convert it into codes, and generate revenue. Clinical workflows became data-entry workflows – serving payers, not patients.

This design misalignment produces predictable distortions. Providers maximize billable sessions because income scales with time spent, not outcomes achieved. The financial incentive isn’t to solve the problem efficiently. It’s to extend the engagement. In that sense, the system isn’t broken, it’s working exactly as intended. The flaw lies in what it was designed to optimize.

The consequences are staggering. The U.S. spends roughly $50 billion each year on substance use disorder (SUD) treatment, yet reaches only about 10% of those in need. The remaining 90%, generate an estimated $135 billion in preventable downstream costs, from ER visits to comorbidity complications to inpatient care.

We’re spending more and helping fewer. The bottleneck isn’t money. It’s infrastructure built around the wrong objective function.

Imagine a near-infinite improbability drive that takes common, raw materials and transforms them into a conveyor belt of wealth-creating products and services. 

Once you owed such a device, you would do everything you could to preserve and protect it. The improbability drive I refer to is “innovation” and the UK was once good at it for healthcare. 

From penicillin to the smallpox vaccine, the UK has a long history of punching above its weight in the field of healthcare innovation. Unfortunately, we have ceded that lead, in part, due to an increasingly hostile culture towards health-tech entrepreneurs.

Here’s why. Innovation is the result of trial and error by tinkerers, often preceding our scientific understanding. It proliferates in decentralized environments where people are free to think, experiment and speculate. It is almost always bottom-up rather than top-down.

The first challenge is the UK’s centralized approach to healthcare that optimizes for low cost at the expense of innovation and spends 20% less per capita on healthcare than the OECD average.

A lack of willingness to invest in innovative health-tech projects coupled with bureaucratic decision-making has created an environment of limited opportunity for new upstarts. The result has been a brain drain of the best and brightest health-tech entrepreneurs migrating to more innovation-friendly markets.