One of the earliest figures in healthcare technology is making a comeback.
In 1997, Jonathan Bush founded a women’s health and natal care clinic called Athena Women’s Health, but pivoted less than two years later to build practice management and physician billing tools as Athenahealth. Over the ensuing 20 years, Athenahealth became a major provider of electronic medical records and medical billing technology with more than 100,000 providers using the company’s tools by the time Bush resigned in 2018 amid a protracted takeover bid from Elliott Capital Management, the hedge fund run by activist investor Paul Singer.
After three years out of the game following being “full-on canceled,” as he puts it (at the time of his ousting from Athenahealth, reports circulated about his treatment of female employees and his ex-wife), Bush returned to the healthtech game late last year, founding Zus Health, which is focused on creating a shared health data platform designed to be used by the growing crop of digital health companies. Last year, Zus raised a $34 million Series A round of funding led by Andreessen Horowitz to build out his vision. Bush spoke to Fast Company about the shift taking place in healthcare that he’s hoping to capitalize on, how healthtech founders can succeed as VC funding contracts, and what he makes of Amazon’s acquisition of OneMedical.
What do you see as shifting in healthcare? How are digital companies challenging established health systems and what’s the opportunity there?
[With] traditional providers, their care is connected to their geography and their referral patterns are connected to other people in their area. The hospital itself can only serve the people that can drive there. They’re in a local battle for a deep, vertical monopoly.
With the pandemic and the continued evolution of the idea of shared software tools like Twilio or Stripe, there’s also been thousands of companies that were born and raised during the pandemic to use our new acceptance of digital-first [experiences] to do a huge swath of care better. Not by doing a vertical monopoly play, but instead saying, “I’m going to take one narrow thing—anxiety, prediabetes—and crush it nationally.”
These new companies don’t give a shit about vertical monopoly. They have no plans on even having an exam room, let alone a lab, a pharmacy, an operating room, an imaging center. This new class of company, combined with a new class of tools and acceptance of digital-first [healthcare] as fine, maybe better, created a window—and that’s what got me back to work.
What is Zus Health looking to help these digital health companies do?
Every PowerPoint slide in every conference at every academic medical center in the history of time since PowerPoint was invented asks, “Why don’t we have a common health record, or at least why don’t we have interoperability?”
[Part of it is that] medical records are designed for the primary use case of defending payment. It’s not actually what you would write or ask to see to optimally treat someone. You could scroll around and find some useful shit and use your intuition to piece together the rest, but it’s really built as a data backing for getting a claim paid, so there’s a lot of frustration.
When a patient arrives somewhere, 90% of what happens is about shit that’s already happened somewhere else—just tons of mapping that needs to be done before anybody can provide you anything, and all that shit is bloat. It’s expensive duplication.
The old health providers don’t want to know about the other stuff, and they wouldn’t mind duplicating it because they probably have a pharmacy, imaging center, or lab of their own. Those guys want to [expand their scope and keep that patient pool], so they really don’t want to share data with anyone else. They really don’t give a shit about what happens far away from them.
[But now there is] this new class of company that on their most selfish day are happy to share data because that’s not how they make money; they can’t win by controlling your referral patterns beyond what they’re focused on. They bring the major thing you need to take up that tired old PowerPoint slide, which is a business case. By being very focused, they’d have a better product if they could know what the hell else is going on [with a patient] without having to collect it themselves.
It turns out, they all need kind of the same [tool kit]—you need a CRM stack, and it’s got to be HIPAA compliant, and it’s got to be secure, and you’ve got to be able to attach documents. These companies were spending the most expensive capital they’ll ever raise—that first round—to build it.
Zus says to these companies: You aren’t going to win by being able to get the basic data on the patient—everyone needs that—and you aren’t going to win by being able to do patient relationship management. I’ll get you all that shit cheap and good—all API-first, so no one will know it’s Zus behind the scenes.
The Zus dream is not being a star. It’s going from being a waterboy to a powerful water man. And that’s where that ends. We just want to be the enabler of a thousand great businesses, and if we can make that sexy, many, many sexy things will happen upstream of us.
Among those newer companies you’re talking about that are building new models is One Medical, which is doing primary care in a different way. What do you make of Amazon acquiring One Medical?
As traditional healthcare assumes an ever deeper vertical monopoly posture, that is ever more at odds with consumer interest, and as medicine itself becomes evermore subspecialized, the need for a hyper intelligent (always-on) layer that is not beholden to any one hospital is finally coming into its own.
The acquired old-school practices of most health systems do not have the technology or other information management sophistication necessary to be instantly available when questions and concerns arise. Yet most of the early digital health solutions lack intimate knowledge of the patient. Amazon/One Medical spans both. The problem they will face is consumer alignment. While Amazon has been able to keep its true North Star ever “closer to the customer,” One Medical has needed to seek payment from one hospital provider over another. This channel conflict with consumer interest will be very tough to iron out as the market heats up.
You’re no stranger to healthtech, but now you’ve gone back to being a founder at an interesting time—VC investment in digital health is slowing down. How have you approached building Zus in this environment and what advice do you have for other founders?
Start with common tools—don’t reinvent the wheel. Rent the wheels and then build something unique on top of it. When capital was plentiful and there was no constraint, you could be as sloppy as you want and still look good as long as you got customer growth and some sort of clinical results that experts could agree were real. Not true anymore.
You need to show long-term value, and if you’re blowing a lot of money on shit that’s not unique, you will not be able to show that. Quickly get to the thing that no one else has and spend all your R&D, design, product time on that and rent everything else, at least until you get to break even or get to some sort of operational stability. That may be obvious advice, but during this last orgy of nearly free capital, people forgot it, and many young people started businesses not ever knowing that was a thing, and they’re about to get a massive bucket of water on their head explaining it to them.
I’ve watched in a very short period of time this digital health space go from a world where people don’t even know what VC is to people who think VC is a human right. It probably won’t go back to zero—”I’m sorry, son, but venture capital is not really for healthcare”—but something like “venture capital is not really for companies with no plans to ever make money.”
Funding is one hurdle for new companies, talent is another. How is getting top talent into healthtech different now than when you were starting out?
When I started Athena, there was really this renaissance of people figuring out that the internet could do more than university blogs and choppy porn, and all of a sudden, there were all these possibilities, but nobody’s thinking about healthcare. [We asked ourselves,] what would you have to do to trick brilliant young people into actually taking their skills and putting them in healthcare? A big part of building Athena was that arbitrage—getting some extraordinary people that would not otherwise have been found in healthcare.
Just as we tried to attract young, bright people to healthcare tech in the late ’90s, 2000s, there’s now a whole bunch of people that are sort of existentially unsettled while they work at their [tech job]. It doesn’t feel good making the algo better this month, but historically, if you move to healthcare, you’re going to go backwards. We hope now that we can say: It’s not gross what you’re working on, and the tools here are just as cool, the scale is just as grand.