Dion Madsen

Dion Madsen

Last week I was in Los Angeles for the quarterly summit that Molly Coye, Chief Innovation Officer of the UCLA Medical system convenes with leaders in the Healthcare venture capital area.  Molly uses this summit to connect and to inform funders of innovation about the initiatives that are underway at UCLA, to identify key technology needs and to understand what is of interest to VCs.  The VCs use it as a way of looking under the hood at what is really an identified need with a leading customer and to understand the priorities and process of innovation adoption.  I thoroughly enjoy getting together with my VC colleagues and the learnings are like a master class on what is going on, in real-time in the market.  What nagged at me is why does this only exist at UCLA and not in Vancouver, Toronto or Montreal?

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In 2006, disheartened by the poor performance of Canadian Olympic teams at the Calgary Winter Games in 1988, the Canadian Olympic Committee formed Podium Canada, the umbrella organization for Own the Podium.

This program marked the first time Canada’s winter sport organizations came together with their sport partners to map out a comprehensive plan. Fragmented funding marked the sporting system in Canada and this was replaced by a high performance body to distribute funds to winter sports based on an annual review and accountability model.

The results of the program are well known and a great source of Canadian pride.  Although the program did not achieve its stated goal of winning the most total medals in the Games, Canada did succeed in breaking the record for most gold medals won in any Winter Olympics.  The ongoing success of the program will be measured again in a few months at the Sochi Games.

The success of our Olympic athletes is now a source of national pride, much like the esteem that Canadians have in the Canadian Healthcare system.  Notwithstanding criticisms about long waiting times, the Canadian system is internationally recognized and is often held up as a possible model for the U.S. The two countries’ health care systems are very different-Canada has a single-payer, mostly publicly-funded system, while the U.S. has a multi-payer, heavily private system-but the countries appear to be culturally similar, suggesting that it might be possible for the U.S. to adopt the Canadian system.

The appeal of the Canadian system to Americans is that it seems to do more for less, spending about $4,522 per citizen vs $8,506 per citizen for the US. Canada provides universal access to health care for its citizens, while prior to the adoption of the Affordable Care Act (ACA), nearly one in five non-elderly Americans was uninsured for economic or prior medical issue reasons. Despite covering its entire population, Canada spends far less of its GDP on health care (11.2 percent, versus 17.7 percent in the U.S.) yet performs better than the U.S. on almost all health outcomes measures.

So the Canadians and their superior healthcare system continue to dominate and we should continue to be proud of this societal accomplishment.  At the same time, we need to realize that continued superiority isn’t maintained from congratulatory backslapping.  Every couple of years I pull out my copy of the 1972 Summit Series and relive this Canadian cultural milestone.  Even though I was only five years old at the time, the memory of clustering around the television at my Grandmother’s house surrounded by my uncles cheering on a potential victory remains fixed in my brain.  Even today, the words, “Henderson has scored for Canada!” elicit an instant goosebump response.

[youtube=http://www.youtube.com/watch?v=lMf2fAXPS1Q&w=530&h=300]

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At the time, the National Hockey League, and also its best players, consisted largely of Canadians and was considered to be where the best hockey players played. The public consensus of hockey pundits and fans in North America was that other countries, the Soviets in this case, were simply no match for Canada’s best.

In a poll of experts conducted by The Hockey News, not one expected the Soviets to win a single game. Journalist Dick Beddoes of Toronto’s The Globe and Mail offered to eat his words “shredded at high noon in a bowl of borscht on the steps of the Russian Embassy” if the Soviets won one game[1]. Canadian journalists Milt Dunnell (Toronto Star), Jim Coleman (Southam) and Claude Larochelle (Le Soleil) predicted results of seven wins to one for the Soviets. American journalists Gerald Eskenazi (New York Times) and Fran Rosa (Boston Globe) predicted eight wins to none, while Mark Mulvoy (Sports Illustrated) predicted seven wins to one for Canada[2].

Dion Post 1What most of us recall is the ultimate victory and what is forgotten is that the Russians kicked our butts for the first five games of the Series with a result of Canada with 1 win, 3 losses and 1 tie, which is hardly a dominant performance.  How could the country that is the birthplace of the sport and where it is almost a religion perform so poorly?

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1. They were overconfident. The team spent too much time reading the press clippings so they were overconfident, even stating that any further training camp would be of little benefit.

2. They were unprepared.  After spending the offseason resting at home, three weeks of training camp was insufficient to compete against a team that was training on a year round schedule.

3. They didn’t work together.  The team was cobbled together from the best NHL players, most of whom didn’t play together regularly and were familiar with different systems and they were competing against a team with a common system and strategy that had played together as a unit.

4. They were unprepared for innovative strategy.  The “Soviet Style” of puck possession, adapted from soccer befuddled the Canadians[3].

So why am I writing this, other than a glorious walk down memory lane?  Well I see strong parallels between the Summit Series and the current state of Canadian Healthcare.

How so?

Here are the parallels:

1. Canada is over confident

Despite feeling that our system is the best in the world, it falls short in many areas, primarily in expenditure, where Canada significantly exceeds the OECD average in spending per capita and healthcare expenditures as a percentage of GDP while not significantly outperforming these other countries (other than the US) on outcomes measures.

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2. Canada is unprepared

Despite a series of National Commissions on the subject and some of the great work that the Conference Board of Canada is doing on the issue, there isn’t a national consensus on structure or strategy for the next step in Canada’s Health game plan.

3. We don’t work together

The is a genuine lack of coordination and cooperation between the various provinces vis a vis incorporating innovation in healthcare delivery.  Despite the amount of investment in Canada Infoway, adoption of Healthcare IT (HIT) lags behind the US (see below) with almost ZERO Canadian hospitals at Level 5-7 of EMR adoption mode compared to the US with over a third of their hospitals already operating at that level.  This is only a symptom of the problem and the challenges that this fragmented system presents to HIT entrepreneurs is immense as the cost of customer acquisition skyrockets for early commercialization.  The response of these entrepreneurs, supported by investors like me, is get validation in your local market and then target the US, ignoring other Canadian markets in the near term.  This is stifling Canadian innovation and is preventing the Canadian system from obtaining the efficiency benefits of novel technologies

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4. We are unprepared for innovative strategy

Dion post HIT FundingSee above.  Without a coordinated strategy, a system of evaluating, adopting and implementing new innovation and flexibility in payments and incentives, integrating new innovations in healthcare delivery will lag other countries.  We are seeing a Cambrian Explosion[4]. of HIT, diagnostic and service innovation in the US, stemming from structural changes kicked off by the Affordable Care Act (ACA).  The result of this has been a corresponding expansion of investment in new HIT start-ups due to the increase in demand spurred by the over $17B USD provided to allow health delivery organizations achieve Meaningful Use Level 2 status.  Without corresponding incentives and a coordinated adoption strategy, Canadian Healthcare systems will look like second-class technology laggards and will suffer the inefficiency of that status.

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With this in mind, calls for disruptive change are thrown about but I prefer to follow the comments of Andre Picard.

“Scrapping medicare and starting over is not realistic, nor is it necessary. We don’t need to throw out the baby with the bathwater. But, to extend the metaphor, we also have to do more than merely change the water; we need to build a better bath[5].”

What is needed is a clear, comprehensive healthcare strategy around innovation that incorporates the tools in front of us; wireless, mobile, cloud, big data, molecular diagnostics, robotics, telehealth and telemedicine. Additionally, there needs to be coordination in these efforts that streamlines the development and adoption of new innovation. The efforts of Hacking Health (mentioned previously by my Partner, JF) and Innovation days hosted by UHN (Techna), McGill and CHUM are a beginning but are not sufficient to make this world-class. We need to work more closely with the leading health delivery institutions in Canada in a regular and coordinated way to identify, develop, finance and support innovative solutions that will dramatically change the way that healthcare is delivered at the same time as developing a robust set of HIT companies that can grow into world class companies.

We are working on a strategy at the moment to build this innovation engine and look forward to engaging leaders in the healthcare industry over the next year to move this forward.

Remember what was said after the 1972 Summit Series?

“In less than 20 years the Russians have gone from nothing to a world hockey power,” as Dryden put it. “In 20 years Canada has practically stayed still. Now it’s time for us in Canada to make some real progress of our own[6].”

Let’s make some progress.

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[1] I wonder how that tasted?

[2] http://en.wikipedia.org/wiki/Summit_Series

[3] It was like nothing I’d ever seen. As they came at you on offence, they would pass the puck backward to another fella, who would be coming up with speed. If we stood them up at the blue line, they’d just walk right around us. – Don Awrey, Canadian Defenceman

[4] http://en.wikipedia.org/wiki/Cambrian_explosion

[5] The Path to Health Care Reform: Policy and Politics The 2012 CIBC Scholar-in-residence Lecture by André Picard Foreword by Michael Bloom, The Conference Board of Canada, 2013

[6] Ken Dryden, Sports Illustrated, Oct. 9, 1972

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Dion Madsen

Those that know me well, know that my favorite words are “Super”, “Great” and “Awesome”. The geek part of me is energized solving the complexity of biology and improving the delivery of care.  I learned patience, hard work and entrepreneurship growing up on a farm in Saskatchewan and teamwork in the rinks and ballfields of my hometown.  After working in Europe and then dealing with bare-knuckle politics in Saskatchewan, I migrated west to Alberta where I began to hang out with some crazy guys doing something called “the Internet” which led to me being the CFO of a publicly-traded company.  After selling the company, I crossed over to the VC side and during a meeting with a vaccine company I had the epiphany of “I can make money and help people at the same time? Awesome!” and I have been working for or financing healthcare companies ever since.

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