75% of dental offices still run on servers in the closet
"Go to your local dentist and there’s a high chance they actually have a server somewhere in the office. A desktop computer, using a server-client setup, with an IT team managing it.
A lot of these offices digitized in the early 2000s or the ‘90s. At the time, those were the options available to them. Modernizing that software doesn’t generally happen, for two reasons.
One is change management. Migrating your system of record is really high risk.
Second, most of these incumbent providers actually make it hard for you to migrate in the first place.
If you’re migrating, you have this SQL database in the office that you own and manage. You’re not a tech company. And then it’s managed by a third party. And all these records are stored in a certain format.
So let’s say you’re going from software A to software B. The migration and the format of that data matters. And it's patient data. You have your billing data. There's a lot of compliance needs behind it. And of course, you’re still serving patients and their records.
So any loss of that data, or it not being compatible with the next system you’re going with, is incredibly risky. Most offices would rather not even take that risk.
A lot of things we expect in tech just don't exist in healthcare. For example, take Salesforce as our system of record. We expect Salesforce to provide us logging data, SSO, and so on.
In our space, at least historically, the vendors just don’t provide those tools. Either because of self-interest, or just a bad product.
As a result, over time the providers themselves are stuck on older systems. And they're unable to upgrade.
And even when they try, they have to go through a ton of friction to do it. Mostly because the incumbents are very incentivized to keep you within their existing ecosystem, unless they’re now selling you a cloud version themselves.
And generally speaking, the business model of most electronic health record systems is really oriented around making sure that migration of data, change management, or access to the office’s data needs permission from the vendor themselves. For any office or any third party to be able to innovate or adopt any tools.
This has a massive downstream impact on the rest of the industry."
Video
Turner Novak 🍌🧢 (@TurnerNovak)
New @ThePeelPod with @alfromnexhealth
Today @nexhealthHQ infrastructure serves 89 million patients and 81% of new AI healthcare startups are built on it.
But at one point, the company had $4k in the bank, a maxed-out Amex card, and was on the brink of running out of cash.
I sat down with Al to talk about why 75% of dentists still run a server in their closet, the reason innovation is so hard in healthcare, and why AI value will accrue to chips, models, and the action layer.
Full episode here + links below.
Timestamps:
0:00 Healthcare skipped 3 platform shifts and went straight to AI
4:10 75% of dentists still have on-prem servers
10:05 How data interoperability holds back healthcare innovation
16:02 Why everyone blames Epic
20:15 Building the developer platform for healthcare
24:36 Why everyone fails to fix the problem
29:11 Fragmented markets enabled developer platforms
32:32 Working as a receptionist at a doctor’s office
36:13 Building a prototype on Twilio
39:15 How incumbents went from blocking to partnering
46:05 Canvassing Soho dentists door-to-door
53:47 Reverse-engineering 40-year old databases
56:21 Funding NexHealth with side hustles for two years
57:30 The scheduling wedge no one could match
1:02:20 Raising $391k from professors and customers
1:03:46 Running out of cash, why customers kept churning
1:07:45 $4,000 in the bank and a maxed-out Amex
1:11:12 The $36k pre-pay that saved the company
1:13:24 NexHealth’s three businesses today
1:20:18 Payments and the “admin-day” problem
1:26:15 72% sales win rate
1:28:27 The term sheet signed the week before COVID
1:30:26 Spending half the Series A on an acquisition
1:33:47 Raising $176M they didn't need
1:37:28 Why starting before 2022 is an advantage
1:42:22 Where AI value accrues: chips, models, the action layer
1:44:55 81% of AI products are built on NexHealth
1:48:24 Staying patient for three years after ChatGPT
1:51:25 Competitors building on their API
1:54:02 “We’re a tech company, not healthcare company”
1:56:09 Hiring from outside healthcare
1:58:34 Shoes, email over Slack
2:01:21 What AI changed inside the company
2:04:16 Inspiration from Microsoft in 1977 - 1990
Video
— https://nitter.net/TurnerNovak/status/2082854053516615920#m