Silicon Valley is missing a 'big opportunity' because it doesn't understand poor people - Medicaid chief

Key Points
  • Medicaid's chief medical officer Andrey Ostrovsky said Silicon Valley has a long way to go to evolve its health care thesis
  • Most health apps are targeted to healthy, wealthy populations rather than on low-income groups.
  • There are many huge IT businesses to be built that improve outdated technology processes for Medicaid
Andrey Ostrovsky
Source: PR Newswire

Silicon Valley might be hunting unicorns in the wrong places.

According to one top federal health official, entrepreneurs and investors are overlooking one massive population: Low-income Americans who qualify for Medicaid.

That's a big mistake, given that new funds are available for those that are bringing IT innovation to the space, said Medicaid chief medical officer Andrey Ostrovsky.

"My gut is that it's a big opportunity with $500 billion in federal spend every year in a system that hasn't evolved technologically much since 1965," Ostrovsky said.

"There are unicorns sitting in there," he added.

Ostrovsky, a doctor and former health entrepreneur, hit the headlines in March for speaking out against the Republican plan to replace Obamacare, despite the potential fallout from his political bosses. He describes that decision as one that was "morally necessary," as he took a Hippocratic oath to protect patients.

Ostrovsky said he grew up in project housing in Baltimore, Maryland. His family was reliant on Medicaid for three years.

These days, he spends a lot of time thinking about how he got out of the projects and become a successful doctor, while many of his childhood friends did not. And he regularly takes his five-year-old son to homeless shelters to "interact with fellow human beings who have the cards stacked up against them."

Health-technology for those in need

The health-technology sector is booming, with investors pouring $4.2 billion into the space last year alone.

But only a tiny fraction of these technologies are targeted to disadvantaged communities. Fitbit activity bracelets or doctor-scheduling apps aren't particularly useful for those who are homeless, or lack reliable Internet access.

According to Ostrovsky, investors have shied away from Medicaid populations in part due to the complexity. But he suspects that another major reason is the lack of empathy and understanding of human needs.

So he recently took to Twitter to publicly invite Silicon Valley investors to spend a "few weeks homeless, functionally impaired or caring for a child with complex needs." On a phone call with CNBC, he said an experience like this is "bread and butter" for design thinking and customer development. "How else will a VC understand deal flow for a population for served by Medicaid?"

Overall, he's optimistic about the increasing flow of dollars into health care, especially for efforts that support the shift from volume-based care (payment based on tests and procedures) to value-based care (payment based on outcomes). But he thinks that Silicon Valley has a long way to go to evolve its thesis, to ensure it's more inclusive of all Americans.

"I can't stress enough that I want to serve as an open door between Silicon Valley and Medicaid," he said.