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Healthcare Tech Culture Underdeveloped In Seattle

Seattle may have a high number of tech developers, but few are focused on healthcare technology.

Polyclinic Chief Medical Officer Dr. Marc Miller was surprised by Seattle’s lack of medical tech when he arrived here from Southern California two and a half years ago. In SoCal, there is a well-developed ecosystem of companies developing medical devices and other technologies, he said. In Seattle, that is not the case.

The Polyclinic at Seventh and Madison

“I had to look hard to find true innovation in healthcare technology in Seattle,” he said.

Miller will be one of the panelists at Bisnow’s The State of Seattle Healthcare event Sept. 27. Virginia Mason Health System’s Dr. Gary Kaplan, Swedish Health Services Dr. R. Guy Hudson and UW Medicine’s Dr. David Flum will also be among the featured panelists.

It is not that the city lacks tech talent. The problem is that it is hard for startups and tech entrepreneurs to recognize what product will benefit what customer.

“You need to understand who your customer is, who is going to pay for it, and who is going to be threatened by the solution to the problem you are trying to solve,” Miller said.

He blames the medical market shifting from fee-for-service to value-based care, which is also referred to as managed care. Seattle’s medical market is still more fee-for-service.

In a fee-for-service scenario, medical professionals are paid each time a patient visits the doctor. In managed care, providers are paid a set fee to keep the patient healthy.

It comes down to a wellness versus sickness scenario. Seattle’s market has been slower to move to managed care than other parts of the country, so the market here is less ready for technological advancements that can keep patients out of the hospital.

A developer may have a great product, but no one is going to pay for it, Miller said.

He gives an example of a product that was developed to monitor patients’ vital signs at home rather than at a hospital, but it was difficult to find providers to buy into that because the product was being pitched in markets where hospitals were being paid per visit.

“We are going through a paradigm change in healthcare,” he said. “We are moving from thinking that a hospital bed being filled is a good thing to a hospital bed being empty is a good thing. If the provider is being paid for a good outcome for the patient, then it is better if they are healthy and not in that bed.”

There are other components of the healthcare tech market that have yet to hit the Puget Sound, such as telehealth and setting up clinics in places like schools and offices.

While Seattle seems to lag in healthcare tech, there are some groups that are helping to change that, Miller said.

Cambria Grove is an innovation center for healthcare technology startups. The University of Washington’s CoMotion is another option for health tech entrepreneurs. Miller also expects to see more health tech innovation now that Kaiser Permanente has increased its presence in the Puget Sound market. Last year, it purchased Group Health Cooperative for $1.8B.

Hear more from Miller and other medical market experts at Bisnow's State of Seattle Healthcare on Sept. 27 at The Westin.

CORRECTION, SEPT. 10, 3:19 P.M. PT: A previous version of this story had an error in one of Miller's quotes. The story has been updated.