Where’s Silicon Valley when we need it? The inexorable rise of healthcare costs has created not only a crisis waiting to happen, but also an urgent need for innovation – exactly the sort of thing for which Silicon Valley is justly famous. So where is it?

While entrepreneurs in the Valley and elsewhere have achieved remarkable success (at least historically) developing new drugs and devices , more fundamental innovation in healthcare delivery – particularly the sort designed to take costs out of the system — has proved far more elusive.

It’s not for lack of trying. Almost every legendary Silicon Valley entrepreneur (see here; also here) has recognized the opportunity: our healthcare system is legendary for its inefficiencies, complexity, and opacity – all areas that seem utterly amenable to a technology-driven solution. Yet, to date, the results have been middling at best. Why hasn’t there been a Google or a Facebook in the healthcare space?

One reason may be that existing stakeholders are more entrenched than generally appreciated; we may also be more reluctant to tinker with our health than we are to try out the latest app. It’s also likely that at least until recently, entrepreneurs were more incentivized to create expensive solutions than to engineer cost-effective ones (as this
McKinsey report suggests).

David Shaywitz, M.D., is an adjunct scholar at AEI.