Can Todd Park Revolutionize the Health Care Industry?


Park's propensity to attack immensely complicated problems dates back to his early childhood. Born in 1973, he grew up in Ohio and was the son of a chemical engineer who emigrated from South Korea and then spent several decades working for Dow Chemical Company. "I think my father was the most decorated engineer in that company except for Dr. Dow himself," he recalled. Park's father had a profound influence on him, both for his tendency to be analytical and his gift for invention. "He basically created this life in America for his family starting with virtually nothing. They were moving from Korea, where he grew up in great poverty. He was a life entrepreneur, if you will. He really inspired me on a very fundamental level." Given all the Amy Chua-induced focus on Asian parenting, it may come as a surprise that Park's father often told his son he was working too hard; he was afraid that his son would work himself into the ground and often encouraged him to relax. "A kid never listens to what his parents tell him to do," Park argued. "The parents actually act as an example of what their kids themselves do. He worked non-stop. He worked day and night. And he worked weekends. He would take us to a fishing hole at the Dow Chemical research center in Ohio so he could keep working. He'd come out just to make sure we weren't falling in the lake or anything like that ... He was an example to me and my brother of a person who was genuinely consumed by his work."

In 1990, Park enrolled in Harvard, majoring in economics. While there, he took a course by a professor named David Cutler called "Public Sector Economics." It was in this class that he first became intrigued by the myriad problems in the health care industry. "I was very attracted to it because it's a very important problem, and a very fundamental problem," he said. "How do you deliver the best possible and affordable health care to maximize health?" It was Cutler who first turned him on to the entrepreneurial opportunities in the industry, showing how it was a lack of innovation in the payment systems and delivery of care that was creating so much waste. The person who could solve these efficiency issues could reap millions or even billions of dollars.

Like many health care economists, Park considers the method in which American insurance companies pay for and incentivise medical care to be the underlying problem with the current system. The way the model works now, insurance pays for health care on a per-service basis. Each individual treatment has a specific cost associated with it, creating a model in which doctors have an incentive to provide more procedures in order to capitalize on the system. In his studies, at Harvard and after, Park has focused on the innovative leaders who have turned this model on its head, focusing more on long-term care as a way of driving down costs. In a recent New Yorker article, for instance, Atul Gawande covered "hot spotters" -- medical professionals who target the one percent of patients that drive the overwhelming majority of health care costs by assigning an entire team geared solely toward driving down those costs with preventive care. During my interviews with Park he made several references to that one article.

Park first got a taste for the massive blockades hindering payment reform when he and his partner launched Athenahealth. Before it became a software company, Athenahealth was focused on maternity care. The team wanted to scale a model where instead of assigning a doctor to a pregnant mother, you also assign her a midwife, a nutritionist and a case manager. Though the upfront costs are slightly higher, studies found that this type of care radically reduces the chances of costly complications with the mother, which drives down costs overall by as much as 20 percent. So representatives of Athenahealth approached the major health insurance companies and proposed a new payment model: Instead of paying for professional services, the insurers would pay a global fee for all care -- hospital care, physician care, lab care -- so that if Athenahealth could keep the mother healthy, lower the rate of complications and therefore lower costs, it would be able to more than cover the cost of the additional upfront preventive care, benefit financially and in the process drive down the total amount of money the insurers had to pay out. A win-win for all. "The insurers said, 'Look, we completely agree with your math,'" Park said. "'We agree with the five-year study that shows this model will work, but we can't rewire our systems to pay you differently from everyone else. We have to keep paying you on a per-service basis, even though we completely believe that this lowers cost for higher value.' And that was my first fundamental lesson regarding the principles of how you pay for health care dictates how health care gets delivered. Because this model can't scale, can't become widespread, if it's not supported by the payment system."

Because of this and other reasons, Athenahealth segued into creating medical management software and online services, and in the late '90s began to take on several investors. One of those investors was Bryan Roberts, a lead partner at a venture capital firm called Venrock. He has been working at the firm now for about 15 years and has invested broadly in health care. After Park left Athenahealth, Roberts continued to invest in companies he was involved with. "Todd is one of a handful of people in the world who I would be involved in anything, anywhere, anytime with him," Roberts told me in a phone conversation. "Todd is smart, and passionate, and personable, but there are lots of people in the world who are those things. For me, the quality that sets Todd apart is that he's a creator. He's very good at creating reality out of an interesting idea, and dealing with the ambiguity of a big problem that has many more variables than solutions, so there's no way to data your way to an answer." Roberts said that Park had several different roles at Athenahealth, and as the company grew he began relinquishing those roles. It was his lack of ego, Roberts explained, that allowed him to put the idea first and step away to let others build upon it.

When Park retired from Athenahealth and moved out to California, he and Roberts invested in a startup called Castlight Health. It was here that Park began to attack the cost and inefficiency issues in our health care system with renewed vigor, using data in a way that would foreshadow his work at HHS. One of the prevalent problems with America's health care is that consumers can't compare prices for medical services; a colonoscopy, for instance, can cost anywhere between $600 and $6,000 in facilities within a three mile radius of each other, but because of the labyrinthine policies regarding how your health insurer negotiates prices with your doctors, there's absolutely no way to determine the cost of a procedure prior to having it. Using the colonoscopy example, a person with a 10 percent copay would end up paying anywhere between $60 to $600, depending on the doctor, but because he doesn't find out the cost of the procedure until after it's completed, there's no way to shop around for a better deal.

Castlight, in essence, attempts to be the Travelocity of health care. Learning from his experience at Athenahealth, Park and his team avoided the major health insurance companies completely and instead approached large corporations that self-insured their employees. Safeway, for example, doesn't buy its insurance from a major provider, but instead pays out health care costs through its own pool of money.  "So Safeway actually owns all of its own claims data," Park told me. "Castlight can go to someone like Safeway and say, 'Give me all your claims data,' and then reverse engineer from the claims what all the prices actually are." Safeway benefits because its employees can use Castlight to find the cheapest services, the employees benefit because it decreases their copays, and then Castlight benefits by receiving all the payment data to fuel its database. "There was this one focus group that we were doing at the beginning of Castlight where a woman started crying in the focus group," he said."And the focus group interviewer said, 'What's wrong, why are you crying? Did we offend you with the product demo?' She said, 'Actually, no. I'm sick and my son is also sick, and we have health insurance, but we have the kind of health insurance that has a very high deductible. I have been withholding care for me so I can afford care for my son. But what you just told me about the health care market is that if I have a tool like this, I can afford care for both me and my son.' At which point everyone starts crying, including me."

Since joining the federal government, Park has divested from all his companies, including Castlight. But, unsurprisingly, he has continued to follow its progress with interest. In March, the Wall Street Journal published its annual list of the top 50 venture-backed companies. At the very top of that list, in the number one spot, sat Castlight.

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Simon Owens is the director of PR for JESS3, a design agency in Washington, D.C. Read his blog or follow him on Twitter.

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