Editor’s note: This guest post was written by Dave Chase, the CEO of Avado.com, a health technology company that was a TechCrunch Disrupt finalist.  Previously he was a management consultant for Accenture’s healthcare practice and was the founder of Microsoft’s Health business. You can follow him on Twitter @chasedave.

As reported on TechCrunch, Google shut down its medical records and health data platform. Since then, there’s been a lot of bits spilled offering explanations, but they all missed the most critical item. Money. Or in the language of healthcare—Reimbursement. I explain more below regarding why Google Health was doomed to fail in light of the legacy reimbursement model.

First, let’s recap some of the explanations offered up so far. These are all valid but miss the biggest point.

Adam Bosworth, who originally ran Google Health gave one reason: It’s Not Social. That’s true if one wants to create a weight management program or is simply interested in fitness-minded folks. Clearly that is important given the obesity epidemic, however there’s vast swaths of healthcare where being “social” isn’t appropriate or applicable in a doctor-patient relationship. In other words, being social is necessary but not sufficient to transform healthcare.

In the comments of TechCrunch’s original article reporting the shutdown, I gave my immediate take…

1. It’s tough, even for big companies, to focus on a bunch of different things. I’m sure they could have figured out how to be successful if it was as strategically important as Search or Chrome or Android or Social…but they have bigger fish to fry.
2. The Health space is a very difficult one. In many ways, it’s counter-intuitive for those who haven’t been in the arena from both the healthcare provider and consumer perspective.
3. As much as there’s a massive consumer-empowerment movement, in order to get ongoing and broad adoption of something in healthcare, one needs to lead with the clinicians.

If you are interested in more, I’ve written about this here.

One of the better analyses was done by John Moore of Chilmark Research.

Few consumers are interested in a digital filing cabinet for their records. What they are interested in is what that data can do for them. Can it help them better manage their health and/or the health of a loved one? Will it help them make appointments? Will it save them money on their health insurance bill, their next doctor visit? Can it help them automatically get a prescription refill? These are the basics that the vast majority of consumers want addressed first and Google Health was unable to deliver on any of these.

As much as we’d like to think it isn’t the case, the fundamental driver of most (not all) behavior in healthcare is the reimbursement scheme. As I described in an earlier piece on the “Do it Yourself Health Reform” movement, I spent much of my time as a consultant in the Patient Accounting departments of heatlhcare providers. The legacy reimbursement scheme can only be described as a Gordian Knot designed by Rube Goldberg.

I expanded on the insidious effects of the reimbursement model in the U.S. in my overview of The Most Important Important Organization in Silicon Valley No One Has Heard About. For those who would like to be optimistic about the reimbursement model changing, read about Health Insurance’s Bunker Buster. In the meantime, it’s critical to understand the current reimbursement model to understand why Google Health failed to transform the landscape.

To understand the impact, I’ll exaggerate to make a point—your healthcare provider doesn’t care about you unless they can see the whites of your eyes. Why is that? Today’s flawed reimbursement scheme only compensates the healthcare provider for a face to face visit. It’s hard to fault the primary care physician who has been put on a hamster wheel of 30-40 appointments per day and can’t even give their practice away upon retirement (that was once their retirement plan) for not wanting to deal with their patients sending email or sharing information from their personal health record.

Interestingly, in the transformative models I describe below, doctors consistently tell me that half to two-thirds of their patient interaction time doesn’t need to be face-to-face. They can deliver high quality medicine without being in the same room as them. Yet, the fee-for-service model causes this country to waste mountains of time waiting to get appointments and then in the waiting room in order to facilitate the face-to-face appointment.

The problem for a company like Google or Microsoft is their success is measured in the tens of millions. Those kinds of numbers are only present in the legacy reimbursement model. Frankly, Google could have done all the right things, but if the reimbursement model doesn’t change Personal Health Records will remain irrelevant for most healthcare providers. At best, we’re seeing Electronic Health Record vendors release so-called Patient Portals that are often driven more by a marketing objective than a clinical objective. Further, they are flawed in that they are a one-way broadcast of the silo’ed information from only one healthcare provider.

Is there any hope for individuals to be more involved in the healthcare system as Personal Health Records promised? After all, it’s clear that healthcare works best and costs least when the patient/individual is a partner in their care with their healthcare provider. Fortunately, I believe that we’re seeing the first waves of a tsunami lapping the shore.

It’s what I call the P.A.C. Tsunami. Patient-centered, Accountability and Coordinated. Today’s flawed fee-for-service reimbursement system is essentially the opposite of those three elements creating all the wrong incentives. In its place, we’re seeing the first waves. Both the Do-it-Yourself Health Reform movement and the government-driven health reform are creating incentives for what are called a Patient Centered Medical Home (PCMH) and Accountable Care Organizations (ACO).

We are already seeing dramatic success with the first editions of PCMHs in the models such as MedLion that were highlighted in The Most Important Important Organization in Silicon Valley No One Has Heard About article. ACOs have the right goals in mind but remain like Unicorns—fantastical beings no one has seen yet and have been described as stupefyingly complex in their design. In contrast, one can’t help but be optimistic when studying the results of PCMHs such as 40-80% reductions in the most expensive facets of healthcare (surgical, specialist & ER visits) or a pilot program in Ohio with Medicaid diabetics that scaled could save Ohio $500 million annually.  Or consider the case of Denmark that was the first country to broadly adopt the PCMH model. It’s been so successful, they have reduced the number of hospitals in that country by over 50% as they simply don’t need that many hospitals anymore.

What does this mean for the tech community? I’d posit that as mobile technologies have fundamentally reshaped voice and data, there’ll be an equally radical transformation of healthcare. Just as legacy telcos had to fundamentally transform themselves or they’d be an artifact of history, so too will healthcare organizations transform (or die). With the transformed healthcare ecosystem, there are requirements for entirely new categories of software that a new generation of startups will develop. Exciting times indeed.

Image credit: Colin Dunn

After several years languishing in the backwoods of Google’s server farms, Google Health got its plug pulled today. Why did the ambitious project to record your health record online and help you research your every ailment fail? I asked this to Adam Bosworth, the former Googler who originally created Google Health, a few weeks ago when he was in the TCTV studio to talk about his new health startup Keas.

In a sentence, he said, “It’s not social.” In the video clip above, we talk about why Google Health never seemed to go anywhere. Bosworth says the problem was that “Google didn’t push to see what could they do that people would want. They basically offered a place to store date, but people don’t want a place to store data.”

Bosworth has learned that you have to make things fun to motivate people. Even healthcare. “If it’s not fun, it’s not social, why would they do that?” he asks. “Yes, they want to be healthy, but they want more than that. They want the encouragement and even the pressure of friends.”

From Google’s blog post: There has been adoption among certain groups of users like tech-savvy patients and their caregivers, and more recently fitness and wellness enthusiasts. But we haven’t found a way to translate that limited usage into widespread adoption in the daily health routines of millions of people. That’s why we’ve made the difficult decision to discontinue the Google Health service.

Google says that it will continue to operate Google Health until January 1, 2012, will allow people to export their health data for an additional year beyond that. Any data that remains in Google Health after that point (January 2013) will be permanently deleted.

Google Health launched in 2008 as a central repository for all of your health information, including prescriptions, medical history, medical records, and more.

One of the key contributors to the overall success of Google Health were partnerships with insurance companies, hospitals and other medical institutions to make data more available to consumers. As last year, Google Health still needed to sign up hundreds of insurers in the U.S. Google announced some key deals (i.e. a partnership with CVS to import prescription data into the platform), but couldn’t gain traction elsewhere.

Google also started transitioning Health into an overall wellness platform, allowing users integrate data from FitBit and CardioTrainer, but clearly this didn’t get enough traction amongst users.

Microsoft’s competing product HealthVault looks to be still alive and kicking.

Via a new dashboard, Google Health will now organize all of your health and wellness (i.e. fitness) information in one place. The new platform will give provide graphs on your progress with weight loss goals, and you’ll be able to create custom trackers for wellness issues like dietary habits, daily sleep, frequency of exercise, pregnancy or even how many cups of coffee you drink a day.

Additionally, you’ll be able to now keep a journal on progress for wellness goals for health conditions. And Google is upgrading content integration for Google Health, allowing users to access content links for each medical condition, medication or lab result users input in their Google Health profile. Past medical history or conditions can be easily removed as well.

And Google is partnering with TechCrunch50 startup Fitbit, which develops a wearable device that captures health and wellness data such as steps taken, calories burned and sleep quality; and CardioTrainer, a mobile app for tracking fitness activity and weight loss, to integrate this data into your Google Health profile.

Google says that in the two weeks since CardioTrainer’s integration went live, the app’s developer WorkSmart Labs says that users uploaded more than 150,000 workouts to Google Health. This data can then be mashed up with medical data that users input to Google Health.

Of course, one the keys to the overall success of Google Health are partnerships with insurance companies and hospitals to make data more available to consumers. As of last Fall, Google Health still needed to sign up hundreds of insurers in the U.S. Today, Google is announcing relationships with the Lucile Packard Children’s Hospital at Stanford, University of Pittsburgh Medical Center (UPMC) and Sharp HealthCare. Last year, Google announced a partnership with CVS to import prescription data into the platform.

You see, Google Health – which enables you to store and manage all your health information in one place on the Web – can be a great service but it only becomes truly useful when your own health insurer and health care providers sign on to participate, since they are the ones who generate and keep your personal health data.

And flocking to it, they ain’t.

With today’s addition of both Harvard Pilgrim Health Care and the American Postal Workers Union Health Plan to the program, the current count of participating insurers is three (Blue Cross Blue Shield of MA joined late last year). Needless to say, there are hundreds more health insurance providers in the United States, so it’s going to be a long haul for Google to include the majority of them in the program.

And even then it’s going to be a challenge for them to provide a seamless service to users; Google in the past has admitted that wrong or incomplete data can cause Google Health to be more of a nuisance than an added value.

Amusing enough, today is the same day that sees the public launch of Keas, a VC-funded startup headed by former Google Health head Adam Bosworth. The fledgling company was profiled in the NY Times this morning and aims to combine personal data with general health information to deliver tailored health plans for individuals, designed by wellness experts. Bosworth has set up partnerships with both his former team and their biggest rival, Microsoft HealthVault.

Apart from the two new insurers, Google has also teamed up with more data providers, namely MDLiveCare and Hello Health.

Whether it be bills, insurance forms, medical records or prescriptions, patients are often inundated with vast quantities of paper. Google Health is now trying to help you organize all of this paperwork in its platform. Google Health, which finally launched last May after months of rumors, has ambitions to become a centralized and secure place to store medical records online.

The new feature lets patients upload scanned paper documents into your Google Health account. Google particularly suggests that you upload an “advance directive,” which determines your end-of-life wishes so that your family and doctor can honor them if you get sick and are unable to communicate. Google Health is actually working with a advance directive provider, Caring Connections, to provide a free, downloadable form customized for all 50 states. In order to complete the form, you need to download it, print it out, complete it, scan it, and upload it back to Google Health.

Google Health also recently launched a feature that gives users the ability to share their medical history with designated family or close friends. The whole concept of hosting medical records online raises security concerns for many but Google says it is taking lengthy measures to ensure the security of the data, associating invite links to specific Email addresses and allowing users to track who has viewed their records. All shared records are also read-only.

Online health records is a rapidly growing segment of the health 2.0 world—Google Health, Microsoft’s HealthVault, WebMD, Aetna’s SmartSource (via a partnership with Healthline), and Revolution Health (now part of Waterfront Media), are just a few of the many online platforms that let consumers organize their health records online in a secure portal.

In a space where you are competing with prestigious medical institutions and platforms backed by the largest tech companies in the world, there’s not much room for the small, bootstrapped startup. Unfortunately, miVitals, an Australia-based startup that provides an online storage platform for consumer health records, will be shutting its doors in mid-May due to lack of funding. miVitals, which was primarily financed by angel investors, is a free service that let you store medical records, manage accounts for your family, schedule appointments, and share this information with your health care professionals.

It seems that in the online medical records sector, partnerships with pharmacies, medical professionals, and institutions are key to making the platform efficient and more consumer-friendly. At some point in everyone’s lives, you realize the difficulty (and inefficiency) of getting your records faxed from a health care provider to an insurance company or another doctor. One of the primary virtues of an online database is that it streamlines the sharing process of medical records, and partnerships are key to making this process work. miVitals was lacking in this area; the startup had only developed partnerships with Australia-based medical companies and institutions despite the site’s aim to be an international resource for consumers across the world. Google Health has partnerships with pharmacies (Google Health recently struck a deal with CVS), insurance companies, hospitals and labs to integrate data from medical professionals with consumer information.

HealthVault’s online platform has been integrated with several large medical institutions over the country, including The Mayo Clinic, The Cleveland Clinic, and New York-Presbyterian Hospital. And Microsoft has been able to sign in insurance companies-last year, Microsoft struck a deal with Kaiser to offer HealthVault’s health record site service to Kaiser’s members.

With competition coming from Google, Microsoft, WebMD, and more, it can be tough for a smaller competitor to find footing in the space. And the current economic crisis and lack of available funding isn’t helping. Perhaps the death of miVitals a sign that there isn’t room for small startups in the already crowded online medical records market.

The slow but steady march towards a unified online healthcare management system continues. Google has announced that it has forged a new partnership with CVS, one of the nation’s largest pharmacy chains, allowing CVS customers to import their full prescription history into Google Health. CVS joins other major pharmacies including Longs Drugs and Walgreens in offering the same functionality, which combined now allow over 100 million Americans to import their medical histories into Google Health, which launched last May.

It may not sound terribly exciting at first, but the ability to quickly look up a patient’s past and current medications is actually very important in an age when it seems that nearly everyone is on at least one prescription medication. While national pharmacies can typically look up what medications you’ve filled from other branches of their store, they can’t search through the systems of other chains, so they’re forced to rely on the patient to self-report their medical history.

Unfortunately most people have pretty poor memories when it comes to remembering their current and past medications, especially when they’re taking generic drugs, which can lead to some very dangerous drug combinations (the Google blog post notes that as many as 1.5 million Americans a year are harmed by dangerous medication interactions). By aggregating prescription histories in a single place (which users can then share with their doctors and loved ones), Google Health can help cut down on these harmful drug interactions.

Of course, a central hub for your prescription history is only really useful if you can import all of your prescriptions, not just most of them. And Google Health is still missing out on a few major players, including national store chains like Wal-Mart and Target. Google won’t comment on who they’re currently in talks with, but I suspect they’re trying to get as many of these chains on board as possible.

Google Health doesn’t seem to get as much attention as many of Google’s other properties, but my guess is that it will be among the company’s most important assets a few years down the line. The American healthcare system makes accessing past records, prescriptions, test results, and other important data a huge hassle, not to mention the ridiculously confusing (and uncentralized) hubs offered by health insurers and pharmacies. There are privacy issues abound with a centralized system (the fact that Google insists on labeling its health product as a Beta is definitely unsettling, as are the company’s past security issues), but the potential benefits may well outweigh the risks.

After months of rumors, Google Health finally launched last May, promising to store our medical records in a secure way that is more accessible, easier to understand, and useful than traditional paper records. Since then we haven’t heard too much about the service, which isn’t particularly surprising given the sensitive nature of the information involved (this isn’t a space where Google is going to take new feature additions lightly). Today, Google has announced that it has launched a significant new feature, giving users the ability to share their medical records with designated family or close friends.

The general idea behind the feature is that oftentimes during emergencies family members may not know the details of your medical history, like medical allergies. Such information can be lifesaving, but sharing extremely personal medical information is not something that should be taken lightly. Google is taking lengthy measures to ensure the security of the data, associating invite links to specific Email addresses and allowing users to track who has viewed their records. All shared records are also read-only.

One security measure that I don’t understand is the 30 day expiration Google Health is placing on each Shared link. Unless users resend their link every month, it sounds like this feature would be effectively useless in the event of an emergency. I’d prefer a system that allowed me grant permanent access to a close family member, which I could revoke at any time. Update: A commenter below points out that this expiration may only apply to the link itself, and that the sharing relationship remains in place indefinitely provided the link is used within 30 days. Google has confirmed that this is the case.

For those users who’d prefer to go the low-tech route, the site is also launching a new feature that makes it easy to print out wallet-sized snapshots of your medical profile, which you can distribute to close family or perhaps just keep in your own wallet. The site is also launching a new graphing feature, allowing users to visualize the progress of health-related metrics like their blood pressure or cholesterol.

With Google Health, you can:
* Build online health profiles that belong to you
* Download medical records from doctors and pharmacies
* Get personalized health guidance and relevant news
* Find qualified doctors and connect to time-saving services
* Share selected information with family or caregivers

The other thing to note is the logo (we’ve included it in this post), it would appear that Google Health is going straight to Beta and not through Google Labs.

Google Health has been hampered by chronic fatigue syndrome in terms of its development, with the site being rumored to launch originally in May 2006. Microsoft even beat Google in the space, having launched its own online health product in October 2007.

Vertical search makes a lot of sense for certain categories, and Health is one of them. Just compare the results for any health related search from Healthline, a well funded new health search site, to a standard search on Google.

The question I have is will Google do any content aggregation or even…gasp…original content…to turn their health search site into more of a Google Finance-like portal. Either way, Google Health will need to be very good to be better than Healthline.