Coming at this from the data science/healthcare research field, I see a number of factors reducing the number of startups. First, healthcare has a number of barriers to entry for technological innovation, including very large bureaucracies in the VA, medicare, medicaid, insurance companies, and many other large, slow-moving entities. It's possible to entrench yourself in one of these bureaucracies and do great changes, but there is a maddeningly slow pace of uptake of changes. Second, you have a vast amount of talent and capability being locked up in guild-like systems, where MD students with brilliant minds are being closeted to study the highly specific anatomical structures they will probably never use, for a massive bill to boot. What if we reduced all of our training programs by 50% in time (and cost to the student), in favor of a leaner, more practical approach to clinical work? Again, the massive bureaucracy of healthcare is slowing down innovation.

So, where DO we see innovation for healthcare? Primarily, it's coming from the labs of academic researchers or its coming from big biotech companies like Pharma, biomedical device firms, etc. Yet, these academics or biotech companies are fundamentally linked with the massive bureaucracies of healthcare, their clients and customer-base.

On top of all of that, keep in mind in healthcare, we have very tight restrictions on use of protected healthcare information. It's hard to study anything, you need very detailed analysis plans and IRB approval before you can even begin to gather/pull the data.

What's the way out for healthcare start-ups/innovators? It's a tricky question, I think we need more open-source work, we need streamlining of bureaucracy, and much more of the talent in this sphere needs to be put to work on the issues that matter. If universal healthcare is ever passed, we will need massive levels of talent reallocation to innovate and drive costs down.

What a time to be in healthcare. We have the best science we've ever had, we have the best diagnostics and treatments and tests we've ever had, and yet we also have arguably the greatest challenges and the most potential for improvement we've ever seen in healthcare. Anyone reading this who is interested in tech, I'd encourage you to join this 1/6th of the economy which is ever-present and only set to increase in prominence with the aging of our western societies.