Oliver Kharraz, the doctor-turned-CEO of Zocdoc, says healthcare disruption is far harder than corporate giants assumed. In a new Fortune commentary, the head of the $2.3 billion healthcare marketplace argues that companies like Walmart and IBM stumbled because they treated a tangled industry as a simple technology problem.
Both companies entered healthcare with big ambitions before pulling back. Walmart opened low-cost clinics in 2019, promising transparent prices for primary and dental care. By April 2024, it said it would close all 51 locations across five states and end its virtual-care business, as rising costs and difficult insurance reimbursement made the model unprofitable.
IBM’s Watson Health followed a similar arc. Launched in 2015 to bring AI to areas such as cancer care, it never lived up to the hype. In 2022, IBM sold much of the division to Francisco Partners in a deal reportedly valued at about $1 billion, after investing roughly $4 billion.
Why Disruption Playbooks Fall Short
Kharraz argues that disruption playbooks fail because healthcare is a “complex systems and incentives problem” rather than a technology issue. Trillions of dollars are tied up in hospitals, pharmacies and other institutions, while doctors, insurers, regulators and financial incentives have shaped one another for decades. Change one piece, he wrote, and the rest will not simply fall into place. He likened it to building the world’s fastest train that cannot run on existing tracks.
Working Within the System
Startups that build around the system often create useful niche products but stay on the margins, he said, because they lack a link to healthcare’s core infrastructure. Others wrongly assume the industry will reshape itself around a better idea, yet the tracks rarely rebuild themselves. Lasting impact, Kharraz says, comes from working within existing realities. He stressed that healthcare still needs people willing to take ambitious swings at improving it.