Analyst Shares Vision for How Digital Will Disrupt Healthcare
Well care vs. sick care. The “patient-to-consumer revolution.” Smart care.
If you’re familiar with digital healthcare but aren’t an insider, you’ve probably heard these terms—quite possibly often enough to wonder if they’re buzzwords or actually represent concepts and trends worth learning more about.
For someone like Tom Main, there’s no question the terms aren’t just buzzwords. He studies and writes about the healthcare industry and is a partner with the consulting firm Oliver Wyman’s health and life sciences practice. He’s also a founder and the managing director of its health innovation center.
As you’d expect, Main has some thoughts about how technology is changing the way the healthcare system works and, more importantly, will work. He was in Denver last week to lay out his vision at the Rockies Venture Club’s annual Colorado Capital Conference.
Main’s big idea is that 40 percent of the $3 trillion the U.S. spends on healthcare each year could be avoided. Startups that create the technologies to cut those costs will have a chance to grab billions of dollars in profits as incumbent players like health plans and hospital start spending money to save even more of it.
That’s a different approach than the traditional way that costly new technologies like MRI machines seem to increase what we spend on medicine. The key, Main said, is changing the emphasis from treating people who are sick to focusing on keeping people who are well healthy. Consumer electronics will be a big part of that, enabling doctors to change how they practice and introducing innovation-driven competition that will cut costs. Ultimately, the new approach will transform patients into consumers able to take a greater role in their healthcare decision making and lead to better outcomes.
Here are some takeaways from Main’s presentation, plus a note about efforts to make Colorado a leader in digital healthcare.
Consumer-centric and consumer friendly. Healthcare and health insurance are industries that are notoriously unfriendly to consumers. Just look at the open enrollment window for insurance plans to see that shopping for deals isn’t easy. Add in the panic and confusion that comes with an emergency, and it’s clear that consumers don’t really stand a chance.
Main foresees that environment changing in big ways that could have major benefits for consumers, at least for non-emergency treatment. The biggest driver will be a shift to transparent pricing and the bundling of services so a patient/customer knows, up front, what everything will cost.
Main said a pioneer in this type of pricing transparency is the Surgery Center of Oklahoma, which publishes its prices online. The listed price for a procedure such as a knee replacement includes the fees for the doctor, anesthesiologist, and the facility. Before leaving home, a patient knows they’ll have to pay $19,400.
That rate has proven to be many times less what hospitals and surgical centers near the Surgery Center of Oklahoma–and across the country—charge. As a result, patients from around the country have been travelling to Oklahoma City to have their procedures.
While the Surgery Center of Oklahoma could transform the way people shop around for costly treatment for non-emergency problems that already have been diagnosed, the same principles could be applied to smaller, common problems, like earaches, fevers, and sore throats. We’re already seeing that in pharmacies and supermarkets that offer walk-in “convenient care clinics” that list prices for exams and minor procedures.
These clinics offer patients the chance to meet a medical practitioner, get a diagnosis, and form a treatment plan in about an hour. Ultimately, Main sees a day when new apps will offer consumers even more. A user could tell the app about the problem, and it would find the closest clinic or the one with shortest waiting time. The consumer could compare prices from competing clinics, like those at Walgreen’s and Walmart or even traditional doctors offices, and the app could come up with an estimate for what the visit and a prescription would cost.
Moving to that approach would transform parts of the healthcare industry, and for once it could be for the benefit of consumers, not the bottom line of insurance companies or medical companies. So why would they want to switch?
Many probably won’t, Main said. Some will resist because they favor the model where patients at an information disadvantage are a lucrative revenue stream, especially if they’re chronically ill. Some companies have invested heavily in clinics, surgical centers, and diagnostic equipment and have considerable costs that will be hard to offset. Others will have trouble coming to grips with changes to medical and business practices that have existed for decades.
But ultimately, they won’t have a choice, Main said. Innovative competitors that take advantage of new digital tools will be able to court dissatisfied customers looking for quality care that’s affordable. In the new world, those people will finally be able to vote with their pocketbooks.
Digitally driven. For the past decade or so, debates about changing the healthcare system have mostly revolved around insurance reforms like Obamacare. But during his wide-ranging talk, Main hardly discussed that at all. Instead, he focused on how digital technology is affecting healthcare—in particular, technology that is or will be readily available to consumers.
In Main’s eyes, activity trackers, wellness apps, and social networks will play a big role. Competing with friends about who can count the most steps or cut the most calories already is helping millions of people live healthier, Main said, and he doesn’t think … Next Page »