This blog post is part of the ‘Think Further’ series sponsored by Fred Alger Management. For more “Think Further” content, please visit www.thinkfurtheralger.com.
There is a perfect storm brewing, one that will drastically reshape Healthcare. The change will come more slowly than many hope but far faster than anyone imagined. For too long healthcare has treated the patient as an object rather than a person. Treatments have been focused on symptoms and not causes.
In the US, healthcare accounts for around 18% of the economy. Costs continue to escalate at a rate than outstrips the growth in earnings of consumers. Yet the health outcomes from all this spending put us in the middle of the pack of nations. Healthcare is a tax on the competitiveness of the US economy and companies can’t escape this tax by continuing to pass a greater portion of healthcare costs on to their employees. Healthcare needs a reset and that reset is coming. We are entering the era of consumer-driven retail healthcare.
A Tipping Point is coming
Consumers (aka Patients) have been the outsider in the Healthcare system. Healthcare companies have traded information about patients and not with patients. But a tipping point is coming.
The past seven years have seen a confluence of change and the pace is accelerating.
The recession in 2008/9 and it’s lingering after effects together with escalating healthcare costs drove employers to revamp employee health benefits. The net impact was a larger portion of health costs shifted on to the shoulders of individuals and families. This shift continues today. It can be argued that the recession has done more than anything to drive change in healthcare.
Legislation and Regulations
The Federal Government has driven massive change through the Recovery Act and the Affordable Care Act. This, coupled with Presidential Executive Orders to make increasing amounts of government data available in machine-readable form, has created massive entrepreneurial opportunities to put previously dormant data to new uses in healthcare.
We are now entering a new phase where policy and regulation is driving change based upon quality outcomes and “alternative payment models.”
Quantified Self: the ability to measure almost every aspect of ourselves and the emergence of this in the consumer mainstream, as wearables, drastically changes the balance of power in Healthcare. Now consumers are generating information about their lives at a volume that dwarfs the volume of information that any individual physician or healthcare organization holds about them.
Consumers trusting their data to the cloud and the evolution of “Big Data” is revealing new insights as a result of data analysis that previously was impossible, or uneconomic, to carry out.
We are already seeing this trend in pharma where there appears to be a shift from finding the miracle drug to composing drug cocktails that are tuned to an individual patient’s genetic profile.
Consumers in the driving seat
These tectonic shifts are circling healthcare and driving unstoppable change. Physician incentives are aligning around quality and effectiveness. This is driving a shift in focus from episodic care to preventative care.
As physicians are increasingly rewarded based on outcomes they are becoming more open to new ways of caring for their patients. Wellness and prevention programs are becoming more important and new care delivery models, such as telehealth will become increasingly common.
As consumer bear a larger portion of health costs and have greater visibility in to the total cost of their care they are becoming more amenable to the use of retail clinics and other retail health solutions.
One area of uncertainty is around the emerging health insurance marketplaces. Outside the largest self-insured employers there is a scenario that sees employers choosing to pay penalties and provide their employees with money to make their own choice for healthcare in the marketplace. This could see consumers have more control over their health insurer. This in turn could see the average duration of a contract increase. A growing group of consumers would have the power to choose the insurance plan that works for them. This could drive a flight to quality and service. This in turn could increase the pressure on insurers to focus on wellness and prevention.
What does the future hold?
We are just starting to see glimpses of the future of healthcare. Over the next five to ten years we can expect these trends play out with greater impact.
The release of open health data has stimulated a vibrant entrepreneurial economy in healthcare. As consumers move to the center of healthcare they will look for applications and services they can trust to help them throughout their health journey. These applications and platforms will help them consolidate their information from many different sources. Helping them reconcile and correlate multiple and disparate data sources. These platforms will not just consume data. They will also enable consumers to share data with whomever they trust. We are already starting to see this happen. The industry is moving towards a developer friendly platform known as FHIR – Fast Health Interoperability Resource framework. All parts of healthcare are actively embracing FHIR to solve interoperability challenges. It is not just the traditional Electronic Medical Record Vendors that are evaluating FHIR. We are seeing all sectors of the industry and other innovators embracing FHIR.
FHIR is potentially the most important development to cut across all areas of healthcare. With consumers able to aggregate their data from consumer devices and merge it with healthcare data, the tipping point is upon us. The healthcare system will be forced to embrace and accept the consumer as a partner. This is the most significant change that is primed to disrupt healthcare.
HIPAA – the Achilles heel of Healthcare
HIPAA: The Health Insurance Portability and Accountability Act of 1996 has long been used by the industry to prevent the sharing of information. Even with the patient themselves. The Office of Civil Rights at the US Department of Health and Human Services has made it clear that the patient has a right to their own data, in electronic format. This is the industry’s Achilles heel. The Patient is the ONLY person across the healthcare system that has the right to their health information. As Interoperability becomes more real, the patient will truly move to the center and be able to choose their trusted partners in their health journey, choosing who they trust with their data compiled from inside and outside the traditional healthcare system.
Patient empowerment is truly the blockbuster application in health care that will shape the industry for the foreseeable future.
Mark is currently HHS Entrepreneur-in-Residence assigned to CMS to update BlueButton for Medicare Beneficiaries by creating a Data API using HL7 FHIR. Mark is also CTO and Co-Founder at Medyear.com, a powerful free tool that helps you collect, organize and securely share your health information. Manage your own health records today. Medyear: Less Hassle, Better Care.
The views expressed in this post are my own.