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Healthcare Competition Creates Opportunities for Advanced Tech

It seems strange to me that health care institutions consistently avoid any reference to competition. Yet health care has become aggressively competitive. Competition for patients is coming from all angles. Primary and urgent care is already starting to feel the bite and labs are next. Patients now have a choice: if someone feels ill they can choose between their primary care physician, an emergency room, urgent care center, retail clinic or online visit. The new alternatives provide two of the most important features that change consumer behavior: convenience and cost. They give cheaper faster medical care. As they evolve they also are using digital technology inside the place of care, advanced telecommunications to connect directly to the patient and intelligent algorithms (artificial intelligence) to improve the value of care, regardless of location. Here is a summary of current and emerging alternatives and what they portend for the use of technology.

Urgent care centers - Depending on the definition, there are somewhere between 7,400 and 9,300 urgent care centers in the U.S., with a yearly growth of about 300 centers per year.[1] At present, most of them are independent operations. Only 22% of urgent care centers are hospital-owned. Visits to urgent-care centers increased 19% from 2010 to 2015.[2] Trends include: further expansion as demand rises; health systems acquiring, building, or partnering with urgent care; increased use of healthcare apps to check on wait times and forward information. On the horizon: use of automated lab testing and a push toward consolidation or competition from large entrants that dominate the market.

Retail clinics - There are about 3,000 retail clinics operating in the U.S., which has almost doubled over the past five years. A big loser with the growth of retail clinics is primary care as consumers see this as a reputable alternative for many health services. Also they represent a growing challenge to traditional labs, retail clinics (more than urgent care centers) are becoming relatively large users of point-of-care tests, and immunoassay laboratory tests and vaccines.[3] On the horizon are ventures linking retail clinics with remote monitoring apps for chronic care patients, partnerships with online service providers. If Walmart seriously takes the plunge into providing primary care services in their stores and online that could be a major game changer as well.

Online – Online primary and urgent care has been growing for years reaching close to 2 million patients this year. The growth of these services has accelerated through the adoption of solutions to early barriers including technical, legal, regulatory, infrastructure and business models. Online services are an interesting market segment occupying a space somewhere between a primary care office and a nurse call center. The horizon includes widespread integration by health systems and physician practices as online services replace after-hours care. Also, several groups in this space are expanding into specialties and remote monitoring for chronic care patients. The greatest movement of independent online service providers is toward licensing platforms and sourcing physician staff to existing health care systems. 

Automation – This is the new frontier.  Not on the radar of many healthcare soothsayers is the pending growth in automation to deliver direct patient care. The use of patient check-ins using computer terminals and iPads and other office automation chores has already taken hold throughout healthcare but on the horizon are direct patient-care applications using intelligent software and robotics to diagnose and monitor conditions and deliver a variety of services. Computers have been reading EKGs and analyzing pap-smears and ICU patients for many years. Even ophthalmological and mental health applications are using technology to provide services normally delivered by a licensed professional, turning smartphones into medical devices with promising applications for chronic care. Investors are looking at serious money in this arena and Apple COO Jeff Williams recently said “We think there is tremendous potential to do on-device computing, to do cloud computing as well, and to take that learning through machine learning, deep learning and ultimately artificial intelligence, change the way health is delivered.”

So what about traditional health care institutions? The stand-alone, independent hospital, serving an array of medical services to the community, is vanishing. While academic journals from 1980 to 2010 included many studies concluding that the U.S. was in danger of a looming hospital bed shortage[4] such discussion has disappeared except for a few specialty areas such as mental health beds. Today, there are about 5,500 hospitals in the U.S., a decline from almost 7,000 in 1980. The total number of hospital beds in the U.S. declined from 1.5 million in the early 1970s to less than 900,000 today.[5] What is the outlook?

  • Many independent hospitals have joined larger health systems from less than 2,700 to over 3,200 in 2014.
  • Hospitals have become more of a critical care center as both inpatient admissions and average length of stay have declined while emergency room and outpatient visits have increased.
  • Health systems are growing by acquiring or networking with smaller hospitals aided by the use of advanced technology. For example, Mayo established the Mayo Clinic Care Network, a hub and spoke system linking almost 50 hospitals providing e-consults. As a result about 80 percent of the patients remain in the host facility while 20% have to be transferred away, many times to a Mayo facility, thus the revenue model for the network.

Next Up

  • Fake Concerns Protect Turf
  • Carving a Niche for Telemedicine in Pay for Performance

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[1] Urgent Care Association and American Academy of Urgent Care Medicine

[2] Accenture

[3] The Advance of the Retail Health Clinic Market: The Liability Risk physicians May potentially face when supervising or Collaborating with Other professionals Mayo Clin Proc. 2011 Nov; 86(11): 1086–1091.

[4] More beds for boomers. A top 10 list of reasons why hospitals will continue to expand capacity. Mod Healthc. 2004 Mar 8;34(10):32. No vacancy: hospital bed needs in the year 2000 and beyond. Health Care Strategic Manage. 1984 Dec;2(12):18-20.

[5] Data from CDC/NCHS and American Hospital Association


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