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So, What to Do? Part 1: opening the market to consumer demand

When I was involved with establishing the American Telemedicine Association in 1993 it was often stated that telemedicine was “just around the corner.” That was 24 years ago. While much has been accomplished, we are still far, far away from the disruptive transformation that was assumed at the time. Why has it taken so long for healthcare to adopt and be transformed by the promise of digital healthcare? 

Like others, I have compared the growth of external digital health applications to several examples: finance, retail, and entertainment. Despite early opposition, all three resulted in a rapid, vast transformation of their industries. All three were driven by private investment and outside disruptors and adoption was accelerated by competition and consumer demand. Like others, the healthcare industry has its share of both Luddites and early adopters. However, there are a couple of critical differences. One of them is the role of the consumer. 

Although there is a lot of talk about consumer engagement or consumer empowerment. The fact is, while consumers receive more healthcare, they have far less power over making healthcare choices than ever before. A large part of this is tracking the source of the expenditures.  In 1960, almost half of all healthcare spending came from  consumers. Consumers paid for 60% of physician and clinical services. Dental services and prescription drugs were all out of pocket. Consumers’ chose what healthcare to receive and paid for it themselves.[1]  Today, while it is commonly held that consumers pay for 28% of all healthcare costs, the majority of this goes to pay insurers: private, employer, Medicare, Medicaid and for copays.[2] The payers (and state medical Boards) largely make the decisions about what can be goods and services can be purchased and how services are rendered. Insurance now covers dental and eye examinations and has a list of approved providers and their own rules on how services are provided. Only about 10% of household expenditures is for true out-of-pocket items where the consumer is the one deciding what to buy, from whom and how.

It’s hard to be transformative when the consumer has little power over consumption. It doesn’t matter how much data a consumer can generate about their own health and how well the data is computer-analyzed, if a consumer doesn’t have some say in what services they receive or how they are delivered. The effect of disruption in the healthcare marketplace is effectively limited to what the payers will tolerate and how it benefits them.

But its not just the money flow. How would you react if your bank told you that they would invest your money where they thought best and you would not be allowed the information to make your own decisions?  What if your car had a malfunction but the mechanics would not give you an opportunity to decide what was the best choice for repairing the car? (OK, maybe they do too much of that still)  Anyway, that is how all the components of healthcare works. Labs and radiology clinics generally do n t provide  he patient with the information about their tests until it is first sent to a physician who often just summarizes the results and tells you what to do.  In many cases, the assumption is that you will be told only if there is something wrong. Prescriptions are mostly written without giving the consumer information about other alternatives. Electronic medical records are kept for the consumer at each stop - hospital, clinic, urgent care center, specialist, etc. without providing the consumer access to the information or sending the information to a central file where the consumer can access, investigate and control their own information. Or have an automated software to analyze the information and provide a second-opinion.

Learn from other industries - Once the bank and the brokerage were the central places for almost all financial services. Consumers entrusted their money to others and relied on bankers and brokers for their investments. Today, its e-banking, online brokerages and over 3 million ATMs worldwide[3]. Consumers can access all their financial information in one place and take money out, make deposits and change investments regardless of location. Banks have morphed into financial institutions and networks and consumers can access online information, advice and histories 24 hours a day.

Few people want to become their own doctor, nor should they. But they can and should be given access to their own information as well as information about alternatives to products and services that they will use, even if they are not a direct payer themselves.

A small first step - trust patients and start calling them consumers (or even clients).

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[1]National Health Expenditure historical data, 1960-2015, Centers for Medicare & Medicaid Services

[2] US Health Care Spending: Who Pays? Josh Cothran California Healthcare Foundation

[3] International Monetary Fund, Financial Access Survey

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