Home United States USA — software How infrastructure will help cure healthcare

How infrastructure will help cure healthcare

383
0
SHARE

NewsHubDonald Trump’s election has left many wary of how he’ll respond to a campaign promise to dismantle Obamacare. It seems that select aspects of the Affordable Care Act (ACA), aka Obamacare, will remain intact. Likely to remain are provisions that make it illegal for insurers to deny a patient’s pre-existing medical conditions and enable children to stay on their parents’ insurance plans through age 26.
While not part of the ACA, structural innovations designed to control cost, such as the shift to value-based care (VBC), a new way of paying doctors and hospitals, will likely continue (more on this later). The Center for Medicare & Medicaid Services (CMS) may cancel their timeline for this shift, slowing momentum. However, private insurance plans and doctors have already changed the way they contract together, making very unlikely a retreat to the old payment model.
Even without a crystal ball of the exact specs of a post-Trump healthcare world, the fundamentals of the healthcare market and the massive forces acting upon it continue to render it an excellent investment opportunity. Specifically, the most near-term and pervasive value-creation area is in infrastructure software, the “glue” that serves as middleware for healthcare.
The persistent truths are that the healthcare market represents $3 trillion, almost 20 percent, of the U. S. economy. This market also is plagued by a level of gross inefficiency and under-performance largely unseen in any other industries in our post-internet world.
Why has healthcare lagged behind so much?
Largely, it’s because despite complaints about skyrocketing costs, there was no need to change. The lack of technology progress wasn’t because of a lack of available solutions, but rather because of a lack of economic incentive. Incumbents maximized profit by continuing along proprietary business processes and technology paths, because doctors and hospitals got paid by insurance companies for every single transaction of care. Nobody stood to gain by re-engineering for common workflows or common infrastructure. Siloed operations were sufficient under a payment model based on transaction volume.
The paradigm, however, is shifting dramatically.
The new role of “patient as consumer” is key in making healthcare behave like a more normal market. High-deductible health plans are the driving engine. In 2006, only 6.2 million members in the U. S. were on high-deductible plans. By 2015, this number grew to 58 million, a growth rate of 28 percent per year. Because almost 90 percent don’t exceed $2,000 per year in healthcare spending, 50 million people are effectively paying 100 percent of their healthcare out-of-pocket!
Unsurprisingly, this will start to change consumer behavior. Previously, patients had a significantly higher threshold for bad experiences because they largely weren’t paying. Increasingly, payments are made by patients themselves and/or insurance companies based on outcome and experience. Healthcare providers that had optimized only around transaction volume are finding themselves in sore need of new CRM-like tools for a consumer-centric business: to segment/acquire/retain the right patients, control costs, message/coordinate care effectively and streamline processes.

Continue reading...