Just as ATMs, then online banking, drastically reduced the need to walk into banks, online health means far fewer people need to come to doctors in person to be cared for by them. The extent of structural disruption this will bring is being vastly under-estimated.
When you’re sick, the last thing you want to have to do is wait for an appointment, then wait for your labs, then wait for your results, only to wait for another appointment. The imminent future of hospital systems is already here.
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State line regulations on telemedicine are being obliterated. 18 states have agreed to the Interstate Medical Licensure Compact, and a dozen more are in the process of approving.
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The Johns Hopkins Hospital monitors patients in its network through a 22-screen command center.
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Montefiore Health System opened a 12-story ambulatory surgical center—with no hospital beds.
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Virtual consultations at Kaiser—whether by phone, email or video—are fully half of all interactions between a health professional and a patient.
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The CDC’s free Text4baby—an advice-giving app for expectant and new mothers—has been used by over a million subscribers.
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At Kaiser’s Oakland medical center, algorithms ping nurses’ phones when a baby is showing abnormal biometrics.
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In Japan, Amazon is already doing same-day drug delivery to your home or office.
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TODAY
88% of doctor consultations are not at a hospital.
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IN 7 YEARS
We’ll see a 1000x increase in telemedicine, but even that phenomenon will be surpassed by health chat.
INSTANT-ACCESS MEDICINE WILL HELP WIN THE WAR OF TRUST
Getting healthcare will be radically faster. Whether by online chat or tele-medicine, you’ll be able to consult with physicians in minutes, not days. Faster lab testing, and even home lab testing with lab-on-a-chip technology, can lead to a diagnosis in under an hour. In some cases, constant-monitoring sensors will detect you’re getting ill—even before you feel any symptoms. Together, these create Instant-Access Medicine, eliminating the pervasive waiting game that drives costs up and allows ailments to go untreated.
WHAT PATIENTS WAIT FOR
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01
WAIT to see if it goes away on its own.
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If it doesn’t, WAIT for an appointment.
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WAIT for lab test results.
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WAIT for referral to specialist.
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WAIT for appointment with specialist.
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WAIT for more test or scan results.
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Once treatment begins, WAIT to heal.
Every time patients have to wait, they feel powerless and lack agency. Frustrated, they take to the internet to Google their symptoms and remedies. Quickly, they’re directed to a $51 billion netherworld where they read that medical science is corrupt, the pharmaceutical industry spreads propaganda and the FDA suppresses the truth about alternative herbal remedies. Why wait, the internet beckons, when you can order online now? Or visit your local naturopathy shop, no prescription needed. Desperate for a remedy, patients think, Well, it’s natural, I might as well try it. The worst part is that 70% of patients who use herbal medicines don’t tell their physician they’re doing so, largely because the patients fear being told to stop. Systematically, this breeds a lack of faith in scientific medicine.
Instant-Access Medicine will help restore trust in the system, simply by eliminating these vulnerable waiting phases. Patients will feel more empowered to get consultations and results and interventions at a pace they control.
We won’t be having patients come into offices. A layer of healthcare will emerge that’s a lot like interacting with Amazon. Whether or not a human is on the other side won’t matter. Drugs will be shipped to you by Uber.
—Josh Makower
New Enterprise Associates
Two big trends have altered the healthcare landscape over the last decade:
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HOSPITALS BUYING PRIVATE PRACTICES
This trend, started in the 1990s, has continued. Since 2000, the portion of physicians in private practice has declined from 57% to 33%. Physicians are attracted by the big buyouts and promise of less paperwork. Hospitals want to get bigger to increase their negotiating power with payers, and also to create a referral pipeline driving patients from primary care practices into the hospital’s bigger-ticket specialty practices.
WHY IT’S RELEVANT: Physicians who switched to employment in the last decade may also be willing to switch again to new solutions, after their seven-year contracts expire and they become free agents. -
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EMPLOYER SELF-FUNDING
Now the majority of Americans with employer-provided insurance are not on a traditional insurance plan. Instead, their employer takes the risk and covers all health expenses, contracting with a third party to administrate. This is especially the case with big companies, for whom self-funding has risen from 62% to 91% since the year 2000.
WHY IT’S RELEVANT: Self-funding companies are looking for new solutions. They’ve already demonstrated their willingness to switch if something better comes along. So as new brands and new types of insurance emerge, self-funded companies will be among the early adopters. Already, new companies like Collective Health are here for innovative companies, promising to make it much simpler to offer health, vision and dental through a single interface.
The result of these trends, however, is that in most major cities, there are four to eight vertically integrated empires that are essentially doing the same thing: competing with each other at every level, from primary care through specializations. The differences between them are not clear to consumers. They all promise similar services and features. They all claim to be the best place to be if you have a stroke, have cancer or have a baby.
The next decade will see this orderly vertical integration disrupted as healthcare migrates to virtual medicine.
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Private Practices
RECENT HISTORY
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Hospital Empires
TODAY
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Virtual Marketplace
THE NEXT TEN YEARS
There will be two main strategies to capitalize on the drastic change—get bigger, or get more agile.
Once you have virtual medicine practices and patient flows figured out, it’s very easy to scale up, because that front end of the business is highly digital. While it’s not quite Netflix, which could go live in 130 new countries on the same day, or Uber, which could launch in 22 countries in the same year, the scalability of digital systems is remarkable. So if your virtual medicine practice works for 500,000 patients, it’ll work for 5 million.
The organizations that get a leg up on virtual medicine will be in a great position to acquire the laggards. M&A activity will increase significantly, and then skyrocket as interoperability improves. Right now, consolidation continues despite the fact that the lack of interoperability creates enormous friction for acquisitions. Similarly, the health networks that get significant efficiencies out of their artificial intelligence, whether it’s their own system or that of an AI specialist like Qventus, will be buyers.
I think we will have a few mega-brands, like Johns Hopkins and Mayo, across many states and internationally. Other brands will be successful by focusing on their specialty expertise, such as cancer care. It will be a mistake to confine any healthcare organization to just the US market.
—Geoffrey Clapp
Healthcare entrepreneur and advisor
NONPROFITS IN PERIL
The traditional advantages of a nonprofit—borrowing at a lower rate, not having to pay taxes—will deteriorate as credit agencies continue to downgrade the outlook on community health nonprofits in the face of so much change. Around the country, the trend of taking on private equity partners will pick up steam. Ten years from now, when these equity partners can cash out, a wave of hospital exits will pronounce the verdict on who really added value and who has to conduct a fire sale.
Agile organizations gain an advantage with every policy change or technological change, because they can respond faster and more fully. Some vertically integrated organizations will decide to pivot, selling their primary care networks and some specialist practices to focus on a specialty market and really deliver superior care. But the majority of agile organizations will be new entrants with digital-age DNA. Soon the landscape will be populated with all manner of hybrids:
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DISEASE-MONITORING CARE MANAGEMENT COMPANIES
Already, new companies like Virta Health promise to reverse diabetes and insulin dependency. Using biomonitoring and constant feedback, supplemented by virtual medicine, these disease-specific companies could prove to be payers’ best recommendation to many patients—a win-win for everyone except the hospital networks that no longer regularly treat those patients. -
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CONSUMER SHOPPING ENGINES
New companies like Stride Health inform consumers in new ways, bringing clarity to the look-alike brands in insurance and healthcare. They run forecasts for patients over the long term to help them make more personal decisions. -
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INSURANCE x PROVIDER MASHUPS
Health targets millennials, offering not just insurance, but some front-end services: fitness trackers, unlimited telemedicine and generic drugs without referral—all with a friendly new face that feels very different from the Blues. -
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DISINTERMEDIATORS
While the back end of care delivery may be the same, the customer-facing front end will have many different “skins,” each of which is optimally designed for a specific customer segment. Once in the system, their pathways of usage can be tailored. They’ll send a patient to one hospital for this condition, but to another hospital for a different condition.
Don’t be surprised if companies that succeed get bought by Silicon Valley giants. The EHR industry lives in fear of a future where Amazon Web Services becomes the dominant hosting service. But that may just be a first step. According to recent international surveys, one-third of people would bank with Facebook, Amazon and Google if those services were offered. They likely feel the same about their health services. While Google has invested in clinical data diagnosis and longevity research, Amazon is already hiring to deliver healthcare programs—incubating the project for Amazon employees, then opening parts up to the world. Apple is also making a big push into healthcare with its HealthKit, ResearchKit and CareKit software frameworks, and recently hired telemedicine superstar Sumbul Desai away from Stanford.
You’ve gotta be able to hunt. You should eat what you kill. Train your own workforce to do it your way. I have to compete with Walmart, where even Medicaid patients are happy to pay $30 in cash out of pocket.
—Dr. Raul Vazquez
Greater Buffalo United Accountable Healthcare Network, New York State’s first ACO for Medicaid patients