Tuesday, July 22, 2014

Getting Our Piece of the Pie

In a Linkedin discussion about one of my prior posts, one reader asked what my thoughts were about mHealth bringing about much needed change to the industry.  My brief answer was, essentially -- gosh, I sure hope so, but I'm worried maybe not.  I'm going to use this post to expand on that answer, as well as broadening it to include other new entrants in health care.

It's no surprise that everyone wants to get into health care -- with the nation's tab at $3 trillion and counting, there's a lot of money up for grabs.  People from other industries see an opportunity to bring their expertise and new ideas to our admittedly creaky health care system, and get their piece of that $3 trillion.  My concern is that they'll end up with their own version of the Stockholm Syndrome, with health care's familiar players co-opting their efforts at innovation.

Whenever I talk to a company trying to get a foothold in health care, it seems they always want to target one or both of the payor/provider markets.  This shouldn't be much of a surprise -- as Willie Sutton once said about why he robbed banks, that's where the money is (include pharma as well).  Plus, it's a lot cheaper to do B2B sales than to establish a retail presence, especially in an industry whose consumers who aren't very used to B2C.  Payors and providers are natural targets for new entrants into health care. 

Certainly there is a lot of money flowing into health IT, which is expected to be a major source of innovation.  Mercer Capital Group reported that 2Q 2014 was healthcare IT's first $1b quarter for VC funding, almost hitting $2b for the quarter.  More has already been raised this year ($2.6b) than all of last year ($2.2b).  Mobile health -- mHealth -- is a particular favorite, attracting $400m in 2Q alone, with wearables and apps being the big favorites.

It's no wonder money is being invested: the wearable technology market is predicted to be a $50b industry within 5 years, according to ON World.  That compares to perhaps $5b in 2014 (both estimates seem generous to me).  This kind of technology not only has the potential to greatly enhance the ability to track consumer health, and to create actionable data in real-time, but also has consumers keen to use.  Slightly more than half of consumers in the Accenture Digital Consumer Tech Survey 2014  said they were interested in buying wearable technology (although, as fair warning, a new survey from IDC Health Insights found that one in three owners of a fitness or activity tracker stopped using them in the past 12 months). 

Still, as great a B2C market as wearables appears to potentially be, the companies in it are already working on B2B approaches with providers (such as health systems) and payors.  As Lynn Dubrack, a vice president at IDC Health noted: "To control escalating healthcare costs, especially for chronic conditions, healthcare organizations are evaluating a variety of options to engage consumers and encourage them to take a more active role in managing their health,"  High on the list of those options are mHealth solutions.

Take corporate wellness programs.  Although data on the their effect on health care costs remains mixed, they are a popular strategy for battling health care costs; some 60% of American workers have a corporate wellness program available to them.  Fitness trackers are a natural for such programs.  One company in San Francisco gave all its employees Fitbits, and saved almost $300,000 on its health insurance costs.

Indeed, Fitbit has an entire section of its website devoted to Corporate Wellness programs.  Some experts believe one key reason Jawbone acquired BodyMedia last year was to help it sell to health plans and self-funded employers.

Similarly, disease management and other firms that deal with chronically ill patients are very interested in mHealth.  They love being able to know what is happening at every moment with patients, and provide feedback to them.  Remote patient monitoring is predicted to be a $24b global market by 2019, and the data is starting to demonstrate that it can, indeed, save money.

Look at a company like Glooko, which is an mHealth leader in diabetes management.  Their website prominently targets payors and providers.  Pick your preferred remote monitoring or disease management company, and odds are they're tailoring much, if not all, of their services to payors and providers, not to consumers.

Or take an example outside mHealth -- retail clinics.  Ten years ago they were a virtually unknown quantity.  Walk in without an appointment and be seen quickly?  A price list for their services?  And very affordable prices at that, so consumers wouldn't mind paying directly?  Their business model was revolutionary.  Providers were scared to death of losing business to them, and payors didn't know what to do with them, especially without upsetting their existing provider networks.  It sure looked like a new kind of DTC approach for many kinds of patient care.

Fast forward to now.  Patients are indeed "flocking" to retail clinics, but now they're mainstream.  They're owned by pharmacy chains, grocery stores, even health plans.  Consumers can still pay directly, but, for the most part, the retail clinics are just another network option for consumers.

Top-down innovation isn't working, and won't.  HITECH was supposed to reap all sorts of benefits by getting EHRs in providers' offices.  It has accomplished many of its adoption goals, but it's hard to call it a success.  A recent blog in Health Affairs described how health IT is failing because all of the existing structures in which it is being used do not allow the kind of local innovation and creativity necessary to solve the underlying problems.

E.g., the "problem" is not lack of an EHR, so simply putting one in a provider's practice isn't going to automatically make things better.  Otherwise, more physicians wouldn't say EHRs make patient service worse than better, or worsen clinical operations more than help.  And physicians so dislike the Meaningful Use program -- despite its good intentions and financial incentives -- that 22% are opting out or disregarding, according to a new Medscape survey.

Selling innovative services to payors and providers is fine.  They can use all the help they can get.  These mHealth and other new entrants can help payors and providers control the rise of costs, while improving patient care and/or convenience.  That's all good.  But that may not be the way to radically reshape our health care system. 

I just don't see truly game changing innovations coming from "the usual suspects" of our health care system -- even when done in partnership with non-traditional organizations.  We need innovators who don't want a slice of the existing pie, but are willing to throw it away and make a new kind of pie.

When Napster started, it didn't go to the music labels and make deals.  It went to consumers, and it wrecked the traditional music market.  That was great if you liked to buy music, less great if you were the one owning or selling it.  I didn't like Napster's loose approach to intellectual property, and it took iTunes to salvage the music market, but you have to admit that market will never be the same.  I doubt many consumers would want to return to the old one.

Where are the Napsters (or, preferably, the iTunes) for our health care system?

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