Tuesday, April 25, 2017

Clicks-and-Mortar: Health Care's Future

The woes of the retail industry are well known, and are usually blamed on the impact of the Internet.  Credit Suisse projects that 8,600 brick-and-mortar stores will close in 2017, which would beat the record set in 2008, at the height of the last recession.  There are "zombie malls," full of empty stores but not yet shuttered.

And then there's health care, where the retail business is booming.

In a recent Wall Street Journal article, Christopher Mims set forth Three Hard Lessons the Internet is Teaching Traditional Stores.  The lessons are:
  1. Data is King
  2. Personalization + Automation = Profits
  3. Legacy Tech Won't Cut It
It's easy to see how all those also apply to health care.

But health care is different, right?  Patients want to see their physician.  That physical touch, that personal interaction, is a key part of the process.  It's not something that can be replicated over a computer screen.  

Yeah, well, the retail industry has been through all that.  Retail once primarily meant local mom-and-pop stores.  They knew their customers and made choices on their behalf.  Customers had little say in the choice of products, nor much ability to compare prices.  But it was all very personal.

The 19th century saw innovations like mail order catalogs (e.g., Montgomery Ward, Sears Roebuck) and department stores (e.g., Macy's, Wanamakers, Marshall Field's), while the 20th century added shopping malls.  Each helped distance consumers from their local merchants.  

Still, though, when Amazon came along, booksellers were adamant: no one wants to buy books sight unseen!  When that truism was proven false, other sectors of retail had their turn in the Internet spotlight, and the last twenty years of results haven't been pretty for them.  

It turns out that the personal touch isn't quite as important as retailers liked to think.

As for health care, it seems to be surviving the Internet onslaught pretty well.  WebMD alone has more monthly visits than to all the doctors in the U.S., but any declines in doctor visits are more likely due to economic factors than to internet searches.  Telemedicine has been touted as one of the next great health care innovations, but research suggests that, while it may substitute some in-person visits, it more than offsets that with new visits.  

Health care is following some historical retail trends.  Independent physician practices are quickly getting purchased by health systems,  which are becoming the department stores of health care -- down to their sprawling suburban campuses and their vertical integration of services.  Even independent practices increasingly rely on impersonal billing and practice management companies.  Everyone has computers, especially for the money, but few have really changed their processes to take full advantage of them.

It's very 1960s in the health care retail world.

As for that "personal touch," well, a Harvard study found that the average doctor visit takes 121 minutes of patients' time, only 15-20 minutes of which is actually spent with the doctor.  That's after being able to actually get an appointment, which can take weeks.  

That's not the kind of personal experience that consumers really want.

So why hasn't health care been more disrupted by the Internet?  Well, for one thing, when you buy a book online, your state doesn't require that you buy it from a bookstore that is licensed by its not-so-friendly licensing board, as is true with seeing doctors over the internet.  The state medical licensing boards are ostensibly there for our protection, but time and time again have acted as though protecting physicians' livelihoods is their main concern.

Strike one for disruption.

For another thing, we (usually) trust our doctors.  Then again, we used to trust recommendations from bookstore staff too.  That is, when they had time for us, if they seemed knowledgeable, and if they were making recommendations that fit us rather than just their own preferences.  AI-based recommendations from Amazon may not be as good as those from a really good bookstore employee, but are probably a lot better than those from the mediocre workers you were more likely to encounter.

Think the same thing won't happen when AI gets better at diagnoses?

Let's go back to Mr. Mims three lessons and see how they apply to health care:

  • Data is King: Health care collects a lot of data, and will get even more with all the new sensors.  Not all of that data is meaningful, much less actionable.  Health care providers sometimes share your data, but not always with your consent and rarely to your direct benefit.  All of that will change.  For example, Google's Verily has started Project Baseline to do in-depth tracking of 10,000 volunteers.  Their motto: "We mapped the world.  Now let's map human health."  The big tech companies know their customers very well and tailor interactions accordingly; health care must as well.
  • Personalization + Automation = Profits: Mr. Mims cited Amazon Go as an example of how these two features could boost margins, and Information Age similarly described retail experiences based on more automation and better knowledge of customers.  Meanwhile, we're stuck in waiting rooms, filling out forms we've already filled out elsewhere. That is not a personal experience that can survive in the 21st century.  It has to be smoother, faster, and friction-less.  
  • Legacy Tech Won't Cut It: EHRs that no one likes.  Claims systems that take weeks to process a claim.  Billing processes that produce bills no one can understand.  Records that are siloed when we want them shared, yet all too open to being hacked.  The list could go on almost indefinitely.  All too often, health care's tech is not ready for prime time.  
The question is, are health care's leaders learning these lessons?

The future of retail appears to be in "clicks-and-mortar" (or "bricks-and-clicks").  Amazon is opening up physical stores, while Wal-Mart is beefing up its online credentials.  They and other retailers know that consumers want things fast, sometimes in person and sometimes not, like options, and always are paying attention to the cost.  It takes both online and in-person presence.

Health care can act like B Dalton or Borders, assuming until it is too late that their consumers will visit them in person, because they always had.  Or it can act now to jump to the data-driven "clicks-and-mortar" approach that other retail businesses are moving to.  

Health care organizations which get that right will be the one to survive.  The rest are zombies, dead but not aware of it.

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