Healthcare

Fighting the Incentive War in Health Care IT Adoption

More than once I have been involved in the discussion of how to commercialize an innovative tool that innovates around the web being a channel for patient care.  In a typical market, this isn’t typically a difficult exercise: identify the supplier, identify the consumer, and then identify data points that influence how to shape the commercials.  But in the U.S. health care system, where the transaction between consumer (patient) and supplier (physician) is typically brokered by a third-party (insurer), this becomes a bit more complex.  And it’s this complexity which has hampered widespread adoption of valuable tools which create a direct interaction between supplier and consumer – the transaction is invisible to the broker.

For insurers, the benefits are readily evident.  An interaction between a patient and provider is one that I don’t necessarily have to reimburse, thus cutting costs.  When these conversations around commercialization evolve, they inevitably circle back to the insurer as the easiest play for sales.  But it’s more complicated than that.  Once the insurer purchases the rights to one of these tools and makes them available, the onus is now upon them to generate utilization in order to realize a positive ROI.  On the patient side, this isn’t as complex.  A tool that can be sold as a benefit of membership in a group plan that involves no coinsurance and makes health care on-demand without the need for an office visit seems like a win-win.

But on the provider side of the equation, things become more complex.  When UC Davis surveyed a small group of patients and physicians on the use of e-mail and web based communications for patient-provider communication in 2003, the results were overwhelmingly positive.  But 3/4 of the physicians surveyed said that compensation for the time spent using these tools was either important or very important.  Additionally, a majority of the staff resources, which includes medical assistants and nurses, noted that while office visits and phone interactions had not changed with the introduction of web and e-mail, that their overall workload had increased.

These concerns are echoed in my own experience at Massachusetts General Hospital while developing Quicksilver, a tool for inter-office communications between physicians and staff structured around patient interactions.  In a medical office, when a patient instantiates communication, rarely does that first interaction involve a physician.  Typically the first point of contact for the patient is a low-cost resource (M.A.’s and R.N.’s).  Quicksilver was ultimately structured to model that experience in an electronic medium.  That ultimately only changes the game by keeping a better cookie trail and integrating all patient communication into the medical record.

But more innovative tools are ignoring this concern, instead directing their efforts towards patient-centric solutions that assume a direct interaction with the provider.  These are challenging to commercialize.  One model suggests charging patients on a subscription-basis to these tools, recouping part of that fee and reimbursing the provider for their time in responding to the patient.  But in the current coinsurance and reimbursement model, this has to provide a lower per-interaction cost to the patient than is currently offered through coinsurance, and the physician must realize equal or greater compensation for their time.  Given that the latter is only acheivable today through the premiums paid on health insurance, this appears to be a losing strategy.

So where are we to look if commercializing to insurers or patients is a dead end?  As with all things, we need to focus on bringing the costs that make the aforementioned models prohibitive.  A more disruptive model that acheives this is to cut the current cost centers out of the picture entirely.

In this model, the IT vendor would have to assume the role of provider and staff their own physicians who provide the professional services augmented by their IT solution.  This likely involves a heavy amount of outsourcing to onshore, nearshore, and offshore clinicians who are as readily qualified but a substantially lower cost.  A panacea?  Not exactly.  This idea works with truly portable health records.  If a patient has open-heart surgery and uses a tool developed by Medullan for one of our clients as an internet-based continuing care solution, the physicians employed by our client will need access to your medical record – something that currently requires a fair amount of gymnastics.  Once the medical record moves to the cloud – whether it be through a federalized health record or industry solutions like GoogleHealth or Microsoft HealthVault, the ability integrate and use this data becomes the crux of providing the core procedure through traditional channels but reducing costs by moving continuing care offshore.

And there are other concerns.  Moving patient data offshore is a strict no-no with HIPAA.  Additionally, the paradigm of trust that comes with the access to an office-visit will only be overcome by dramatic savings for the consumer.  Furthermore, state-mandated insurance programs like in Massachusetts will add a dynamic where the insurer would still need to broker the transaction, regardless of where care is given.  I would regard this as an additional commercial channel though – a benefit offered to patients that saves the insurer reimbursement costs and provides more affordable, more convenient care.

If innovation is to occur in the U.S. health care market around information technology, there will have to be a siginificant revolution in the delivery of care in order to enable a sizeable vertical in this realm.  And without true adoption of a universal medical record, whether it be CCR or some other standard – integrations will continue to be a cost barrier to the innovation that will push care delivery to the next generation.

Ryan Norris is the Director of Technology at Medullan. He has a background working with physicians and clients in the eHealth space in developing and delivering solutions that better interconnect providers and create more informed patients through extensible service architectures and highly-usable interfaces.