Why Smart Use of Digital Health Technology Can Make Health Care More Affordable

“When companies start unbundling costs, it is a sign of increasing consumer power and weakening market power.”

This is what CEO David Goldhill and author of Catastrophic Care: Why Everything We Think We Know about Health Care Is Wrong told me once. Airlines have unbundled everything that used to be included in a plane ticket. No longer do tickets include meals, in-flight entertainment, and the ability to check in baggage. Today, travelers get to choose what they want and don’t want. Further signs can also be seen in other markets. Cable TV customers are cutting the cord and picking only the services they want. No longer do they need to pay high monthly fees for a package of hundred of channels. Content providers like HBO, CBS, and others now offer stand alone services which is more convenient, accessible, and on-demand for a much lower monthly. These are signs of increasing consumer power.

With new digital health technological platforms enabling patients to seek, connect, interact, and pay doctors and hospitals in different ways, it appears health care will undergo similar changes.  Patients will have more choice and convenience than they have had in the past.

Will American Well Be the Next EBay?

American Well expects to be that marketplace by offering a digital health technology that is a health system grade product and by being smart and conservative with their cash. American Well envisions a marketplace where providers can compete for business that transcends physical borders. Much like eBay was one marketplace for people to exchange goods and services, a health care marketplace would allow health systems and doctors to develop a brand and online presence. On the internet, regional hospital systems could have a national or international presence that previously would have required a brand name like Mayo Clinic, Cleveland Clinic, or Kaiser Permanente. Academic medical centers can connect to patients in rural areas.

Jeffrey Kosowsky, MD, PhD, Senior Vice President Corporate Development & Business Development at American Well sees no value in telehealth companies building a parallel competitive health care system to the existing one. Instead the opportunity lies in providing a platform and framework to enable further reach of the existing system and outlined how that would occur. For Telehealth 1.0, the goal for American Well was creating a delightful experience for patients who needed urgent care issues addressed. A patient is connected to a physician via American Well video typically starts within five minutes. Like Uber, the users (patients) rated the experience and the providers (doctors).

For Telehealth 2.0, the focus is on wellness and chronic disease management since 85% of health care is in chronic care. For Telehealth 3.0, the goal will be to close the entire loop and provide care at home. Dr. Kosowsky notes that currently telehealth accounts for about one percent of encounters, but over time he expects it to grow to 50 to 70%.

One can see how eventually American Well could be a marketplace portal for health care much the same way Expedia, Travelocity, and others provide choice for travel. Patients be paying more out of pocket as a result of high deductibles, less comprehensive health insurance and coverage. With fewer choices of doctors and hospitals as result of narrow network coverage, patients will look for alternatives to traditional ways of getting care.  A health care marketplace like American Well allows patients to find providers who offer the right treatment, at the right time, with the right expertise and experience and less on where these providers are located.

Will Primary Care in the Cloud Make Care More Affordable, Accessible and Lower Overall Costs?

Health care startups Sherpaa Health and Oscar Health think so. By using technology in a smarter way, Sherpaa doctors spread out the jammed packed and rushed 15 minute office visit to secure messaging asynchronous platform between doctors and patients. Sherpaa’s Dr. Jay Parkinson believes that 70 percent of primary care problems can be handled. His doctors are assisted with stock phrases and algorithms to capture important information to help with diagnosing and treatment. They partner with specialty providers and ancillary services for the times where a virtual visit alone won’t suffice.  As a result, Sherpaa doctors help patients avoid unnecessary visits to insurance contracted doctors. As a result with less utilization of their insurance, patients can expect smaller premium increases in the future.

Oscar Health also believes that providing convenient primary care virtually will also manage health care costs. By creating a virtual call center and solving a patient’s problems quickly and easily, Oscar Health physicians can minimize unnecessary visits to their network of contracted physicians. Its inability to manage the health care costs of its network was part of the reason Oscar Health reported significant financial losses.

By moving primary care into the cloud and solving problems using digital health technology rather than in a physical office visit, money is saved. Avoiding unnecessary visits and tests financially favors the patient in Sherpaa and the Oscar Health insurance plan in the latter. Will primary care in the cloud succeed? As Oscar Health chief policy and strategy officer Joel Klein noted, “When anybody sets out to be a disruptor, which we unabashedly set out to be, the question is can you disrupt the system, or will the system beat you back?”

What Do These Changes Mean for Doctors?

Much like individuals and stores who use eBay to open shop and have market reach virtually at a fraction of the cost compared to the past, entrepreneuring doctors, group practices and hospital systems too will have greater opportunity to generate more business and revenue. No longer limited by geographic location or restricted by office space and physical plant,  doctors and patients will have more options and choices. This is good news.

With this new advantage and opportunity also means increased risk as other doctors, group practices, and hospital systems will also have be restricted by  geographic location, office space, and physical plant.

Surely this outcome is better than the current health care system, right?