Tech

Moore’s Law in Healthcare – Three Predictions

apple storeJe n’ai fait celle-ci plus longue que parce que je n’ai pas eu le loisir de la faire plus courte. —Blaise Pascal

Translation: I have made this longer than usual because I have not had time to make it shorter.

As Appley as it gets.

A while ago I was challenged to write about what an Apple-like approach to healthcare might look like.

That challenge has been weighing on me.

For starters, we’re all over Appled aren’t we? Maligned anecdotes about Steve Jobs and the iPhone make their way into almost every presentation remotely related to innovation or technology. Triteness aside, I’ve been stalled because Apple is really a philosophy, not a series of steps or lessons learned. (Although, they are nonetheless methodical.)

Instead, what I’ve been kicking around in the ole noggin are three notional predictions, which I’ll assert are inevitabilities which will fundamentally disrupt healthcare delivery as we know it today.

What follows is about as Appley as I’m likely to get. Despite big-bang product launches, Apple actually plays the long game. They introduce small features into products to affect user behavior years before a flagship product takes advantage of those reprogramed behaviors.

That’s how they disrupt.

I believe there are three meaningful, unstoppable trends, in our current world which will significantly alter healthcare. The steps taken towards these inevitabilities, along the way, are what will define the innovators and leaders. They are the ones who see this future and know how to drive towards it.

The three trends are:

  • Tools and culture which favor individual empowerment
  • The commoditization and automation of diagnosis
  • Accelerated globalization of treatment options

But wait, there’s Moore.

Don’t worry, I’m not going to leave you hanging. I’ll attempt to rationalize each of these points and explain why, particularly when considered as a bundle, they are a powerful force for disruption. And to prime that pump, we have to talk about Gordon Moore.


Moore, the co-founder of computer chip foundry Intel, in 1965 posited computer chips would double in speed every two years. Moore’s Law The speed increase, according to Moore, was inevitable; a fact, it will happen.

Before we put on our propeller hats, and geek out over processor speed, suffice it to consider a few examples of how this actually plays out. Sure, computers have gotten faster. Remember that first home PC you had, with its external disk drive and green-screen monitor? What?

You aren’t old enough to remember that? Get off my lawn! We also see Moore’s Law in effect in the general progression of technology. Consider how cell phones have advanced, exponentially, since the 1990s.

Cell Phones

What Moore’s Law describes is a general absoluteness about the advancement of technologies and processes. It might be thought of as Newton’s First Lawapplied to manufacturing and society, rather than mass. In other words, some things continue to advance, and that’s the fact, jack.

The three prognostications I’ve laid out are examples of trends which I believe will follow Moore’s law. They will continue, they will evolve and they’ll be an increasingly powerful force on healthcare.

Just ask a travel agent.

The internet is a wily enabler. Its vast interconnectedness, often terminating at the tips of end user fingers, works like a stream of water slowly eroding mountains of rock. When we step back and observe with some time or distance, we call that erosion disruption.

Nearly every industry has been affected by the rapid increase in our technological interconnectedness over the past 20 years. Although, how we view the effects depends entirely on if you are the stream or the mountain.

Consumers are the streams. Customers, end users, call them whatever you like, they are the ones seeking the path of least resistance. In healthcare we call them patients. They want what is most effective, simple, desirable and affordable to them.

Mountains, on the other hand, prefer not to be moved. It takes a long time to build up a granite wall. And, according to Newton, an object at rest tends to want to stay put. Companies and industries —intentions and altruism aside —are often large, resting forces.

There was a time when, if one wanted to travel, particularly on a complicated international trip, one used a travel agent. Sure, they still exist and can provide a great deal of value, but according to a 2010 survey Travel, nearly 78% of airline tickets were purchased online.

40% were sold directly through the airlines and 38% were sold through online channel partners (think Expeida and the like).

Anyone who remembers the days of travel agents remembers the travel industry didn’t love this trend at first. But consumers did. Travelers showed what they desired was affordable, simple, direct access to shop for travel and make their own choices in the comfort of their own homes.

There was a time when we had to go to a shopping mall for things like books, wrapping paper, and new jeans. Enter Amazon.com. There was a time when buying music meant buying a physical object. Enter Limewire and Gnutella. And you thought I was going to say iTunes didn’t you?

The online music sales industry grew out of a consumer hack. People wanted to download music because it was easy! It was the path of least resistance. The desire path as designers say. Figuring out how to sell it online only came after the stream eroded a path through the mountains.

1. Tools and culture which favor individual empowerment. This is happening in healthcare too.

The internet provides us the tools for increased consumer empowerment. If we look to Amazon, iTunes and Expedia, we affirm our culture already favors consumer empowerment. Today, we see this in healthcare selectively, although it is more evident on the fringes.

In the main stream delivery system, providers are implementing patient portals to view notes, lab results, and share some limited communication with their providers. Avant-garde and large provider organizations with sophisticated resources are starting to crack that most desired nut: online appointment scheduling (see above re travel trends).

As consumers of healthcare observe what they can do in other industries, they begin to seek those same experiences in healthcare. These desires include online scheduling, easy asynchronous communication (think emailing your doctor), one click prescription refills, etc.

Put it this way, if you are given the choice between shopping on Amazon or driving across town, waiting for an hour, disrobing, waiting some more, and walking out with a piece of paper you now have to physically deliver to another building and wait some more…. well, you get the point. The stream is starting to eat away at the mountains.

On the fringes of healthcare, we see some examples of consumerism empowerment in action. Several companies are experimenting with online, Skype-style doctors appointments. We also see empowerment taking off among quantified selfers, those of us who casually (or…cough…obsessively) track data about our steps, diet, sleep, etc.

The companies who provide those services are inherently customer-focused and provide easy to use tools and direct services to customers.

For a last example, consider the genetic testing company 23AndMe.com. I’ve called 23AndMe.com the Netflix of spit. You go to their website and purchase a kit. They mail you the kit, you spit into the test tube and return it in the provided mailer. A few weeks later, you get a rich genetic profile.

Setting aside concerns about their process and the presentation of the data, it doesn’t get much easier than the 23AndMe.com process.

You never leave your house.

It is simply inevitable. As a matter of culture, we will continue to seek out paths of least resistance to enable consumer-centered solutions.

Patient experience, the movement around re-centering processes and healthcare deliver around patients, is an example of this trend towards true empowerment. And, while it is an early bellwether, many who are deeply involved on the front lines of patient experience will attest, it’s still about getting a proverbial seat at the table.

Real empowerment comes when consumers of a service are able to get what they need or desire in different ways; ways which short circuit the people who didn’t let them sit at the table in the first place.

2. Your destination is ahead, on the left. The commoditization and automation of diagnosis.

A friend recently remarked: “the real economic product of the healthcare system is a diagnosis.” In many ways, that is in effect what is being purchased. Without a diagnosis, or a working hypothesis, doctors cannot order labs, or tests or write prescriptions.

A diagnosis is the widget which the factor produces.

Clinician readers may take rightful umbrage at the following oversimplification. A diagnosis is the logical conclusion of a series of data inputs. Blood pressure + lab results + family history + observational data = diagnosis. Are there other, extremely important, more nuanced points to consider when making a diagnosis? Of that, I’m 100% positive. Nonetheless, a diagnosis essentially a distillate of data points.

Take, for example, strep throat. The generally accepted way to determine strep is through a rapid strep test. The rapid strep test can be done in a doctor’s office and provides results which are definitive enough to conclude a diagnosis. The data point is the test result + your sore throat and fever.

Your doctor then writes a prescription for whatever is generally regarded as the best antibiotic for step these days.

What happens when a version of that rapid strep test is made available to home users? If the test has the same degree of accuracy, isn’t the home diagnosis just as valid? What if the testing device could electronically transmit its diagnosis to a pharmacy?

Couldn’t then the pharmacist -if our regulations allowed it- dispense the appropriate medicine?

By the way, this isn’t pie-in-the-sky stuff. This year, the Scanadu device will come to market. Scanadu is an in-home diagnostic device which includes a small, hockey puck-like sensor and an in-home urinalysis machine. Scanadu have also announced ScanaFlu, an in-home rapid strep test.

How long do you imagine it will take before Scanadu enables patients to transmit those in-home results directly to providers and pharmacies?

Dr. Petrov: [Ramius has taken the Political officers Missile key and kept it] Sir! The reason for having two keys is so that no one man may…
Captain Ramius: May what, Doctor?
Dr. Petrov: Arm the missiles Captain.
Captain Ramius: Mmm, thank you for your concern Doctor
Red October

I get it. There are laws and stuff about this today. Yawn. #SorryNotSorry. They will change. It’s inevitable. Our laws, regulations and processes often evolve to match the current state of the art. See also the power of consumerism.

When the traditional players don’t keep up, the stream finds a way to erode the mountain.Maybe the local mega pharmacy won’t accept the Scanadu diagnosis, but I’m sure an enterprising mail order pharmacy will.

We see further support for the automation and commoditization of diagnosis in IBM’s Watson. From IBM:

Physicians can use Watson to assist in diagnosing and treating patients by having it analyze large amounts of unstructured text and develop hypotheses based on that analysis.

Watson can then identify the key pieces of information and mine the patient’s data to find relevant facts about family history, current medications and other existing conditions. It combines this information with current findings from tests, and then forms and tests hypotheses by examining a variety of data sources—treatment guidelines, electronic medical record data and doctors’ and nurses’ notes, as well as peer-reviewed research and clinical studies.

From here, Watson can provide potential treatment options and its confidence rating for each suggestion.

Hmmm….that sounds an awful lot like automated diagnosis to me. But it will never take the place of a physician’s expertise, right? There was a time when pilots didn’t have GPS instrumentation. Today, I don’t know a single pilot who would consider going up without a GPS.

Can you still fly a plane without GPS? Absolutely. But GPS allows you to focus on actually flying, rather than navigating.

If Watson can make an accurate diagnosis, what does that change? It means patients can know their diagnosis without leaving home. They can research treatment options, if they so desire. They can research which providers are the best at treating their condition. Providers, in the mean time, can start treatment plans, rather than spending time on the diagnosis.

Pretty soon, both patients and providers are copiloting the plane, rather than looking at the map.

When we apply Moore’s law to something like 23AndMe.com, Scanadu and Watson, its not far fetched to imagine a small bluetooth gizmo into which one feeds a single hair. In a few seconds, you get genetic data on your phone. A few seconds later, a cloud service renders a diagnosis.

Within five minutes, an evidence-based, personalized treatment plan is emailed to you. But Nick…DNA sequencers are huge and expensive and the tests take forever to run… To which I offer the cell phone picture above.

At this point, there is also an obvious connection between these first two themes. If consumers of healthcare desire more empowerment and autonomy, and we short-circuit the traditional process by putting reliable, accurate tools in their hands, then they also become more responsible for the end result.

Isn’t that what we in the empowerment movement so desire? Isn’t that also what providers who speak about patient activation also want?

2. Bingo jet had a light on. Accelerated globalization of treatment options.

Just as technology has enabled connections which make our world feel smaller, so too have advancements in travel. From the US, we can be in Europe in less than a day. We can fly from coast to coast in less than six hours.

And, increasingly, people are considering if a few hours by car or plane is worth it for better, newer, or more cost-effective treatment options.

Consider the following:

In 2012 Lowes hardware stores inked a deal with Cleveland Clinic. Cleveland Clinic became the sole provider for Lowes employees with specific heart conditions. The value proposition goes something like this: Cleveland offers a recognized name in quality —we’ll set aside an analysis or discussion regarding the validity of that assumption —and Lowes offers a statistically predictable amount of business.

A special price is agreed to. Lowes, even when covering the travel cost for employees and a family member, saves money and gets better quality results.

Aravind Eye Hospital in India does more eye surgeries than any other place in the world. It treats nearly 2 million patients a year, for remarkably less than most hospitals in the United States, and it treats nearly two-thirds of those patients for free.

It is generally regarded as one of the best facilities for eye care quality in the world.

[youtube]http://www.youtube.com/watch?v=3cjnNPua7Ag[/youtube]

Rochester Minnesota is a town of roughly 150,000 people. Most towns that size which are fortunate enough to have a towered airport, have runways averaging 6,000 feet. The main runway at RST is over 9,000 feet long and capable of landing medium sized international jets.

RST also has immigration services for international flights. What’s in Rochester that warrants a such a sophisticated airport? The Mayo Clinic.

Meanwhile, where I live in Richmond, Virginia, we have 11 licensed hospitals. Eight of which are large, traditional community hospitals and one is a large academic medical center. Of those eight, seven offer most of the same services: OB, general surgery, diagnostic imaging, orthopedics, emergency care, etc.

At the risk of sounding anti-capitalistic, does it make sense for seven hospitals to all do the same thing, with different processes, standards, outcomes and costs? Or might I be better off flying to India for my eye surgery?

My point in these vignettes is to consider the globalization of treatment options. As our world gets smaller, our ability to specialize treatment options and concentrate them into true centers of excellence becomes not only a reality, but an important consideration.

In fact, the VA has had this model for many years. The VA recognizes it is better for quality and costs to concentrate expert providers in key centers, and move patients and families to those centers for treatment. We also see this today in cancer care. May patients, albeit most often those with resources, consider traveling to the Kennedy Center, Sloan-Kettering, MD Anderson or Stanford.

Steve Jobs famously traveled to Tennessee for his liver replacement.

See! I told you every discussion of disruption had a mention of Steve Jobs.

As an inevitability, these high-volume, high-quality centers will increasingly emerge. Insurance companies will recognize the bang for their buck and deals will be stuck where airfare, hotel and treatment are bundled into one payment.

Need a knee replacement? Your options may be Denver, Bar Harbor and Juno. Or something like that…what do I know, I’m no cartographer.

There will, of course, be intermediate steps along the way. You might travel 2,000 miles for a knee surgery. But you probably aren’t going to get on that flight 3 times a week for physical therapy. Some things, like politics, are local. But, as our national discussion of quality and cost evolves, we’ll be forced to ask when volume, specialization and concentration matters.

Maybe all hospitals don’t need to offer the same services.

Sushi, in the mountains?

These three inevitabilities play off each other, don’t they? We desire consumer empowerment, we’re building the tools to circumvent the system and enable that empowerment and we’re seeking out the best options for acting on that empowerment.

These things will happen, because they always happen. The technology will come to enable them, because Moore’s Law shows that it always does. And we’ll broaden our geographic view of our options. After all, the best sushi restaurant I’ve ever been to is in the middle of Colorado.

If my Yelp app on my iPhone tells me FedEx can get raw fish to Aspen, we can surely get the blind to India.

Nick Dawson, MHA (@nickdawson) has more than 15 years experience in work in hospitals in strategy and operational roles. He currently focuses on helping health systems develop a modern strategic focus based on human-centered design. He is President-elect of the Society for Participatory Medicine. You can follow Nick at his personal website, nickdawson.net.

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32 replies »

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  4. This sentence needs scrutiny: Nonetheless, a diagnosis essentially a distillate of data points.
    Realize that this is an assumption, not a fact; and that this assumption derives from the proposition that an algorithm may be created for all challenges.
    Algorithms are at the start, not the end, of medicine. “Clinical Practice Guidelines” are the algorithms of medicine. They should not “tell you what to do,” although it appears that they are becoming de facto legal standards of care for medical practice. This is not at all a good thing.
    Algorithmic methods are like lighthouses along the coastline. Those points are defined exactly; but what is between is not illuminated, and it takes skill to navigate those regions. The art of medicine involves that which is between the lighthouses.
    “the computer has almost since its beginning been basically a solution looking for a problem.” Joseph Weisenbaum, Professor EECS, MIT
    Many techy solutions are in the instead-of category. We can run this little app instead of caring properly for the problem. And anyone who suggests the emperor is naked is severely shusshed.

  5. Honestly? Deregulate 75% of prescription drugs – go ahead and buy them over the counter. Narcotics, the very dangerous ones, chemotherapy drugs – probably don’t deregulate them in the first wave.
    Let the market have it and be done. that way, the liability falls on the same people as who buy chainsaws and ATV’s. Go ahead.
    The Excitable Market won’t give up until people get to do it on their own, anyway. It’ll be a great experiment on public health, and the public’s asking for it. You Think Your Diabetes Is Controlled Better Than A Fifth Grader? Bring it on – the A1C game show.
    Far be it from me to warn the thundering herd.

  6. Nate – I think we are in agreement, at least one points 1 and 2.

    I agree that we want more human interactions. Today, I’d argue, even the time doctors and patients have together is encumbered, often by technology. I suspect we’ll see most of the tech disappear. We see that today, when things work seamlessly and enable richer experiences. In those cases, we don’t comment on the tech, we remark about the experience.

  7. I’d be happy to let Watson check all the boxes and do all the clerical work that the government keeps piling on. Then I can get on with the real doctoring.

  8. My list did not include a Venn diagram. ObamaCare includes all sorts of bogus prevention intrusion for every covered person as well as all the other items correctly on my list.

    35 year MD
    32 year ER doc

  9. 1) Preventative care (which does suffer dubious evidence) DOES NOT EQUAL Diagnosis, Disease Management, and ongoing care. Don’t muddy the waters by claiming equivalence and then diminishing the bit that you added.

    Certainly as an MD (?) you understand the distinction.

    2) Obamacare does not create a substantial increase in government involvement in health care delivery. Financing, yes, but delivery, no.

    Obamacare IS cover and funding for continued insurance/administrative waste. We spend a large multiple, per-capita, of any other OECD on healthcare administration and billing, and the ACA only served to further entrench these inefficiencies.

  10. The vast majority of people do not need diagnosis, disease management or ongoing care. That is where the entire problem lies. People do not need all this prevention. They do not need all this meddling. They do not need all this government.

    Obamacare is cover and funding for continued government waste.

  11. At the very least an Apple approach to healthcare would be free of the veritable cascade of buzzwords, flip rhetorical questions, and marginally relevant vignettes in the article.

    Clear and intellectually honest healthcare journalism is sorely lacking: the conflation of “procedures” and “healthcare” is both misleading and irresponsible.

    Centers of procedural excellence is as an idea old as Frederick Winslow Taylor.

    On the other hand I’ve not yet seen a model that consolidates diagnosis, disease management, or ongoing care.

  12. As someone who spends a preposterous amount of time interacting with technology, I’ve noticed a rapidly growing trend of caring doctors, therapists, counselors and aged friends recommending that people unplug for better health. I spoke with one of my clients last week about the implications of adding house calls to his suite of care services, and was reminded me of that human connection is necessary for the growth of society, culture, survival, in the world …

    My predictions:
    1) Humans will begin demanding human attention from their docs … telephone / video chat / email access to their primary care doctors will become the norm.
    2) Technology will take a more ‘behind the scenes’ role in medicine … your doc may look at your cloud-synced readout from your Fitbit and call you on a telephone to find out why your sleep quality went to crap that week.
    3) Technology’s largest role in medicine will be in delivering education to the populace … split between noble purposes like preventative medicine, to not so noble purposes like promoting the latest dieting fad (unfortunately I don’t see that going away anytime soon).

    My three cents,

    – Nate –
    Outreach Guy @ http://www.BudgetDoc.com/blog

  13. David Goldhill talks a lot about prices in his book Catastrophic Care.
    He compares the Real Economy to health care, which he calls The Island.

    In the real economy, people can get very rich by selling cheap substitutes for popular goods and services (i.e. Travelocity vs travel agents)

    But on The Island, once insurers have set a price for some good or service, there is no incentive to market a cheaper version. Instead you get rich by ramping up volume (i.e. overtreatment)

    Health care seems to consist of three broad products:

    a. those things which are genuinely expensive, like transplants or any round the clock nursing;

    b. those things which are quite advanced but relatively cheap, like tylenol or eyeglasses

    c. and those things which are expensive due to price gouging and monopolies and timid regulators, i.e. many drugs and medical devices.

    My own approach would be essentially to nationalize the truly expensive things through universal mediicare part A, while turning capitalist competition loose on the items in group (c).

    However my mixture of socialism and libertarianism has not gotten much traction.

    Bob Hertz, The Health Care Crusade

  14. The internet is a cash flow machine. Every transaction is paid for on the spot. No EOBs. No refiling. No ICD-10. No ENTALA. No HIPAA. No prior authorization. The internet is the fastest cash flow machine ever. In fact the cash was reduced to electrons. It is Star Trek..Beam me the cash, Scottie.

    If 60-70 present of each charge item in healthcare was not stolen, the price per item would be far less than it is. The internet does not allow for phony bookkeeping. You don’t see Amazon in healthcare.

    If you use the wrong denominator you get the wrong answer. The lovely piece above uses so many wrong denominators for cost and quality it is laughable. I do understand the fantasy.

    Half of all cash in healthcare is provided by the entity that owns snail mail. That is how fast cash flows through the government. That is after the theft by legislation in Medicare, Medicaid, TriCare, and theft authorized for the Blues and commercial payers.

    Medicare is not sending dialysis patients to India three times a week. Medicare does not pay the same for a given service done in different locations. It could never find available a given service in southern California if they only paid what they pay for the same service in North Carolina.

    Lets see Lowe’s get care for post-op complications once the patient is back home.

    The vaunted VA quality does not measure those vets who get emergency care elsewhere, which is where vets get most of their emergency care…elsewhere.

    Cash driven healthcare is cheaper than ever (Lasik).

    Richmond has eight hospitals doing the same thing for the same price because competition is not rewarded and the patient is insulated from any decisions of value. All they see is the nice granite and the free Wi-Fi.

    Using the wrong denominator is how many bad policies are born.

  15. “Moore, the co-founder of computer chip foundry Intel, in 1965 posited computer chips would double in speed every two years.”

    How come in health care the price does not fall like chips did?

    “My point in these vignettes is to consider the globalization of treatment options. As our world gets smaller, our ability to specialize treatment options and concentrate them into true centers of excellence becomes not only a reality, but an important consideration.”

    If you want “centers of excellence” build them in India – that way you’ll also get it for 25% of the cost – and help an emerging economy. Now that would be a real “disrupter”.

    I’m thinking “Moore’s Law” in health care is Michael Moore’s Law.

  16. Very good write up. However, I must opine that you didn’t emphasis the difference between regulated and unregulated markets quite enough. Through regulation ‘human tribalism’ takes a protective form which would not exist without the government intervention. For instance, let’s assume that the Scandau device can actually make accurate diagnoses. There are a lot of doctors that are living on ‘the margins’ of their practice. These docs would go out of business, and then CMS would have areas where patients would not have access to doctors. Because of this, it would be easy for the docs to get together with CMS before the device is publically accepted to ensure that the device does not get: FDA clearance, reimbursement from CMS, and support from medical associations. These contrived barriers to entry are more steadfast than people realize… these did not exist in the case of online music or travel agents. I’m not saying that the walls will never come down; no, I’m saying that it will happen much slower and differently than the above article espouses.

  17. Platon20 – I’m dying for more time in the day so I can thoughtfully digest and respond to all the wonderful feedback on this post. Given the fact that we cannot seem to invent more hours in the day, I’m rather hamstrung…But i don’t want 24 hours to pass without responding to your comment specifically. It’s that important.

    I didn’t list the ways the the healthcare system will be disrupted. In fact, out side of some wishful thinking, it’s too hard to know.

    But I’m sure of one thing – these three disruptions have just as much potential to protect and restore the joy of care to providers as they do to provide desire paths for consumers.

    I hope something like Watson means you get to do more of something amazing, with more human contact and more joy and more science and more results and more time and more everything wonderful.

    ” They want a story on what causes their illness, how it manifests, how it is treated, how serious it is. I am much, much better at this than Watson will ever be.”

    You’ll get no argument on those points from me. Those are the best things —I imagine? I’m jealous of! —about being a provider.

    Let’s be deliberate in how innovation is applied in light of these three predictions so that providers like you always have the opportunity to be the story tellers, comforters and reassureers.

    What I want is a future where the technology enables as many desire paths for patients as it does for providers like you.

  18. Mehhhh…. I’m a doctor and I’m not worried.

    I propose an experiment. Let Dr Watson open up a clinic right next door to mine. One man vs one machine. We will compete against each other and see who draws the most patients.

    In the first month or two, Watson is going to kick my butt, simply because people will be curious about a “computer doctor.”

    However, over the long run I am going to clean Watson’s clock. That is true EVEN if he is more accurate at diagnoses than I am.

    Why? Because people dont come to me for just a diagnosis, they come to me for an explanation. They want a story on what causes their illness, how it manifests, how it is treated, how serious it is. I am much, much better at this than Watson will ever be.

    Sure, Watson can tell the parents of a 3 month old that their baby has bronchiolitis. But Watson cant explain to them very well what bronchiolitis MEANS. Sure Watson can search reams of databases and spout off statistics, but that wont suffice to anxious parents who are worried about their child.

    Within 6 months, after the novelty wears off, the waiting list for my clinic will be much longer than for Watson.

  19. Due partly to technology, American hospital admissions have been falling for 20 years.

    Yet hospitals are richer than ever, thanks to charging more for each admission.

    Fee schedules have proven very easy to exploit.

    Will this not continue?

  20. This is great, Nick, but I think we have to solve several trust
    problems before doctors or the public can accept new technologies. New devices and software are developed so fast and so cheaply that we can’t subject them all to rigorous quality and safety checks–that is the whole point of the big FDASIA study released a few weeks ago (I blogged about it at http://bit.ly/P2CzV5 ). Watson, I hate to say, has not proven itself either, although I’m doctors will stop having to act like heroes and accept tools like that. Pre-screening is a particularly valuable use of devices.

  21. Color me skeptical – for two reasons:

    1) Contrary to the current myth – healthcare (the kind that adds up to 31% of Hospital spending and 10% of Rx) isn’t a “consumer” product – and likely won’t be for the foreseeable future. Arriving on a gurney from the helipad isn’t exactly conducive to firing up the comparison shopper on my smartphone.

    2) Our current system is optimized around revenue and profits – not safety and quality. As Al Lewis is quick to point out – greater efficiency around diagnosis and then expensive treatments doesn’t address the fundamental question of whether they should be done at all.

    Dr. Otis Brawley’s book (How We Do Harm) highlights this dilemma. If you give away free PSA screening at the mall – you will build an lucrative pipeline of expensive treatments. Historically, we’ve ignored the relevance of treatment (radical or otherwise) on mortality because hey – it generates a TON of revenue/profit in many directions. A key quote from Dr. Brawley (CMO of the American Cancer Society):

    “People in America may not live longer, but we sure do a better job taking pictures of them dying.”

    Relying on consumers to “force” this disruption (from revenue and profits to safety and quality) isn’t remotely reasonable – or rational (at scale) because it presumes that clinical decision support can be codified and then cheaply automated. There isn’t a day that I don’t see at least one headline where clinical options (as simple as a daily aspirin for health) aren’t in violent opposition.

  22. Great article, Nick.

    Let me add a thought: These disruptions will change the shape of the industry in a different way. We can most easily see this in the article in the NY Times this morning about “financial orphans,” drugs or therapies that might actually have great promise, but can’t get real trials because they will not be highly profitable. E.g. a particular NSAID taken before breast cancer surgery seems to cut recurrence by 2/3 — because apparently inflammation itself is an adjuvent to cancer.

    In the legacy model of healthcare, there is no powerful force pushing for radically cheaper treatments. In a changed world that combines these technologies with employers and consumers alike that are increasingly paying with their own money (or act as if they are), we will see methods popping up to get new, radically cheaper treatments tested and in use.

    The prime movers in this will be employers and consumers. Payers and providers will follow when they see their market slipping away from them. The differentiation between early adopters and late followers among both payers and providers will likely be huge, with casualties on both ends of that spectrum.

  23. Very thoughtful piece. Thanks for writing.

    It does feel that we are at a point of great excitement, with the various potential flavors of disruption.

    And we agree, wholeheartedly: Empowerment, certainly, is the theme of the day.

  24. Great article. I think the verdict is slowly coming out about what patients/consumers want with the healthcare industry. Empowerment and a streamlined approach as you mentioned.

    The big obstacle that I see that’s impeding our progress is really the amount of clout that health plans have in the industry. Much like your travel agent example, health insurers are those travel agents. Popular momentum is swaying towards efficiency and coordination between the patient and provider, but what are insurance companies doing? Just the opposite.

    Take for example the ACA (politics aside here). The ACA lays out an expanded guideline of benefits that insurance must cover. This is an example of the health plans expanding their influence into the patient/provider relationship. Insurance should be taking a lesser role, not an expanded one.

    The ACA has a limit on deductibles. While this is good for affordability, what it’s doing is taking the spotlight away from consumer-driven plans like HSA’s and consumer decision making. If deductibles are lower, consumers have less incentive to make decisions based on value and cost. After all, once I hit my deductible, I would only want to go to the best and most expensive hospital after that.

    I believe less insurance is the way to go and this is coming from a guy working in the industry. The more that goes through insurance, the more that is siphoned away, and the higher your premium will be. And the higher the premium, the higher the profits. Go figure.

  25. I see a lot of excellent points. Here are a few observations

    First, do we really think Americans suffer from a shortage of diagnoses? The first part of this essay is about how to get more diagnoses faster. The problem is that, like with anything else, there is an optimal level of diagnoses and we’ve long since passed it, I suspect. Diagnosis does, as you say, trigger everything so more diagnoses means more triggering of everything.

    Second, I’m all for true regional and international centers of excellence — Tom Emerick and I had a chapter about them in our book Cracking Health Costs. But getting from point A to point B is harder than you posit, I suspect. A few places (Mayo being one, Mercy in Springfield MO being another) excel at turning patients down for surgeries, but many of these centers are all about the number of procedures they do — as you say.

    Procedure quality general improves as more of that procedure are done, and cost/procedure comes down…thus creating an artificial competition on a per-procedure basis, rather than asking whether the procedure really needed to be done. My co-author, Tom, found when he ran benefits at Walmart that many of these major procedures didn’t actually need to be done. As Peter Drucker says, “Nothing is more wasteful than doing something effeciently that need not have been done at all.” How does this concern get addressed?

    Finally, on the good news side, it happens I had exactly that strep test 2 nights ago at an urgicare center. It was negative. The doctor insisted that I take antibiotics anyway (I took the scrip but not the pills because I had lost my voice — I couldn’t argue with him) and also gave me two other totally unncessary treatments. By taking the strep test at home I could have avoided all that.

  26. Outstanding thinking, sir, and I’m in agreement with every word.

    The mountain is indeed being worn down by the stream of consumer/patient/customer/whatever demand. As someone who has little patience for “that’s they way we’ve always done it” thinking, I chafe at the lack of speed of change in this most essential of human enterprises, but then I’ve always been a fast-thinking fast-moving beast.

    I just hope I see this shift finally gaining wide deployment in my lifetime …

  27. Terrific post Nick, and fully agree our growing ‘need for speed’ is empowered with health technology. I focused on the words ‘building the tools to circumvent the system and enable that empowerment and we’re seeking out the best options for acting on that empowerment.” so that we truly adhere to quality, safety and efficacy as we seek out those best options and that our ‘need for speed’ is not the priority but rather a catalyst for a healthier end product.

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