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July 14, 2016

Digital healthcare can deliver major cost reductions

As consumers and patients take more ownership of managing their health with the proliferation of mobile health apps and wearables, it is important for leaders of health care institutions to understand that not technology will drive the digital transformation of the healthcare sector, but innovative business models.

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In healthcare as in daily life, technology alone isn’t the main catalyst of change, writes Hospital & Health Networks. An example is the adoption of smartphones in the second half of first decade of this century. Sure, mobile devices changed the world, but not by themselves. It took an entire ecosystem that includes mobile apps and business models behind these apps that made consumers replace previous generations of products: smartphones as part of a bigger mobile ecosystem made life simpler and more productive.

In the same way it is not a mobile device itself that changes the way healthcare is delivered, or the existence of IoT networks. But by introducing new ways to embrace emerging solutions in care delivery, hospitals and physicians are well-positioned to significantly reduce the cost of care while meaningfully improving its quality.

Smartphones successfully replaced traditional cellphones, cameras and music players partly because one device could handle three functions previously offered by three separate devices. A more important reason is because apps and connectivity could be purchased to enhance user experience and device performance. In fact, the smartphone manufacturers’ business model of employing a technological innovation to deliver affordable software and internet access allowed consumers’ jobs to be accomplished much more effectively.

Disruptive innovations in clinical environment

Assuming the current health care system will remain intact in the foreseeable future, consumers will seek disruptive innovations to address jobs unfilled by the clinical environment: diagnostics and prevention.

More and more, diagnostics is becoming a job that consumers would like to address, as the current model of performing even the most routine diagnostics in physicians’ offices has limitations. Effectively and precisely diagnosing a disease is the first step toward finding a treatment or cure. At the moment though, billions of dollars are wasted in mis-diagnosis and late diagnosis.

Consumer-friendly technology may overcome this hurdle. Sophisticated wearable sensors and even genetic tests are becoming directly available to the public. The emerging opportunity for health care institutions is to channel patient information to the appropriate care providers, so that the most valuable part of the process — a physician’s interpretation and recommendation — can be quickly accessed.

Chronic disease prevention is the second segment ready for disruptive changes. Even as science becomes more successful at treating the symptoms of diseases, the number of people with chronic diseases continues to grow. Prevention is the only way to curb the cost of chronic diseases, such as diabetes, heart disease and obesity.

In a future environment where maintaining health and preventing disease are rewarded, consumers might become interested in products or services that promise to keep them well. Here as well, data interpretation and risk profiling can best be performed by the experts and physicians at health care institutions.

Focus on cost reduction

Innovative business models in digital health care are models that will reduce the growing financial burden on the current health care system, by providing affordable access to simple but effective technology. The growing focus on potentially consumer-friendly health care solutions –  such as big data, sensor technology and point-of-care tests  – on delivering more revenue streams to health care providers is therefore disappointing.  Although better screening increases patient volume and associated revenues, truly game-changing solutions need to reduce the costs of disease management and patient volume, enabling a new model to improve patient care.

Affordable sensor technologies that allow consumers to monitor general health and periodic anomalies, such as fever and malaise, could be extremely effective in addressing health issues and reducing costs from late discovery. Some deadly diseases, such as colon cancer, can be easily treated and cured if diagnosed early but are generally fatal and expensive if diagnosed late.

A new wave of consumer diagnostics that incentivize prognosis of potentially expensive diseases could gain substantial market traction. On the prevention side, health care institutions can demonstrate even greater value by keeping generally healthy populations away from hospital beds. 

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