In 2012, healthcare spending in the US was nearly $3 trillion or approximately
18% of the Gross Domestic Product.
With another $90 trillion in estimated unfunded liabilities, the rate of healthcare spending is unsustainable and represents one of the single greatest threats to the economy.
Yet, out of control spending is merely a symptom of more fundamental issues across the healthcare industry:
- Patients demand more care than they want to pay for;
- Fee-for-service incentivizes providers to perform procedures, but not necessarily improve health;
- Health plans make more money insuring the healthy than the sick;
- Limited implementation of evidence-based medicine and enabling technology; and
- The uninsured receive too little care, while the insured often receive too much.
The entire industry is evolving because we can no longer afford to ignore the need for change, cost-effective technology can finally make a meaningful difference and the government has begun to implement sweeping reform.
Patient Protection and Affordable Care Act has become synonymous with this reform as it attempts to increase access to care, expand coverage for clinical preventive services, reduce health disparities, fund data collection initiatives and encourage the coordination of medical care via patient-centered medical homes and Accountable Care Organizations (“ACOs”). As the industry seeks ways to move away from fee-for-service medicine, accountable care initiatives seek to tie provider reimbursements to quality metrics and reductions in the total cost of care for a specific population of patients. The adoption of this care model is changing the way that key healthcare constituencies view their structure, role, activities and how they measure themselves. What was once a payment is now a cost and what was once a cost is now a potential savings.
In addition to government influence, however, the healthcare industry is under considerable economic pressure to evolve and is looking for innovative technologies and business model advances to address the many challenges it faces:
- Physician shortages;
- Physician alignment and risk-sharing;
- Data collection and integration;
- Aging in place, mobility and information security;
- Technology selection and adoption; and
- Patient engagement.
Although healthcare providers have been notoriously slow at understanding and responding to these challenges, they can no longer be avoided and providers are not alone.
Payers, to include self-insured employers, are also being forced to rethink the nature of health plans due to the rising cost of care, a shift towards high-deductible plans and health savings accounts, the development of insurance exchanges and increased demand for more personalization.
With the adoption and implementation of technology and new business models, healthcare is evolving to operate more like other service industries by:
- Becoming increasingly data-driven;
- Moving towards a globalized delivery model with an emphasis on collaboration, quality and outcomes;
- Developing standards and incentives for adoption;
- Encouraging personalization of care;
- Adopting technology to increase convenience and access while lowering costs; and
- Increasing the use of analytics and trend analysis.
The US healthcare industry is undergoing a once-in-a-generation disruption that has opened the door for new innovations that can help get us on a more sustainable path. At TEXO, we are excited and humbled to play a role in this effort.