Healthcare's Next Phase: Think Amazon - InformationWeek

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Healthcare // Patient Tools

Healthcare's Next Phase: Think Amazon

Patients want an of healthcare, a single source for all information about insurance, prices, and availability, says a PwC report.

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The same digital wave that transformed industries ranging from music to taxi service is consumerizing healthcare, and it could create a new market leader.

That's good news for patients, who can expect more transparency, lower costs, and improved efficiencies, Chris Wasden, managing director of US healthcare strategy and innovation practice for PwC, told us. Established healthcare providers might no longer be patients' de facto suppliers of care. New entrants -- ranging from entrepreneurial startups to telecommunications companies, retailers, athletics firms, consumer products businesses, and more -- have entered the fray, with more expected to target this $2.8 trillion opportunity, Wasden writes in "Healthcare's New Entrants: Who will be healthcare's"

"Changing the status quo is difficult and painful to do, and most people don't want to go through the challenge," he said.

[Would you use a healthcare social network? Read Healthcare Social Networks: New Choices For Doctors, Patients.]

About two dozen companies in the Fortune 500 are new entrants to healthcare, PwC reported. They include Ford, which will monitor drivers' health via sensors in the seat; clinic-operating retailers such as Walmart, Walgreens, and CVS/Caremark; and the telehealth provider Verizon.

Like some large corporations, patients are eager for change. In a recent study, participants were asked about using an at-home kit to diagnose strep throat or administering chemotherapy at home. About 50% said they'd use these lower-cost services, and about 59% said they would choose a home or online option for minor services, such as having a rash evaluated, according to the PwC Health Research Institute (HRI) study. More than one-third would consider online or home services for even more sophisticated treatments such as infusion therapies.

In 2011, US healthcare providers received about $64 billion for services that patients could receive at home, HRI reported. The nation's diagnostic and medical laboratory industry earned about $50 billion in 2013. By using consumerized mobile health devices, patients and the nation save money on healthcare, advocates said.

Patients want an of healthcare, a single source for all information about insurance, prices, and availability, the report said. Today, healthcare searches are overly complex, time-consuming, and incomplete.

Typically, those in favor of the status quo argue that people will overuse the system, choosing to forego work, family, or hobbies in favor of unnecessary medical tests. Hypochondriacs do exist, but it's unlikely most people would opt for unneeded testing, especially in an era of higher deductibles.

"I don't believe people want to go see their doctor every day," said Wasden. "The consumer doesn't feel they have transparency. In other industries -- buying a car, phone, home -- I have lots of information that tells me what's good or bad, even things that are very complicated. In healthcare, we believe consumers aren't smart enough to know what's good for them."

Payment for value-based care is one reason healthcare providers now focus more attention on educating patients about preventive measures, healthy living, diet, and exercise. Consumer interest in medical spending -- and the ability to compare prices -- is generating new businesses such as Castlight Health, which helps organizations' employees make the most cost-effective use of their health dollars. And several telehealth providers, often in partnership with insurers, serve patients across the country.

Even if they're loath to implement telemedicine within their practices, doctors have used telemedicine for years, said Wasden.

"If you talk to a physician about how he practices medicine on his own family, he does it digitally. He calls a specialist or he sends in images," he said. "So when you look at what they do in their personal lives, they do practice it. It's only professionally where they don't see themselves getting paid for it."

Almost 39% of those polled in the HRI study would consult a physician in real-time via a smartphone app. Last year, 10 million people benefited from telemedicine, Jonathan Linkous, CEO of the American Telemedicine Association, said in an interview, yet many of those interactions occur away from public scrutiny. Most hospitals use teleradiology, and a lot of mental health treatment happens via phone or videoconference.

With a doctor shortage projected to reach 45,000 by 2020, and pent-up demand for transparency and convenience, traditional healthcare providers should embrace the disruptive forces shaping their world, said Wasden. They must put the consumer first, evaluate services to determine whether it's worth offering everything, and create new ways of adding value.

Download Healthcare IT in the Obamacare Era, the InformationWeek Healthcare digital issue on the impact of new laws and regulations. Modern technology created the opportunity to restructure the healthcare industry around accountable care organizations, but IT priorities are also being driven by the shift.

Alison Diana has written about technology and business for more than 20 years. She was editor, contributors, at Internet Evolution; editor-in-chief of 21st Century IT; and managing editor, sections, at CRN. She has also written for eWeek, Baseline Magazine, Redmond Channel ... View Full Bio

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User Rank: Author
5/8/2014 | 5:04:54 PM
Re: Disruptive innovation
That is a great point, Ron. Many times we see these disruptions coming through government mandates (and we've certainly seen those in healthcare!). I wonder though, given the relationships built between patients and physicians and the service provided in healthcare, whether this industry is different than banking, insurance, travel, or other disrupted vertical markets? Or are consumers ready to get health advice from non-traditional sources?
Ron Hammerle
Ron Hammerle,
User Rank: Apprentice
5/8/2014 | 2:08:07 PM
Disruptive innovation
Industry leaders rarely if ever initiate structural change within their own industry.

Later, if outside innovations and market pressures continue, they reluctantly agree to modest "reform," but only in order to delay or disrail disruptive innovation.

Alas, healthcare is no exception to the rule.


Ron Hammerle, Chairman 

Health Resources, Ltd.

Tampa, Florida 

User Rank: Author
5/8/2014 | 10:17:22 AM
Re: Who Will Win?
I'm not sure if Amazon itself will move into healthcare or whether it'll be another company using Amazon-like tactics. We've seen tech giants -- Apple, Google, and Microsoft among others -- trying to get into this space, and some certainly have the analytics, integration, and infrastructure chops to cross some chasms in this market. Or it could be a consortium of healthcare providers that really embrace technology and force the breakdown of artificial proprietary silos and infrastructures that cause so many bottlenecks in today's system. Either way, consumers are a powerful force to be reckoned with and I think anyone who ignores their power is in for a nasty surprise.
User Rank: Ninja
5/8/2014 | 4:36:54 AM
Re: Who Will Win?
I am surprised on how technological inventions are making things easy and bringing them to our door steps. I think people should not make rush decisions when it come to matter relating to health care. It is true that is the largest selling e-reading website in the world and marketing through it is advantageous. I think Amazon is taking it far; they want to dominate every market at their own gains. And if this goes on then do not be surprise to see that Amazon is the next big fish of the next generation healthcare.
User Rank: Author
5/6/2014 | 10:02:57 AM
Who Will Win?
Which organizations do you think will be the big winners in the next generation of healthcare? Which existing providers will transition? Which established businesses will successfully move into healthcare? And which startups hold the most promise?
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