Recent learnings about resiliency in the healthcare industry
Every institution and enterprise in our world has been stressed beyond any expectation, but few have been as tested as our healthcare providers. While nearly every other organization was ramping down, closing shop or moving to virtual work, our hospitals were hunkering down for an intimate, up-close and personal fight with COVID-19. The response of our healthcare workers has been heroic and worthy of our admiration and appreciation, yet this pandemic has also exposed some extremely malignant weaknesses in how healthcare systems operate.
What is now apparent is that enhancing resiliency in the healthcare industry is not optional; it is essential. This exposure at a time of global emergency may finally provide the impetus for the healthcare industry to fully embrace digital transformation, and the liberation of better outcomes through the use of information.
There are four key trends that will likely result from COVID-19’s echo across this industry:
- Polarization – the continued refinement and differentiation between commodity, emergency care and high-value, elective care
- Dissociation – the unbundling and disaggregation of services to enhance distribution and lower costs
- Contextualization – massive data collection and analysis to optimize all aspects of the healthcare value chain
- Automation – the expansive automation of the supporting processes across the industry, and in some instances the automation of actual care delivery
After a century and a half of maximizing efficiency through scale and scope, and delivering the most average solutions possible, we have reached the end of the road of classic Taylorism. We are now in an era where commodities must be driven to zero cost, both in money and in time, and differentiated products and services must be constantly refined to be the best available. In US healthcare, this bifurcation exists between emergency care and elective care, and the contrast between these two worlds was made even more stark by COVID-19. In countries with nationalized healthcare, bifurcation may appear to be less of an issue. But this perception is undermined by the increase in private, payer-pays care alternatives, and in healthcare tourism, both of which are on the rise in many countries.
Emergency care is largely undifferentiated, and in many ways commoditized. When a patient has broken an arm, suffered a heart attack or been burned in a fire, they aren’t likely shopping around for the best-qualified doctor at the best price. They instead go to the closest possible facility that can treat their injury, and hope for the best. The service is largely undifferentiated, because it is an emergency. As such, this is a largely commoditized service with very inelastic price sensitivity. This is made even more true by the guarantee of care that most hospitals provide, regardless of the patients’ ability to pay. As a result, many emergency rooms are huge loss-leaders for hospitals that have to pay for this community resource through the elective part of their business.
Elective care is pretty much everything except emergency care. Here, patients have more choice, and quality and to a lesser extent price matter a great deal. Elective care is the profit centre of most hospitals, and makes up the shortfalls that may come from emergency care. Here, things like customer service, clean rooms, politeness, and even the quality of food provided, can have a significant impact on how a hospital is viewed by patients, and whether or not they choose one facility over another. Price elasticity is much higher in this part of the hospital business, and competition for patient dollars is fierce.
Because of this duality, hospitals must bifurcate to manage two different business models. Their emergency care business must ruthlessly cut costs, both in money and time, and eliminate any and all inefficiencies. Maximizing throughput, by reducing patient wait times, improves the revenue and profit-generation of this part of the business, and is acceptable even at the expense of some patient care. ER doctors may be a bit more curt with their patients, as long as they get them discharged in half the time. So, emergency care should outsource and automate as much as possible, eliminating friction, delays and direct human intervention in processes as much as possible (much as was done in financial services and travel and leisure over the last thirty years).
Meanwhile in elective care, hospitals need to use these same technologies to improve the patient experience. Making their facilities and staff more inviting and comforting increases patients’ perception of care, which may prove to be what decides which hospital gets their business. Some facilities have begun implementing home automation (or more cynically, Persistent Ambient Surveillance, or PAS) devices such as Alexa and Siri into hospitals so that patients can receive faster, more customized and more appropriate care, yet at reduced cost. Here, technology is used to better understand patient wants and needs and to meet them as quickly and accurately as possible (same technologies, but entirely different purpose and value proposition).
What COVID-19 has taught us about resiliency in the healthcare industry: bifurcation, polarization, outsource commodities. Invest in high-margin, differentiated care, telemedicine, real-time data collection and analytics (for things like contact tracing)
For over a century, hospitals – like most other capital-centric organizations – have grown larger and larger, seeking to aggregate as much care capacity into a single location as possible. This has led to a number of mega-hospitals, providing comprehensive healthcare services under one roof. Such super-hospitals appear to be the epitome of centralization, scale and scope, and they are. But increasingly, these same facilities appear to be anachronisms as technology continues to shrink in both cost and physical size, and patients are less and less inclined to leave their own living rooms to seek care.
This trend has been greatly accelerated by COVID-19, and hospitals worldwide have seen a significant fall in admissions due to patients’ fears of contracting the virus there. These patients had the same need for care that they did pre-COVID-19; they simply chose to forego care to reduce their risk of infection. When any person you come into contact with might be carrying a virus that could be lethal to you, bigger is definitely not better.
So, what has this taught us about mega-hospitals? They have become white elephants. An enormous amount of the healthcare value chain falls under the category of diagnostics: figuring out what is wrong with a patient. Then and only then can care be administered appropriately. Until now, the vast majority of testing has occurred within hospitals – part of the scale and scope equation. But, as COVID-19 has shown us, a great deal of testing can now be performed with disposable test devices that plug into a smartphone and report their findings to a doctor anywhere in the world.
Over the span of only a few months, COVID-19 testing evolved from a fairly invasive swab or blood sample to a do-it-yourself mail-in test kit that anyone could do at home. This made testing safer, faster and cheaper, and will be key to bringing this pandemic under control. But it also further accelerates the motivation for digital transformation in healthcare. If I can walk up to a kiosk and get tested for COVID-19 in two minutes or less, why can’t I do the same for cancer, diabetes or allergies? Diagnosis is the front half of the healthcare value chain, and it is this half that is most likely to be disrupted by new technologies that will make most ailments self-diagnosable using a throwaway chip and a free app on a smartphone. What we do in 2020 in diagnostics for COVID-19 will reverberate massively across this part of the healthcare industry for the next decade.
Contextualization is the recognition that context – where things are and their condition in space and time – is critical to digital transformation, and explains the explosive growth of companies such as Uber and Airbnb. These companies are context engines, joining the context of someone’s need with the context of what they desire. Again, healthcare is greatly lagging behind in contextualization, but this will change dramatically due to COVID-19.
Suddenly there is an urgent demand for contact-tracing technologies that allow peoples’ interactions with each other and their environment to be tracked and reviewed when an infected person or object comes into contact with others. Initially, this will be used to help identify people who may have been exposed to the virus, so that they could be potentially quarantined. Further, devices such as ventilators can be tracked to ensure that they are properly sanitized before reuse, which will be a topic of hundreds if not thousands of lawsuits over the coming years.
As hospitals embrace contact tracing they will quickly see the power of contextual information, just like Uber or Airbnb. They will be able to immediately recognize underutilized – or even overutilized – resources, and optimize accordingly. An enormous amount of systemic waste will be identified, and subsequently rooted out, much as Uber and Lyft have forced former automobile manufacturers to transform themselves into destination deliverers. In the same way, contextualization of care will transform hospitals from care providers into health restorers, as patients continue to grow their expectation of results, rather than services.
Naturally, all of these trends will manifest through the application of ever-increasing automation. For a vast proportion of humanity, self-service is not only the expected means of receiving value, but the preferred means. Automation in healthcare began with, and will continue to grow in, upstream processes such as intake and triage. Indeed, these will increasingly be completely automated and invisible – as they should be.
As stated previously, automation will also deeply impact the diagnostic part of healthcare: licking a microchip will immediately screen you for thousands of possible ailments, in minutes, for a few dollars. This is not science fiction, it is science fact, as shown by Google’s Tricorder competition from almost ten years ago. This capability has not yet scaled across all of healthcare, but COVID-19 is sure to change that.
What about treatment and cure? More and more technology is entering this aspect of healthcare, particularly in telemedicine, robotic surgery, and drone delivery of medicines and treatments. While treatment and cure will be the last bastion of direct doctor-patient interaction, it too will be fundamentally transformed by technology over the next decade.
Bringing it all together
While some may view this picture of healthcare transformed as some digitized utopian dream, set far into the future, it is not. Or, at least as science fiction writer William Gibson once stated, “The future is already here – it's just not evenly distributed.” The case that proves this point can currently be found in Dubai, United Arab Emirates. And, perhaps tellingly, this example is already nearly five years old.
The United Arab Emirates has used social media, analytics and artificial intelligence to massively change how care is delivered to its citizens and residents. When patients require care, their needs are matched in real time to whichever care provider is closest to them in space and time. The scheduling system looks for the closest provider with the necessary skills, licences and available appointments and proposes the best match to the patient. Once an appointment is set, the patient is notified of the appropriate time to depart for the appointment, regardless of where they are located; their commute time is dynamically calculated so that they arrive at the correct time.
Upon arrival, each patient is assigned a particular parking spot, guaranteeing them easy parking. If someone else is in their spot, that person gets a ticket. If the patient parks in a different spot, they get a ticket. Once they enter, they are guaranteed to be seen within 15 minutes. Their doctor has their complete medical history at their fingertips, and they have collected much of the symptomatic information from the patient before they even depart for their appointment. The patient receives their treatment quickly, efficiently and has their prescriptions and any follow ups fulfilled before they leave the doctor’s office.
This isn’t a vision of some possible future of context-enriched healthcare – this is a present-day reality. And while all of this technology and automation may seem unattainably expensive, it isn’t. The cost of this automation pales in comparison to the inherent inefficiency of how our current healthcare system operates. Automation and analytics can and do dramatically increase both the efficiency of care delivery and the quality of that care. Over the course of the last three decades, the US has seen its productivity double. But productivity has not grown equally across industries, and healthcare has dragged far behind other technology-friendly industries such as manufacturing or financial services.
In 2018, healthcare in the US was a $3.6 trillion industry – double the size of the information technology industry and quadruple the size of retail. If, through the use of IT, AI and automation, we could improve the efficiency of the healthcare industry by 25 percent, we would create more economic value than the entire retail industry. Bringing healthcare into the 21st century is not merely an exercise in convenience, it’s a critical requirement to restart the economy and drive continued wealth generation and wealth distribution throughout the world.
In addition, we will deliver better healthcare, and better health, to millions of people all over the world, while reducing the cost to our society and increasing the productivity and overall wellness of humanity.
COVID-19 is indeed a plague upon our society. But like most disruptions, it brings with it the possibility of creating a better world from what it teaches us – if we take those lessons to heart.
While healthcare companies struggle to respond to the dramatic impacts of COVID-19, their leaders must recognize the opportunity that lies in this adversity. Using COVID-19 as the pretext for dramatic change is not only possible, it is preferable. Only in times of extreme adversity are most humans able to accept extreme change. And digital transformation is the most extreme change our society has faced since the start of the Industrial Revolution, almost 250 years ago.
Realigning our healthcare organizations to be patient-centred, data-enabled and results-oriented will feel strange and unnerving for many providers. But this sensation of discomfort is precisely the indicator that you are getting change right. Chase after that sensation, rather than avoid it, to achieve the results that you seek in the end.