Technology (preventative apps like Apple Health and HealthKit; EHR, claims and reimbursement analytics; Physician Practice management etc.) will reinvent healthcare as we know it. I expect the healthcare transformation to start incrementally and develop slowly in sophistication. Though the early changes will appear clumsy and underwhelming, by 2030 they will seem obvious, inevitable and well beyond the changes we might envision today.
Why change? Consider this:
- Honeywell, a Fortune 100 technology and manufacturing company, needed to manage the ever-escalating cost of insuring its 130,000 employees and their dependents. Honeywell has reported that health care costs were growing approximately 8-10% per year.
- Self-insured employers like Wal-Mart want to make health care cost and quality information available to their 1.2 Million employees. Useful information that can be used by employees to select physicians based on how their rank, or how much they cost, resulting in savings for both the employee and the employer. Decision support enabler.
Historically, employers like Honeywell, Wal-Mart and their employees have not had access to comprehensive information about the cost and quality of care as they evaluate benefit designs across multiple health plans and treatment options.
In some cases, U.S health care providers and other market participants have actively resisted efforts by employers and others to obtain information about the costs and quality of health care services. Why? because opaqueness means money. UCSF researchers uncovered an enormous discrepancy in what different hospitals charge for the same procedure, ranging from a low of $1,529 to a high of $183,000. The median hospital charge was $33,611. The startling cost variation illustrates an inefficient system.
Despite this resistance, the health care industry generates extensive data that is relevant to determining the cost and quality of health care services. These data reside in myriad formats and disparate databases, without a common infrastructure, and have therefore been of limited value to employers and employees in controlling costs and improving outcomes.
In many cases, information relating to health care services has restrictions on its use, such as contractual agreements that some health plans and providers have historically entered into to not disclose price information. These factors make it challenging for employers and employees to use these data for the purposes of measuring cost and quality and making informed decisions. Read more
- IBM is moving to a private health exchange…Extend Health private exchange will be handling plan options for 110,000 IBM retirees
- Walgreens is moving employees to a Corporate Health Exchange. Of the 180,000 Walgreen employees eligible for healthcare insurance, 120,000 opted for coverage for themselves and 40,000 family members. Another 60,000 employees, many of them working part-time, were not eligible for health insurance.
- Trader Joe’s — decided to send some employees to the new public exchanges. Trader Joe’s has left coverage for three-quarters of its work force untouched but is giving part-time workers a contribution of $500 to buy policies. Because of the employees’ low incomes, the company says it believes many will be eligible for federal subsidies to help them afford coverage.
- Time Warner will direct retirees to an exchange to get health coverage
For the past year I have done strategy and implementation work in the employee Healthcare benefits and Private Exchange area. I wanted to share my insights into the massive structural changes taking place in health insurance. The move to patient-centered, consumer-driven, and value-based models is real.
Employee Health insurance in the U.S. is at the cusp of a major transition from an employer-driven payor model to a model directly involving many more employees and consumers. Private health insurance exchanges with a defined contribution approach represent a significant step in this journey. Also some clever risk shifting strategies are emerging where employers are moving part-time workers onto public exchanges.
The market size is enormous. Healthcare spending is forecasted to be ~$3.1 trillion in 2014, with $620 Bln of this paid by U.S. employers. In 2013, employers contributed 32% more in health care expenses than 2008.
A satisfying customer experience is the driver of any business’s revenue growth. Disney Theme Parks is no exception. Disney is executing a guest personalization strategy leveraging wearable computing (and analytics) to track, measure and improve the overall park experience. The ultimate goal is increase sales, return visits, word of mouth recommendations, loyalty and brand engagement across channels, activities, and time.
Wearable computing seems to be the next big thing. Many believe a new crop of gadgets — mostly worn on the wrist or as eyewear — will become a “fifth screen,” after TVs, PCs, smartphones, and tablets.
Wearables are already being used to monitoring vital signs, wellness and health. Devices like Fitbit, UP, Fuelband, Gear2 track activity, sleep quality, steps taken during the day. Consumers of all sorts — fitness buffs, dieters, and the elderly — have come to rely on them to capture and aggregate data.
What most people don’t understand is how powerful wearables (coupled with analytics) can be in designing new user experiences. Businesses thrive when they engage customers by creating a longitudinal view of each customer’s behavior. To understand the wearables use cases and potential we did a deep dive into a real-world application at Disney Theme Parks.
Wearable Computing at Disney: MyMagic+
Disney has been rolling out a new guest experience called MyMagic+ to the 30 million guests per year at the Walt Disney World Resort in Orlando.
Realizing that guests were arriving with smartphones and tablets in hand and expecting access to more information, Disney started the MyMagic+ initiative to provide a next generation experience. The overarching goal of MyMagic+ is to provide a much more personalized friction-free vacation at various theme parks, even down to characters knowing your name.
Disney is following in the steps of Harrah’s (now Caesars Entertainment) Total Rewards program that provided an integrated experience for gamblers across nearly 40 resorts and casinos. Loyal spenders were rewarded with innumerable entertainment options, enticing special offers, free hotel rooms, and different ways to redeem credits.
How does MyMagic+ work?
A key element of MyMagic+ is MagicBand. MagicBands is a ultra-personalization experience. These brightly colored bands link with online profiles for each visiting family member, and can be scanned at park kiosks to access advance ride bookings, receive customer service, and pay for all the stuff your kids want to buy.
The key to a great experience is being predictive in terms of context. For instance, while wearing her MagicBand, a young lady who loves Disney princesses might be approached by her favorite of the park’s life-size characters and be greeted by name.
Disney extracts and integrates all the information about the guest from all the park siloed data systems. as well as from external sources. This allows them to create a longitudinal view of each guest’s behavior over channels, activities and time.
Sophisticated pattern-detection science is applied against the 360-degree view to extract each guest’s behavioral predictors – like early warning on guest/family fading, real-time park experience dynamics (via feedback), and each guest sensitivity to specific promotions. The objective is to turn these signals into individuated recommendations served via customer marketing systems.
Technology behind MagicBand
According to Disney, each waterproof MagicBand contains an HF Radio Frequency device and a transmitter which sends and receives RF signals through a small antenna inside the MagicBand and enables it to be detected at short-range touch points throughout Walt Disney World Resort. MagicBands can also be read by long-range readers and used to deliver personalized experiences, as well as provide information that helps us improve the overall experience.
The next version of MagicBand might have much more computing built into it. If they go the Android route…Google has announced an SDK aimed at making Android, more palatable for small devices. Android apparently was consuming more battery. Samsung tried using Android for the Galaxy Gear, its smart watch, and the results were not so great. It couldn’t last very long without a recharge. For the Gear 2 Samsung dropped Android in favor of Tizen, its own operating system. I won’t be surprised if Apple and Disney team up in a few years around this.
Another day, another data breach. Just received another “We’re sorry you got hacked”…letter.
This is the fifth letter I have received in the past 3 months: Forbes.com, Target, Neiman Marcus, credit card company and a previous employer. What is going on?
Why aren’t firms investing in beefing up their predictive ability to spot the cyber-security intrusion threats? What’s taking them so long to identify? Why is the attack signature – sophisticated, self-concealing malware – so difficult to spot? Do firms need to invest in NSA PRISM type threat monitoring capabilities?
The three impediments to discovering and following up on attacks are:
- Volume, velocity and variety – Not collecting appropriate security data
- Immaturity and not identifying relevent event context (event correlation)
- lack of system awareness and vulnerability awareness
Obviously… where there is pain…there is opportunity for entrepreneurs see below – data from IBM). There is a growing focus on big data use case for security analytics after all the breaches we are seeing. General Electric announced it had completed a deal to buy Wurldtech, a Vancouver-based cyber-security firm that protects big industrial sites like refineries and power plants from cyber attacks.
Here are three recent examples that I was personally affected by – Forbes, Target, Neiman Marcus.
The following eight secular disruptive themes are what Goldman Sachs believe have the potential to reshape their categories and command greater investor attention in the coming years.
The Eight Themes:
- E-cigarettes – The potential to transform the tobacco industry
- Cancer Immunotherapy – The future of cancer treatment?
- LED Lighting – A large, early-stage and multi-decade opportunity
- Alternative Capital – Rise of a new asset class means growing risk for reinsurers
- Natural Gas Engines – Attractive economics drive strong, long-term penetration
- Software Defined Networking (SDN) – Re-inventing networking for the cloud era
- 3D Printing – Disruption materializing
- Big Data – Solutions trying to keep up with explosive data growth and complexity (Industrial Big Data and Personalized Big Data)
These eight themes – through product or business innovation – Goldman claims are poised to transform addressable markets or open up entirely new ones, offering growth insulated from the broader macro environment and creating value for their stakeholders.
Goldman focuses on the impact of creative destruction – a term made famous by the Austrian economist Joseph Schumpeter, which emphasized the fact that innovation constantly drives breeding of new leaders and replacement of the old.
Health expenditures in the United States crossed $3.0 trillion in 2013 which is more than ten times the $256 billion spent in 1980.
Almost 15% of U.S GDP is spent on healthcare…a staggering number. As a mega-vertical, healthcare covers several major segments (the 7 Ps)
- Payers (Health Insurance and Health Plans),
- Providers (Hospital Systems, Labs and IDNs),
- Pharmacy (retail distribution networks), and
- Pharmaceutical and medical equipment manufacturers,
- Prescribers (Physicians, clinics and pharmacy minute clinics)
- Police (Regulators, FDA)
- Patients (consumers)
A Healthcare system is a complex beast and difficult to navigate – providers need to make it easier for patients. They are using people resources like care coordinators and patient navigators to help patients navigate the system.
The focus on the payor side is in digitizing Health today is to reduce the amount of waste in the health care system via implementation of new forms of health IT and Analytics… that reduces inefficiencies, redundancies and administrative costs.
According the CEO of Aetna…”the health care system wastes more than $765 billion each year – that’s 30 percent of our health care spending.”
While spending on health care is dominating headlines, the health care industry (7Ps) is in a state of flux. Stakeholders across the health care sector are running hard to reduce costs. The drivers impacting cost of healthcare include:
- Aging population – Patient history and patterns of care impacting patient readmission rates
- Rise in Chronic Disease – 75% of cost – Prevention not reactive medicine
- Drug cost – escalating for certain therapies (Generics exchanged for biological drugs)
The healthcare ecosystem is being reshaped by two powerful counter economic forces at work: (1) Improve quality of care and (2) drive the cost of care down. Basically spend less and get more.
As a result, the entire healthcare ecosystem is changing into a “information-driven”, “evidence-based” and “outcome-driven” model.
The target healthcare transformation goals are:
- align economic incentives between payers and providers,
- digital engagement…create a simpler, more transparent consumer experience, and
- connected health….technologies that seamlessly connect our healthcare system.
In this posting we look at Digital Health Care use cases and how data and analytics are being slowly but sure being adopted in the form of informatics. All this change is being driven under the guise of Health Reform.