Poor Return On Investment
A broken funding system
‘Digital health tech is dead’ announced Rob Coppedge, CEO of Echo Health Ventures in a post on the 6th September 2017.
Rob has more than 20 years of experience in health care venture capital, so his opinion counts. Echo Health Ventures invests in, builds and grows health care companies.
How did such an experienced health investor come to this conclusion? And is his judgement correct?
Rob’s point is that that the return on investment (or ROI) of health technology just doesn’t add up. He estimates that over the past three years, about 16 billion in investment has been poured into about 800 companies offering digital health products.
‘If the investors of these companies were to generate the returns they are expecting, we would need to triple the public market cap of the health IT space by 2021.’
That’s not to say that one day the investments may reap a reward. Or that health care doesn’t need support in reforming.
‘There’s no argument here that our health care system demands fixing.’
Rob also pointed out, that in place of real ROI, there is an abundance of effusion and cheap flattery.
‘The only thing that has grown faster than dollars invested in digital health has been the hype surrounding it – with conferences, blogs, incubators and Twitter handles springing up everywhere.’
What is the reason for this failure? Transformative technology been able to convince lawyers use digital documents and home owners to rent out spare rooms to strangers via an app. Why can’t it reform healthcare?
In my opinion, the fault lies with both health technology and the health industry.
The health industries greed and outdated payment system is literally sucking the life blood out of Western countries budgets.
Meanwhile, a million apps and sweat-soaked smart armbands aren’t going to help people avoid outrageous medical bills or hospital-acquired infection. They just provide distraction and digital debris.
Werewolf – Pixabay
Point A. In healthcare, funding is per individual item, not whole of service. This is sometimes referred to as ‘fee for service’.
Patients typically see a general practitioner, specialists, have a number of pathology and/or radiology tests before being given a diagnosis of blood pressure and a pharmacy script. This journey triggers multiple bills, which are sent off to an unrelated host of government departments and/or private insurers.
There is no ‘whole of payment’ for the diagnosis and treatment or hypertension or any other disease. The multiple health services involved and government or private payees do not communicate with each other.
Would you buy a house, brick by brick, metre by metre of electrical wiring, or piece by piece of timber?
Money jigsaw Pixabay
Point B. Every body in the health industry is ‘making’ so much money out of the current system. The traditional low-tech, bricks and mortar, paper-bound hospital-centric health system makes huge profit margins. It also supports an entire industry of powerful unions, professional associations and guilds. Any shift from hospital care to home-care would disrupt this cosy model.
No matter how much patients would love to be home for most of their care, or health departments and insurers would be delighted to pay less medical bills. Hospitals, their old-fashion technology and unionised staff would all lose money and power from health reform.
Money – Pixabay
Point C. Health technology has been rightly referred to as committing war crimes. The first wave of hospital software was appalling. Slug-like, filled with duplication of data, while making it impossible to document the basics; like the patient is feeling scared/sick/stressed/frightened. It was obsessed with bank-level privacy security, while ignoring busy hospital work-flows and the multiple pathways that patients assessments and treatments actually go through.
If Doctors or patients wanted to access this data they’d find it virtually impossible. Which is just as well, because much of it is inaccurate anyway.
Hospitals are the only industry in the world still using faxes and pagers. They are the Jurassic Park of the 21st Century.
Other industries focus on coordinating ‘assets’ and ‘people’ together. As Paul Rylance said, you can’t treat a sick person unless you know where there is a hospital bed available.
The second wave of health technology is smick, smart-phone based and beeps and jingles while you run a marathon or suffer a run of Atrial Fibrillation. However it repeats the same mistakes as dinosaur software. Health apps are obsessed with individualised, insular, personal data.
Guess what? People come into ED in a family group. Aneurysms run in families. And adults across all populations die younger and sicker when they fail to exercise and control their weight.
These apps full of chirpy ‘I am the best me I can be‘ phrases and brightly coloured pie charts also ignore the winding and often complicated pathways that health diagnosis and treatments actually go through. Like dinosaur software, they are mostly full of useless and often inaccurate data.
Who cares that a marathon run went for 97 minutes? The patient could still have stage 4 cancer. And the 24.3 second run of AF, could be from an otherwise healthy 30 year old male or a crumbly 80 year old female who also has heart failure.
In the same way that gravity bends light, patient’s health data is completely dependent on factors that surround it. So much for privacy and personalised healthcare.
Some brilliant exceptions exist like Simon Carter’s Predict BGL, designed by entrepreneurs with personal experiences of health problems. But mostly, modern health technology is crap. Which is a great pity. Because we desperately need quality data in healthcare.
‘Technology is worth nothing if it doesn’t solve an important problem or improve lives.’
Robert Pearl, MD
So what’s the solution?
Step outside the cosy traditional health marketplace. Ask questions and shop around. Medical tourism for patients and price analytics for health insurers and hospitals now exist. Demand the same transparency and accountability from healthcare that over industries now provide. If you don’t like the service of your health provider, explain your issues clearly and go somewhere else.
The health industry is no different to education, transport, accomodation or food. You should be asking for the highest standards for the lowest cost.
Try out health startups and promote them to others. In general their services are cheaper, more accurate, home-based and customer-friendly. They need your business to survive and the chances are they won’t make it unless you and everyone else supports them.
Stop voting for parties that indulge ‘big government’ and ‘big companies’. Small businesses and small parties are far more likely to work hard for your money, and experiment with newer technology and home-based services.
The future of both your health and your countries budget deficit is in your hands. Grab it with both hands.
© Wikihospitals October 2017.
Motor bike Pixabay