March 24, 2020
PUBLISHED BY Phyllis Whiteley
SOURCE Wildcat Venture Partners
Busting at the Seams & Screaming for an Outlet: Data Liquidity in the Healthcare Industry
The last few years have seen great strides in the FinTech market fueled by digital transformation and the embrace of new technology. FinTech’s wins—most recently Plaid’s acquisition by Visa for $5.3 billion earlier this year—give hope that other highly regulated industries (such as healthcare) can also capitalize on the current wave of technology advancements to unlock trapped value and more importantly, trapped data.
In the Healthcare industry, huge quantities of data reside in silos across hundreds of different software platforms. This data is currently stored in different formats that don’t speak the same language. Just as Plaid “democratized” financial services by breaking down data silos, the same opportunity exists for data liquidity and healthcare.
Healthcare’s Time Is Now
According to Bob Bausmith, Founder of Accelerate Innovation, the healthcare industry is way behind its counterparts when it comes to digitization. Electronic medical records (EMRs) have started to put into place a systems of record for patient data, but the industry still needs to separate the front-end applications aimed towards patient experience and process automation from the back-end applications that create the systems of record. “If you look at the financial industry, this happened decades ago, so I would argue that health care delivery systems—unliked health plans—are twenty years behind any other industry.”
Today more than ever patients want to be in charge of their healthcare information. They are becoming more tech savvy and want to engage with providers and insurers digitally with full access to all of their records. This engagement has made it apparent that today’s methods for collecting healthcare data are not patient friendly at best, and highly inefficient at worst. How much time do you waste filling out the same paper forms over and over each time you visit a new doctor? It just doesn’t make sense.
Cost drivers also play into why Healthcare is primed for disruption. Errors alone account for hundreds of millions, if not billions, of wasted dollars each year. Just look at how many diagnostic errors there are in the US, every year, not to mention the number of incorrect prescriptions that are written, or tests that have to be duplicated again and again because the information doesn’t flow.
There is no shortage of people trying to attack this problem from all angles. Even people who are outside of the traditional healthcare roles are trying to solve the problem. New tech entrepreneurs bring a completely different approach and perspective to an area that has been highly regulated, highly focused, and highly dependent upon a specifically trained labor force. But in order to succeed, they will have to fully understand how complicated the industry is and the gravity of the regulations surrounding it. They also need to navigate the convoluted pay structure that makes the healthcare business model different than all other industries.
The Three Ring Circus—Patient, Doctor, Insurance
So why is the Healthcare industry still so far behind its counter parts in highly regulated industries such as financial services? Part of the deficit can be attributed to the industry’s business model.
Healthcare is an odd world in that neither the consumer (Patients) nor the healthcare staff (physicians, nurses, etc.) are part of the pay structure. We have a complex third-party system of reimbursement that actually pays for most of healthcare. That means that the people who want technology improvements are not always the same as the people who pay for those improvements.
Bob stresses that physician buy-in is a key driver for implementing digital transformation. Given heavy regulation and reliance on expert labor, the healthcare industry has historically been slow to change.
I did research on a company that was trying to assess whether or not physicians would use a diagnostic in oncology. The younger physicians were interested and open to the idea, but the older physicians were not. Many of their comments portrayed a sense of “I know how to practice medicine; I don’t need to do those tests.” Some physicians can see automation or any other system that cuts them out as a problem.
The True Consumer of Digital Health in the Healthcare Industry
When I asked Bob to explain how he views the problem of data silos, he brought it back to the physicians and seeing things through their eyes.
“Think about it from the doctor’s perspective,” said Bob. “Take an orthopedic specialist for example. Their office has an EMR, but the doctor will also need to access a hospital system which has its own EMR, and then imaging data may be on a third system. The doctor is kind of like the financial services user when mint.com and plaid came out.”
And thinking about it that way makes perfect sense. “How many times a day do you access the patient portal at your local hospital?” continues Bob. “It’s not part of your lifestyle, however when you think about it from the practice standpoint, they’re doing this every fifteen minutes, repeating the process with each patient they see.”
So, the true consumer is the practice or providers and their employees, not the patient who we typically view as the end consumer.
There has also been a massive shift away from independent doctors to staff doctors who are employees of the hospital system. It is much harder for independent doctors to get privileges at hospitals like Stanford.
Bob points out that this is one of the unintended consequences of the large government incentives. “The $30 billion that have been incentivized to have big hospital systems implement EMRs has also resulted in independent physicians being put out of business. At the regional level you are seeing a lot of consolidation and roll up into these silos. They are building monolithic organizations and systems by purchasing primary care practices, specialty practices and other hospitals so you can basically get all of your medical care within one system. We now have these monolithic health systems arguing that by providing everything in one shop enables value-based care giving you—the patient—a better user experience.”
Breaking Down Silos
The healthcare industry is lacking a key ingredient for data sharing; standardized EMRs. This makes it hard for someone—patient or physician—to gather a truly comprehensive patient history that includes labs tests, doctor visits, hospital information, medication lists and the like. All of this information resides in disparate systems with limited or non-existent APIs.. This is where technology can play a role in consolidating information.
It will be impossible to tackle standardization across all providers but using technology to create a framework that loosely-couples discrete systems is a viable and realistic option. The question comes down to business models. Who is incentivized to consolidate it and how much control does the patient (consumer) get over it? It most likely won’t be the third party reimburser whose business model in part relies on controlling the timing of payments.
Bob also doesn’t think it will be the large consumer focused companies. “A few years ago, Google and Microsoft both led efforts in healthcare data consolidation, but have both since abandoned the projects. While they were successful at aggregating data, it wasn’t being put into workflow, so it wasn’t being used. What will drive valuable aggregation is something that helps to streamline and automate workflows.”
So, will it be the new monolithic health system providers who have the most to gain with regards to workflow? If they don’t see the benefit of freeing up their receptionist from distributing and collecting paper forms to enter manually into the system, I think that they will be getting pressure from patients who don’t want to have to fill out the same forms over and over again each time they visit a new practitioner.
Who Is Leading the Charge?
We need more automation in standard of care as well as processes for collecting data and the categories to watch are Digital Therapeutics and Data Aggregators. Here are some digital health companies that I see as strong contenders for helping to tackle the problem.
Human API stands out as a real-time consumer health data platform. The company has built a comprehensive network that centralized fragmented health data sources across the US. The platform allows users to securely share their health data with developers of health applications and systems, and its network includes data recorded by medical records from hospitals, test results from labs, medications from pharmacies, financial data from claims and more. Human API takes care of the data integrations with third party data sources and user management for your identities across all data sources. They also work to normalize the data over a secure, HIPAA compliant, RESTful API.
Redox aims to improve healthcare by uniting patients and providers through easily accessible technology. Healthcare organizations and technology vendors connect to Redox once, then authorize what data they send to and receive from partners through a centralized hub. Redox’s cloud-based platform is vendor and standards agnostic and enables the secure and efficient exchange of healthcare data. This approach eradicates the need for point-to-point integrations and accelerates the discovery, adoption, and distribution of patient and provider-facing technology solutions. With hundreds of healthcare organizations and technology vendors exchanging data today, Redox represents the largest interoperable network in healthcare.
Vital, the new healthcare startup by mint.com founder Aaron Patzer, is a digital platform for emergency departments. The company is striving to close communication gaps with patients and help emergency care teams deliver safer, smarter are that meets the demands of patients while streamlining existing processes.
Carrum Health, a marketplace SaaS platform for planned healthcare procedures and is driving the transition away from fee-for-service to value-based care where providers are accountable for both cost and quality. The company directly connects progressive, self-insured employers to top-quality regional healthcare providers through the industry’s first comprehensive bundled payment solution, eliminating waste in the payment administration and realigning provider incentives. Their innovative platform re-imagines how health care is paid for and delivered; improving the value of health benefits for employers and their members.
Innovaccer, is another one to watch. Innovaccer is a healthcare data activation platform company focused on delivering more efficient and effective healthcare through the use of pioneering analytics and transparent, clean, and accurate data. Innvoaccer’s aim is to simplify complex data from all points of care, streamline the information, and help organizations make powerful decisions and realize strategic goals based on key insights and predictions from their data.