The Trillion Dollar Expense Weighing Down Healthcare, And How to Shrink It
One thing the pandemic has shown is that health care is an ever growing and changing sector. New patients, data, and technologies are reshaping the industry. As Kiplinger puts it, medical technologies are “transforming how we treat and care for our bodies'' and creating great opportunities along the way.
But a central problem weighs down the sector: Being a heavily services oriented industry, more than one-third of expenses go to administrative tasks, the vast majority of which is handled by personnel. This is far more than in many other developed nations, and much of it is redundant, creating an unnecessary burden for providers. Even these figures may be an underestimation, an article published by JAMA reports. So how much money is the industry pouring into these costs? Annually, $1.1 trillion -- and of that, nearly half is “excess,” a study found. This represents about $500 billion that can be avoided.
Working in health care technology, I’ve seen one of the biggest forces creating these avoidable costs. Crucial information -- about patients, their medical histories, social determinants of health (SDOH) in various parts of the country, and much more -- has long been held in separate siloes. Myriad players, from health care providers (doctor’s offices, hospitals, clinics) to insurance companies, have held their own separate records, making it difficult for a new provider to get the information it needs.
The industry has continued to rely on case-by-case information sharing with lots of paperwork. At times, this has led to physicians not having access to information quickly enough to make the best call for a patient, contributing to problems such as duplicate testing, medication errors, and misdiagnoses.
More patients, more silos, less innovation
As the U.S. population grows and the percentage made up of older Americans rises as well, the pile of back office work increases exponentially. The time and costs of scheduling, authorization, insurance communication, follow-ups, and all sorts of other tasks results in even higher costs for everyone involved, including patients.
Meanwhile, anytime a provider takes on a new technology designed to help in some specific way -- such as addressing the needs of patients with one disease or patients who fit a certain demographic -- providers have to shoulder costs of the manual work associated with making that new technology function.
So the entire process of modernizing the sector and getting people better care is dramatically slowed down.
The solution: a unified data platform for automation
As Deloitte’s 2021 Global Health Care Outlook puts it, resolving this requires sweeping change. “Radical data interoperability is a required foundational capability to enable health care providers, insurers, and other stakeholders to deliver patient-facing programs and associated technologies. When implemented correctly, it can help greatly improve care delivery and patient empowerment and provide a solid return on investment (ROI).” It goes on to explain that “radical interoperability suggests that all relevant data about people—health and otherwise—will be integrated and available for both research and action.”
What health care needs is a unified data platform -- a single place in which all relevant information is brought together, made accessible to those who need it, and ideally presented in a way that makes sense to a user given what they’re looking for.
The good news: In creating a data platform for the health care sector -- with information from over 3000 hospitals, 3,500 counties, all 50 states, and insurance payers updated via our algorithms -- our team at CloudMedx has found that much of the current manual work can be automated. And it can all be done without sacrificing patient privacy. (Privacy and security is one of our biggest areas of focus.)
This moment offers opportunity
Now is the time for this transformation to happen. During the pandemic, lawmakers have finally dropped some of the rules designed to prevent providers and insurers from sharing information. The overwhelming majority of Americans support such changes and want more of them, Pew Trusts found.
There’s a long way to go. Many medical records are stored on paper and need to be digitized, and some technical barriers make electronic health records difficult to transfer across certain platforms, Brookings points out.
But things are moving in the right direction. As data platforms come to play a larger role in the medical industry, administrative hassles will decrease. This will allow health care providers to take on many more new products and services. It will also incentivize more entrepreneurs to enter the industry, knowing that their creations could become more affordable to medical institutions -- expanding their pool of potential customers.
Ultimately, this will lead to the central goal of better health care for more people. And along the way, investors will have even more reason to harness the opportunities of emerging medtech.
Tashfeen Suleman is cofounder and CEO of CloudMedx. Based in Palo Alto, California, CloudMedx is transforming healthcare delivery using Artificial Intelligence, giving patients, providers and payers the information they need to ensure the best care, avoid mistakes, and save money.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.