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    Using Technology to Change Healthcare

     
    2/2/2004
    Technology can be a valuable tool for both providers and consumers of healthcare services. So what are the next steps to change the current system?
    by Julia Hanna

    As consumers and business owners feel the pinch of rising healthcare costs, the buzz around consumer-driven models continues to grow—and so does demand for information. Selecting a doctor can be one of the most crucial decisions a consumer makes, and patients are seeking out the data they need to make an informed choice.

    This growing demand translates into opportunity, agreed a group of healthcare specialists who discussed the market's ongoing transformation at the Cyberposium 2004 conference at Harvard Business School on January 17.

    From the provider viewpoint, technology can be used as a competitive tool. Electronic medical records offer doctors and patients increased efficiency, for example, while health plans can use specialized software to analyze factors such as cost, quality, and efficiency to determine which hospitals and physicians to include in their network.

    You have to look at things on a human being level, not just a claims level.
    — Gary M. Austin, Blue Cross Blue Shield

    Consumers, meanwhile, are increasingly taking matters into their own hands, often using the Internet to conduct research on alternative treatments or to look up a doctor's background. While such tactics don't always result in the most reliable or up-to-date information, the trend represents an undeniable shift in how consumer views on healthcare have changed.

    "All healthcare is personal," said Gary M. Austin, director of health management systems delivery at Blue Cross Blue Shield of Massachusetts (BCBSM). "You need to be able to educate the consumer near the point of service."

    On the insurer's side, massive retooling needs to happen, he continued. While BCBSM's current system is built around transaction processes, Austin said that their office is shifting to a more member-centric perspective. "You have to look at things on a human being level, not just a claims level," he said.

    Kenneth L. Sperling, a consultant at Hewitt Associates, provided a snapshot of the market in three takes:

    • Consumers have learned the current system, so they don't want to change, and won't, until they're given incentive to do so.
    • Consumers don't know how to buy healthcare. In the absence of other information, they often equate cost with quality, which only drives up expenses further.
    • The market won't be ready to move beyond the cost-equals-quality equation until consistent metrics and data are translated into a language that any consumer can understand.

    "Who is the best cardiologist in Boston?" Sperling asked. After a moment of silence he concluded, "My point exactly."

    Consumer-driven healthcare is beginning to take shape around three different models: An account-based program that covers basic needs and catastrophic injury; a tiered network that separates providers into low, medium and high categories with incentives to choose one provider over another; and a build-your-own plan that allows consumers to pick and choose deductibles, drug plans, co-pays, and other elements of healthcare.

    What about doctors, asked one audience member. What do they think of the changes in healthcare?

    "Oh, they love it," Sperling quipped.

    "They're reluctant, but the rules have changed," said John Morrow of Health Grades, a healthcare ratings and services company. Consumers are demanding information, and providers are beginning to comply with that demand. "Others are embracing the change and becoming more market-savvy," he added. Physician groups and hospitals that ignore the growing need for branding and other marketing skills are only putting their capital-intensive organizations at risk.

    "Most doctors don't care about ratings," countered Dr. Thomas C. Hawkins, director of e-health strategy at Harvard Pilgrim Healthcare. They have other concerns, he said, such as mastering the billing complexities for the six different health plans they accept.

    Clearly healthcare—which represents roughly 15 percent of GDP—offers vast business opportunities, noted moderator and HBS professor Lynda M. Applegate. Where should aspiring players in the field focus their energies?

    "A key opportunity is in driving price and quality transparency of the provider system into the delivery system," said Sperling.

    "Analytics," said Austin. "The industry needs people who can massage data and understand biostatistics."

    "It's all about e-business platforms that can provide connectivity and act as data warehouses," said Hawkins.

    "It'll be important to understand how to take the function of an operation and digitize the process," said Bob Tavares, manager of consumer products for HealthShare Technology. Imagine going to a pharmacy, for example, swiping a card, and being informed in real time of which medications your plan covers.

    "There are huge opportunities in differentiation and branding," said Morrow of HealthGrades. "Name a healthcare brand right now," he asked the audience. Only one—Kaiser Permanente—was mentioned.

    Julia Hanna is an associate editor for HBS Bulletin.

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