How Big Technology is Fundamentally Restructuring the Healthcare Industry

Imagine using your Amazon Prime account to order your prescription drugs, visit an Apple clinic, or receive health insurance benefits from Google. These technology giants are disrupting the healthcare industry.

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Medicine in the United States is big business. Since 1980, healthcare expenditure has risen ten fold. The U.S. healthcare system is broken, and the sad part is that we spend more money per capita on it compared to any other nation.

In 2017, the U.S. spent over $3.5 Trillion on health care, that’s roughly 18% of our G.D.P. The Centers for Medicare & Medicaid Services (CMS) project that number to increase by ~5% in 2018. That’s quite a jump in one year. As health insurance premiums soar and private insurers become more selective, the average American struggles to cop up for healthcare.

To put this in a big-picture perspective, almost 30% of our entire Federal spending budget is allocated to healthcare, yet 44 Million Americans are uninsured.

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What’s Going on?

The healthcare leadership system is comparable to a pyramid. A handful of centralized leaders dominate the political healthcare ‘machine.’

Unnecessary Care

One of the biggest problems is the amount of unnecessary care. Approximately 1/3 of all healthcare costs come from overuse and unnecessary tests and treatments.

If you’ve ever been to the E.R. with an undiagnosed problem, the chances are you will undergo a slew of unnecessary testing and procedures. Not only are they unnecessary, they’re wasteful and frustrating as a patient. Over $200 Billion is wasted annually on unnecessary testing.

Stuck in the Past

Today’s healthcare system is stuck in the past, and care is sometimes purely prescriptive.

‘If patient X has symptom X,Y, and Z, then this is the definitive treatment solution.’

People are more than their symptoms, and those in practice should take a more holistic approach to patient treatment. Our society is ridden with chronic diseases. From diabetes to addiction, half of all U.S. adults have a chronic disease.

Genetics plays a part, but there are many other lifestyle and deep-rooted personal, social, financial, and behavioral issues that have profound effects on health. For example, no one wants to talk about, or address, mental health. 1 in 5 adults in the U.S. experiences mental illness in a given year. Mental illness results in almost $200 Billion lost in earnings per year, and many other chronic diseases and illnesses are not being treated.

Backwards Incentive Programs

toddoto health care blogInstead of focusing on actual health outcomes, many healthcare providers focus instead on maximizing practice revenue through healthcare services. Despite the Affordable Care Act’s provision to shift incentives from volume to value, 86% of providers are still paid for each individual test, procedure, and treatment they provide.

Doctors often play musical rooms, jumping from one to the next, squeezing in as many patients a day in order to bill a third party (insurance companies) for their services. This also means that every facet of care must be coded, documented, and delivered the correct way in order to get paid. This fosters hostile patient-doctor-insurance relationships and environments.

Baby Boomers

We should also consider the rise in costs that are associated with the aging baby boomer population. Boomers are flocking to retirement in droves, approximately 10,000 are retiring a day. The rate at which they are retiring coupled with longer life expectancies puts a serious strain on healthcare processes and reform efforts.


Where are we Headed?

It’s not all dark and gloomy, but healthcare will soon be transformed by big technology like Amazon, Alphabet, Apple, and Microsoft. They have all been patiently waiting for their opportunity to take on the highly profitable, yet lucrative healthcare industry. With the help of Artificial Intelligence (AI) and Machine Learning (ML), the race is on.

Each of the big four are positioning themselves a little differently, so that they are catering to their strengths.

For example, Apple wants their products to be patient health hubs. They want healthcare providers and consumers to use the  ‘Health’ software app that is installed directly on the iPhone. It is cloud-accessible and has the capability to be used for personalized health insurance plans, better record collection, and analysis. Apple is also opening medical clinics focused on holistic approaches.

The benefit of health organizations working with big tech lies in the potential for better quality of care at a lower cost. In this digital age, companies are swimming in a sea of data and information. Big tech companies are selling their data management and analysis solutions to support health systems, payers, and consumers. They want their piece of the Federal spending budget pie.

Amazon-Berkshire-JPMorgan Chase (ABC) Alliance

Amazon, Berkshire, & JPMorgan Chase are partnering up to reduce healthcare costs. An interesting trio for sure, but they named Dr. Atul Gawande, a surgeon and bestselling author from Harvard, as the CEO of the partnership. He may be an outsider to the traditional healthcare systems, but that’s exactly why they chose him. His job is to fundamentally disrupt the healthcare industry.

A long time ago back in 1999, Jeff Bezos bought a 40% stake in Drugstore.com. Now, 19 years later, Amazon just purchased the delivery prescription service, PillPack, for $1 Billion. PillPack has the ability to coordinate, fill, and deliver medications to your door at a low cost.

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Amazon already has the distribution logistics and membership loyalty to take on the daring feat of disrupting the healthcare industry. With the corporate, outsider-partnership they formed, they are going all in.

Their goal will be in selling their expertise to small and large business in order to significantly reduce healthcare costs and promote better overall care. Much like how they went all in on retail and grocer industries. From selling books online to fundamentally disrupting major industries, perhaps the Amazon effect will give the healthcare industry a run for its money.

Alphabet Bets Big on Healthcare

Alphabet, Google’s parent company, is the most active tech giant investing in healthcare and biotechnology. One of their most prominent research units called Verily is on a mission “to make the world’s health data useful so that people enjoy healthier lives.” As of this year, Alphabet has filed over 180 healthcare patents.

They have also become notorious for hiring prominent CEO’s who are on their way out of power. For example, Dr. Cosgrove, the CEO & President of the Cleveland Clinic was recently recruited by Google Cloud’s healthcare team. They recruit from the FDA, National Institute of Mental Health, and universities from all over the world.

Artificial Intelligence & Machine Learning

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Artificial intelligence (AI) will be the growth engine of the healthcare revolution. As AI-learning algorithms become more accurate and precise with the data organizations collect, AI will become the copilot of patient-doctor treatment solutions.

AI is also making strides in diagnoses, assisted robotic surgeries, and even virtual nurse assistants. The virtual nurses can question, interact, and assess patient health and direct them to the appropriate source of treatment. It is estimated that virtual nurse assistants could save 20 Billion a year. As baby boomers age and the nursing shortage continues, virtual nurse assistants could be a viable solution.

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The hope for AI and ML powered applications is to reduce overall costs and increase the quality of care by allowing AI to do the heavy, data-sifting work. The tedious, task-oriented work like writing chart notes, ordering tests, and filling prescriptions can be optimized using AI-based technologies.

With more time available, providers and insurers should be able to improve care.

Healthcare systems are very complex, and restructuring them won’t be an easy task. The competition that will result from these changes will most likely be good news for consumers.

Even though these companies have been successful in uprooting other industries like retail, it doesn’t mean their strategy will work this time. Healthcare related startups will continue to be bought by big tech used to further their new systems.

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The future of healthcare rests in the hands of tech giants, whether or not that’s a good thing is up for debate. The one thing that is for certain, the current healthcare environment is in desperate need of change. As chronic disease continues to increase in the U.S., so do the costs of sub-par treatment.

Reform is required, but are we ready for big tech in healthcare?

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