Innovative Service Delivery can Reduce Health Care Costs
By Bob Fabbio, CEO of WhiteGlove Health, Inc. (from Stanford SOCIAL INNOVATION Review)
No country spends money on health care like the US — national health care expenditures amounted to almost 18 percent of the Gross Domestic Product (GDP) in 2009. More money is spent per capita on health care in the US than in any other nation; meanwhile, almost 17 percent of Americans lacked health insurance in 2009, according to the US Census.
Today’s fee-for-service health care system is part of the reason health care costs continue to rise. Why? Because insurance companies continuously drive down reimbursement rates, forcing providers to perform unnecessary visits, procedures, and lab work to survive. Unless something changes, this upward cost trend will continue.
Employers use a number of tactics to manage these skyrocketing health care costs, including switching plan vendors; raising contributions, deductibles, co-pays, and other employee cost-sharing provisions; implementing wellness and other health-promotion incentive plans; and eliminating or reducing retiree medical plans. But recent history shows these approaches do not work—employers and employees have absorbed double-digit increases over the last 5 years.
What has been missing is large-scale innovation that introduces higher-quality, lower-cost medical providers that can improve the health care experience, and ultimately break the cost trend for employers and employees.
What does this innovation look like? It is mobile, digital, and efficient, and has low overhead. It brings health care services to patients, is available pretty much on demand, and can match the talent and expertise of the health care workforce with the immediate needs of patients.
Mobile health care delivery cuts down on overhead costs, saves time, and is less disruptive for both the patient and the provider. Mobile care also means less out-of-pocket costs for individuals and businesses. My company, WhiteGlove Health, provides its members with just such a service. Nurse practitioners visit our members at their home or workplace to provide primary and chronic medical care, and the services are provided for a fixed cost plus an annual membership fee, with no costs passed on to insurance providers. By delivering services directly, we save on the cost of maintaining a clinic—savings we pass on to the patient. The patient also saves the time and money they normally would spend on transportation and associated disruptions, including trips to the doctor’s office, the pharmacy, and even the diagnostic lab.
Mobile health care has the added advantage of removing common medical ailments out of already-crowded ERs (crowded hospitals have been tied to both increased death rates and a waste of resources when a standard physician would suffice).
One type of emerging mobile health care is mHealth — health care solutions that employ mobile technologies such as smart phones and tablets. mHealth applications are particularly useful in rural areas or impoverished communities where access to health care is slim. However, mHealth also has many implications for the industrialized world. For example, nurse practitioners can use iPads to access medical records, perform charting, and provide forms for patients to sign; patients can request appointments and access medical records via a mobile app. These methods cut down on time and resources needed to manage data and process forms, and we have seen the cost savings firsthand. Mobile health applications also make services timelier and better informed.
Advances in mobile technology are creating other opportunities as well. Many telecom providers are starting to invest in telemedicine: health care services provided over wireless, networked, or cloud-based mediums. New software technologies give patients remote access to health care services; for example, Anthurium Solutions Inc. produces solutions that enable nurses, pharmacists, and other health care professionals to engage in long-distance consultations with patients.
The rise of mobile technology and the cloud are creating new opportunities for innovations that simplify health care delivery, and in this age of rising health care costs and uncertain health care reform, health care innovation is perhaps our one hope for controlling costs. However, innovation can’t and shouldn’t be limited to new medical technologies; we also need innovation in delivery models and process optimization. Until we create leaner, more-efficient health care delivery systems with fewer middlemen, we’re never going to see a true reduction in the health care cost curve.
Read a related sponsored supplement article, “Opportunities in Mobile Health.”
See the complete health care sponsored supplement.
Bob Fabbio is CEO and co-founder of WhiteGlove Health, Inc., headquartered in Austin, Texas. Bob has more than 30 years of experience in all aspects of business: company formation, board oversight, and day-to-day operations. His past startups include Tivoli Systems, which was acquired by IBM, and DAZEL Corporation, which was acquired by Hewlett-Packard. Fabbio also spent nearly 6 years in the venture capitalist industry with Austin Ventures, as a Venture Partner, and with TL Ventures, as a Managing Director.
