In 2008, I gave a speech at a Florida International University conference, and I discussed the view that we were entering a new renaissance in healthcare. I must say, I am still amazed and saddened how so little has changed in the last nine years. As an optimist, I believe that change is around the corner, and the rest of this blog shows that hope.
We have always advocated the need of transformation in healthcare, and more utilization of technologies that have already transformed nearly every other industry in the United States.
I had a conversation this past weekend, where I tried to shed some light on a portion of the underlying problem in healthcare reform and the slow adoption rate of technology in healthcare. In the discussion, I compared the complexity and complications that exist in healthcare, and the resistance to change to the famous Rubik’s cube puzzle.
As some may recall, to move a single tile color from one side of the cube to another, you must move 11 other colors simultaneously. This playfully simple example highlights why moving even a seemingly minor item in healthcare can have such a dramatic effect. Now, let’s go further with our Rubik’s cube example – if we want to move a color tile to another axis, you must move 11 other colors in cross direction, making the cube barely recognizable from where we started with just two moves.
Recently, I read that the Rubik’s cube had 43 quintillion variations. I am no mathematician therefore, I found the MIT paper containing the formula (for those who care to indulge themselves) and it looks like this:
The next time you hear about a change in healthcare, think about how frustrating it is to move a single tile in a complete Rubik’s cube, from one location to another and from one axis to another.
This series of blogs is about technology and healthcare – specifically, the technology in Silicon Valley and Apple, Google, Amazon, Microsoft, Intel, as well as many others. I was preparing to write about another company in the big tech space when another very interesting and timely article came out about Apple. The article, reported by Christina Farr with CNBC , has recently published several compelling articles regarding the growing interest, and activity in healthcare within the leading technology companies. In fact, the relevant part of article noted that Apple had held “secret meetings” to explore bringing the Apple Watch to millions of Aetna customers.
Though I have had business relationships with some of the largest insurance companies in Florida, Aetna has not yet been one of them; however, the following principles are generally the same for all health insurance companies.
In 2016, it had been reported that Aetna was either going to subsidize, or give away the Apple Watch to as many as 50,000 employees, as part of a corporate wellness program. We can infer that the program was successful, if Aetna is considering provisioning the Watch to its member base.
However, before we get too excited, we should look at the economics of insurance, and the potentially transformative move if, and when, Aetna does it. In the article by Ms. Farr, it states that Aetna has 23 million members; and in other public filings, it has been reported that Aetna had $63 billion (USD) in revenue in 2016, with approximately $2.2 billion (USD) in profits. That is effectively $100 in profit per member for all of 2016.
If Apple were to discount the Apple Watch to $100 (USD) each, then it would cost Aetna effectively 100% of its profit for 2016 to cover all 23 million members. Of course, this is impractical based on prudent business practices; however, it is not impractical for Aetna to take a select portion of their member base, and do a real world pilot program. It will surprise many that insurance companies do not net that much profit per member, on a yearly basis. We operated risk entities in the past and we looked at literally every penny in cost. When you multiply it by 20,000 or 20,000,000 members, every single cent counts, that is not a cliché in healthcare, but an accounting reality.
What would Aetna get from such an investment?
The Apple Watch, and many other wellness wearables in our opinion, would benefit in the care management of their members. They could track certain vital functions continuously, they could be able to alert members based on their location (even if they are geographically out of area for provider network coverage), and they could even GPS the location of its members to provide emergency help, if needed.
Clearly, the Apple Watch could be used to improve the wellness of the Aetna member base, which in turn should reduce the cost of providing healthcare coverage. Certainly, the potential is there to help members improve their own health, but don’t count on it anytime soon. The reason again is quite simple, and that is the information they generate, for the most part, is not shared with the members’ care team or their primary care provider. Some could say that the member will simply be able to share their data from the “application” with their care providers, and I will respond that there are 100,000+ doctors doing the “eye roll” right now. Providers will then ask if there will be CPT/ICD-10 codes associated with that “procedure,” to get paid to review the data? That is a valid question.
Doctors/providers are already inundated with data that they cannot process, and sadly most electronic healthcare records (EHR) have only served to compound this situation. New requirements taking effect this year, are only going to make it worse. This is not to say that “wearables” could not help transform the U.S. healthcare industry and bring it in the age of the iPhone. As a matter of fact, we believe they will, and soon. Maybe we also need to incentivize patients with financial rewards for improving their health.
Yes, we do believe that wearables can be of significant added-value to providers, once the data is aggregated, processed and delivered to providers in an actionable form. We believe this so strongly, that we filed a patent in that space a few years ago. We believe that by having that information available from multiple sources, delivered to care managers, and eventually to providers via their EHR, will not only demonstrate the value of wearables, but also bring it mainstream in the healthcare industry. Until then, wearables will likely remain an isolated collector of wellness data.
We are delighted to see Apple stepping into the healthcare space, and even more excited to read about their “secret team working on adopting continuous noninvasive blood sugar monitoring.” This is truly an awesome idea, in a complicated space. My own father died because of complications from diabetes. This has been needed for a long time, yet the path forward is littered with “red tape.” Beyond the technical issues, data collection and transmission in a HIPAA compliant manner, this “skunk works” team will face the Food and Drug Administration (FDA). The FDA has issued some “interesting” guidelines related to the separation of wellness devices/medical devices and software. However, clarity is sometimes a challenge in these type of communiques, therefore, this issue is in somewhat of a “no man’s land” from a regulatory standpoint, or at best a very wide gray line. We will discuss this recent initiative in a future blog, and point out that the more these devices are used in relation to actual medical care, versus wellness, the more interest the FDA will have. We pray they will allow innovation to flourish.
The opportunity is exciting, and especially the impact that Apple could have in healthcare. It’s also important that we continue to remember that until the wearable data is delivered to the providers, in an actionable form, the quality of care and reduction in costs by using technology will not be achieved.
– Noel J. Guillama, President