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How Much of Healthcare Business is Healthcare?

Posted on January 27, 2014 I Written By

Kyle is CoFounder and CEO of Pristine, a VC backed company based in Austin, TX that builds software for Google Glass for healthcare, life sciences, and industrial environments. Pristine has over 30 healthcare customers. Kyle blogs regularly about business, entrepreneurship, technology, and healthcare at

Editor’s Note: We’re excited to welcome Kyle Samani, Founder of Pristine, as a regular blogger here on EMR and HIPAA. I first met Kyle when he was a high school student working at his father’s EHR company. It’s amazing how far we’ve both come since then. You can find all of Kyle’s EMR and HIPAA posts here.

In The Great Re-Bundling of Healthcare, I argued that healthcare will be rebundled along new dimensions because technology will break assumptions that predicated bundling in the analog era of healthcare delivery.

In that post, I noted that a few industries have been completely dismantled and rebundled by technology:

The print publishing industry – newspaper and magazines – thought that their unique value was in their core product – news, editorials, and classifieds. But the unique value they delivered was in printing and distribution. When the Internet reduced the cost of printing and distribution to effectively $0 and free news became the standard, their businesses collapsed. Print publishers are left servicing the paper news market, which is a fraction the size of the overall digital news market.

Taxi companies thought that their local, retail, administrative, and regulatory overhead was necessary to solve the get-from-point-a-to-point-b problem. Using the Internet, Uber, Lyft, and SideCar proved that none of those overhead functions matter, enabling a new era of get-from-point-a-to-point-b solutions. Taxi companies are left servicing the I-haven’t-heard-of-Uber and there-aren’t-enough-Uber-drivers markets, both of which are rapidly shrinking.

Hotels thought constructing buildings and staffing employees was the only way to solve the get-a-place-to-stay-for-the-night problem. Using the Internet, AirBnB proved that anyone can solve the get-a-place-to-sleep-for-the-night problem for anyone else. Hotels are left servicing the high-end, premium service market in the get-a-place-to-stay-for-the-night business.

These examples beg the question: when healthcare is completely rebundled around digital delivery, what businesses will healthcare providers really be in?

In the examples above, the Internet empowered laymen to circumvent legacy establishments. Using the Internet, laymen performed the same tasks more affordably than traditional retail businesses.

With Watson-like self-diagnostics; an army of cheap, connected, sensors; and a wealth of freely available information on the web, laymen will increasingly self-diagnose and self-medicate whenever and however possible. This process will start at the low end – the simple stuff such as common colds, simple bumps and bruises – and increasingly move up market.

Over time, tri-corders (such as Scanadu), smartphone EKGs (such as AliveCor), smartphone ultrasounds, CTs, MRIs, and blood tests will empower patients to gather all of the necessary diagnostic information without ever visiting a retail medical facility. Patients will send data to providers electronically and consult with providers via video conference. The web will obviate the need for most retail overhead, capital expenditure, and labor cost associated with most care delivery.

Medicine will be disrupted from the bottom up. Hospitals won’t completely go away, but they will be left servicing the high-end of the market – ICUs, surgery, labor and delivery, and other high-acuity conditions – just as hotels, print publications, and taxis service the most expensive segments of their respective markets. The vast majority of care will be delivered as virtually and cost effectively as possible.

By circumventing retail establishments, medicine will centralize as geography loses relevance. Just as the hotel and taxi industries consolidated around mega-platforms such as Uber and AirBnB, healthcare will consolidate around provider hubs that service enormous populations. The mega healthcare systems will have the tools to centrally manage populations and interact with them contextually. The major health systems of the analog era that were bounded by geography will battle to become national behemoths as geography becomes irrelevant. Mayo Clinic, Cleveland Clinic, and others are already doing this by establishing virtual clinics across the country.

Why did the publishing industry, taxi industry, hotel industry, and travel agency industries collapse? Why will all of the old practices of medicine collapse? Cost. The most costly aspects of delivering care are labor and retail overhead. As increasingly small, localized, connected computers gather an increasingly large amount of data, computers will help patients self-diagnose and self-medicate without the need for expensive retail or labor overhead. Computers will automate inherently repetitive processes.

So how do I answer the question I posed in the title of this post? I’ll do some high level math. About 15% of the cost of delivering care is associated with billing and administrative overhead. About 40-50% is provider labor. There’s another 5-10% is spent on other miscellaneous expenses. And the remainder of costs are in capital expenditures including retail overhead. I suspect that 50-60% of total healthcare costs could be cut when healthcare is fully digital.

Tricorder Devices, REC Numbers, and EHR Photo IDs: This Week in HealthCare Scene

Posted on June 10, 2012 I Written By

Katie Clark is originally from Colorado and currently lives in Utah with her husband and son. She writes primarily for Smart Phone Health Care, but contributes to several Health Care Scene blogs, including EMR Thoughts, EMR and EHR, and EMR and HIPAA. She enjoys learning about Health IT and mHealth, and finding ways to improve her own health along the way.

John’s Note: As regular readers know, I usually reserve the Sunday post to do a Twitter round up. The Sunday post on EMR and EHR has been a Healthcare Scene round up post written by Katie. I decided to mix things up a little bit. Each week I’ll swap which site does the Twitter round up and which site does the Around Healthcare Scene.

If all of this is confusing, don’t worry. Just subscribe to the emails for EMR and HIPAA & EMR and EHR and you’ll be all set. Now sit back and enjoy a look around the Healthcare Scene network.

The Shift From Expensive Technology to Cost Saving Technology

For years, medical technology came with a hefty price tag. While many of these investments were a miracle worker of sorts, it left hospitals and medical practices with a large bill. Fortunately, in recent years, the technology being released, such as EHR, are trying to make health care less expensive. While it is up for debate if software like EHR really is less expensive, there is a definite shift in the costs of medical technology.

Photo IDs as Part of the Patient Record — Flashy Trend or Future of Medicine?

Unfortunately, errors do occur in hospitals. However, putting photos on a patient record may help prevent some of these problems. Children’s Hospital in Colorado is currently trying this out. The number of mistaken orders dropped from 12 in 2010 to 3 in 2010 since the hospital started using photo IDs. So the question is, are photo IDs worth the time and effort?

Hospital EMR and EHR
Make Consumers Want Their PHR

More PHRs seem to be popping up, but are any of them really convincing people to use them? Anne Zeigler doesn’t think she. In this post, she lists several different ideas on how to get people “excited” about PHRs with tips such as good marketing and rewarding the user. If companies want consumers to use their PHR, many things should be taken into consideration.

EMR Thoughts

REC Numbers for REACH (Minnesota and North Dakota Doctors)

REACH is a nonprofit federal Health Information Technology Regional Extension Center that aims to help hospitals and medical practices through Minnesota and North Dakota implement EHR or optimize the current system. It had many goals in mind when it started, and recently, many of these goals have been met or surpassed. REACH serves 4,749 priority primary care providers across these two states.

EHR and EMR Videos

Dr. Eric Hartz’s EHR Story from the 2012 HIMSS Conference

At the recent HIMSS Conference, Dr. Eric Hartz shared his thoughts on EHR. He discussed the benefits of EHRs and gave tips on participating in incentive programs. He also talked about how to use EHR across a number of different hospitals.

Smart Phone Health Care

Is the Tricorder Device a Reality?

Is that rash on your child something serious, or nothing to worry about? Or is that fever from a UTI? Scanadu, a tricorder-like device, supposedly will use social media to help make healthcare more immediate and accessible. The machine will allow people to take a picture or sample of something worrisome, and immediately find out what action needs to be taken. The world of social medicine is quickly expanding, and a tricorder is becoming an actual possibility.

Pajamas Created to Monitor an Infant’s Vital Stats, Sends Mobile Alerts

Wearable monitors are popping up throughout the health care world. The latest? Pajamas for an infant to wear. It monitors an infant’s vital stats and sends mobile alerts to the parents. Great idea, or just another gimmick to sell to paranoid parents? Read more and decide for yourself.