The paradox of digital health, part 1: Money

money-v1

Despite the overwhelming evidence of the benefits of digital health over the traditional analog services, we have seen significant barriers to adoption that have resulted in what I refer to as the Ten Paradoxes of Digital Health. This article will address the Money Paradox.

The Money Paradox in Digital Health is that healthcare stakeholders seem to be unwilling to transform their business models to deliver the digital triple aim of greater access, with better quality at lower cost unless they are paid more than at present to do it. How can we save money if we have to pay providers more to adopt money saving technologies?

Digital health is demanding that provider, payers, pharma and medtech organisations radically transform their business models, which includes their revenue models, to deliver more powerful value propositions across all Five Cs: Cost, Convenience, Confidence, Compensation, and Connection. Such value propositions must significantly decrease costs, improve convenience, guaranty confidence and deliver greater connectivity to consumers (aka patients). But what is the net benefit if these healthcare stakeholders require meaningful increases in compensation in order to deliver these new benefits in a transformed business model?

Healthcare stakeholders are rational economic actors,  which means they do what they are paid to do. Our fee-for-service model, which has governed the practice of medicine for over a century, seems to have locked us in to antiquated methods. New digital technologies, like social, mobile, analytic and cloud, have enabled the complete transformation of health practice among all stakeholders. Yet while technologies enable radical change in how we prevent, diagnose, treat, manage and cure disease, our payment system has locked us in to antiquated methods of the past. In order to get clinicians and other stakeholders to leverage these technologies we have to do more than demonstrate they deliver better patient care – we need to pay for better clinical care. We have to reward clinicians in novel ways for learning how to leverage these technologies and transforming their practices. Only by first rewarding them for radical change can we ever hope to decrease healthcare costs, while improving access and quality of care.

In order to get providers to adopt electronic health records (EHRs) in the United States, the government provided billions of dollars of financial incentives for adoption that amounted to nearly $50,000 per physician. But this was not enough to ensure adoption. The government added sticks to these carrots by decreasing reimbursement to providers that failed to adopt EHRs and achieve Meaningful Use targets of performance. This has resulted in an actual increase in healthcare costs to incentivise the adoption of the digital health platforms necessary to support new connected business models.

In January 2015, the Center for Medicare and Medicaid Services (CMS) will start paying providers $42 per patient per month to provide connected health solutions to patients which, for the first time, doesn’t require the clinician to physically meet with the patient. CMS has provided seven new reimbursement codes to allow clinicians to provide a broad array of remote digital health services to expand the new practice of virtual care through connected technologies. This new willingness to pay for digital services will provide a bridge from our current fee-for-service and in-person patient care to capitated virtual visits where clinicians will be paid for outcomes and results.

To get digital health solutions adopted clinicians will initially get paid more money to provide incentives and rewards for moving their business model from analog to digital. Then once all providers are on digital platforms with virtual delivery capabilities, the payers will change the payment paradigm from fee-for-service to outcomes and performance based payment that will result in lower overall costs per patient.

We are finally seeing the necessary commitment to pay for digital health that will enable us to address the paradox and transform the practice of medicine.

To hear Dr Wasden chair an expert panel of medical professionals debating the future of mHealth on December 9th at the mHealth Summit in Washington DC, register here to attend.

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