Note: This article first appeared in TechCrunch.
Healthcare reform has eluded Congress for more than two decades. It seems technology, driven by the Internet of Things (IoT), could well make the biggest transformation of all. In many respects, IoT is just what the doctor ordered. It holds the key to lowering medical costs, improving quality and making healthcare more personalized, accessible and affordable for average patients.
Call it the Internet of Medicine (IoM). From a financial standpoint, the annual impact from IoM could soon exceed a trillion dollars a year — revenue, by the way, that will increasingly rely on recurring revenue arrangements.
The move toward IoM is gaining momentum. In fact, I believe its adoption is inevitable. Why? For starters, it serves the financial interest of key players in healthcare — the insurance industry, big pharma, hospitals and doctors. Secondly, it’s ideally suited to help meet the demands of today’s increasingly health-conscious and empowered patients.
And where does recurring revenue fit into all of this? Healthcare is so expensive that the entire healthcare ecosystem — from insurers to hospitals to patients — prefers to do business through incremental payments. For example, many hospitals have begun storing medical images in the cloud on a pay-per-image basis, rather than maintaining costly on-premise storage systems. As medical costs continue to climb, these sorts of recurring payment mechanisms will become even more widespread.
According to a June 2015 study from McKinsey & Company, the economic effect from cloud-connected health technology could range between $170 billion to a whopping $1.1 trillion a year in the next 10 years. The lion’s share of that impact, the study says, will come from using IoM innovations to more effectively manage and treat chronic illness.
Chronic conditions such as heart disease, diabetes and stroke account for 86 percent of the more than $3 trillion spent on healthcare each year in the U.S. today. The report concludes that financial gains will come from helping patients with chronic diseases get better faster and stay healthy longer, while lowering treatment costs. By giving patients immediate and continuous access to information about the state of their health, IoM will help usher in a new era of highly personalized, self-directed healthcare.
When it comes to cost savings, the insurance industry stands to benefit the most from IoM. As a consequence, insurers will continue to push for technology innovations that reduce the amount of money they pay in claims, a figure that totaled more than $250 billion last year, according to the U.S. Treasury Department.
Hospitals, responding to cost pressures from insurers, are turning to IoM solutions to trim expenses — solutions they will pay for on a recurring revenue basis. For example, they’re increasing their reliance on sensor-based technologies such as smart chips, RFID tags, real-time location systems (RTLS) and beacons to better orchestrate the flow of patients, doctors, nurses, medical equipment and supplies.
In addition, sophisticated tools such as sensor-enhanced imaging systems enable doctors to diagnose disease sooner, while new wearable devices like the HealthPatch MD allow them to monitor patients remotely.
Innovations like these are of vital importance to another segment of healthcare — the $1 trillion-a-year pharmaceutical industry. The reason is simple: The sooner doctors can detect illness, the sooner patients can start taking the drugs they need to manage or cure their conditions.
New devices are in the works that will transform the treatment of many chronic ailments that comprise a large portion of recurring revenue for drug companies. For example, Swedish drug maker Novartis is working with Google on a contact lens for diabetics that can measure blood sugar from tears. It’s a significant advancement over the uncomfortable finger pricks millions of diabetics must currently endure several times a day. The lenses will also provide continuous data about blood sugar fluctuations, knowledge that’s essential in helping diabetics avoid life-threatening complications.
Indeed, wearable technology and the data it generates may well be the most revolutionary outcome from IoM. The insights they provide, purchased through incremental payments, (for the most part) will benefit everyone — insurers, drug makers, hospitals, doctors and, most of all, patients. By giving patients immediate and continuous access to information about the state of their health, IoM will help usher in a new era of highly personalized, self-directed healthcare.
According to research firm Forrester, we’ve already entered the age of the customer, a period in which technology innovation is tipping the scales in favor of customers and forcing businesses to become “customer-obsessed” as never before.
The same market forces are playing out in medicine in what you could call the “Age of the Patient.” Faced with rising deductibles, insurance premiums and out-of-pocket expenses, today’s patients are more cost-conscious about healthcare. And thanks to the Internet, mobile apps and wearable devices, they’re also more informed and more proactive about their health.
As a consequence, the old order, where patients were at the mercy of healthcare systems, is giving way to a new dynamic, fueled by IoM, in which patients have more control and more options than ever to get healthcare that’s more affordable, available and convenient. IoT is poised to dramatically transform virtually every aspect of medicine.
Powered by IoM technologies such as telemedicine, emerging delivery alternatives give patients access to healthcare on their terms and their schedules. In many cases, they enable people to bypass trips to doctors and hospitals entirely. And, because most of these options employ recurring revenue payments, patients view them as a more affordable choice to traditional medical providers.
The age of the patient will no doubt enhance patient care. But it won’t come without strings. Medical providers, whether in traditional settings or new subscription-based practices, will be motivated to find ways to deepen patient engagements, perhaps through loyalty discounts or specialized services for life moments like pregnancy.
On that score, IoT will be invaluable. It can provide unprecedented, real-time access to troves of patient health data that doctors, hospitals and drug companies can use — responsibly and with permission, of course — to improve results and forge lasting relationships with patients. More broadly, IoT is poised to dramatically transform virtually every aspect of medicine while paving the way for incremental profitability across the entire healthcare landscape.