Healthcare Revisited

Consider how healthcare should be…

Why telehealth is so scary…

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I’ve been hearing quite a bit lately about how telemedicine (connecting providers to other providers for virtual consultations) and telehealth (connecting patients to providers for virtual care) are exciting new technologies, but that there just isn’t enough return on investment (ROI) to justify the cost of implementing them. The truth is, there’s massive ROI potential from this kind of care model, but existing providers simply don’t have much motivation to pursue it.

Telehealth is scary to existing healthcare systems, because it fundamentally changes the paradigm of how healthcare is delivered. In order to provide modern healthcare, we’ve always had to create massive “care factories” (also known as hospitals). Existing healthcare players have become pretty good at operating these care factories under the existing system’s rules. They are pretty happy with that situation, also, because the ridiculously high costs associated with building and running these factories protect established players by creating incredibly high barriers to entry into the healthcare industry. It’s also meant that the hospitals have become a vortex, sucking providers, services and patients into their field of influence.

Telemedicine and telehealth remove geography as a barrier to care. That means that suddenly, it’s possible to push out healthcare to the patients, rather than centralizing providers and pulling patients to our giant, expensive care factories. That’s incredibly disruptive!The reason that most existing healthcare institutions don’t see an ROI on potential telehealth investments is that, like legacy players in other industries, they can’t manage to break free of the shackles of their existing business models and value networks. They’re mired in the sunk cost investments that they’ve made in their big, inefficient, care factories and the systems that support them.

The groups that will be successful are the nimble new companies that can leapfrog the need for traditional “bricks and mortar” care, the same way that developing nations have leapfrogged expensive, labor intensive, wired telecom and gone straight to cellular systems. Leveraging this kind of technology with innovative new, low-cost business models (think call centers and mid-level practitioners), and logical new networks of value that bypass the traditional fee-for-service system.

The value of telehealth isn’t the real issue. It’s the fear of disruptive innovation that’s the true obstacle.

4 Responses

Great comment. I believe we are at an inflection point, and traditional solutions need to be reconsidered.

  • Nice post. Hopefully the telehealth movement is gaining momentum with easier licensing and credentialing and better reimbursement.

  • I agree about being at an inflection point – keep up the great writing!

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