But computers evolved: They got smaller and faster and cheaper and better, until there was one on every desktop – then in every college kid’s backpack. Instead of tens of millions, they cost a few hundred bucks and, especially once we connected them all to the Internet, they did everything – played us music and movies, sent our messages, kept our records, served as typewriter and filing cabinet, post office and toy.
And then, as companies like Apple and Google stepped in, blurring the lines between media companies, telecom providers, and consumer electronics manufacturers, there was a jolt of new value. It was hard to tell exactly what an iPhone was – part communications device, part media player, part Internet, part store – but the experience was compelling and the perceived value off the charts.
Falling prices. Rising value. Products and services that are more and do more: That’s what innovative industries are supposed to provide.
So what’s wrong with healthcare, and how do we fix it?
Healthcare in the United States, of course, is the exact opposite of this tech scenario. Prices go up, decade after decade, at well over the rate of inflation. Each year we spend more and get less for it. And competition, which has driven value creation in so many industries, seems to have little impact. Much of that has to do with how the industry is structured. Patients with health insurance don’t care about costs – and mostly don’t even know what they are. The doctors and hospitals that make the decisions about what care patients receive are paid on a perservice basis. It’s a blueprint for runaway costs.
What if healthcare companies were rewarded for achieving great results for the lowest possible costs? It turns out that with better economic incentives, creative companies can come up with ingenious ways of keeping patients well – some of which truly expand the definition of healthcare.
For example, elder-care specialist CareMore has discovered that you can break the back of medical inflation by keeping your highest-risk patients well and out of the hospital. Hip surgery is a big driver of costs among the elderly; CareMore keeps them on their feet by fall-proofing homes and clipping their toenails. Congestive heart failure sends large numbers of the elderly to the hospital; CareMore detects it early, when it can be treated on an outpatient basis, by giving patients wireless bathroom scales that report unexpected weight changes to doctors.
CareMore’s patients are frail and old, but the targeted approach works just as well with more mainstream populations. At Boeing, for instance, a pilot program with targeted care for the at-risk reduced healthcare costs by 20 percent – and sent absenteeism plunging by more than half.
Other employers need to follow Boeing’s lead, and soon. For them, the rewards will be lower costs and healthier employees. For the rest of us, the payoff will be a vibrant healthcare marketplace, where traditional providers and new entrants from retail, tech, and other fields compete to provide more value year after year.
Or to put it another way, remember what happened to tech. Now imagine it happening in healthcare. It’s a truly great idea.
Terry Stone is the managing partner of Oliver Wyman’s Health & Life Sciences practice. She is based in Dallas.
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