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4 Challenges Facing the Health Care Industry

Image of a stethoscope resting on a computer keyboard

Medical and technology innovations have together produced radical service delivery advancements. Despite monumental improvements, society is only experiencing the beginning phase of this process. While today is a time of growth, it is also a time of growing pains. Duly, the medical field currently faces four prominent challenges: service integration, service quality, Internet connected medical device security and publicly sustainable pharmaceutical pricing. While innovations promise to change healthcare service delivery forever, it will take some time before the advancements reach their full potential.

A Period of Sweeping Changes

According to a report issued by the healthcare consulting firm PwC Health Research Institute, patients have multitudinous innovations available due to recent healthcare reform and technological innovation, resulting in service delivery when and where patients want and need it. [1] The advancements come at a time when patients need detailed information to manage new, complex and increased caregiving expenses. As a result, many clients rethink and improve how they manage their retirement funds. This prudence will likely carry over into other fields connected to healthcare service delivery.

2016 marked the year the medical community expected significant healthcare delivery improvements due to enhanced access to patient information and groundbreaking technology incorporation. For the first time, the concept of virtual hospitals exists with service delivery limited only by Internet connectivity, while the medical community experiments with alternative payment models and big data management tools. These combined advancements will soon create sweeping changes in the medical field.

While these changes are monumental, they will take place at a moderate pace. Caregiving organizations want empirical evidence that each innovation will provide quantifiable returns, and while a unified patient database moves toward fruition, conflict over information rights – for consumers and organizations – slows progress substantially. Finally, legislative wrangling over healthcare delivery policies further slow advancement in the medical field.

Challenge 1: Information and Service Integration

The medical community easily welcomes big data advancement, but implementation is not as fluid. Non-relational databases merge patient information from many sources, providing actionable metrics. The technology presents itself at the perfect time to fill the need to exploit newly available patient information stores.

Traditionally, care providers use relational databases to store and access patient information. However, relational databases cannot efficiently manage unstructured information, such as clinical notes and transcripts. Only a small percentage of care providers have been able to transition from relational to non-relational databases using traditional electronic health records (EHRs). Most organizations successfully implementing non-relational information technology are large and financially capable.
Non-relational databases fully exploit all recorded patient information despite the format. The technology helps care providers recognize traits typically lost once recorded or until individually reviewed. By making details such as these easily available, drug or equipment manufacturers gain stronger insight into how patients use medical products. Additionally, primary care providers discover more information to help them discover solutions for current patients.

In the United States, some care provider networks have already deployed advanced non-relational databases. Patients’ willingness to share their medical information is critical for non-relational database success. While most patients have no qualms providing medical information to caregivers, significantly fewer are willing to share their information with third parties, such as drug manufacturers.

Because many care providers have only recently adopted electronic health records, they are unwilling to implement new non-relational database technology. With additional investment, care providers can increase database effectiveness markedly.

Because of limited access to patient information, drug manufacturers waste immeasurable expenses on research and development, which is passed on to consumers. Educating patients on how information sharing reduces costs is essential to developing a free information flow facilitating medical advancements and helping care providers develop more personalized service delivery plans. Patients understanding these benefits are more willing to share medical records with third parties.

Challenge 2: Effective Payment Model Discovery and Implementation

A report issued by the nonprofit medical association Academy Health states that to decrease costs and increase service quality, insurers and benefactors have instituted new payment models. [2] Under the new models, financial incentives hinge on patient outcomes rather than service quantities. The new models include incentives, such as:

  • Bundled payments
  • Disbursements to patient-oriented care providers
  • Global payments
  • Shared savings

The medical community widely reproaches the way insurers disburse funds as the primary cause for high healthcare expenses in the United States. Because many insurers simply pay for services rendered, patient advocates believe traditional models incentivize care providers to deliver quantity rather than quality. Additionally, since care providers receive disbursements directly, they have little reason to work collaboratively with others. This typically results in increased expenses and unsatisfactory patient experiences.

New payment models seek to alleviate these problems. Large organizations, such as Medicare, serve as proving grounds for the new models. The group has dedicated an entire business unit to developing, testing and implementing new payment models to improve patient outcomes and decrease costs.
The shared savings model has gathered the most attention among care providers. Many versions of this payment model exist, but accountable care organizations (ACOs) implement the most noted approach. Under ACOs, healthcare groups assume responsibility for improving patient outcomes and reducing costs. When they meet these criteria, the participants share the savings produced by their collaboration. This encourages providers to coordinate services and uniformly promote preventive practices.

It is a difficult to secure provider participation in the models and monitoring processes. Further complicating the matter is that the new payment models are adjustments, rather than complete overhauls, and measuring return-on-investment proves difficult. Consequently, truly transformative practices will emerge due to the efforts put forth by the handful of early adopters.

Challenge 3: Protecting the Devices That Protect Public Health

Many healthcare technology advances incorporate Internet connectivity, an industry forecasted to grow to almost $300 billion by 2020. [1] However, this convenience also extends to computer hackers. As the Internet connected medical device field matures, malicious cyber-attacks will increase.

In 2015, the United States government issued a warning that hackers can instruct infusion pumps to deliver lethal medication doses. The disclosure highlighted the possibility that malicious programmers can infiltrate medical devices and harm patients. Furthermore, hackers use medical devices to infiltrate care provider information networks, performing malicious acts such as stealing research and clinical trial data.

The US Food and Drug Administration (FDA) encourages medical device manufacturers to limit equipment access to trusted users. Additionally, the administration requires manufacturers to report and repair potential device compromises immediately.

To date, hackers have not compromised any medical device and prompted a mortal occurrence. However, cyber security analysts point out an attack against an unprepared care provider will devastate an organization in many ways. In 2014, almost all large health networks fell victim to cyber breaches with 20-percent of those attacks costing over one million dollars in recovery expenses.

Information technology experts suggest that medical organizations carefully consider how they structure proprietary networks. They recommend organizations bear the expense of segregating external consumer medical devices from internal devices on enterprise networks and in effect limit intruder access.
A PwC Health Research Institute poll reports that over 60-percent of respondents prefer device security over simplicity. Medical devices engineered without security protocols place patients and healthcare organizations at risk. Organizations implementing technological developments will incur added expenses implementing these precautions. The medical community will have to borrow many practices from secure industries, such as banking and government organizations. If left unchecked, these ongoing risks may cause legislators to shift from making recommendations to enacting full regulatory medical device security mandates.

Challenge 4: The Search for a Win-win Outcome with Pharmaceuticals

Patients, insurers and regulators join in lamenting that drug prices have grown exorbitantly. Pharmaceutical manufacturers counter that lower pricing will hinder product development. In the meanwhile, the two groups continue struggling to find a pricing consensus, while consumers struggle to keep up with prescription costs.

Under increased governmental pressure, drug makers must now substantiate their pricing. The enterprises are also under scrutiny from the public, insurers and pharmaceutical value assessment groups.
Many factors contribute to the fair drug pricing challenge. Spending on “complex specialty” drugs increased almost 30-percent in 2014. Brand name drug prices have risen higher than inflation every year since 2006. Generic medication, which typically reduces in price over time, increased in price almost 10-percent in 2014. Analysts predict these trends will continue.

Some pharmaceutical executives advocate for fair pricing and suggest that insurers reward organizations prescribing new, cost-effective drug treatments. Globally, several groups have formed to evaluate and monitor pharmaceutical pricing. Each develops its own formulae to measure price traits, such as:

  • Economic viability
  • Effectiveness
  • Patient outcomes
  • Toxicity

The information made available by these international groups helps insurers reduce prescription costs in the United States.

Almost 20-percent of patients request a less expensive alternative when physicians issue prescriptions. Difficulty and dissatisfaction are likely to increase as policyholders face increasing deductibles. Reliable drug pricing information is not available among manufacturers or insurers to help resolve this matter. With cooperation from insurers, manufacturers and patient advocates – the medical community can develop a continuous framework to ensure fair drug pricing. If pharmaceutical firms do not reach an accord with consumers and insurers, legislators are calling on drug prices determined strictly by manufacturing costs, which will significantly decrease medication fees.

Service delivery innovations are on the verge of drastically improving community health. While the medical community and patients alike welcome these changes, making these innovations a reality presents several challenges. Despite the struggle to implement advancements, history will remember this era as the beginning of the next evolution in medical service delivery.

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[2] AcademyHealth