Recently I wrote an article about the Buy Now, Pay Later space. For those who didn’t read it, BNPL is a modern(ish) take on the lay buy we all used to use as kids – just done far worse. As I wrote in my article, the BNPL space has seen a huge amount of turbulence in recent months as default rates skyrocket, customer acquisition plateaus and the winds of a stricter regulatory regime blow in the general direction of these disruptors.
The tone of my article was that the whole BNPL fiasco (or emerging fiasco, at least) is an example of what happens when the tech ecosystem gets itself in a fluster about just how revolutionary it is. In a bid to disrupt huge swathes of the economy, tech sometimes develops a heightened sense of its own importance and impact.
This is certainly the case in many sectors and examples such as WeWork and Theranos tell that side of the story well. And yet there are examples where the technology sector genuinely deserves the disruptor moniker. Examples where technology and its vendors are poised to forever change an entire sector.
One of these sectors, itself languishing in a perfect storm of increasing costs, ever-increasing customer demand, and a huge workforce crisis is the health sector. As we have seen in recent months in New Zealand, we have overworked clinicians, patients receiving sub-optimal treatment, tired infrastructure, a never-ending list of new (and expensive) treatments and a growing shortage of trained staff to do it all.
In the case of New Zealand, the approach to solve this problem has been to totally reform the structure of the health system. Countless thousands of words have been written about the current health sector reform but its genesis lies in a belief that it is the overarching structure of a system which determines its success or otherwise. Thus our government has decided that restructuring the system will deliver better patient outcomes, better equity and better economics.
It is worth thinking about the last of those themes, economics and looking at other recent developments. In particular some news coming from the US. Now I have to be the first to say that the US health system isn’t one that I’d look to for salvation. US healthcare spending is the highest in the world rising from $2,968 in 1980 to $12,531 in 2020. That spending has created an industry accounting for nearly 15% of the country’s workers and a fifth of its GDP.
All that spending has delivered poor outcomes in relative terms. Inefficiencies, exorbitant pricing, a classed system where those who cannot afford health insurance die because they can’t get treatment. An economy that sees two thirds of bankruptcies caused due to healthcare issues.
So, no, I’d not hold the US up as the leader in healthcare provision. But where a system is so fundamentally broken, rampant capitalism sometimes suggests solutions. And while I’m fully aware that it is rampant capitalism that has created the problem (indeed, rampant capitalism has created so many problems) there’s no denying that sometimes it answers a pressing need.
And it is in this light that I was interested to read that a couple of weeks ago online giant Amazon announced its plans to buy One Medical. One Medical delivers primary healthcare but via a online model. Called telehealth within the sector, the idea is that you can obtain medical assistance via a smartphone application. Tap the button, describe your situation, get connected to a clinician online, and receive advice.
One Medical has close to 750,000 members in the US. That’s a big number, but when you consider that Amazon boasts membership to its Prime service that covers over half of all US households and you have an obvious inflection point going on. All of a sudden Amazon can offer virtual health services via its Prime membership, and can even tie-in its nationwide logistics and fulfillment infrastructure to deliver medications to those same members. Speed and convenience, scale and efficiency.
Now I get the concerns. There is indeed an equity issue with these large corporate healthcare providers – what happens to those who can’t afford their services, is this the next step in the “post code lottery” that we’ve talked about in the health sector for years? What about continuity of care? My father was a GP and I still have friends whose parents he cared for, who he delivered (back when GPs still did obstetrics) and who had a clinician/patient relationship with him for decades. Under this new digital model, are those one-to-one relationships going to be broken? Perhaps most concerning for those of us who feel immense pride at a state-funded health system, do these corporate types syphon off profits by driving down costs and, by extension service levels? And what about privacy? Can we trust these private organisations to the extent we can (hopefully) trust public ones?
All valid questions and I’m not advocating for mass privatization here by any stretch. What I would say is that for some reason we accept a level of overall service from the health sector that is far lower than we’d put up with from our restaurants or hotels. For some reason, and despite health sucking up a huge proportion of our GDP, the user experience, to use a term the tech world throws around a bunch, kind of sucks. Long wait times, duplication and poor information sharing are all things we take for granted from the health sector, with no obvious reason.
And all of this poor user experience surely indicates a poor experience for those providing care – nurses, doctors, hotel administrators all seem to be frustrated by inefficiencies and a lack of innovation as well.
And that’s the nut we need to crack. Amazon is doing it in other ways. Its Amazon Care product is an in-house programme this tech juggernaut provides for its staff. It covers telehealth services and also nurse visits in the homes of staff. And Amazon is rolling that out as a product offering to its own customers. It has the scale, the capital and the deep understanding of driving efficiencies to deliver stuff better,
So that’s the challenge for us here in New Zealand. How do we retain all that is good about a public health system while still ensuring that it offers a level of user experience that is world class. I’d suggest we do it by creating a culture of innovation, and wrapping a commercial mindset around the system. A big challenge, but one we absolutely need to overcome.
Ben Kepes is a Canterbury-based entrepreneur and professional board member. The last thing he wants is for our health system to go down the US path…
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