Challenges of the Interaction Economy (part 4) : embracing complexity in the Health care sector

Table of contents

Challenges of the Interaction Economy (part 1)

Challenges of the Interaction Economy (part 2) : embracing complexity in the Public sector

Challenges of the Interaction Economy (part 3) : embracing complexity in the Finance sector

Challenges of the Interaction Economy (part 4) : embracing complexity in the Health care sector

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4.     Health care sector

4.1 Introduction

Over the last 50 years there has been enormous economic and social progress in Europe and – although there are large regional and social differences – Europeans are living longer than ever before: on average eight to nine years more than in 1960. This coincides with other demographic developments: fewer children are being born, which will mean fewer people paying into state pension and healthcare systems, and a smaller pool of potential carers. The health care industry is relying more and more on innovation and the use of IT to cope with the costs and increased workload. Finally, prevention becomes an important part of the health care policy.

The health care industry is very heterogeneous. It covers both care and cure. There is a large and diverse group of actors each with its own practices and interests. On a high level these groups can be dividend as depicted in the beneath picture, based upon a report of the Dutch Court of Audit.

Figure 11 Actors in the health care industry

The Health care industry is challenged by three interlocking crises that make present health care systems unsustainable:

  1. Rising costs,

  2. Changing demographics.

  3. Quality of care. 

All three crises have become drivers for change.

According to a survey of Frost and Sullivan in 2007 healthcare spending will double claiming 20-30% of the GDP in 2050. Health care cost continue to upward spiral; it seems to be a recession resistant industry. The premium growth continues to exceed increases in inflation and workers’ earnings. As a consequence of the rising demand and increasing costs the resent insurance model for health care costs becomes unsustainable.

The changing demographics leads to the need for anytime, anyplace care. Care and cure have to be provided outside the traditional residential boundaries. Telemedicine and tele monitoring become new disciplines. Self-care becomes more important.

Figure 12 Continuous change in the health care economy

The quality of care can be improved by continuous innovation. New medicines, insights and practices can bring relief to existing problems. On the other hand, however, is the quality at constant risk. The error rate is too high, information systems are not interoperable and a unified patient view is lacking. This makes it very hard to fulfill the need for patient centricity.

Complexity and workload is crippling physicians and hindering their ability to deliver high quality care. Clinicians in healthcare face problems like patient overload, bureaucratic red tape, loss of autonomy, loss of respect and low reimbursement rates. This results in low morale and burn outs that in combination with staffing problems affect the quality.

The pressure of governments and regulators to control quality and costs increases. Governments want to know where every invested Euro or Dollar goes and what he delivers.  At the same time new quality regulations increase the bureaucratic burden of the health care system. Medical and administrative liability leads to the creation of huge information containers and flows across organizations that become unmanageable and lead to more errors.

As a result of the focus on costs the power balance between the organizations in the health care industry is shifting.  Insurers are more and more dictating which medicines can be provided and which treatments are insured. Reputation management becomes important, because ill performing providers are getting excluded from new contracts. The applied policies and conditions are in constant change.

One of the answers to the challenges is the increased use of technology. Technology impact will be visible in diverse areas like medical technology, consumer electronics, communication technology and of course information systems.

Important means in the use of information systems are:

  1. The Electronic Medical Record (EMR)

  2. Interoperable Health Care Information management systems

  3. Decision support systems

  4. Interoperable Health Care insurance systems

The use of technology is needed to improve the patient safety, improve the process e.g. (waiting time), improve the quality of practices and the regulatory compliance. There are however also barriers that hamper the use of IT like privacy concerns, conflicting interests and lacking standardization.

Another answer to the challenged mentioned before is the shift from reaction to prevention. More and more tend governments and health care professionals do stress the importance of prevention. The present system contains some perverse incentives: hospitals and physicians get paid helping people once they are sick as opposed to keeping people healthy. Also, hospitals compete against each other, there is medical arms war. Specialization and economy of scale in IT and medical technology are used to get a competitive advantage.

It is to be expected that the focus will shift in the coming decennia towards more prediction and prevention. The options to predict in very early stages the possible risk of getting for instance diabetes are expected to improve dramatically. This will give an extra boost to prevention programs and stressing the importance of lifestyle management. Self-responsibility of citizens will become an important criterion.

The complexity that the healthcare industry faces will by no means diminish, on the contrary it will expand.

4.2 Facing complexity

The health care industry faces various forms of complexity as can be analyzed based upon the preceding paragraphs. In the domain of social complexity, we can situate the emergence of the e-Patient. e-Patients are health consumers who use the internet to gather, share and produce information about a medical condition of particular interest to them. e-Patients are increasingly active in their care and are demonstrating the power of the Participatory Medicine or Health 2.0 / Medicine 2.0 model of care. They are equipped, enabled, empowered, engaged, equals, emancipated and experts. They use the internet as the primary source of information.

Results of a recent survey in Germany show that e-Patients put their trust far more in general health care portals, portals with patients exchange possibilities and sites of official support groups. The websites from hospitals, pharmacies, health care insurances and the pharma industry scored way below these groups. The obvious lack of trust in the industry complicates the interaction between health care providers and consumers. It leads to an increase of second and third opinions, medical migration, reputation damage and claims. It is also a blocking stone for the industry to play a major role in the trend to self-responsibility, prevention and self-care.

With respect to dynamic complexity one can state that the health care sector is among the most active and evolving value chains. “Under construction” seems to be the only constant. Governments are continuously looking to control and reduce cost, given the magnitude of government spending. Through privatization, many governmental organizations in any country seek to reduce costs by introducing market discipline, creating a value chain, spanning both public sector as well as commercial enterprise. As a result of all these transformations, financial regulations and processes have become mind-bogglingly complicated. Unfortunately, it means that governmental bodies as well as both the “cure” and the “care” side of public and private healthcare spend valuable budget on managing that budget, cost and other financial flows. All these complexities and complications lead to more opacity instead of the desired transparency.

Besides the financial processes have also the medical processes become more complex. Medical technology, drugs and practices are constantly changing. Evidence based medicine has become an integrated part of the industry.  The number of actors that is involved in the treatment of a patient is often large and case dependent. The introduction of an electronic medical record advances only slowly because of privacy concerns, established interests and halfhearted government and industry support. Changing disease patterns, consumer behavior (e.g. refusal of vaccination), political importance and care accessibility do add to the complexity.

The health industry has also to deal with emerging complexity. Emerging complexity is characterized by disruptive change. The sector faces challenges to which the solution is unknown. It can even be that the problem itself is still unfolding and not yet totally clear. The greater the emerging complexity, the less organizations can rely on past experience. One has to deal with situations as they evolve. This requires an adaptive approach and also calls for competences, methods and instruments that are oriented towards continuous change. New business models, new entrants, new alliances and new channels are on the verge and require a capacity to adapt and adopt and preferably also to generate for instance a new playing field. Scenario planning can be one of the instruments to be prepared for various events and outcomes.  

An recent opinion on future trends in the health care economy[i] lists the following trends:

  • Open world: From markets defined by boundaries to markets defined by flows

    • Expanding global patient populations, internationalized labor resources, and globalization of biomedical innovation and production will create markets defined by flows of knowledge, human & capital resources rather than regional, national, or geographic boundaries.

  • Ecologies of risk: From institutional to individual risk management

    • As institutions are no longer willing or able to offer risk protection, individuals will have to manage the full range of health-related risks made more challenging given the relationships between these risks.

  • Do-it-yourself anytime: From passive patients to co-creators of health

    • Whether by choice or by force, individuals will have increasing responsibility for managing their health. They will respond to this burden of empowerment with three do-it-yourself behaviors: self-agency, self-customization, and self-organization.

  • Anyplace health: From traditional clinical settings to new points of care

    • Cost-pressures, the changing role of hospitals, non-institutionalized care for seniors, and new communication & diagnostic technologies will expand care setting into the community, the home, and into niches of time and place in the course of daily life.

  • Health-aware environments: From computing to sense-making

    • As objects, places, and even humans are embedded with technologies that sense, understand, and act upon their environment, we will gain the ability to track and monitor our physical, social, and emotional well-being, creating new options for personal health management.

  • Better then well: From therapy and treatment to enhancement and extensions

    • Self-improvement approaches extremes as people experiment with digital, pharmacological, biomechanical, and medical tools to alter, enhance, and extend their bodies in profoundly different ways, in turn reinventing their bodies, minds & identities.

The field of play of health care is therefore changing as depicted in the following image.

Figure 13 Field of play health care industry

There will be a growing use of medical devices, the nature of prescriptions will change, health benefits will be sought too in food, the make-over culture will expand and the information ecology will be dominated stronger by collective intelligence.

All these trends offer opportunities and threats to which the industry has to respond. The biggest challenge however is to become resilient to change and open to innovation.

4.3 Looking at the health care sector from the blank canvas viewpoint: examples

From a purely objective point of view do many health care sector processes only consist of a few steps. If we take for instance the patient treatment process, we can see that the process basically consists out of four steps: Checking of health followed by medical diagnosis (somatic and non-somatic) by a specialist which leads to medical treatment, residential or non-residential. The process ends with medical discharge.

If preferred the process can be drawn in more detail by adding aspects like information gathering, referral and consultation. But even then only a short list of steps remains. Every step consists of a limited set of activities, that can be executed multiple times. In the center of the process resides the patients case file that connects the results of the activities. This is a virtual Electronic Medical Record. After each step the dossier will be in a specific state, like diagnosed, referred, hospitalized or released. The rules that determine which activities are allowed by whom, which deadlines apply and which procedures apply to a specific situation are managed separately and infused into the process at runtime. Exceptions do not exist anymore; they are caught in the business rules. Data that are needed in the case and that reside in various databases are also fused into the process, in order to prevent asking information that is already known. Also correspondence, medication, results of tests and other registrations can be linked to the case file.

The productivity of processing the financial aspects of health care cases can benefit from building a hybrid process in which cases are handled via Straight Through Processing. Exceptions can be moved to a manual step if for instance human interpretation is required. After the interpretation step the case is re-injected into the STP-process.

Figure 14  Hybrid processing based upon STP

Interoperability between registrations of the health care sector and public registrations is needed to process a case in which for instance the cost are covered by multiple parties (insurance, welfare benefits and personal contribution based upon income tax).

The interdependency between regulations, procedures and processes can be managed by using a regulatory framework for the implementation and compliance of regulations and policies. Beneath is an example of such a framework in the financial sector. The used principles apply also to the health care sector.

Figure 15 Knowledge base with integrated legal source browser

The framework contains the regulations and policies, the topics that have to be taken care of, the requirements for these topics and the controls that are implemented in the specific processes to meet these requirements. The basis of this framework is an authentic source in which the regulations are execution-independent stored and maintained. From this source they are related to the processes, actors, departments, products etcetera to which they apply. Changes in a rule can directly be related to all instances in which this rule is applied.

The Regulatory Framework can also be used an instrument to identify and improve governance and e.g. operating procedures, risk processes and data quality.

4.4 Empowerment by embracing complexity

By embracing complexity health care sector organizations become capable of empowering their stakeholders, leverage first class services and closing the gap between strategy and execution.

The Electronic Medical Record applied as a virtual case file enables organizations to become more patient centric. Decisions are made faster and more consistent by using the same information and rules. Managers can monitor progress and auditors and lawyers can trust upon the embedded compliance. Services can be organized around patients and their stakeholders.

Health information can be supplied in a more tailor made way, e.g. by using the concept of life events. The health care sector can work together with interest groups to improve and assure the quality of information. Patients can participate in the process. This could stop the trend of demisting trust in the sector.

Health care quality can be improved without affecting privacy protection of individuals. Transparency increases by embedding compliance and traceability into the case handling process.

Interoperability problems between autonomous organizations are solved by introducing semantic interoperability and dynamic case management support. Existing value chains become even more valuable and new value chains can be created. Value chains can be provided with their own case file, which allows them to work together on a case without the need to share every piece of information. Only the results of a test or e.g. an internal consultation round can be shared. A Physician Workplace can be used to collaborate on cases, exchange opinions and practices.

Employees are released from doing monotonous administrative work by introducing straight forward processing in order to enable them to use their expertise in solving more complicated cases and issues. Patients and financial parties get up-to-data and coherent information. Contact centers can offer self-service by providing the same source of financial information as they use themselves.

Figure 16 Value drivers for stakeholder empowerment

The use of a Regulatory Framework and the introduction of rule governance leverages the re-use potential of data and policies. Interdependency becomes visible and the impact of change scan be analyzed before introducing the change into the service. Policy scenarios can be drafted and simulated. Policy targets can be compared with the realized outcomes and provide valuable feedback for continuous improvement.

Employees are context specific and timely informed about changes in laws and regulations and new operating procedures. This leads to less education & training efforts. Staff can be allocated at their own strength: experienced employees with much knowledge can concentrate on handling exceptions, and focus on the execution of complex tasks.

The information management environment becomes sustainable, efficient and effective. By using the blank canvas approach to IT the huge cost saving potential of removing complicatedness becomes clear. TCO-costs will implode. Changes in products and services, regulations, work instructions are implemented fast and consistently. When a change is modeled, it can be executed directly. New care models and new business models can be supported without creating a parallel universe for the new approach.

Managers can sleep comfortable at night because they have embedded and embodied complexity in their organization.

[i] A. Fleshler, Future trends of healthcare. Study done by the Institute for the Future. 2009.


Note: This series is a republication of a paper that I wrote in 2011.