About two years ago, I wrote about the “Tapeworm of the Economy,” in which I opined that ballooning healthcare costs are overwhelming the U.S. economy.
As a recap, consider these three facts:
- In the past 30 years, healthcare spending as a percentage of GDP has nearly doubled in the United States—rising from 9 percent to 17.6 percent.
- While we were once in line with other developed countries in per capita healthcare spending, today no other developed country in the world spends more than 12 percent of its GDP on healthcare—and most spend far less. The average developed country spends $3,153 per capita for healthcare, compared with $8,233 in the U.S.
- Moreover, if the U.S. spent the same GDP percentage on healthcare as the average developed economy does, nearly $1.2 trillion would be saved—roughly equivalent to the federal government’s 2011 corporate andindividual tax revenue combined.
Fortunately, a partial solution to our astonishing predicament may be arriving in the form of predictive analytics and preventive medicine. New technologies and data strategies have the potential to improve outcomes while simultaneously lowering costs.
For example, the $73-billion diagnostic lab industry, which performs blood tests on hundreds of thousands of Americans each year, is in the process of disrupting itself. Diagnostic companies will shortly be able to perform nearly 1,000 of the most commonly-ordered blood diagnostic tests—a critical component of care, given that these tests drive nearly 70 percent of doctors’ medical decisions—while only taking a drop or two of blood through what could be described as a gentle pinch.
More importantly, some diagnostic companies are doing this at a fraction of the current cost—as low as one-tenth of the traditional cost. In addition to these short-term savings, they offer long-term solutions to healthcare savings. Due to its reduced cost and less-intrusive nature, these products enable preventive medicine by increasing access to blood diagnostics. For example, instead of simply getting your blood drawn once a year, at most, you will be able to get your blood tested relatively painlessly for about $2.99 at your local Walgreens. This creates a baseline for monitoring: as opposed to using a blood sample as a snapshot of your health, you instead will be able to check it frequently and watch for irregularities. With this information, providers will be able to identify early-stage cancers or advance signs of disease onset, such as diabetes. By addressing these issues early (or preventing them altogether), we will save billions of dollars and improve our quality of life.
Beyond the many technological improvements helping to improve care and reduce costs in a range of different sectors in healthcare, the healthcare industry is on the precipice of data explosion. While the healthcare industry is not necessarily producing more data, it is producing far more, highly-accessible digital data. Over the past decade, hospitals, clinical labs, and physician offices have transitioned from stacks of manila folders to bits and bytes and cloud storage. Electronic health record (EHR) use has increased five-fold in healthcare institutions since 2008, and now 9 out of 10 hospitals possess EHR technology.
As an example of how data can be utilized to change the face of healthcare, hospital networks across the nation are tapping into the power of preventive medicine by using electronic health records to reduce costs. For example, one nine-hospital network in Pennsylvania has successfully saved money and improved patient health by analyzing its vast stores of data to identify the most at-risk patients, and then intervening with appropriate prevention and treatment. This hospital network can predict which patients are at the greatest danger of developing conditions like heart failure, diabetes, strokes, etc., and then provide preventive care before the illness reaches a critical (and very expensive) state.
We are just beginning to scratch the surface of preventive medicine and the power of predictive analytics. Although we will need to carefully balance prediction and prevention with ethical and privacy concerns, we are making progress. Looking into the future of healthcare, it is clear that new technologies and predictive analytics will be critical to taming healthcare costs in America.