|WHAT WE’RE READING
Stuff we read this week that made us think.
(Back to) the “operating room of the future”
The lead article in a recent Wall Street Journal series on health innovation detailing the “Operating Room of the Future” caught our eye this week. We’ve closely followed the proliferation of new clinical technologies in the surgery space across the past twenty years, and to put it bluntly: if what’s described here is the future, we’re a little underwhelmed. Many of the innovations profiled were not uncommon in health system capital plans a decade or more ago: stereotaxis that enables in-field imaging, hybrid ORs that combine open and minimally-invasive capabilities, and of course, da Vinci robots. All of these innovations have struggled to deliver on their initial promise of quality and efficiency. Robotic surgery, in particular, has not demonstrated significant benefits over traditional surgery, despite the seven-figure cost. What lies beyond remains vague, with references to “Surgery 4.0”, a nod to artificial intelligence (of course), and in the words of Intuitive Surgical’s CEO, “increasing collaboration and control between the computer and the surgeon”.
Ten years ago, the average community hospital was budgeting for multiple 64-slice CTs and da Vinci robots. Given current cost pressures, health systems and physicians must give additional scrutiny to multimillion-dollar technologies, to ascertain if they actually deliver improved outcomes relative to cost. And they’ll need to educate patients not just to seek the newest, but also the best-value treatment options.
(Side note: The OR “innovation” most likely to deliver value was buried in the article—easy-to-clean stainless-steel walls and terrazzo floor tiles that don’t support bacterial growth. These promise to reduce infections and should probably be a part of the design of most new surgical suites.)
Kaiser sets a new benchmark for digital care delivery
From that same special section of the WSJ, we were intrigued by an interview with Kaiser Permanente CIO Dick Daniels, in which he revealed that nearly six out of ten of the health system’s 131M “patient interactions” are now virtual. Kaiser patients can manage a full range of needs online, from refilling a prescription to having a face-to-face physician visit; two-thirds of all online interactions are now mobile. Digital innovation also shapes in-person visits. Patients can check in online and pay copays before an office visit. In the hospital, physicians now view patient data on a tablet outside the room, enabling them to personalize the visit. Inside the room, an interactive screen allows patients to access resources from meal orders and movie streaming to physician-prescribed virtual consults.
Daniels describes the integrated digital experience as central to Kaiser’s strategy to engage individual consumers, as more patients access insurance coverage directly rather than through their employer. In other conversations, Kaiser leaders have told us that digital interactions are one of the strongest drivers of creating an ongoing relationship with consumers, “making them Kaiser members for life”. While the market looks to tech giants and start-ups for innovation, Kaiser has made great strides not just in developing point solutions to solve discrete care needs, but in building a full digital experience. In their markets they are setting expectations for access and convenience that will quickly spread beyond their 12M patients. Kaiser’s fully-integrated, salary-based model surely removes some of the barriers that other providers face when adopting digital platforms. Regardless, health systems who wait for changes in payment or physician receptivity before adopting a digital platform will likely lose patient visits entirely as they seek virtual care elsewhere, and they’ll miss the larger opportunity of creating a deeper ongoing relationship with their customers.
“You’re stupid if you don’t get scared” of Amazon
We spend a lot of time in healthcare these days talking about—and worrying about—Amazon. There’s been a lot of speculation about whether, when and how the online giant will make its mark on our industry, and a lot of legitimate anxiety (or viewed differently, optimism) about Amazon’s potential to disrupt incumbents in healthcare. Yet if you asked most people what business Amazon is really in, they’d probably say “e-commerce”—not so. Amazon is really a giant, very profitable cloud computing company, with a sideline business in online sales (that barely manages to break even). That’s the picture painted by a fascinating new piece from the Wall Street Journal. The article describes, in some detail, the economic engine behind Amazon’s success: Amazon Web Services (AWS), which generates 73% of the company’s overall profits.
The article provides an intriguing view inside AWS and describes the ways in which the company has positioned itself as both partner and competitor to other firms. With more than 40 percent of the world’s public cloud-computing marketplace, and giant data centers worldwide, AWS provides server capacity and web services to many, many companies—including some of Amazon’s largest competitors. For example, one of Amazon’s biggest AWS clients is Netflix. When you stream a movie to your home using Netflix, that movie is delivered to you via an Amazon server. At the same time, however, Amazon is a major competitor to Netflix—offering its own streaming movies and TV shows as part of its Prime membership. Indeed, when Amazon introduced monthly pricing for Prime memberships last year, analysts largely viewed that shift as a way of enabling consumers to directly compare Amazon and Netflix prices (to Amazon’s advantage). That same friend-and-foe dynamic plays out again and again across Amazon’s business. As the company looks to enter healthcare, our industry would do well to heed the lesson here—expect Amazon to offer partnership opportunities and collaborative ventures, even as it positions itself to compete head-to-head at some point with its healthcare partners.