Thinking Through the “Where” of Where to Invest in Health Care

I get asked all the time about where I think people should be investing in health care. I don’t know. But when I think about the question in its most simple form, there’s actually a lot there. “Where will health care happen in the future?” It probably won’t be where it’s happening now. Considering what’s going on with reform, technology and traditional delivery models, together with the trends that are already apparent in other sectors gets me to a vision of a health care future that looks pretty different than today. It helps a lot with the investment question too. Imagining a health care future based outside of physician offices, hospitals and various subacute facilities works well as a framework for thinking about how to manage the change that we all know is coming.

Where will doctors “see” patients?

It is highly unlikely that the traditional physician office visit will endure as the preferred method of physician-patient interaction. The mobile technology revolution that has so radically transformed almost every other business will eventually find its place in medicine. Telemedicine will replace the face-to-face exam. Cloud-based electronic medical records will negate the need for physicians to be near the paperwork many still house in their offices. Mobile sensing technology will supplant the stethoscopes, blood pressure cuffs and otoscopes docs use to poke and prod patients today. Blood work can be managed remotely. Vital stats can be taken through a myriad of different platforms in the home (think Wii Fit). Taking a history and assessing reported symptoms are no more than just a conversation between a doctor and patient. We already have many much more sophisticated conversations by e-mail, text, Facebook and video chat already today.

Sure, there will be times when touch enters the equation or where a diagnosis requires more sophisticated sampling and/or testing. But the lion’s share of what happens when a patient visits a doctor really doesn’t require much more than a robust and secure information pipeline. I believe that most doctors will spend a large proportion of their time in home offices or in significantly scaled down medical facilities where they “hotel” or use only as required by some specific need to interact face-to-face with their patients. Couldn’t Wal-Mart, Target and Walgreens provide that infrastructure through their in-store clinics today? They can and will. Where will physicians “see” their patients in the future? Mostly in the cloud.

Where will physicians do procedures?

It’s true that a lot of medicine is simply the exchange and interpretation of data, but a lot of it is highly skilled intervention as well. We will still need surgery centers, imaging suites, intensive care units and their associated infrastructure to manage the interventional side of health care. But the where of that is shifting as well.

Every hospital or system exec understands the shift from inpatient to outpatient care as the winning paradigm in health care writ large. The growth of ambulatory surgery centers as a site of care in the last decade is clear evidence that this shift is likely to continue. If we consider emerging technologies in the space, it’s also easy to think about surgery centers evolving to be modular and moveable. The military already uses shipping container-based mobile units to manage battlefield injuries. Couldn’t hospital systems do the same to match local demand to capacity across multihospital systems? Isn’t the DaVinci robotic surgery system specifically designed to function remotely? Isn’t part of the point of a virtual ICU that the attending physician doesn’t necessarily need to hang around on the floor anymore to monitor post-op recovery? Aren’t MRIs already in trucks?

The future of surgery will be less about privileges at a specific site that is purposely built to handle a specific capacity and more about finding available time and equipment to get a job done. It’s not at all unrealistic to envision a system infrastructure that is “assembled” according to need during a specific time period and “reassembled” at a different location as market dynamics shift. The where of surgery will be a constantly evolving picture, more like the where of traffic rather than the where of hospitals today.

Where will the chronically ill be? What about end-of-life care?

There is a financial mandate to shift chronically ill patients out of the hospital. Average length of stay—affected most dramatically by hospital admits for chronically ill or multimorbid patients—is the single biggest driver of operating expense for many hospitals today. Providing care for patients who die in the hospital is our single biggest health care expense in the U.S. One way or another we’ll need to get these patients out of the general ward and back where they belong: at home.

The good news is that much of the technology required to get that done is already here. The home health market has been growing at a steady clip for years and is projected to continue at about an 8 percent CAGR for at least the next five. A number of technological advances will supplement this infrastructure and dramatically expand the available service offerings this population will use to reduce inpatient admissions moving forward. Telehealth solutions focused on preventing CHF-related readmissions are already available. Most major players in peritoneal and hemodialysis markets are developing connected “dialyze-at-home” solutions. Home-based, self-administered respiratory therapy programs for COPD patients have shown promising early results. Patient administered sleep study equipment is already commercially available. Most importantly, the NCHS reported this year that significantly more terminally ill patients are choosing to die at home as opposed to allowing for late-stage or end-of-life admission to a hospital.

None of these developments will negate the need for physician oversight, but many of them do equip health care providers with the capabilities they need to dramatically reduce length of stay or prevent unnecessary hospital readmissions. Presuming that the demand for these services will only grow and that the pace of technological innovation in the space will continue, the need for capital intensive hospital beds outside of the acute care setting will almost certainly decrease.

Where will the rest of it happen?

Everywhere. So much of what has been developing in information technology has yet to find a firm footing in health care. But it will. Simple communication tools, like e-mail, Twitter and texting, can connect patients with health care providers outside of the venues they would traditionally use. Why wait in a physician’s office waiting room just to be told that, “Everything looks good. Let’s plan on touching base again in three months”? Social media represents a huge opportunity for physicians to interact with their entire patient panel simultaneously (see “Future Health Care Flash Mob: Micro HMOs). Apps for nutrition, hypertension management, diabetes self-care and cardiovascular health are already widely available. Is it so inconceivable that “more serious” diseases, like cancer or autoimmune disorders, won’t follow suit? Couldn’t mental health care be at least partially administered via new technology channels? The answer to all of these is a definitive yes. Real health maintenance (remember that terrible phrase?) will almost certainly migrate away from the over-crowded, too-confusing, hard-to-navigate system we have today and into the spaces patients already occupy—their kitchens, living rooms, cars, the train they take to work and the Starbucks down the street.

So, where to invest?

The implications of all of these trends and possibilities are significant—for providers, for life sciences companies and for payers. Investing in this landscape requires asking hard questions about the degree to which any one of these new places will emerge as a site of care as well as how your existing business models can fit. Providers need to ask how their 10- and 20-year facility plans match this potential future. Physicians need to consider their technology capabilities and build toward a future not dependent on the traditional “four walls” model. Drug companies need to reconsider their commercial models in light of a distributed patient care and physicians they can’t pin down. Medical device firms have to re-examine where the next greatest widget fits into a mobile, or home-based, or cloud-based future. Payers need to build benefit plans and payment schemes that reflect these potential care delivery models.

The answer to the question about where to invest is in options that build platform opportunities in a still unclear future health care model. That sounds wordy but really is nothing more than a charge to imagine the future without the infrastructure we use today. It’s also a call for innovation that will allow for its evolution over time.

That’s hard to do from the hospital, office or outpatient center you’re sitting in reading this. But it’s important to remember that while investments take time to mature and sometimes don’t pan out as planned, catch-up is always a much harder investment to make.