Will Big Tech’s Entrance into Healthcare Just Entrench the Current Expensive Healthcare System Even More?

A lot has been made about big tech companies entering healthcare. In fact, it’s something we’ve covered on this site quite a bit (See: Google, Apple, Microsoft, and Amazon). That doesn’t even include other big tech companies like Salesforce and BestBuy or even large retailers like Walmart, Walgreens, and CVS. It seems like almost every large company is making some sort of entrance into healthcare.

This shouldn’t be surprising. There’s a lot of opportunity in healthcare. It’s a multi trillion dollar industry and growing. The problem is that healthcare is unlike other industries. In many ways, we think it’s good if an interesting grows really large. Growing the healthcare industry is a bad thing.

Of course, many people and publications are heralding the arrival of these big tech companies and other large corporations as a great thing for healthcare. No doubt they’re going to have a big impact on healthcare. In fact, in many ways they already are having an impact and much of what they’re doing really is creating fascinating new solutions. However, it begs the question on whether their entrance into healthcare will be good for the healthcare system overall or not.

At the core of the question is whether new health IT entrants are going to create a new disruptive healthcare model which is extremely profitable for them while disrupting the old model or whether these new health IT entrants are going to just profit from the healthcare trough and exacerbate the problem even more.

Chew on this idea because it’s really important. There are two main scenarios to consider.

In scenario 1, a new health IT company enters healthcare and is able to create a $1 billion business for themselves while disrupting a $50 billion business. This would be a great thing for patients and the costs of healthcare. We’d be saving $49 billion on our healthcare costs while this new entrant has a new billion dollar business. The patient wins. The healthcare system wins. The new healthcare entrant wins. Hard to say who the $49 billion of savings would hurt, but this would likely happen over time and could be adjusted against. Although, if you’re in that piece of the industry that was disrupted it would hurt really bad.

In scenario 2, a new health IT company enters healthcare and decides that disrupting the healthcare industry is too hard. Instead of trying to create a new model for healthcare, they see that healthcare has an insatiable appetite for cost increases and so it’s much easier for them to just hop on the gravy train and profit from even higher healthcare costs. What’s another $5 billion in new healthcare costs when it’s a multi trillion dollar industry? The new entrant sees this opportunity to create a $5 billion business riding the healthcare cost growth curve. Great for them, but really expensive for the patient, the health system and the economy in general.

This is what scares me when I see all of these big tech and large corporations entering into healthcare. I have yet to see many efforts from them that actually provide a solution that truly disrupts the healthcare system as they build a profitable business for themselves. That’s a hard route to choose when it’s so much more profitable for them to instead tap into the seemingly never ending growth of healthcare.

What’s your take on big tech’s entrance into healthcare? Will it bend the cost curve and lower the cost of healthcare? Or will they instead exacerbate the healthcare cost problem by growing healthcare costs as they profit? Doing the later will entrench the current expensive healthcare system even more.

About the author

John Lynn

John Lynn

John Lynn is the Founder of HealthcareScene.com, a network of leading Healthcare IT resources. The flagship blog, Healthcare IT Today, contains over 13,000 articles with over half of the articles written by John. These EMR and Healthcare IT related articles have been viewed over 20 million times.

John manages Healthcare IT Central, the leading career Health IT job board. He also organizes the first of its kind conference and community focused on healthcare marketing, Healthcare and IT Marketing Conference, and a healthcare IT conference, EXPO.health, focused on practical healthcare IT innovation. John is an advisor to multiple healthcare IT companies. John is highly involved in social media, and in addition to his blogs can be found on Twitter: @techguy.

1 Comment

  • If the new entrants focus on sickness and treatment and reinforce the fee-for-service model, then scenario 2 will prevail. If the new entrants focus on preventative health and wellness and serve a value-based model focused on patient outcomes, which is to make the incidences of medical care less frequent, then scenario 2 will rule the day and we’ll actually reduce the costs being borne by the healthcare system. Our focus must be on reducing ER visits and inpatient hospital stays by focusing on efforts like medication adherence that prevents negative health outcomes.

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