The pandemic as a catalyst for healthcare transformation
The implications of COVID have touched everyone. Whether that's directly from catching the disease, or having your liberties curtailed in order to protect others, the simple matter of the fact is, aside from the most isolated of societies, everyone has been affected. All industries have also had to adapt, from airlines trying to navigate global travel restrictions, to local coffee shops having to transform to a take-away model.
Few however, have seen first-hand the direct impact of COVID quite like Healthcare professionals, and few industries will change going forward quite like the healthcare industry will. From the use of Zoom to more extensive uses of cloud applications, industries are leveraging technology to overcome workers not physically being present and maintain some semblance of normality in these unprecedented times.
This phenomena is also manifesting in the healthcare industry with market players rushing to develop digital solutions in the form of apps which supplement care or virtual care through AI and phone-based diagnostics. This digitisation will require flexible regulatory frameworks and regulatory technologies (RegTech) to ensure safe practice through compliance that allows healthcare to focus on patients and not administration.
Like in many industries, COVID will be a watershed moment for the healthcare industry. With healthcare systems around the world struggling, the propagation of scalable, digital solutions will help relieve healthcare workers from the challenges of a largely physical industry.
McKinsey & Company outline three key shifts in the healthcare value chain that will come as a result of the pandemic. These include seismic infrastructure shifts, importance of operational excellence, and increased growth opportunities.
Infrastructural shifts are the foremost concern in dealing with increased volumes of patients who require (intensive) care, coming as a result of the pandemic. This is to ensure that hospital capacity can meet the needs of a pandemic, including the construction and development of greenfield facilities and maximising infection controls.
The impact of COVID has also impacted many aspects of care, with patients often facing delays in, or the postponement of, care due to the diversion of resources towards the COVID frontline. One response to this is having the delivery of elective care in dedicated facilities. This is especially crucial to patients with illnesses that cannot wait, such as cancer treatment. In the US, $1,200 is spent on compliance-related activities on every hospital admission totalling $39 billion, and no-wonder considering the plethora of regulations that exist (e.g. HIPAA, MACRA, HITECH etc.). More effective compliance solutions allow for i) reduced compliance costs, allowing for better investment in patient treatment and ii) time savings that allow focus on patient treatment, not background compliance administration.
These changes will ultimately be weighed against their monetary costs as margins are squeezed. However the above primarily deals with fixed costs regarding the reorganisation of hospital infrastructure but one must also factor in the marginal costs of COVID treatment. The most obvious marginal cost in dealing with COVID patients is that of Personal Protective Equipment (PPE). There is of course the cost of the PPE itself but, more prominently, increased regulatory stringency regarding PPE inventory and safety stocks, will mean care providers must develop more effective inventory management policies and procedures to comply with local policies, monitor expired supplies, and maintain stockpiles with suppliers.
In terms of opportunities for growth and change of strategic direction, providers will likely look to opportunities within the community for non-emergency care. This will likely be discipline specific such as community pediatric/obstetric/gynecological care.
In a time of crisis as such, with costs and patient volumes skyrocketing, many healthcare providers are simply overwhelmed, lacking the experience, funds, or organisational efficiency to cope under the unprecedented conditions created by the pandemic. There have been some regulatory exceptions granted by governments to healthcare providers, but for the most part, regulatory costs are still rising in healthcare, possibly more now than ever. The rate of digital transformation seen across industries over the last decade has also helped to mitigate some of the organisational strain brought about by the pandemic, but surprisingly for an industry such as healthcare, many processes are still manual and laborious. In the new normal where every second counts, having high skill workers constantly tied up completing laborious and low-skill regulatory tasks is a major area of unrealised potential for improvement. Through RegTech solutions many of these processes can often be automated, freeing up healthcare professionals to do more important tasks.
As with many systems that capitalise on AI, and especially in a time as such where the global job market is in increasing ruin, it is important to emphasise that the introduction of AI technologies in day-to-day life is unlikely to lead to mass job loss, but rather change the ways we do jobs in promoting greater efficiency and productivity.
The introduction of RegTech into healthcare would not only serve to increase the efficiency of the industry through automation of various compliance processes, but also increase process accuracy as the possibility of human error is minimised, leading to reduced costs, and allowing for valuable funds to be redirected elsewhere. In addition to this, administrative costs are also a major expense that can be slashed with RegTech automation. In the UK’s NHS, between 8-10% of its £100 billion budget is spent on administration alone, and with the WHO estimating that anywhere between 5% to 50% of all medical errors in primary care globally are administrative errors. Automation of this process would undoubtedly save time, money, and even lives.
Healthcare has taken a major blow in these unprecedented times, but the effects on the industry post-COVID, will of course differ between different countries and healthcare systems. In the book The Healing of America, T.R. Reid identifies four major forms of international health care systems: the Beveridge model, Bismarck model, National Health Insurance and the Out-of-Pocket model.
The Beveridge model, named after its designer Lord William Beveridge whose report served as the basis for the United Kingdom's welfare state, provides healthcare for all citizens, free at the point of delivery, financed through tax payments. Sometimes also referred to as socialised medicine, this model can be found in the UK, Spain and New Zealand. With the government as the sole payer in this model, costs can be kept low and benefits standardised nationwide.
The Bismarck model is an insurance system jointly financed by employers and employees through payroll taxes, called “sickness funds”, these taxes are directly deducted from paychecks. Unlike with the US insurance industry, Bismarck-type health insurance plans do not make a profit, and must include all citizens. Doctors and hospitals tend to be private in Bismarck countries, and the model can currently be found in Germany, France, Belgium, the Netherlands, Japan, and Switzerland.
The National Health Insurance model encompasses elements of both Beveridge and Bismarck. It uses private-sector providers, but payment comes from a government-run insurance program that every citizen pays into. Since there’s no need for marketing, no financial motive to deny claims and no profit, these universal insurance programs tend to be cheaper and much simpler administratively than American-style for-profit insurance. Canada provides the purest example of such a system, but examples can also be found in Taiwan and South Korea.
The Out-of-Pocket model is fairly self-explanatory. Those that can afford healthcare receive it, those that can't, don't. This system is found in the majority of the world in countries that do not provide any kind of national health care system - primarily underdeveloped countries and is similar to uninsured/underinsured patients in the United States.
Singapore has a rather unique system. Around 37% of Singapore workers' wages are put into mandated savings accounts which can cover health care, housing, insurance, education, etc, with part of that being an employer contribution. In government-run hospitals, basic healthcare is cheap as the government uses bulk buying to ensure the price of medication and treatment remains low, with more deluxe services and facilities available to those willing to pay more of a premium.
The type of healthcare system may affect the deployment of technology in a post-COVID world. Healthcare systems relying on big government may be less able to adapt to innovative, digital healthcare solutions due to the difficulties of implementing change in massive bureaucracies. Only 52% of The NHS are professionally qualified clinical staff, with over 200,000 people in infrastructure support roles, hence the ability to be agile, and respond to the most up-to-date HealthTech advancements is more difficult compared with private practices.
ICU's around the world have been struggling to cope with the demands of a global pandemic, but a shift towards eICUs is already underway. eICU's are a form of telemedicine that uses state of the art technology to provide an additional layer of critical care service.
This forms part of the wider trend of digital healthcare services as care is increasingly being able to be delivered remotely. In the United States, more than 300 hospitals in more than 40 health systems across 34 states take advantage of eICU services with plans to expand the model across the Asia pacific region with facilities in Australia, New Zealand, Vietnam, Hong Kong, Singapore, Mauritius, Dubai and Sri Lanka.
But with the introduction of any new system in any industry, there will undoubtedly be regulatory challenges that arise from both unforeseen compliance issues and oversights, as well as malicious attacks on remote systems as criminals attempt to exploit regulatory loopholes and increased security vulnerabilities to generate profits. RegTech can help to fend off some of these attacks, but as each individual circumstance is unique, true industry resilience can only be achieved through experience gained through failures and missteps. In other words, the way society and healthcare will operate from here on out has already changed forever, with it being up to individual healthcare providers to catch up through the implementation of adequate technology and automation. The early days may be rocky, but that is to be expected, firms should persist, addressing regulatory challenges when and before they arise, and before long significant improvements will be noticable.
There is no doubt that the pandemic will accelerate online-offline integration, this being especially true for initial consultations with the first port of call for patients in the future being in-app or online. For example, EMIS Health is providing a range of digital services to help power the NHS's digital front door strategy. This includes services from Online Consulting and Video Consulting, to clinically curated content and personalised, digital access to primary care. These digital solutions help patients to access care at the touch of the button while avoiding long wait times, and alleviates unnecessary pressures on caregivers.
Technological advancements including AI-based diagnostics, cloud-based storage of medical records, and integration of information across the care continuum in and outside the hospitals will continue to grow and power the digital healthcare shift. Online instruments which encourage remote correspondence between suppliers and patients will continue being created and improved, along with point of-care devices and home-based monitoring devices powered by the Internet of Things. The increased use of real-time data can not only be used to better monitor, and therefore prevent, patient health problems but can also increase the efficiency and workflow of caregivers.
However with this shift in healthcare delivery to increasingly online-based services, regulators may need to rethink frameworks to account for care being increasingly remote, with changes to regulations possibly also being necessary to allow such services as e-prescription to take off. That said, with an average of 200 regulation changes across industries each day, the medical industry should really be at the forefront of compliance to ensure that valuable time and funds are not unnecessarily tied up in these processes, thus exemplifying the urgent need for RegTech deployment in this industry to address such challenges 24 hours a day, even in unprecedented circumstances as such.
It goes without saying that COVID-19 and its implications will dramatically change the way healthcare is received forever. This will be a largely digital shift, similar to what we are seeing in many industries around the world, to allow for a more remote provision of services which help to increase efficiency and patient satisfaction but also less reliance on analog and manual processes. The digital shift will be powered by regulation technologies that help facilitate remote caregiving through compliance adherence, with those that focus on both the patient and healthcare provider, most likely to succeed. This is reliant on regulators being able to facilitate such a shift, with new frameworks being adopted which often take time to develop.
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