Defining Distributed Health Service Delivery
Not too long ago, of course, most healthcare services were provided in the home.1 The capital requirements of the medical profession were minimal, so there was little reason for an office. Since it cost little (if anything) to certify as a physician, barriers to entry into medical practice and the relative wage paid to physicians were both lower than today. The advent of modern medicine over the past century changed this. In 1930, house calls constituted 40 percent of physician encounters; by 1950 that number had dropped to 10 percent; by 1980 it was just 1 percent.
However, in the past two to three decades, the advantages of hospital‐based care have started to erode. Part of this erosion has been due to a reversal of the advantages of hospital‐based health care2 due to high cost,hospital acquired infections, and injury or death directly induced by hospital care.
At the same time, technologies and organizational innovations enabling healthcare provision both in the home and at a distance have improved radically in terms of both performance and cost. I employ the term “distributed health service delivery” to refer to four distinct categories of innovations in health service provision that, jointly, are creating lower cost, equal or greater effectiveness options for consumers:
- Telehealth / Remote Medicine & Mobile Health (mHealth)
- Medical House Calls / Home‐based Primary Care
- Health Agency Care / Peer‐to‐Peer Health Service Delivery
- Big Data
Together, the four elements listed above combine to create a very real, but as yet unrealized, potential for distributed health service delivery on a large scale.
Overall, what fraction of the services currently provided within hospitals can be offered within the home? We don’t know the answer to that question. But we do know that it is a far greater fraction than is reflected by current practice.
Recent studies of home healthcare provision using existing technologies have shown reductions of 15–30 percent compared with hospital‐based care for similar patient populations, with savings that may potentially be realized from a full embrace of existing telehealth and home healthcare services over the next 25 years projected at $200 billion. Considerably greater cost reductions may be attainable using powerful, distributed technologies currently under development, and benefiting from ubiquitous broadband that is a proximate reality. By allowing a competitive environment to evolve in which entry by distributed health service providers occurs at scale, government at various jurisdictional levels can accelerate economic growth while simultaneously address first‐order national concerns related to the budget and the quality of life of citizens.
Enabling Distributed Health Service Delivery3
Federal policy toward home healthcare has undergone a steady progression, focusing first on post‐acute care; gradually incorporating “housekeeping services” as part of post‐acute care; envisioning home health as a substitute for nursing home care; and ultimately extending that vision to include a range of individuals above a minimum threshold of medically demonstrated need. Constants over this lengthy interval have been concerns over costs and access, all driven by the parallel growth of populations of people over 65 years of age and of people suffering from chronic illness and disabilities.
The core challenge for health care policy at present is not in increasing the uptake of one or another existing model of health service provision in the home, but rather in enabling the creation of entirely new business models aimed at helping people become and remain healthy outside of institutional settings. The key to enabling new, viable business models is a great deal of experimentation. That experimentation must be legal, it must be feasible, and it must be compensated.
Action in three specific policy domains is required, with the objective in each case being the reduction of barriers to entry that advantage incumbents to the detriment of beneficial change:
- Technical/regulatory (e.g. regulatory approvals, standards for interoperability)
- Financial/regulatory (e.g. methodologies for determining eligibility for reimbursements)
- Labor market/regulatory barriers to entry (e.g. certification requirements)
Technical/Regulatory Barriers to Entry
Lack of regulatory clarity is currently a significant impediment to realizing the full benefit of distributed health service delivery. Representative Mike Honda (D-CA), who in 2013 proposed legislation to create an FDA Office of Wireless Health,4 offers this perspective: “The tech community needs confidence in a consistent, reliable framework for wireless health. The FDA has a critical role to play. Today, there is no confidence [among people in the] industry. It’s nonexistent.”
The fundamental problem lies in the mismatched timescales in which the digital economy and the regulatory structure operate. As with the case of methodologies for determining eligibility for Medicare reimbursements, the standard operating procedures for device approvals at the Food and Drug Administration are as much as an order of magnitude slower than the rate of innovation in distributed health service provision. Institutional innovations to reduce this gap are an urgent priority for federal action.
Policymakers and regulators in health care at all levels also must get past the notion that health care is exceptional when it comes to privacy. Other industries — financial services and education, notable among them — also face privacy issues that must be balanced against the considerable gains attainable from data aggregation. While these issues are well beyond the scope of the current paper, a general takeaway for policymakers is well stated in the 2012 report of a Kauffman Foundation Task Force on Cost‐Effective Healthcare Innovation: