Tag: CipherHealth

Curing Healthcare’s “Tapeworm Effect” with Technology

By Lucia Huang, RN, CipherHealth.

Lucia Huang, RN
Lucia Huang, RN

The joint venture just announced between Amazon, Berkshire Hathaway, and JPMorgan Chase & Co. is anticipated to bring profound transformation to the healthcare industry. By joining forces, these three giants hope to leverage their technological, sales, and investment expertise to address and resolve the many inefficiencies in the current U.S. healthcare system. The objective of this partnership is to harness their considerable scale and operational efficiency to manage healthcare’s rapidly growing costs, placing greater emphasis on providing high-value healthcare services.

Regardless of whether the partners are successful in disrupting the healthcare industry, one positive outcome is the strength these new players bring the comparative weakness of the fragmented American healthcare system into sharp relief. In the press release, Berkshire Hathaway Chairman and CEO Warren Buffett explains the primary motivator of the joint venture with the now-infamous phrase, “The ballooning costs of healthcare act as a hungry tapeworm on the American economy.” With healthcare accounting for 17.9 percent of the gross domestic product in 2016, the “hungry tapeworm” of exploding healthcare costs is fueled by the widespread inefficiencies of the U.S. healthcare system.

The industry is still riding out significant aftershocks from recent M&A activity. In the last month alone, CVS purchased Aetna for $69 billion to remake the consumer healthcare experience, Catholic Health Initiatives (CHI) and Dignity Health joined forces to expand their reach across 28 states with 700 care sites and 139 hospitals, and Providence St. Joseph Health and Ascension are expected to merge to create the largest hospital operator in America. In the statement, Amazon Founder and Chief Executive Jeff Bezos acknowledges, “The healthcare system is complex, and we enter into this challenge open-eyed about the degree of difficulty.” With the healthcare industry in the midst of significant upheaval, any new players will face an uphill battle in addressing rising healthcare costs and creating transparency within a notoriously-opaque system.

Addressing the “Tapeworm Effect,” as Buffet mentions, presents a blue ocean for disruptive innovation. The paradigm shift from fee-for-service to value-based care models requires healthcare systems to become increasingly patient-centric. To lower their costs, healthcare systems must eliminate variations and inefficiencies in their care processes that lead to poor patient outcomes, such as hospital-acquired infections and 30-day readmissions. By investing in data-driven technology, healthcare organizations can create systemic improvements in care delivery at every touchpoint across the patient journey.

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