The Most Important Trend in Healthcare

For entire generations we have operated with the idea that healthcare is a hard, complex thing, best done by highly trained, well paid specialists using complex, expensive technology.

Healthcare has been the domain of clinicians, scientists and all sorts of other experts – sharpened by decades of expensive education and experience – plying their trade in hospitals, clinics and laboratories,

The other thing that everyone agreed on is that healthcare was one of those things that had to be triggered by a clear event – disease or accident.

An apple a day

Yet, the data tells a different story.

Say you live in the world’s richest country. Here is what is most likely to kill you
(source1, source2):

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And here is more, also capturing the impact of disability to your quality of life:

Finally, here are the biggest risks to your health:

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Turns out that most causes of illness, suffering and death are actually related to “lifestyle”. There is ample evidence that small day-to-day choices have a tremendous impact on your health and quality of life in the long term. Things like tobacco, alcohol, dietary choices, (lack of) exercise and occupational risks cause MOST of the deaths and disease in the developed world have very little to do with what we traditionally consider “healthcare”.

Follow the Money

Yet, the way we spend money for our health – and the way we account for the money spent – tell a different story. In America, to take an extreme example, the total spending for health is between $10K and $15K per person, per year. Most of this money pays for treatment of disease, medicine, surgery, laboratory expenses and the likes. Solid, hard, clinical work. Traditional healthcare.

None of this money is spent on people’s diet, access to exercise, clean air or quality of life. Not that it doesn’t happen – many people people do actually make good choices in their lives. However, these choices – or the spending associated with them – are not accounted as a “health” spending and therefore not reflected anywhere in these statistics. Nor are these expenses captured anywhere in traditional healthcare economics.

This is important because of the way money moves in healthcare

People in healthcare are mostly paid by insurers, and insurers ONLY pay for hard, clinical “healthcare” work. This has profound implications on the way even the best medical practitioners look at lifestyle vs. treatment choices.

Simply put, if your doctor recommends you change your diet while you are still healthy they don’t really get paid. However, if they wait for you to get sick and put you on treatment (i.e. if they medicate you), they get paid.

Meanwhile, changes you are doing to your lifestyle save insurers a lot of money. Some of these changes are a net cost to you – fresh food, gym subscription, sport equipment add up. In fact, the cost of these lifestyle changes are a real barrier for people’s changing their behavior. Fries at Wendy’s are cheaper and more convenient than cooking a fresh meal at home. Practicing sport consistently takes time and equipment and access to facilities that many people cannot afford. Accessing clean air is hard if you live in a small, over-populated flat in an urban wasteland.

In the twisted world of modern healthcare economics, your healthy choices are directly subsidizing the insurers.

Smart insurers are already noticing this and are building data-driven products that are paying people to stay healthy. It is becoming more common for insurers to cover the costs of regular Dr. visits and even regular exercise – at least in the premium health insurance market. As an aside, this in itself is a way to optimize/ segment for a more premium – i.e. more healthy user base. Either way, it is a drop in the ocean.

All of this is about to change. And as it does, it will redefine healthcare as we know it and will trigger a long overdue wave of innovation in this sector. In fact, smart people are already working in this space, building the healthcare companies of tomorrow.

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