2005 June

eHealth: an illusion?

This critique is in response to the Summary Report of the Fifth Annual eHealth Developer's Summit that was held November 10-12, 2004, in Huntington Beach, CA; see www.ehealthinstitute.org

To show my hand upfront: I have a sizeable investment in eHealth and I have my own reasons to proceed with it. Still I believe it necessary to formulate a devil's advocate position against eHealth and thereby against the Report.

Let me define eHealth first: the application of Information Technology (IT) to enhance cost effectively patient care and/or to reduce the expense of patient care without decreasing the quality. (Excluded are administratrivia, usage of additional hardware as for ICU applications, ultra sound, MRIs, etc.)

Key successes of IT in other industry segments are cost reductions and productivity enhancements, often accompanied by business re-engineering.

I will argue that eHealth fails or does not apply to the medical "machine". I provide a sequence of arguments starting at a high abstraction level and subsequently filling in the mechanisms at lower levels.

The argument at the top level stares everyone in the face by combining two well known facts:
** Health care in the US is roughly twice as expensive (in terms of percentage of GDP) than in other industrialized nations
** "... yet the nation ranks 46th in life expectancy ... And 41 countries, including Cuba, have achieved lower rates of infant mortality." (Newsweek special edition 2005 Summer)

Conclusion:

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* The US has not been capable to achieve cost effective quality  *
* healthcare (which is eHealth's key potential contribution).    *
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This conclusion suggests there is a massive opportunity for eHealth. However, one must wonder why eHealth has not been able to deliver its magic in the past decades, as IT has done in other segments.

Let me go down one level to nail down what is going on.
We have the following stakeholders:
- the public that consumes the medical services
- the care givers (physicians, support staff, hospitals)
- the insurance companies, HMO, PPO
- the payers

Lets look at each of the stakeholders in turn.

The consumers

The 20-80 rule tells us that 80% of the public consumes only 20% of the services. Hence for a large majority health care is just only of marginal relevance. The consumers belong to different segments:

Population segment      Size    Total use       Average use per member
Total population        280M    $1.4T           $5K
Medicare & Medicaid     41M     $442B           $10.7K
Insured                 194M    $883B           $4.3K
Uninsured               45M     $125B           $2.8K

Only the uninsured have to worry about the payment of the services. They pay out of pocket $733. The balance comes from other sources. Health care is by and large for the consumer not a financial concern - although co-payments are creeping up. Hence eHealth cannot sell to consumers.

Care givers

The medical machine (employing an abundant segment of the US workforce) is happy with the status quo. The bills are submitted and get paid - no matter what. A fine example are ER visits. Half of them are not necessary, but no hospital is motivated to weed out the unnecessary ones. They are lucrative sources of revenue. (The public sector paid 60% of the US hospital billings in 1996.) Care givers are not interested to improve productivity through eHealth if that entails reducing the billing rate. Hence, eHealth cannot sell to care givers either.

Insurance companies, HMO, PPO

They do not deal with patients, thus using eHealth can be a conflict of interest. Plus: why rock the boat? It is estimated that administrative overhead is 30+% of the nation's healthcare expenses. They have been very successful in building their empire. Why promoting operating efficiencies using eHealth?

Payers

There are the following parties;
- public sector (federal, state, county, city)
- employers
- private insured
- uninsured

The last two parties are marginal in this discussion. Employers are desperate about the benefit costs spiraling out of control. They try to get out as fast as possible. Using eHealth is dangerous for them because there is a conflict of interest. Employees fear eHealth systems because of privacy concerns.

The most significant party is the public sector because it pays more than 50% of the nation's healthcare expenditures. This explains also why the employers are desperate: the market does not function because the public sector is not cost conscious; it just spends tax money for entitlements. These entitlements are themselves the consequence of our political system: pressures for a reelection seduces politicians in the creation of entitlements, while cost cutting is political suicide. Hence eHealth also cannot do business with the public sector.

Conclusion:

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* There is no stakeholder that eHealth can do business with.  *
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Let me now make a few comments about the Summary Report.

Page 6 has: "There is increasing recognition that by healthcare organizations, employers, the government and consumers that eHealth is an essential tool for improving quality and reducing costs."

This quote expresses a sentiment and has no support of documented references. It captures the desires of the attendees (a kind of wishful thinking), but is not supported by the current realities - in my opinion.

Page 6 also talks about Electronic Health Records. One of my most popular papers specified details of an EHR. Around 1986. The government demanding widespread adoption of an EHR within 10 years time is ... is "pathetic" the word?

Page 10 has: "Forty-three percent of this year's Summit attendees selected health care organizations and providers as the most influential driver/player in eHealth" But why? They are the beneficiaries of the largest boondoggle ever created. Why would they want to change?

I would be happy to be proven wrong or even an idiot. The best way to make your point is to identify a candidate customer in the public sector for our HealthCheck system to help the uninsured. This system permits self-diagnosis by users over the web and a prototype version allows access by phone (using speech technology). A version with advisors that "look over the shoulder" of patient users for real-time intervention is available also.
For details see: www.ontooo.com
The free, anonymous, no ads, English, browser version is at: www.healthcheck4me.info
Partnerships invited.

Dennis de Champeaux
President OntoOO
ddcc AT ontooo DOT com