“The Uber of Healthcare?”: It’s Not About the App, It’s About The Overhead

For a very long time, one of the most valuable business assets in New York City was a yellow cab taxi medallion.

In 2014, medallions sold in the $1 million dollar range; ownership of the medallion was a virtual cash annuity, combined with equity growth (in 2004 medallion prices were in the mid $200,000 range and increased in value 15% year over year in the subsequent 10 years). As one owner once put it “it even makes money for me while I sleep”, since the cars can be ‘rented’ when the owner is off shift.

Medallion owners tend to fall into two categories: Private Practitioners and Fleet Owners. Private Practitioners own their own car, have responsibility for maintenance, gas and insurance, and tend to use the cash flow to live while allowing the medallion to appreciate over the course of their career. They then cash out as part of their retirement plan.

Fleet Owners have dozens of medallions; they lease or buy fleets of automobiles and often have their own mechanics, car washes and gas pumps. They either hire drivers as employees or, more often, ‘rent’ their cars to licensed taxi drivers who get to keep the balance of their earnings after their car and gas payments.

In London, licensed taxi drivers have to invest 2–4 years of apprenticeship before they can take and pass a test called “The Knowledge”. However, like NY, finally getting that a license to operate a Black Cab in London is a hard-working but stable way to earn a living.

Now imagine that someone comes along that can offer all the services of the NYC yellow cab or the London Black Cab directly to the general public, but does not have to own the medallion, own the car or employ the driver. With as much as 70% lower overhead, they provide the same service to the consumer; in fact they are so consumer friendly that they become the virtual gatekeeper for all the taxi and car service business in the community.

Of course, this what happened with Uber. By outsourcing the overhead, providing just-in-time inventory management, and taking full responsibility for customer engagement, they have taken away 80% of the 2014 value of a NYC Taxi Medallion, one of which sold for $241,000 in November 2017. Those that bought at the height of the market are now ‘under water’, owing hundreds of thousands of dollars in medallion mortgage debt.

This disruption came to mind with the announcement today of a collaboration between Amazon, JP Morgan Chase and Berkshire Hathaway to create a new system of care for their employees, bypassing traditional health plans and, most likely, most provider networks. Their efforts would guarantee access to otherwise inaccessible metrics of quality and safety without any of the barriers and overhead associated with enagaging siloes of providers , payers or hospitals.

As masters at consumer engagement, they will create levels of affinity and loyalty usually found with consumer products and soft drinks.

Using a ‘don’t make me think” approach to their technology, they will seamlessly integrate communications platforms into their ‘covered lives’, and offer those without a digital footprint a host of options for communications, including access to information and services via cable TV box or free Amazon tablets. They will leverage high-level marketing analytics to determine who will be responsive to non-personal tools for engagement, like digital coaching, and who requires a human touch.

Care planning will be done based on clinical stratification and evidence; population specific data is used to determine the actual resources required to achieve clinical, quality and financial goals. Physicians will serve as ‘clinical intelligence officers’, their recommendations implemented by non-clinical personnel, with additional resource allocation based on individual patients progress towards goals.

They will employ former actors and actresses as health coaches and navigators,and analyze online behavior and in-store supermarket point-of-purchase data to see what people are really buying in order to supporting lifestyle change strategies.

The ‘primary relationship’ will be with a low cost, personal health concierge: primary care physicians who agree to standards of quality and accountability will get a guarantee of traffic based on predetermined eligibility criteria and are spared administrative burdens.

Multi-tiered scenario planning for emergencies will be built into the system. For professional resources only required on an ‘as-needed’ basis, such as hospital beds, surgeons and medical specialists, access is negotiated in advance based on a formula of quality standards and best pricing but only used on a just-in-time basis.

They are not a payer, although a professional relationship with them is on a business-to-business basis. They will become a completely new type of health system, guaranteeing health and well being, transparent in their operations and choosing their ‘vendors’ based on their willingness and ability to achieve those goals.

In doing so, they significantly reduce the resources necessary to achieve goals for quality of care and quality of health across the entire population; they treat quality achievement as an operational challenge and manage their supply chain accordingly. Their business model is non-profit, and therefore purely value-based, both to the employees in terms of improving quality of health (and associated productivity and focus at work) and to the employers in terms of most efficient use of health-related investment in personnel.

The Uber of healthcare will have much less to do with the “mobile app”; and far more to do with creating value by minimizing overhead, designing flexible operations, supporting goal-directed innovation and bringing supply-chain discipline to the idea of resource-managed care delivery. It will involve embracing models of care delivery that leverage emerging evidence on non-clinical approaches to health status and quality improvement and focusing on designing goal-directed interactions between people, platforms, programs and partners.

While I hope that such new systems revitalize the role of medical professionals in our systems of care, we must be willing to acknowledge and embrace dramatically different, often counter-intuitive, operating models for care that will require new competencies, forms of collaboration and reengineering the roles and responsibilities of those who comprise a patients ‘health-resource community’.

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