A RE V O LU TI O N OF THE HEALTHCAR E SYSTEM

A focus on healthcare insurances in the United States. A new model powered by the Internet of Things.

Yoann Lopez

Sous la tutelle de Madame le Professeur Sophie Gaultier-Gaillard Master 2 Professionnel Innovation et Management des Technologies Paris 1

Abstract
Healthcare systems are struggling all around the world. It is becoming harder and harder for governments to sustain them and to make them efficient. In this paper we will focus on the United States because it is one of the most inefficient system one can find. We will quickly explore the history of healthcare and the current landscape before considering a brand new type of healthcare insurance that could have the power to partly revolutionize the current system not only in the United States but also in other countries. This new health insurance will have its foundation deeply rooted in the value-based benefits design and be powered by the Internet of Things and a smart Software as a Service backbone capable of diminishing the transaction costs related to information exchanges.

Rsum
Les systmes de sant sont lagonie partout dans le monde. Il est de plus en plus difficile pour les gouvernements de les maintenir et de les rendre efficients. Dans ce mmoire nous allons nous concentrer sur les tats-Unis car cest un des systme les plus innficaces que lon puisse trouver. Nous explorerons rapidement lhistoire des systmes de sant ainsi que le paysage actuel avant de considrer un tout nouveau type dassurance maladie prive qui aurait le pouvoir de rvolutionner en partie le systme actuel non seulement aux tats-Unis mais galement dans dautres pays. Ce nouveau type dassurance aura ses fondations profondment ancres dans ce que nous appellons valuebased benefits design et sera soutenu par lInternet des Objets et un systme intelligent de SaaS (Software as a Service) capable de diminuer les cots de transactions lis aux changes dinformations.

Acknowledgements
I would like to take this opportunity to thank all the people who have contributed in some way, formal or informal, to this paper. I want to particularly thank Erika Batista with whom I had a lot of conversation regarding the healthcare system, the Internet of Things, and new technologies in general. Through these conversations I had the opportunity to have a better vision of what a new system could look like. I cant be more thankful to my parents who have always been by my side and who have always supported me through my whole life and especially through my student life. Without them I couldnt have probably spent this year in this Masters degree and this paper wouldnt exist at all. My friends have also contributed to the writing of this paper in a more informal, but nonetheless necessary way. I would like to especially thank Lisa who became a really good friend during this year and who has made all my afternoon spent writing my paper more enjoyable and full of laughters (As we all know, laughing is great for creativity) and who helped me to go through difficult times. I will always be grateful for that. Guillaume has also been a source of creativity after spending hours debating about various topics even remotely related to the topic at hands today. Of course, I would like to thank the faculty and more particularly the professors who have helped me and inspired me this year and during my entire cursus: the Professor Sophie GaultierGaillard from the University Paris 1 Panthon-Sorbonne, the Professor Bertrand Lemennicier from Paris 2 Panthon-Assas, the Professor Bruno Jrme from the University Paris 2 Panthon-Assas, and the Professor David from the University of Memphis, Tennessee.

TABLE OF CONTENTS
Introduction The Current Landscape
1 - The healthcare systems
a/ A brief history b/ The healthcare system in the United States C/ The new reform : an overview

6 9
9
9 11 14

2 - An economic analysis of health insurance

a/ Adverse selection, Risk aversion, and the Insurance Market b/ The basic model: an homogeneous market with an homogeneous risk C/ What if we add heterogenous risk and hidden information?

15
15 16 17

3 - The internet of things and the healthcare system

a/ The Internet of Things: a definition b/ How the internet of things is consumerizing the healthcare industry

18
18 19

4 - A new flow of data modernizing the healthcare system

a/ Big data b/ On the opposite side, the individualization of data: Micro data

21
21 23

Redesigning the Healthcare Systems

1/ Electronic Health Records and Health Information Technology

24
25

a / A definition of Electronic Health Records (EHR)

1/ Why using EHR? 2/ What are the difficulties that such a system can encounter

25
25 28

B/ A Cost-Benefit Analysis (CBA) of the EHR system

29

II/ The new reform of the healthcare system in the United States
A/ Toward a better system? B / The Issues that need to be tackled

30
31 33

A new model of health insurance: value-based health insurance powered by the internet of things
I/ Value-based health insurance: The proof of effectiveness from an economist point of view II/ A new model powered by the Internet of things
A/ Some thoughts on the inherent problems of the current healthcare system and health insurances
a/ The lack of desire to monitor our health b/ Miscommunication in between the different actors c/ A lack of monitoring and feedbacks loops

35

36 37
37
38 39 39

B/ A model of integrated health insurance powered by the internet of things

a/ A value-based model B/ Incentivizing the agents to perform the right treatment and to focus on preventive care C/ A model powered by the Internet of Things D/ A model where SaaS (Software as a Service) is its backbone E/ A model where the client is at the center of all attentions

41
41 43 44 46 48

Conclusion Bibliography

49 51
5

INTRODUCTION
Americas health care system is neither healthy, caring, nor a system. These are the words of Barack Obama. Indeed, the United States of America have a pretty flawed system, which requires a lot of adjustments, reforms, and new leaders that can make the system evolve towards a more efficient one. First of all, what is health insurance? Health insurances and individuals enter into contract stipulating that in exchange for a premium, the health insurance will cover the costs of any accident or illness covered by the plan in question. The U.S. Census bureau said in 2010 that close to 50 million residents accounting for roughly 16% of the entire population are uninsured.1 This is one of the highest percentage among industrialized countries. One can think that this will result in lower health related expenditures but once again the truth is surprising. The U.S. rank among the top 5 countries spending the most per capita when it comes to healthcare. Even more interesting, the U.S. rank 1st with regards to healthcare expenditures as percentage of its GDP2 with a mind blowing 15.2% figure in 2008. The situation isnt sustainable. In 2013, many senior citizens went bankrupt because they could not afford their medical expenditures. The United States is not the only country facing such an emergency, many States across the globe are struggling to balance their health care system expenditures due to an aging population living older and older and needing more and more medical assistance. Moreover, the actual economic turmoil striking the U.S. and the other countries doesnt help this crisis. States budgets are skyrocketing and officials arent prepared to cut the healthcare part of them because, as the Public

DeNavas-Walt, Carmen; Proctor, Bernadette D.; Smith, Jessica C. (September 13, 2011).Income, poverty, and health insurance coverage in the United States: 2010. U.S. Census Bureau: Current Population Reports, P60-239. Washington, DC: U.S. Government Printing Office.
2

WHO (2011). World health statistics 2011. Geneva: World Health Organization.ISBN 978-92-4-156419-9.

Choice Theory 3 nicely describes it, politicians are seeking one thing and only one: being reelected. Therefore, there is no incentive for them to do any reform that would cost them popularity points. In the U.S. most of the healthcare system is composed of private agents like private health insurances, private clinics, and private hospitals. This could imply that politicians are not involved in the reform process but they are in fact extremely involved not only through legislation but also through their links with the private industry. We will see later how this can sabotage reforms and slow any attempt of change toward more efficiency. On top of that, the healthcare industry and the medical industry have a pretty high level of inertia. The status quo is well anchored and in order to be disrupted, and to be more efficient, this industry will need great leaders ready to fight and to think out of the box. Besides the political side, there is another factor that is needed in order for this industry to evolve towards more efficiency: the technological factor. Some industries are making quantum leaps and are revolutionizing the way people are living. One of the great examples of this century is the personal computer or the emergence of smartphones around the world. These two revolutions have been initiated by one man: Steve Jobs. This visionary disrupted many industries such as the music industry with the iPod, the smartphone industry with the iPhone, and the tablet industry with the iPad. Of course these areas are less regulated than the healthcare industry. Nevertheless, they all have a big inertia effect with stakeholders that are willing to fight the status quo vehemently and violently. Entrepreneurs dreaming of disrupting this industry will face much more enemies, but the impact on the society is worth the fight. In this paper we will talk about the Internet of Things movement but also about new technologies in general that can foster innovation within the healthcare industry. For instance, the internet has been modifying greatly the healthcare and medical landscape in the U.S. with more and more startups blossoming around the country focusing on the healthcare market and bringing the power of computers to serve the medical industries (electronic health records, new medical technologies, etc.). This wave of enthusiasm shows that the market is ripe for being disrupted. The big players such as the giant healthcare insurances are showing some
3

Wikipedia definition : Public choice or public choice theory has been described as "the use of economic tools to deal with traditional problems of political science". Its content includes the study of political behavior. In political science, it is the subset of positive political theory that models voters, politicians, and bureaucrats as mainly self-interested. In particular, it studies such agents and their interactions in the social system either as such or under alternative constitutional rules.

signs of weakness. For instance, some new entrants like SeeChange health are destabilizing the big players. They are applying a new system called value-based benefits that we will study more thoroughly later on. Another big movement that has the power to shake things, the power to foster innovation and more efficiencies is the Internet of Things movement. Indeed, after the Internet revolution that has connected billions of users around the world, the things around us are starting to be connected to the internet just like our computers. Dumb things are becoming smart and the possibilities surrounding them are expanding. Everyday objects being plugged to the internet can send and collect many data to and from the internet. This enhances their usability but also the benefits delivered to the user because the internet - or the cloud as we call it today - increases the computation power of things that cant have this kind of capacity embedded for practical reasons such as power consumption, cost, or size. Thus, we are the witnesses of a new revolution that will change our lives forever. This is particularly true for the health and wellness industry. More and more startups such as Withings are entering this market and they offer consumer products alongside more medical-oriented devices that can help us take care of our health. This Internet of Things revolution has the power to shake things up within the healthcare industry. In our case we will turn our focus towards the effects that it can have on the health insurance industry. This naturally leads us to the main question that we will try to answer: how can the Internet of Things (IoT) and a new kind of health insurance design reshape the healthcare industry in the United States? We can make three hypothesis: Hypothesis 1: A model of totally integrated health insurance is possible. Hypothesis 2: the Internet of Things can be integrated within a new model of health insurance. Hypothesis 3: Value-based design can lower the cost of healthcare while increasing its efficiency. In order to validate or invalidate these hypothesis we will first take a look at the current landscape including the healthcare system in general, its history, with focus on the american healthcare system and the new reforms undertaken in the United States. We will then look at health insurances, the Internet of Things, and the new wave of big data that can influence the healthcare system. In a second part of this paper we will change gear in order to take a look at what kind of technologies and practices are remodeling the healthcare system in the U.S.A.

Finally, we will discuss a new model of health insurance powered by the Internet of Things and relying on value-based benefits. Indeed, the Internet of Things alone cant disrupt an entire sector, it has to be integrated into other sectors to enhance them and to give them enough horsepower to move forward and to make big and impactful reforms.

THE CURRENT LANDSCAPE

1 - The healthcare systems
Before starting a deeper analysis of the healthcare system it seems relevant to start by looking at its history. Indeed, it will help us to understand why the healthcare sector has evolved to what it is today. After that, we will focus on the current system in the United States since its the geographical location we are interested in. One question needs to be asked at this point. Why choosing the United States and not another country? The answer is simple yet complex at the same time. The U.S.A. have a very complicated system, where the public and the private sectors are intertwined in a very opaque way. The private sector is the main provider and that is the reason why innovation will likely appear there before it will in countries with a public healthcare system that prevails. The public sector is usually slower to innovate due to the red tape linked to its bureaucracy.4 Finally we will see how the Obama administration is planning to reform the system.
A

/ A

BRIEF HISTORY

Just like any other kind of insurance, health care started as a regular service that was performed in exchange for a fee. We can trace this kind of trade back to the Mesopotamia era where, under the code of Hammurabi, a surgery with a knife was more expensive but the costs of a failed surgery were even higher for the surgeon. The compensation and the liability were both set by the patient5.

4 5

For more information on this, read bureaucray by Von Mises, a Libertarian thinker. Price, Massoume. History of Ancient Medicine in Mesopotamia & Iran. Iranchamber.com. October, 2001.

During the 19th century, a giant wave of industrialization rolled all over Europe, which helped modernize social security systems across the continent, thats when the modern era of this safety net started. Nonetheless, the concept of mutual insurance among a community wasnt born at this period of time. Indeed, during the antiquity, both the Greek and the Roman empires had some kind of social security and healthcare systems. Before the industrial era, really poor individuals were assisted among corporations when they needed help. The main source of this help came from charity, and the people who received it were mainly orphans, homeless people and isolated persons. The royalty created, around the 17th century, the first system of healthcare for injured soldiers and marines, these kinds of organizations were pretty basic and were completely wiped by the French revolution. The development of the proletarians systems across Europe during the 19th century created new risks such as accidents, unemployment and layoffs. This new configuration needed to be built by the workers of the biggest industries in order to maintain a healthy social climate. The first mutual organizations appeared thanks to the collective actions of the workers of these industries. The system is pretty simple: each organization takes a relatively small fee out of the salary of each worker in order to pool the risks and to provide with help and assistance when an accident happens to one of its members. Nevertheless, the actions of those mutual organizations were pretty constrained by the administrations, which looked carefully at those institutions and didnt let them do whatever they wanted to. If we look at the United States, it is during the Civil War that the first individual health plans appeared. It was mainly insurance that would cover injuries related to railroad or steamboat accidents. These plans became very popular, so popular in fact that some of them extended the range of the coverage as early as 1847. During the beginning of the 20th century, many groups started to build links with health providers and gave birth to what we know today as modern health insurance plan or fee-based contracts. During the early years of health insurances (early 20th century), the cost of medicine in general wasnt as high as it is today due to very little technological innovation. As a consequence, many patients were treated in their home and were using sickness insurances6 and not health insurances. After this period, more and more institutionalization of the medical education took place, as well as many innovations that increased the price of medical care and moved the patients from their homes to hospitals. This led a group of teachers to decide to negotiate with

Similar to what we call today disability insurance. It covers the loss of wages

10

an hospital a prepaid fee in exchange of a certain number of hospitalization days (the name of this organization is Blue Cross). Of course the physicians guild wasnt happy about that. They decided to counter attack by building their own pre-paid plan: Blue Shield. Doctors fought against a state that seemed to want to implement a compulsory health insurance system that would put their power to discriminate in jeopardy. In 1965, the Congress enacted the Medicaid and Medicare Act. Medicare was in charge of providing a mandatory hospital insurance for people over the age of 65 and medicaid was an insurance that provided care for low income people. Nevertheless, not everything was covered by Medicare and Medicaid and people still had to pay the difference in between what Medicare and Medicaid were reimbursing and what physicians were charging. This little journey in the past of the healthcare systems in Europe and in the United States naturally leads us to the current landscape of the healthcare system in the U.S.
B

/ THE

H E A LT H C A R E S Y S T E M I N T H E

U N I T E D S TAT E S

You can either love or hate the healthcare system in the U.S. for many reasons. Some people will argue that the United States have the best healthcare system in the world thanks to its state-ofthe-art technologies, hospitals, and medical devices. On the other side, youve got the people that disdain this system because of its extreme complexity, its fragmentation and how it segregates people with a health insurance and people without one. If we want to understand these two discourses we will have to take a look at the basic structure of the system. We will first analyze the organization of it and then its financing. How is the healthcare system organized? Just like in many other countries, there are both private and public actors in the U.S. but what is striking when we compare it with other countries is how dominant the private sector is over the public one. Here is a figure7 that sums it up:

Kaiser Commission of Medicaid and the uninsured and Urban Institute analysis of the March 2004 Current Population Survey.

11

5% 15%

Employer sponsored Uninsured Medicaid/other public Private non group

18%

62%

Source: Kaiser Commission of Medicaid and the uninsured and Urban Institute analysis of the March 2004 Current Population Survey.

Lets start with the public system and the Medicare program. Medicare is a federal program that targets (mainly) elder people above the age 65. The program is administered as follows: there is a single payer, which is the government. Single-payer means that there is only one agent (the U.S. government) that can reimburse the insurees. The taxpayers are the main contributors. They are financing this program through their income tax. The other tax involved in its financing is a payroll tax that is shared by employers and their employees. What can people expect of Medicare in terms of benefits? Medicare covers a part of hospital fees, physicians services, and drugs costs. This program is far from being perfect because the coverage is very limited. For instance, there is no coverage for dental or vision care, which is quite common for people over 65. Lets turn to the Medicaid program. This program targets low-income people and the disabled. This means that states should cover some very specific persons if they cant afford a private insurance (extremely poor pregnant women, children, disabled people, etc.). The problem with this is that many poor people are not poor enough to qualify for Medicaid but dont have enough money to afford a private insurance. Since there are 51 different states in the U.S. there are 51 different Medicaid programs. Each program is free to expand eligibility if they want. These programs are financed by both the states and the federal government through various taxes. To make it simple, every dollar that a state spends on Medicaid is matched by the federal government at a minimum of 100% but it could be more if the state is too poor for example. Medicaid offers many benefits but

12

once again a lot of them are limited and on top of that its hard for people under Medicaid to find providers that will accept them because of the low reimbursement rate of this program. Besides the public sector, the private sector is the main provider of health insurance in the United States. We can find two types of private health insurance: Employer-sponsored insurance and private non-group (the individual market). The employer-sponsored insurance is the most used in the United States. The employer includes in the benefit package of their employees the health insurance. These insurances are administered by private companies both for-profit and non-profit. Next to those, some companies are selfinsured, which means that they pay themselves for their employees health expenditures. These private insurances are financed mainly by the employers and the remaining by the employees. The benefits can vary widely from one insurance to another and from one plan to another depending on what the employer chose. We can also see a wide spectrum of cost-sharing (co-pays and deductible) that employees have to pay from their pockets. The individual market or the private non-group covers the part of the population that is selfemployed or retired. Within this group of the population, insurance companies can refuse some people based on previous conditions or pre-existing ones. These plans are administered by the private insurance companies themselves and they are financed through the premiums paid by insurees. The premium will vary from one individual to another depending on their risk of illness, injury, etc. High-risk persons will pay a higher premium than low-risk people who are healthy. This system is extremely complicated and surely more than it looks like in this description. Many are uninsured and others are struggling to pay their health insurance. A lot of money is wasted because this system is highly inefficient. That is the reason why some reforms are necessary.

13

C/ THE

NEW REFORM

A N O V E RV I E W

For many decades the American people have been in favor of giving access to health insurance for everyone but the topic is quite sensitive. Indeed, Americans think that health policy is extremely personal because not a single person is similar to another. The main question is who will pay for a universal healthcare system? Most people dont want to pay for their neighbors, which makes the reforms pretty difficult to pass. In 2010 the Congress managed to pass a bill that will require all Americans to be covered by an insurance. What if somebody doesnt have enough money to pay for one? The government will subsidize the remaining. This reform is pretty unique in the sense that, compared to other countries, the United States didnt opt for a public system only financed by taxes. The U.S. decided to go along with the predominance of the private sector, which is today, extremely costly. In order to counterbalance these high prices, the government had the idea to regulate the market so that it will transform it into a regulated-competition market. This regulation would tell insurances who they must cover and how. Besides that, the government created what they call exchanges. These exchanges would permit people and businesses to shop among numerous health insurances. This system would also allow individuals that cant subscribe to an insurance through their employee or the state to be part of a bigger pool of insurees and to benefit from lower prices negotiated for a big group. Maintaining this private insurance market was also a political move that prevented many backfires for the Obama administration. Indeed, the health insurance companies are big lobbyists and they employ thousands of people. Thus, Obama decided to go stealth and to modify the system from the inside without shaking the entire ecosystem. This bill led to two federal statutes enacted in 2010: the Patient Protection and Affordable Care Act (PPACA), signed in March 2010, and the Health Care and Education Reconciliation Act of 2010, which amended the PPACA and became law on March, 30, 2010.8

http://en.wikipedia.org/wiki/Health_care_reform_in_the_United_States

14

2 - An economic analysis of health insurance

In this section of this paper we will use an economist toolbox in order to analyze the health insurance system and the economics behind it. We will mainly rely on microeconomics in order to do so. We will talk about adverse selection, risk aversion, and the insurance market.
A

/ ADVERSE

SELECTION

, RISK

AV E R S I O N

AND THE

I N-

SURANCE

MARKET

This section is mainly based of the work of David Autor (2010). There are 3 reasons why people decide to use the services of an insurance. This applies to any kind of insurance (health insurance included), this 3 reasons also explain why insurance markets exist:

1. 2. 3.

Risk pooling. This uses the Law of large numbers Risk spreading. Each risk is spread among a big number of individuals Risk trading. Risk is traded between more and less risky individuals

From a welfare point of view, it would be optimal to have perfect insurance markets. Instead, we can see that these markets are incomplete. Indeed, not everybody is insured and even when somebody is so, the coverage is incomplete (deductibles, tight rules, refusals to cover some people, etc.). This incompleteness finds its foundation within the following 4 explanations:

1. Credit constraints: people cannot afford to buy an insurance. Therefore they have to bear all the risks and have to pay the full cost of their health care. 2. Some risks are non-diversifiable: this means that everybody faces the same risk at (virtually) the same time. For example in case of a nuclear attack, millions of people would face this risk. As a consequence, insurance companies cant insure this kind of risk. 3. Adverse selection: people will rarely tell the truth about their condition. If they have to hide some facts about their personal condition in order to decrease the premium or just to get an insurance they will do it.

15

4. Moral hazard: this is a common characteristic of Human Beings. Once we know that we can get something for free, we will likely abuse of it. If healthcare is free, we will get too much of it. This is one of the reasons why healthcare costs across the globe are skyrocketing these days.
B

/ THE

BASIC MODEL

AN HOMOGENEOUS MARKET WITH

AN HOMOGENEOUS RISK

Why studying a case that doesnt exist in the real world? The reason is simple, to dig further after and to get our ideas fixed and clear. Lets assume that all the insurees have the same probability of loss: pi = p and all the losses are equal to L.

Source: David Autor (2010)

By definition, a risk averse person will buy an insurance if he rationally thinks (he makes computation) that it is fair. We will not develop the Von Neumann Morgenstern expected utility property here because it would be too long. We can just say that at the point E, and on all the point belonging

16

to the fair odds line, the insurance companies will be willing to offer their insurance policies to insurees since they dont lose and dont make any money at this very specific point.

C / W H AT

IF WE ADD HETEROGENOUS RISK AND HIDDEN

I N F O R M AT I O N

What does heterogeneity means? It means that the loss probability p will vary across agents. Lets imagine 2 insurees: h l ph : probability of loss is equal to ph : probability of loss is equal to pl > pl

These 2 agents have the same wealth w and face the same loss L in case of an accident. The only thing that is different from one to the other is their odds of losing. Lets also assume that some of the information is private. This means that an agent a knows that he is of type ai, for example, but the insurance company doesnt know that. In economics we say that theres an information asymmetry. Given these two types of agents, h or l, and the asymmetric information, there are two equilibria that are possible in this model: 1. Pooling equilibrium: all agents buy the same insurance 2. Separating equilibrium: Each agent of a particular risk buys a different policy than an agent with a different kind of risk. Without going through complicated equations, we can argue that because of the lower probability of loss for type l agents, l must receive more money than h in case of an accident to compensate for income thats been taken before the accident happened. What we deduce from this very short and basic model is that welfare losses can be high if adverse selection appears to be present. We know for sure that it is especially the case in the healthcare sector. That is one reason why health insurances can be pretty expensive and another reason why insurers are screening and filtering their clients pretty drastically in order to get rid off this asymmetrical information. This problem of asymmetry in such a system is extremely costly and premiums should be more personalized. We will get to this topic soon enough.

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3 - The internet of things and the healthcare system

Just like the internet some decades ago, the Internet of Things will revolutionize the way we interact with each others and with our objects. Of course the healthcare sector wont be set apart and will benefit from this new wave of objects.
A

/ THE INTERNET

OF

THINGS:

A DEFINITION

The term Internet of Things was first coined by Kevin Ashton in 19999 while he was doing a presentation for Procter & Gamble. The Internet of Things refers to objects that are connected to the internet and can communicate with structures in the cloud as well as with each other. Therefore, each object has a virtual representation in the cloud that gives it the ability to be identified within this gigantic system. In order to give an accurate definition of the Internet of Things theres no better way than using Ashtons owns words Today computersand, therefore, the Internetare almost wholly dependent on human beings for information. Nearly all of the roughly 50 petabytes (a petabyte is 1,024 terabytes) of data available on the Internet were first captured and created by human beingsby typing, pressing a record button, taking a digital picture or scanning a bar code. Conventional diagrams of the Internet ... leave out the most numerous and important routers of all - people. The problem is, people have limited time, attention and accuracyall of which means they are not very good at capturing data about things in the real world. And that's a big deal. We're physical, and so is our environment ... You can't eat bits, burn them to stay warm or put them in your gas tank. Ideas and information are important, but things matter much more. Yet today's information technology is so dependent on data originated by people that our computers know more about ideas than things. If we had computers that knew everything there was to know about thingsusing data they gathered without any help from uswe would be able to track and count everything, and greatly reduce waste, loss and cost. We would know when things needed replacing, repairing or recalling, and whether they were fresh or past their best.

http://www.rfidjournal.com/articles/view?4986

18

The Internet of Things has the potential to change the world, just as the Internet did. Maybe even more so. As Ashton said more than 10 years ago, the Internet of Things has the power to change the world, because giving this kind of horsepower to objects permits to dramatically increase their possibilities. Lets take the example of a very common object: a body scale. Withings, one of the pioneers of the Internet of Things within the healthcare and wellness sector was the first one to propose a connected scale. This scale can automatically send all your weight data to the cloud without requiring any action from its user. This can help a lot a people that want to lose weight because it gives them a very accurate and precise view of her data. You can see your weight curve, your body mass index at one point in time and the trends of these data with regards to a specific time of the year. Collecting data has never been so easy. Thanks to the boom of the Internet of Things weve seen a boom of data collected. Thanks to these data, we will be able to have a better understanding of many phenomenons such as obesity-related trends for instance. To summarize, the Internet of Things is a way to enhance our everyday objects capabilities and also to create new objects that couldnt be built a few years ago. We will now see how this revolution can benefit the healthcare industry and especially how it is going to help to consumerize the healthcare industry.
B

/ HOW

THE INTERNET OF THINGS IS CONSUMERIZING

T H E H E A LT H C A R E I N D U S T RY

Before diving into the topic, let us explain what is consumerization. As we can read on Wikipedia, consumerization is the growing tendency for new information technology to emerge first in the consumer market and then spread into business and government organizations. The emergence of consumer markets as the primary driver of information technology innovation is seen as a major IT industry shift, as large business and government organizations dominated the early decades of computer usage and development.10 Nevertheless, this definition is not complete. Consumerization within the healthcare sector also means that the responsibility for care is moving from healthcare professionals towards the pa-

10

https://en.wikipedia.org/wiki/Consumerization

19

tients themselves. It means that people are more and more willing to take care of their own health. We first saw this tendency thanks to websites specialized in diagnosis and symptoms interpretation. These kind of websites empowered the patient by giving him some tools that werent accessible a few years ago. Later on, social networks with websites like www.patientlikeme.com created another niche market enabling a wider consumerization of healthcare by crowdsourcing diagnosis and treatments. Indeed, people with the same diseases and symptoms are collaborating on this social network in order to gain psychological support but also, and most importantly, to fight and to cure their conditions. A few years ago, doctors were reigning as kings over the healthcare realm, today theyre not alone and patients themselves want to gain more liberty and to be responsible of their own health. Most people in America think that it is good for the country because it helps to save large amounts of money and time. Today when you go see a physician for a particular symptom, it is very likely that you already went to visit a website like a forum or Wikipedia to check if you can find something that would look similar to it. This is clearly a quantum leap compared to what medicine looked like 20 or even 10 years ago. Today we added one more layer to this consumerization of healthcare: the Internet of Things. Thanks to a new wave of startups trying to tackle this market, more and more activity trackers and various health and wellness objects are being marketed. This puts some computing power that wasnt even available to the richest hospitals into the hands of patients. In order to track your sleep theres no more need to spend entire nights at the hospital with wires all over your head. Thanks to a small head band you can do the same within the comfort of your own bed without being distracted by the hospitals environment. Some startups like Withings or Scanadu are trying to de-demonize hardware related to the health sector by using beautiful design and a prevention approach instead of a fix-it-only-if-its-broken one. Scanadu built one of the first real life tricorder, the famous device portrayed in Startrek that can instantly monitor your vital signs and have a diagnosis ready within a few seconds. With Scanadu, this science fiction dream has become a reality. More and more devices that were born in the consumer space are inspiring big medical devices manufacturers. They are using more and more attractive design and increase the quality of their products user experience. Needless to say that it is a great improvement for both the physicians, the patients, and therefore the society in general. On top of that, since people are getting more

20

and more concerned with their own health, they are gathering more and more data, which are incredibly useful to doctors and to all the healthcare actors. Indeed, those data are a big asset when it comes to developing new treatments, new drugs, or improving various medical processes.

4 - A new flow of data modernizing the healthcare system

Data are everywhere, they are becoming easier and easier to collect, and they are giving us more and more insights when it comes to knowing how our body works and how we can treat some conditions.
A

/ BIG

D ATA

Yesterday we were scared of people gossiping about ourselves, scared of the neighbors spying us. Today were scared of our privacy on social networks, were scared of companies storing our digital data and using them who knows how. Tomorrow were gonna be scared of our everyday life data beeing stored, exchanged and used automatically by objects and other way of recording our digital life. The question is: are we going to be really concerned about this new waves of big open private and public data? Are we going to be concerned about objects and doctors collecting and storing huge amounts of data stored online and exchanged on a centralized platform by many actors of the health sector? I am pretty sure that our generation, and the following ones at a bigger rate, wont be concerned at all about sharing data and about companies using them for marketing or research purposes. We will be more and more willing to give our personal health data to our doctors so they can share it with their peers and with others actors such as labs and hospitals. We can already see this trend taking off. The generations, which grew up in the 90s are more prone to use Facebook, Twitter, or any other social network. Those people, including myself are also less reluctant when it comes to give away personal data to companies. They all know that when you connect to a website or an app with Facebook or Twitter for example, personal data are surely going to be plugged from one pipe to another and they are willing to do it in exchange for time and for a better user experience. One click is always better than typing your information. They all know that our Gmail inbox

21

are constantly scanned by Google bots to check what were writing in order to display targeted ads. But still, it doesnt block them from using the Mountain View companys service. Why would they decide not to give their health data to someone trusted like a doctor or a health insurance? This is one sign of a lower level of paranoia among the 90s generation. Even governments are opening up despite concerns of some people against publicly available data. Indeed were just following the well known pattern of the birth and growth of new technologies and the fears associated with them. Big data are some outputs of those technologies and were just learning how to use them. Not only for commercial and marketing purpose but also for crucial social and medical researches. People are slowly accepting all this data mining and they are more and more willing to share their personal data like their weight, their blood pressure, or pictures of what they ate for lunch. As legislation and companies become more and more transparent about what theyre doing with our data, people will be less and less worried about sharing them. What is today a hot topic will probably be an insignificant one for our kids. I am glad to see this trend since its crucial for the development of the Internet of Things. This huge flow of data will revolutionize the healthcare system by allowing doctors and researchers to dig into them and to find trends that could help to cure some diseases for example. On top of that it becomes cheaper and cheaper to sequence a human genotype. This is truly a revolution. What you could do ten years ago for thousands of dollars, you can do it today for 99$ with the 23andme startup. This giant pool of genetics data will help big companies like pharmaceutical ones to develop new drugs, which will be more and more personalized because we do not all respond equally to various kind of drugs. This will also modify how healthcare insurances function. Since they will have more data on peoples health in general but also as individuals it will allow them to fine tune their price and to better serve their clients. Indeed, this kind of medicine relying heavily on data will be more preemptive than defensive. Therefore, the cost of healthcare will decrease dramatically for health insurances. By preventing costly diseases like diabetes or severe accident, insurance companies will be able to
save a lot of money.

22

/ ON

THE OPPOSITE SIDE D ATA

T H E I N D I V I D U A L I Z AT I O N O F

D ATA

: MICRO

As we already pointed it out, we will see an increasing amount of data that are extremely personalized. I am calling them micro data because contrary to big data, they are focused on data collected at the individual level. This will mainly appear as doctor Topol said in genomics. 11 People will have their genome read and coded by computers in order to extract extremely useful data. Topol made some research in genomics in order to advance individualized medicine so that each drug is engineered with the right amount of chemical components in order for the patients body to reply more efficiently to this dosage. Indeed, today, all drugs are the same. You can of course modify the dosage for some of them but it wont be done with regards to your genotype. Having your genome analyzed will permit an individualization of treatment and therefore a dramatic increase of drugs efficiency. This will disrupt the entire industry including health insurances because once again it will decrease the price of healthcare in general by permitting people to be treated in a quickly and efficient fashion.

11

Seen in the book by Topol Eric: The Creative Destruction of Medicine: How the Digital Revolution Will Create Better Health Care

23

REDESIGNING THE HEALTHCARE SYSTEMS

So far we have tackled the current landscape and mainly how the current system works. We saw some flaws and problems inherent to this system and why it is broken. Indeed, the healthcare system and the insurance one are extremely complicated and opaque. Transparency is not an adjective that can be applied to those. Inefficiencies are extremely common and who knows how much money is really wasted. Probably billions as the journal The Atlantic stated in one of its articles 12. Unnecessary Services Excess Administrative Costs Prevention Failure Ine!cient care delivery Inated Prices Fraud

10" 7" 14" 28"

17" 25"

Here is a graph breaking it down. This article was backed by a report of the Institute of Medicine (IOM). As we can see, the biggest wastes are found within the Unnecessary Services. People are going to the doctors for the wrong reasons and doctors are prescribing medicines and other interventions for the wrong reasons. People
12

http://www.theatlantic.com/health/archive/2012/09/how-the-us-health-care-system-wastes-750-billion-annually/262106/

24

dont have to pay for the amount of care they receive. Indeed its like a plan with an all-you-can-eat approach that encourages wastes and inefficiencies. In this section we will take a look at some trends that can improve the system and that can dramatically decrease the amount of waste. The first topic we will highlight is the EHR (Electronic Health Record) that have been promised since many years but are hard to implement. After that we will take a look at the current reform in depth in order to understand it and to see what it should tackle in order to disrupt the industry in the right way.

1/ Electronic Health Records and Health Information Technology

A

/ A

DEFINITION OF

E L E C T R O N I C H E A LT H R E C O R D S

(EHR)
The EHR concept is still at its infancy. Indeed, the concept is still under construction and it keeps evolving as time goes by. To make it simple, an EHR is a collection of medical informations attached to an individual or to a population. These digital information are collected by various actors of the health system and can be shared through various private or public networks. These records can theoretically be accessed from different machine with the right authorizations. This system is being implemented in different countries in order to modernize healthcare systems and to adapt them to the new technologies of our century. In this part we will discuss 2 different things : - Why using EHR? - What are the difficulties that such a system can encounter. 1/ WHY
USING

EHR?

Physicians and hospitals in general have been using classic paper folders for decades in order to keep track of their patients. Why would physicians and the actors of the healthcare industry in general be willing to move away from the status quo and to learn how to use a new tool known as the EHR or electronic health record. The EHR can transform the industry from a paper-based industry to a digitalized one that uses clinical and many different other types of information like lab reports and university research for instance in order to improve the quality of life of their patients.

25

As the Washington Post stated in one of its articles, more than half of the doctors in the US have now moved to an EHR version of their records 13. This means that the adoption rate of this technology is incredibly high in this country compared to others like France or Italy for instance. We will dig into three different kinds of benefits : the benefits with regards to the quality of care and the appropriateness of care, the benefits with regards to organization issues, and finally the benefits for the entire society. Lets start with the quality of care. Quality of care is defined as follow: doing the right thing at the right time in the right way to the right person and having the best possible results.14.Some research that have focused on the effect of EHR on the quality of care, the patient safety, the effectiveness and the efficiency of the care have pointed out the benefits of EHR. The studies shows that adopting the EHR means adopting more efficiently evidence-based clinical guidelines ("the conscientious, explicit and judicious use of current best evidence in making decisions about the care of individual patients." 15). Indeed there are many issues that can prevent clinicians and doctor to adopt these guidelines. For instance they could be not aware that a specific guideline exists or what this guideline actually says if they know it, they can also be aware of the guideline but they dont know when they have to apply it to a specific case, and finally there could be a lack of time when a patient visit them. If an EHR system is in place it can help to overcome these difficulties. For example, a study has found that a software reminding a doctor to administer a vaccine can increase the usage of influenza vaccinations from 0 to 35%!16 If those guidelines are followed thanks to the use of the EHR, it can dramatically improve the quality of care of patients and therefore keep the society healthy and in a good shape. EHR can also increase the efficiency of the system by decreasing the amount of resources that are wasted (equipment, human resources, drugs, etc.). For instance, without an EHR system,
13

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/05/23/meet-farzad-mostashari-the-bow-tie-bureaucrat-convi ncing-doctors-to-go-digital/
14 AHRQ.

National Healthcare Quality Report. Rockville, MD: Agency for Healthcare Research and Quality; 2004. AHRQ Publication No. 05-0013ed.
15

Sackett DL, Rosenberg WM, Gray JA, Haynes RB, Richardson WS (January 1996). "Evidence based medicine: what it is and what it isn't". BMJ 312 (7023): 712. doi:10.1136/bmj.312.7023.71. PMC 2349778.PMID 8555924.
16 A computerized

reminder system to increase the use of preventive care for hospitalized patients. Dexter PR, Perkins S, Overhage JM, Maharry K, Kohler RB, McDonald CJ N Engl J Med. 2001 Sep 27; 345(13):965-70.

26

redundant tests could be performed on a patient without the doctor being aware that the same test has been performed before. This participates to skyrocketing healthcare costs. An EHR system with a reminder feature can prompt a doctor that this test has already been done on a specific patient. On top of that, EHR can decrease the number of serious drug-related errors by 55%.17 When it comes to the effect on organization, EHR can help to improve many things. For instance it can increase the total revenues, decrease some costs but also some other benefits such as a greater ability to conduct research. The increase revenue can come from various place but mainly from less error in the billing processes of the healthcare actors. Indeed EHR can help theses actors to pinpoint wastes and also to capture revenues more efficiently and in a timely manner. On top of that, another non negligible advantage of EHR is to remind doctors that their patients need a routine checkout visit that can increase their revenues. For the cost saving part we can argue that having electronic records of patients can decrease the amount of human resources needed to manage them compared to the old fashioned paper-based system that can also be expensive with regards to supplies (stamps, paper, furniture, etc.). Some studies have also shown that an EHR system can help decrease the number of malpractices and therefore, to reduce the number of the claims related to them.18 Finally, we cant forget the societal effects of EHR. One of the biggest one it the fact that EHR can help to improve research processes and results. Indeed, because the data are electronically stored, it means that they can be easily retrieved and gathered in order to analyze them. This can lead to a better understanding and more discoveries of evidence-based practices that can in turn improve the overall welfare of the society by improving the health of its inhabitants.19This also means that data can be retrieved from anywhere in the world. For instance, an Indian hospital could download some data from a French clinic through the internet instantly.

17

Effect of computerized physician order entry and a team intervention on prevention of serious medication errors. Bates DW, Leape LL, Cullen DJ, Laird N, Petersen LA, Teich JM, Burdick E, Hickey M, Kleefield S, Shea B, Vander Vliet M, Seger DL JAMA. 1998 Oct 21; 280(15):1311-6.
18

Electronic health records and malpractice claims in office practice. Virapongse A, Bates DW, Shi P, Jenter CA, Volk LA, Kleinman K, Sato L, Simon SR Arch Intern Med. 2008 Nov 24; 168(21):2362-7.
19

57. Aspden P. Patient Safety Achieving a New Standard for Care. Washington, D.C: National Academies Press; 2004.

27

Thus, we have seen some of the benefits that comes with EHR systems. Of course the list is not complete and much more smaller benefits can be associated with Electronic Health Records. We will now take a look at some of the difficulties that such a system can encounter. 2 / W H AT
ENCOUNTER A R E T H E D I F F I C U LT I E S T H AT S U C H A S Y S T E M C A N

Of course, not everything is perfect in the world of EHR. Theres a lot of difficulties that such a system can encounter. Like every system that replace another one that was in place for years, there are many barriers that can block the adoption of a new system. Moving from paper-based record to electronics ones is an extremely hard task. Here we will talk about some of those difficulties without covering everything. We will tackle the financial issues, the problem of adoption, the privacy related to personal data, and finally workflow related issues. When it comes to financial issues, there are many factors that can be taken into account like the cost of adoption and the cost to implement the system, the cost of maintaining the system and the costs related to the fact that some revenue will be lost in the beginning due to a loss of productivity. Indeed, the price of buying and installing an EHR system is extremely high for an hospital or a physician. Moreover it is really time consuming and costly to convert the previous paper records into electronic ones. To maintain and keep an EHR up to date can also be extremely costly. For instance, some computers and other kind of hardware have to be replaced or installed in the first place and it has to be upgraded regularly. On top of that, we have to add the costs of training the employees or the physicians since this kind of tool is not extremely easy to use. There is also an incentive problem since some of the biggest benefits of an EHR is the diminution of the claim payments, which means that it benefits mainly the big health insurances. This is a big problem for some physicians and practitioners because the maintenance and upfront cost are quite high compared to the incentives related to EHR. One other big issue is the fact that the entire workflow of people interacting with the EHR is slowed down in the beginning since it is a completely new tool that requires a lot of training and

28

therefore, a lot of time to master. This is mainly translated into a productivity loss that declines over time but which impacts considerably the everyday work of physicians, clinics, and laboratories. When it comes to data privacy, the issue is more touchy since more and more people are extremely concerned about what big corporations are doing with their personal data. It is even more true for data concerning their health. These health data are more and more exchanged in between the healthcare system actors through EHR and the legislation makes it mandatory to use highly secured protocols to ensure that data wont be stolen or lost. This is a very important issue that needs to be tackled by EHR provider in order to create trust. Without trust people will refuse to use EHR and the system could be doomed to fail. That creates many problems for EHR providers because this kind of highly protected systems are very complicated to build and to maintain. Therefore, this increase the price of the software for the end-users.

B / A C O S T - B E N E F I T A N A LY S I S ( C B A )
SYSTEM

OF THE

EHR

As we have seen earlier, there are many benefits and many costs associated with EHR. This means that it would be interesting to do a cost-benefit analysis of this kind of system in order to see if implementing them is worth it or not. Of course this analysis will vary from one place to another but we will use it as a benchmark. According to many economists and managers, a CBA permits to: - know if an investment is sound, if it is a good idea to invest and to put our money in it in order to gain more benefits than it costs us. - it is also a good idea when you want to compare different projects. Is paper based health record cheaper and linked to more benefits than EHR? Is it the contrary? A cost-benefit analysis can help to answer this kind of question. In a cost-benefit analysis, the costs and benefits are translated into monetary value in order to be able to compute easily and to picture the overall costs and benefits. To sum up, a CBA shows if a project is desirable compared to another by comparing their financial values.

29

The main problem for care providers when it comes to decide whether or not to implement an EHR is that the return on investment (ROI) is not clear enough. An EHR system may necessitates a huge amount of capital for its implementation and then to maintain it overtime. We already talked about this kind of costs so we wont discuss them once again here. Here were going to study an example in order to understand why an hospital should or shouldnt engage into reforming its health record system. This example is here to illustrate the method. It can differ greatly from one system to another and from one place to another. Lets assume that the initial price to buy and implement the EHR is equal to $14,000 and every year theres a maintenance cost (upgrades, changing hardware, etc.). We also assume that the discount rate is equal to 10%.20 This table comes from the paper written by Tiankai Wang titled Running the Numbers on an EHR. Initial Inow outow Net Cash ow $12,500 Year 1 $4,500 $7,000 Year 2 $20,000 $3,000 $17,000 Year 3 $20,000 $9,000 $11,000 Year 4 $35,000 $3,000 $32,000 Year 5 $35,000 $3,000 $32,000

-$12,500 -$2,500

As we can see the net cash flow of this EHR goes from negative to positive due to what we said before (price of training, of buying the software and hardware, etc.)

II/ The new reform of the healthcare system in the United States
We already talked about the new reform of the healthcare system in the United States earlier but we will try to dig deeper here in order to understand it more thoroughly. We will first see if we are aiming toward a better system and secondly, we will analyze the issues that need to be tackled. In this section we will mainly talk about the Patient Protection and Affordable Care Act (PPACA) signed by the president Obama on March 23rd, 2010.

20

The discount rate is basically the interest rate that needs to be discounted

30

A / T O WA R D

A BETTER SYSTEM

The healthcare system in the United States is in an extremely bad shape and a big reform is needed if we want it to survive. We can classify the different parts of the system that need heavy reforms as follows (Gary Hirsch et al.): - How to access the system: this part needs to be more efficient. Indeed, if we want the system to work well we need to expand the spectrum of coverage in order for people to have a better access to healthcare - Containing the costs: costs of the system are skyrocketing to such an extent that its becoming unbearable for the U.S. economy - Increasing the quality of the healthcare system: some automated systems and processes to control the quality of the system and the competences of its actors are needed if we want a better healthcare system. The quality can also be increased by increasing the quality and the amount of information provided to the end-users. This can help them to make better decisions. - Prevention: we need to increase the amount of prevention in order to make diseases and accidents decrease. Promotion of healthier lifestyle might be the key for this but modifying peoples behaviors is something really hard. Especially at the level of an entire country. How well does the Patient Protection and Affordable Care Act stands here in order to find a solution to these issues? What are the primary goals of this act? The goal of this act is to enhance the quality of health insurances but also to make it more affordable to more people. The collateral of this, is to have a lower rate of uninsured by decreasing the cost of it for both insurees and the government. This is mainly done by requesting the health insurances to lower their requirements and to offer rates that dont increase insanely if the person has pre-existing conditions or depending on its race and sex. Another crucial goal of this reform is to replace quantity by quality by giving incentives to insurees in order for them to take care of themselves and to not over consume healthcare. This plan wants to achieve this by increasing the competition among health insurances.

31

Here is the exact list of the provisions of this act: - Guaranteed issue - an individual mandate - The so called Health insurance exchanges - Federal subsidies for low-income families - The expansion of Medicaid - Standards that must be met by health insurances - A modification in the medicare reimbursement in order to have better incentives Lets take a look at each of them more thoroughly. - Guaranteed issue: this means that health insurances cant refuse somebody just because this person had a previous medical condition. This provision also requires insurers to have the same rate (premium) for every insurees of the same age and location without looking at their sex or race. - An individual mandate: this requires people not being covered by an employer sponsored health plan or medicaid/medicare to have a private insurance policy. If the individual does not subscribe to a private insurance he risks a penalty. - The health insurance exchanges which is a marketplace within a state where people and businesses can buy and compare health insurances. The goal of this provision is to increase competition among health insurers in order to decrease premiums. - Low-income individuals will receive subsidies from the federal state. This increases the coverage rate. - In order to increase the number of people covered by Medicaid, the eligibility of the latter will be expanded (to be precise, it will include people with incomes up to 133% of the level of poverty). Unfortunately there have been many resistances from states not to pass this provision. As a consequence, states are free to choose their own level, which lies well below 133% in many situations.

32

- Standards that must be met by health insurances. In order to prevent abuses by health insurances, the government requires them to meet some standards. - A modification in the medicare reimbursement in order to have better incentives. Previously we had fee-for-service kind of reimbursement. Now there will be what we call bundled payment where just one payment is paid to an institution or a physician group covering a particular period of care. All these steps seem to be aiming toward a better system but there is a long road towards a great healthcare system and as we will see later, a better design is necessary in order to achieve it. These kind of reforms are baby steps and government interventions are not always the best way to solve a problem at such a big scale.

B / THE ISSUES

T H AT N E E D T O B E TA C K L E D

Of course, this reform is far from being perfect and many things have to be fixed. The main problem that have to be tackled is the overconsumption of healthcare. Indeed, the incentives are wrongly oriented. Even with the new reform, people are inclined to consume more and more healthcare since they pay an all-you-can-consume plan. That means that people want to be treated even when there is no reason for a treatment. A person might go to the physician for a cold for instance and maybe there is nothing you can do but rest. Nevertheless, people will want antibiotics and all sorts of medication in order to feel like what they are paying is worth something. There is no incentive to consume what needs to be consumed. Moreover there is no incentive to get healthy, people are getting money when they are sick or they get into an accident, not before that. Once again there is no incentive. What if you could get a lower premium if you take actions that keep you healthy? These are the right incentives and we will talk about them in the last part of this work. Another issue that is not really addressed by the reform is the way physicians get paid. Indeed, the money they get from insurances is correlated to the amount of care they give to their patients and the amount of medication they prescribe to them. How can a system rely on such processes in order to lower its costs? Physicians should be incentivize to keep their patient healthy and not for just treating them. They should be rewarded to help the system spending less. This could be achieved by modifying the reimbursement method. A physician should, for example, receive more

33

money for a prevention operation than for a treatment of a disease of one of his patient that could have obviously been discovered earlier. The education system of physicians needs to be updated in order for them to get used to all the new technologies that are available to them. Not only the physicians but also all the various actors of the healthcare system. This would lower the cost of moving from a paper-based system to an all digital one. Moreover the educational system is today centered around treating diseases and other condition and not around the patient and how to keep him healthy, which should be the crucial point. Treating should be a secondary priority. If we can tweak the system to make physicians and all the actors of the healthcare system understand this issue, the overall cost of the system would be extremely low compared to what we can observe today. Indeed, many diseases today are chronic ones. Like diabetes for instance. These chronic conditions are extremely expensive, they cost billions of dollars every year to treat. The irony is that these kinds of conditions are easily prevented if people would be more aware of the risk they can encounter by following bad habits (food, cigarettes, alcohol, etc.) and if they could receive incentives by following the good ones and by going to the physician and getting blood tests regularly in order to decrease the odds of getting sick. Finally we need to foster innovation within the healthcare industry by modifying laws and regulations that can be huge barriers to entry for small startups that want to enter this market. In order to do so, lobbying is needed and only big companies can have an impact. For instance, Google is a big lobbyist for having less strict rules and regulations. Another problem is that big health insurance companies are fighting for the status quo because they rely on the current model to make huge profits. They are heavy lobbyists and small startups can only enter niche markets and expect to grow from there in order to disrupt the industry. The government is impending innovation in many industries by forcing companies to comply with so many regulations. Of course we need somebody to verify the quality of products and services provided within the healthcare system but there are some limits that cant be cross in order to foster innovation. The United States is not the country with the highest barriers to entry when it comes to regulation and legislation in general (that is why we see more health startups in the U.S. than in France for instance) but this can be even lowered in order to disrupt the actual system and to allow the new generation to put a dent in the universe as Steve Jobs would say.

34

A N EW M O D EL OF HEALTH INSURA N C E : VA L U E - B A S E D H E A LT H I N S U RANCE POWERED BY THE INTERNET OF THINGS

We can argue that the healthcare system in the United States is not perfect and a lot has to be done. Nevertheless, the government is not the only player that can change things. As we already said, new entrants like startups can disrupt the system even with high barriers to entry. One side of the healthcare industry that can be heavily disrupted by new business models and innovative startups is the health insurance industry. The currents big companies are extremely bureaucratic and their inertia is incredibly high. Its really hard for them to innovate and they are based on a business model that is outdated and that favor the kind of reimbursements that lead to wrong behavior and to over medication. In this part of this paper we will try to demonstrate that a new kind of health insurance, evolving in the current environment can disrupt the system and increase the efficiency of the overall system by creating the right incentives. This new kind of business model is already starting to develop in the United States and is called value-Based benefits. A company called SeeChange Health is a pioneer of this new type of health insurance. Today SeeChange Health has more than a million members and this number keeps growing. We will later dig deeper into value-based benefits in order to see how they can affect incentives and how they can tweak peoples behaviors for the best. What is value-based health insurance? The concept is pretty simple, a value-based health insurance is an insurance where the cost of services are related to the value perceived by the patient. This is pretty straight forward, for instance, an healthy 25 years old who is a bit overweight could have his monthly plan to the gym (or a part of it) reimbursed by his insurance since it will make him healthier and it will decrease the chances of getting obese and of contracting chronic diseases like diabetes for example. On the other hand, the same individual wont be reimbursed for an MRI for instance if he doesnt need it (indeed, MRI are heavily overused in the United States and they cost a lot of money to the system in general).

35

In the new model I will develop, I will also integrate the Internet of Things because this recent trend has the power to help this new kind of health insurance to go in the right direction and to decrease transaction costs by allowing monitoring at home for instance. In this final chapter we will first do an economic analysis of value-based health insurance and see how the incentives can be way more efficient than regular health insurance models. After this first part we will design the model of health insurance we think could be the most efficient. Last but not least, we will see how this model can be integrated with the different arms of the healthcare system in the United States.

I/ Value-based health insurance: The proof of effectiveness from an economist point of view
The goal of value-based health insurance is to trigger the good behavior in order for people to use health services with high value. It doesnt mean that the cost of this service is cheaper but that this service will permit the patient to be healthier. Therefore, in the future, he will spend less with regards to health related expenditures. This kind of insurance will reduce the payment asked to the patient for high value health services that will improve their health drastically. Indeed this kind of treatment are extremely likely to decrease the odds of an adverse event in the future. These kind of adverse events are way more costly than the treatment needed to avoid them. On top of that we have what we call moral hazard in economic theory. Moral hazard is a situation where a person will act recklessly or without caution because the consequences of her acts are not fully internalized by this person. The cost will be supported by the insurance and the person wont act to avoid risks. It is a well known phenomena within the insurance industry. Value based insurance try to shift this kind of behavior by introducing higher co-payments (the insurance and the patient both pay). This follow the classic economic theory saying that people will only consume things if they provide them with a higher value than their cost. For instance, youre willing to pay a higher price for a good steak because you are a big fan of steak and it makes you happy to eat a really good one. The value in term of happiness is higher than the already high cost of the steak. The goal of a value-based insurance is to balance the co-payments in order to trigger the right behavior, the right incentives.

36

II/ A new model powered by the Internet of things

First of all, in this part we will take a look at some of the problem that are inherent to the American healthcare system and especially in the area were interested in. After this short summary we will talk about the design of a new kind of health insurance, a kind that will resemble to a giant hub where the patient is at the center, a hub integrated with many different blocks of the current system and therefore more efficient because designed specifically for this.

A/
THE

SOME

THOUGHTS

ON

THE

INHERENT

PROBLEMS H E A LT H

OF

CURRENT

H E A LT H C A R E

SYSTEM AND

I N S U R-

ANCES

If we think about self-diagnosis, the Internet of Things, healthcare system in the United States (but also everywhere else), and how this system is broken, we can say that theres a huge way to improve it. Lets breakdown some of the issues we can find in this system: - Most people do not desire to monitor their health before they get sick, which lead to poor prevention - There is very little communication (compared to what could be the efficient amount) in between all the agents of the system (doctors, laboratories, clinics, hospitals, etc.) - There is very little monitoring and almost no feedback loops after a visit to a doctor or to an hospital/clinic - Health insurances are not involved enough (as we have seen earlier) through their premium system, in incentivizing their clients We are going to study each point and the model will be articulated around them. I have first pointed out these problems in an article on my personal blog www.yoannlopez.net called Some Thoughts on a Reformed Healthcare System Powered by the Internet of Things.

37

/ THE

L A C K O F D E S I R E T O M O N I T O R O U R H E A LT H

This first problem is linked to our human nature. We hate to go to the doctor and we avoid to do so as long as we can until the disease or our condition has already worsened. An early diagnosis for a cancer or a simple flu is the key to a better and faster treatment. Unfortunately we do not desire to look for a good doctor or just to visit one when we actually need it without being aware of that. On the contrary, when you go to an electronic appliances store in order to buy a new TV or a new PC you usually check online what people say about the device, how is the competition, what are the characteristics you are looking for and so on and so forth. This usually never happens when you go to a doctor. There is no excitement linked to the novelty, no feeling of possession or enhancement of your lifestyle (we are talking about a routine visit not a visit when you are sick). It seems weird to me that we act in such a way. I am not blaming anyone since Im also one of those. I do not really enjoy going to the doctor. Fortunately, we can see more and more incentives and gamification entering unexpected fields. Why not the healthcare industry? Why not our health insurances? It could be a solution to trigger our desire when it comes to our health. And if you add on top of this gamification some real rewards, some great feedbacks from the doctors and all the actors youve visited to treat your condition, and a better user experience when you exchange with your health insurance and your doctor, then the entire process could be way more enjoyable. I am completely persuaded that that the Internet of Things can foster this desire. That is exactly why so many people are buying devices such as the nike fuel band, the Withings Pulse or the fitbit flex to track their daily activity and the Withings or fitbit scales to track their weight in the long run. There are more and more devices within the consumer electronics area trying to tackle some health issues. The consumerization of healthcare is also powered by this trend. People like rewards, they want to feel and see their progress and results. This could be applied to the healthcare industry and to health insurances more particularly and that could lead to a lot more prevention than what we are currently seeing.

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/ M I S C O M M U N I C AT I O N

IN BETWEEN THE DIFFERENT ACTORS

The second issue is the communication in between all the actors of the healthcare system. Here the health insurance could act as some kind of hub as we will see later when we will design the actual model. Indeed, when you go to a physician and lets say, you go to another one a year after for the same issue, its very likely that the two doctors will never communicate to each other. Maybe youll have a prescription to show to the new doctor if you didnt lose it before this visit, but nothing more than that. Some services have been created by young startups and by bigger companies like Google (Which failed) and Microsoft with Microsoft HealthVault which never really took off. The key, as they understood, is to have a cloud based personal storage that could be accessible with your permission by your doctor or any other actor of the health system like laboratories or hospitals for instance. What if the health insurance acted as this cloud storage and what if it was easy to move these data if we move from one health insurance to another? What if any actor of the system could get plugged to the health insurance and get the information it needs to follow the health of his patients with their legal consents of course? The transaction cost in term of information cost would be way lower than they are today. It would be easier to track ones health and to prevent a lot of chronic diseases like diabetes or obesity with the help of big data analysis gathered thanks to the integration with connected objects monitoring patients health.
C

/ A

LACK OF MONITORING AND FEEDBACKS LOOPS

The third problem is the lack of monitoring and feedback loops after a visit to a physician. This is especially true when it comes to chronic diseases where monitoring and feedbacks are very important in order to fine tune a treatment or a lifestyle to a condition. The Internet of Things could be in this case a very powerful tool enabling doctors to monitor their patients in real time and to communicate with them as easy as it is to send a text message or an e-mail. This could be linked to the gamification we were talking about earlier. If you receive encouragements from your doctor, youll be more likely to follow your treatment or to cut off your consumption of eggs and bacon. What is the role of the health insurance in this setting? The health insurance could act as the police man, the one who monitor that everybody is playing the game within the rules. To do so it can just

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use incentives, many kind of incentives exist like money incentives for example. Moreover, health insurances can monitor themselves their clients and set up some triggers that could warn people of possibilities of disease or any other conditions and prompt them before they get the condition to visit their doctor. This will save a lot of money for both the insurance and the patient. To conclude, and as we will see in the following part, the key is to find solutions to those issues and to coordinate them in the best possible way in order to coordinate everything within a health insurance. This is one solution out of many other alternatives but I think that its where its implementation could be the most effective and efficient. Health insurances need to take the patients experience into account, they need to cost-effectively and efficiently push the system to deliver high-care and care designed to every particular case because we are all different and we also differ in our responses to drugs and various treatments. It is very likely that the disruption will arise from outsiders since the inertia in this industry is extremely high. Fighting the status quo wont be easy but the disruption has already started since we are seeing more and more startups entering this area in the United States even though no health insurance hasnt disrupted the system in the way we are describing here. I am persuaded that building a new healthcare system is possible and can use health insurances as its new foundation. So far they have mainly been a bottleneck and this one has to be smashed really hard in order for the system to work perfectly. Obviously, the government and other actors have to work along them in order for the disruption to work but if health insurances ignite this engine, it could surely work. By integrating the Internet of Things into this remodeled system, we can create desire for the patients, we can gather an incredible amount of data, which can be share by all the actors across the value chain: the patient, the doctors, the clinics, the laboratories, etc. We have to break the silos that separate each actors. By gathering all those data and by computing them into a useful and readable output, we can surely make the system a lot more efficient. Transforming data into ways of improving our lives is already here and the results are encouraging. For instance, many users of the Withings body scale have lost an incredible amount of pounds. This in turn has permitted healthcare systems across the globe to save a huge amount of money (by preventing money spent on obesity-related conditions). We need to continue working toward this direction. We are the generation that will witness the disruption of the way we manage our health.

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B/ A

M O D E L O F I N T E G R A T E D H E A L T H I N S U R A N C E P O W-

ERED BY THE INTERNET OF THINGS

I have qualified this model of integrated because it is not a simple health insurance that reimburses its client when they are sick or when they have an accident but a complete hub where the patient is clearly at the center of all the attentions. Such a model has to include different facets. First of all this model has to be value-based and we will see the reason why quickly since weve already talked about that earlier. Second of all, this system should incentivize physicians and patients to act in a particular way. This system should be helped by the Internet of Things and we will study how. It should be a hub facilitating communication in between the actors of the entire health system where Software as a Service (SaaS) is its backbone. It should also be centered around the client who is also the patient and treat him as a regular business customer, which means with full attention and focused on every single details contrary to what we are witnessing today.
A

/ A

VA L U E

-BASED

MODEL

As we have seen earlier a value-based model seems to be the best when it comes to delivering healthcare because it delivers only when it is at a high value for the customer. In order to achieve this the insurance has to take advantage of the big data revolution. By this I mean that each treatment should be well analyzed not only the treatment itself but also its effects on different persons. For instance, a treatment for diabetes could work perfectly well for a person who is obese but not at all for a person who is not. This is only an example but we could use the giant flow of data coming from huge clinical trials in order to personalize medicine. In this model, the insurance would be at the center and it would be the agent pulling all those datas in order to serve their clients in the best possible way. Topol (2011) presents a personalized medicine based on peoples uniqueness in term of genes. Indeed, we are all different when it comes to our genotype and it means that their cant be a one size fits all kind of treatment that works perfectly. Of course, in the past, this kind of treatment for everybody was the only one possible due to the tremendous cost of performing genotype tests. But today, the cost of having your genes analyzed is dropping substantially and a huge amount of data are being collected. For instance, as stated earlier, the startup 23andMe co-

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founded by Anne Wojcicki (the wife of the co-founder of Google Sergey Brin) allows people to have their DNA tested for $99 and it is just as easy as spitting in a tube and sending it back to their labs. Imagine our healthcare insurances asking people to perform this kind of test through their own labs or through external ones like 23andMe and lowering their premium if they do so (giving them the right incentive). By doing that, the insurance would be able to use its huge data resources and crush it with some algorithms in order to see what kind of treatment would work the best for this specific patient. High value treatment would be delivered, perhaps not the cheapest but it doesnt really matter because in the long-run the health of the patient will be better and it will cost less to the health insurance. The customer subscribe to the insurance A DNA test is performed and the customers premium is lowered The test is stocked on the health insurances servers

A diagnosis is performed, data are collected

He sees a doctor afliated with the health insurance

The customer gets sick

The condition is pinpointed

Data are crunched and the best possible treatment is found

A high value, personalized treatment is delivered

As we can see, the technology is highly present in this value-based model. Probably much more than any current health insurance in the world. What is interesting is the fact that many companies like Amazon or Facebook are using personal data in an extremely efficient way for their business. Amazon is capable of making recommendations based on your previous purchases or just on the pages you visit and the click you perform on their websites. Facebook can push some ads tuned to what you really like and this is only the tip of the iceberg. Why dont we see more of this kind of data usage in the medical world and in the health insurance business? The first barrier is of course linked to privacy. Indeed, medical data are extremely protected by government regulation and it is really hard to handle them. For instance, the servers on which the data are stocked have to

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be approved by the government. These barriers are not impossible to circumvent but they are definitely slowing innovation in this business. On top of that, the big health insurances do not have any incentives to change their way of doing business since they are making huge profits today and disrupting their business doesnt seem necessary for them. This kind of innovation can only blossom from smaller companies and startups. The problem are all the barriers to entries in front of them. A huge amount of capital is necessary to start this kind of insurance and as said before the regulations are extremely drastic. B/ INCENTIVIZING
T H E A G E N T S T O P E R F O R M T H E R I G H T T R E A T-

MENT AND TO FOCUS ON PREVENTIVE CARE

Innovation in prevention should be tackled as soon as possible if we want to save healthcare systems across the world and not only in the United States. Indeed, today the system is focused on a sick-care model. There is no incentives for doctors, hospitals, laboratories and patients to be careful and to practice prevention. I am persuaded that the health insurance is the right organization capable to incentivize all the actors. The health insurance is right in the middle and knowing that all the agents of the systems are rational from an economic perspective, they will act in the right direction if we provide them with financial incentive. How can this work? Lets start with the doctor. The doctors are generally directly reimbursed by the health insurance and therefore, the institution has the power to nudge the doctor in the right direction. For instance, as said earlier, the insurance could have the ability to know which treatment works better for a very specific person and therefore approve or disapprove a treatment prescribed by a doctor or an hospital. All this could happen flawlessly thanks to new technologies. A SaaS (Software As A Service) could be provided by the health insurance in order to act as the backbone of the entire system but we will see this in another part of this work. Besides that, the doctor should also be incentivized by the health insurance to prescribe preventive care. For example, some financial rewards could be split in between the doctor and the patient if the doctor prescribes some preventive care like some sports lessons for a person on the way of putting on some weight or an appointment to a nutritionist for a person prone to diabetes (the genotype test can show that).

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On the patient side, the incentives for preventive care can also be extremely efficient as pointed out just above. Imagine if a part of your gym plan is payed by your health insurance. It seems quite extreme at first but if you really think about it, it is proven that exercising can lead to a better health. It is not rocket science. It is beneficial for the insurances patient and also for the insurance. The patient will be healthier and will be less sick in the long run (no overweight, less cardiovascular diseases, etc.) and, as a consequence, the health insurance will spend less in the long term for this patient. For x dollars spent today on preventive care, way more dollars are saved in the future. Moreover, Joshua T. et al. (2008), said that some evidence does suggest that there are opportunities to save money and improve health through prevention. Preventable causes of death, such as tobacco smoking, poor diet and physical inactivity, and misuse of alcohol have been estimated to be responsible for 900,000 deaths annually nearly 40% of total yearly mortality in the United States. Moreover, some of the measures identified by the U.S. Preventive Services Task Force, such as counseling adults to quit smoking, screening for colorectal cancer, and providing influenza vaccination, reduce mortality either at low cost or at a cost savings. Of course, we have to be extremely careful with preventive care for patients since it will save costs only if a big enough portion of the population screened would have been sick otherwise. The right conditions have to be screened and not all of them. In order to find the right ones, a cost-benefit analysis could be performed. Indeed due to the incredible development of some medical technologies and the decreased costs associated with them, it could be a better allocation of resources to treat a condition instead of preventing it. C/ A
MODEL POWERED BY THE

INTERNET

OF

THINGS

As we have seen earlier, the Internet of Things within the healthcare sphere plays a bigger and bigger role month after month. More and more devices focused on health and wellness are built around the world. More and more startups are entering this market, which was a niche a few years ago. Today, venture capitalists are extremely eager to financially back those startups and platforms like kickstarter (a crowdfunding website) are flooded by these new devices. The question is how can this sensors revolution be integrated into our health insurance model? First of all, we have to think about how those devices should be distributed to the insurances clients. They shouldnt be mandatory but people should be incentivized to use them. The in-

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surance could, for instance, tell its client that if he/she uses it regularly it could decrease his premium. As a consequence, people would be more willing to use these devices on a regular basis. Of course the data collected by these connected objects should be share directly with the patients doctors and they should be extremely well protected. The insurance could, on its side, collect the data anonymously in order to add more data to its huge pool for performing some data analysis. Thanks to this collected data, the doctor could follow his patients health more easily and continuously. This could be of a big help when it comes to diagnosis and prevention. Is this something that can be imagined? The answer is clearly yes because companies like Withings are already starting to work with big health insurance companies or big corporate accounts in order to provide them with these objects for tracking their clients/employees health. This proves that the trend is clearly going where I am talking about. An health insurance could produce its own connected objects or externalize this production to another company in order to track their clients health and to prevent and treat them more efficiently through their affiliated physicians, laboratories, and hospitals/clinics. The question that remains is: what kind of connected objects should be used. Of course, a connected scale is perfect to track obesity or overweight, two diseases costing billions to the American system. Warnings could be sent automatically to doctors when an upward trend is found. Activity trackers are a second family of devices very helpful to follow weight related conditions or sleep disorders. Indeed, people sleep with those devices and patterns can reveal some conditions. Connected blood pressure monitor are extremely useful for people with high or low blood pressure conditions because they can perform the measurements right from the comfort of their home and at the best time of the day. The data can be directly pushed to the doctor and he can follow his patients blood pressure on a daily basis, augmenting the odds of detecting conditions and to see the efficiency of a particular drug or dosage of drug. These are the kind of devices we can already find today in electronic shops. But in the future those devices will be even more powerful and useful. Imagine a connected toothbrush able to detect cavities and other dental related conditions. The toothbrush could automatically book an appointment with your dentist or at least the dentist could directly send advices to his patient, like, be careful to what youre eating because the concentration of x in your mouth is too high. A person who needs constant heart rate measurement could also have a specific device permitting him to have this vital sign checked and the data sent in real time to his doctor and in case of emergency or odd behavior, the doctor or hospital could act quickly. It

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could also increase the efficiency of the diagnosis since the heart rate monitored continuously can give a way bigger amount of useful information than sporadic measurements. These exchange of private information could seem extreme but some decades ago it was weird for people to exchange some other kind of information that seem appropriate today. Our societies are evolving and if exchanging these information with our doctors, laboratories, health insurances, and hospitals can be beneficiary for our personal health, people will be willing to provide them to these actors. We are already seeing people tweeting their weight automatically when they step on their Withings scale or people doing the same with their hearth rate on their Facebook account. Were at the age of more personal transparency, which is not always a good thing of course, but when it comes to our health, if our information are kept secret just like the information collected during a visit to the doctor are kept secret, there is no reason not to embrace this kind of methods if they can improve the health insurance system and our health in general.

D/ A

MODEL WHERE

S A A S ( S O F T WA R E

AS A

S E RV I C E )

IS ITS

BACKBONE

SalesForce has revolutionized the Customer Relationship Management (CRM) industry by implementing a completely different approach than its competitors. They believed that a solution in the cloud would be far more efficient than a software you would have to install on your computer and update from time to time. Everybody was laughing at them when they did their first minimum viable product. Today, SalesForce is the leader of its sector and the competition is now following them to survive. Providing a solution in the cloud, or a SaaS as it is known in the IT jargon, has many advantages. First, from the business model point of view, it allows company to flatten their revenues by proposing plans and not a one time payment followed by sporadic payments for updates. The total value of a customer is therefore higher than in the software industry. From the customer perspective, it is a great opportunity to have a better experience since updates are deployed efficiently and effortlessly, nothing has to be done by the customer. The only thing that has to be done is to connect to your account and thats it. On top of that, no need to install a software on each

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new computer or device. Its accessible from anywhere as long as there is an internet connection. And still, without one, there is an offline option that permits to continue to work. As a result, I believe that this model of health insurance should rely on SaaS that it could provide to the entire agents orbiting around it. The doctors, the laboratories, the hospitals could use this solution to communicate with each other and with the health insurance. The information cost would decrease drastically since everything would be online. Imagine a patient who has to go to the lab in order to get a blood test. The blood test is made by the lab, the results are automatically uploaded into the SaaS database and sent to the doctor and to the patient on the fly through the SaaS. No need to wait and to send paper documents. All the actions would occur online. The patient would also have access to this SaaS from his own computer or tablet/smartphone and see its results. The doctor could analyze them and send a message directly through a secured communication platform built in the SaaS. Lets assume that the patient in question has a condition that necessitates the intervention of more than one doctor, lets say that three different specialists are following this complex patient. With the SaaS they could all have access to the results and observation of the others. They would all have access to exams results at the same time and discuss together. This platform would help dramatically the communication in between doctors and the creation of more accurate diagnoses. On top of that, the SaaS could be a dashboard for the patient and the agent of the healthcare system (insurance, doctors, labs, etc.). This dashboard could integrate a huge amount of data including the one collected thanks to the connected devices we talked about earlier. This could be a dream situation for most doctors today since the information available today is extremely scattered across different means of communication (paper, computers, EHR, etc.). Miscommunication is happening all the time (when communication actually happens) and it leads to too many deaths every years. Of course the SaaS solution could be provided by another company and not the health insurance but as said earlier, I want the health insurance to act as a hub in order to integrate the various element of the model described. This is extremely important because the health insurance is the one having the biggest incentives to have healthy customers. This position is arguable but I truly think that the right model of health insurance should be designed as such.

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E/ A

M O D E L W H E R E T H E C L I E N T I S A T T H E C E N T E R O F A L L A T T E N-

TIONS

Today, health insurances clients are definitely not the center of all the attentions of these giant companies. This is kind of strange since it should be the exact opposite. Companies like Amazon, Apple, or Airbnb are putting the customer right in the middle and each and every decisions are taken with the customer in mind. If it affects negatively the user experience, then the idea is put aside or simply killed. Health insurances do not really think about the patients experience. Customers experiences are usually described as being awful and extremely frustrating. Some situations take months to be resolved and the customer assistance is pretty poor in this industry. In the model I envision, the health insurance would take the same approach as companies like Zappos or Amazon. The main goal of those companies is to make the customer happy. It should be the same for the health insurance. Having user friendly processes to treat claims, following patients during all the process and have all the experience described earlier extremely easy to follow and to adopt.

To conclude, this model is extremely integrated as weve seen. It takes the approach of companies like Apple, which thinks that for the user experience, the integrated model is more efficient. This system could also be less costly for everybody. As we have seen earlier, adverse selection can be extremely costly for health insurances. Thanks to this model and its characteristics (prevention, health tracking, etc.) the adverse selection can be extremely diminished.

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CO NC LUSION
Through this paper, we have seen that the healthcare system in the United States is in a pretty bad shape. It is pretty much the case in every country across the world. This is due to a complicated mix of different factors. In the United States the private insurance industry is fighting for the status quo, an incredible amount of lobbying in Washington is performed by them in order to shape the legislation into what they want in order to continue to serve their client as poorly as possible while making huge profits without increasing the health quality of their customers. We can see on this graph that the insurance industry is second after the Parma/Healthcare/HMO industries.

Obama has started a new reform but the changes that are gonna happen are not likely to disrupt entirely the system and to make it more efficient as we said.

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Many new technologies are appearing today such as many new devices within the Internet of Things area. Many of these devices are devices that can track the human body in numerous ways. New technologies are also emerging in the patient management sphere like electronic health records software (EHR). SaaS solutions are becoming the norm in other industries but not at all in the health system. As said earlier, all these new technologies could all be integrated within an health insurance. The model described earlier doesnt exist yet and is only hypothetical. It surely can emerge but the question is how. I have been thinking about that and my guess is the following: in order to succeed, a company cant just say Im gonna start this model from scratch and deliver it in its entirety. On the contrary, the company wanting to tackle this should start by responding to the problem of a small market or even a niche market. For example, developing a SaaS software for doctors or dentists. But from the very beginning the company should have a moon shot in mind. Google for instance from the very beginning said that it wants to organize the worlds information and to make it accessible to virtually anybody instantly. Google started by building a search engine but slowly it evolved into a way bigger information company scanning entire libraries and mapping the world with an army of cars for instance. A company aiming at becoming this kind of insurance should start by a simple product and as it grows it should work on its moon shots. When the company has enough capital to become an insurance company it could get a first foot into this industry by providing its services for one city for instance. It could therefore test and iterate the model in order to fine tune it. Are we gonna live long enough to see this kind of model disrupting the healthcare system? Are new entrepreneurs bold enough to have this kind of idea? Are regulations gonna evolve in the right direction? Only the time will say. It is probably a good idea to think that a crazy person will try to disrupt this industry and the best way to illustrate this is to quote one of the best Apple ads ever made: Here's to the crazy ones, the misfits, the rebels, the troublemakers, the round pegs in the square holes... the ones who see things differently -- they're not fond of rules... You can quote them, disagree with them, glorify or vilify them, but the only thing you can't do is ignore them because they change things... they push the human race forward, and while some may see them as the crazy ones, we see genius, because the ones who are crazy enough to think that they can change the world, are the ones who do.

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