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There is a modern “gold rush” taking place within the United States, not too dissimilar to the one that occurred during the mid-19th century. This gold rush is having a substantial impact on the U.S. economy and many are jumping in to stake their claims. But instead of individuals mining for gold, today they are trying to “hit it big” in the continually growing health care sector. With so many individuals and companies looking for revenue in untapped markets, a new way of thinking about the traditional healthcare business model has arrived.
The health care sector now accounts for roughly one-sixth of the U.S. economy. This means that innovation and entrepreneurial spirit will drive revolutionary changes to how healthcare is delivered to patients. New technology such as pocket diagnostics, vital-monitoring wearables and smartphone apps that summon providers are creating excitement and attracting investment dollars. The Autumn 2015 strategy+business article “Staking Your Claim in the Health Care Gold Rush,” examines ways in which the health care delivery is evolving and how these shifts have inspired both individuals and companies to rethink their competitive positions. Additionally, in response to the gold-rush-like events that are unfolding in the healthcare sector, the article presents two new business models that have emerged as a potential response to health care’s expanding presence in the U.S. economy.
According to the authors, how patients and physicians communicate has evolved thanks to the expansion of mobile communications and information technology. This change represents one of the current shifts occurring in the healthcare field. Gone are the days when doctors, nurses and ancillary providers would rely solely upon a paper chart to understand the patients past medical history.
Today, patients and physicians are able to communicate more fluidly and more intimately through interconnected electronic medical records and smartphone applications. Moreover, health care delivery is expanding beyond the hospital or private office, supporting an ever-present digitized view of a patient’s health which can be retrieved and examined instantaneously. Finally, in response to changes in insurance plan design and reimbursement, the authors detail how consumers have become more important and empowered because they are financing a greater share of their own healthcare. As a result, healthcare services are beginning to transition to more of a consumer service.
With technology, modernization and reform influencing the dynamic healthcare sector, new markets have emerged creating new opportunities to profit. Similar to the original gold rush of the past, the authors describe two new business models that have emerged to address the changing demand of consumers.
According to the article, “gold miners” and “bartenders” have emerged to meet the new competing demands of the healthcare industry. A “gold miner” primarily takes ownership of healthcare by creating value through improved management of populations who use health services the most. Examples provided include:
According to the article, “gold miners” such as Aetna, Kaiser Permanente and the Cleveland Clinic effectively coordinate care by leaning on technology and community support to derive more timely and cost efficient clinical outcomes. This business model tends to be more fitting for established healthcare systems that encompass a large patient base and rely on generating profit through population healthcare management. Furthermore, “gold miners” see added value by improving routine healthcare processes by connecting new technology. Finally, the gold miner business model is more traditional in the sense that it still allows healthcare providers to make decisions that are then followed by patients.
The “bartender” strategy described by the authors represents an entirely different approach compared to “gold miners.” “Bartenders” disrupt the traditional model of doctor-patient interaction by giving patients greater control over the care they receive. Examples provided include:
According to the article, the bartender business model is one that new market entrants gravitate towards because of its consumer-oriented approach. Non-conventional players ranging from Apple to Walgreens are able to tap into new markets by creating products with a narrow focus. Unlike the gold miner business model where new methods drive results, the bartender creates a customized experience through new services, offering advice, or building upon doctor-patient relationships.
While distinct, the authors explain that these two new models of business are not at odds with one another. In the 1840’s, gold miners relied on bartenders just as bartenders relied on gold miners. This cooperative relationship has created a natural synchronicity in today’s market as well. One example of this is how a patient with a specific condition can be treated in two different ways. The gold miner model will follow the approach that allows the physician to develop a rapport with the patient and then use technology to tailor a specific treatment plan to that patient that entails coordination of EMR-linked providers. On the other hand, the same patient treated by the bartender scenario would have wearable devices or a phone app marketed directly to them, giving them more control of their own treatment.
This article examines the shifting dynamics currently taking place within the healthcare industry. The evolving market has changed how patients interact and communicate with health professionals. Today, new technology and products are being applied to the healthcare process for a more interactive and tailored experience. At the same time the healthcare data is being used more seamlessly in today’s healthcare environment with patients becoming more engaged with their own health treatments. This has spurred a new way of thinking about the traditional healthcare business model.
According to the authors, “gold miner” and “bartender” business models are able to meet the new competing demands of consumers and tap into unexplored niche markets in an effort to stake claim in new profits. In a naturally competitive environment, both services complement each other and are effective at keeping pace with the growing healthcare sector. The gold miner model represents the much needed progress that will keep large population health management organizations competitive. Likewise, because of its strategy to utilize technology to create personalized healthcare, the bartender business model will further empower consumers to take greater responsibility for their own health.