Every time there is a national dialogue surrounding health care, the conversation seems to focus only on what the government can do to lower costs and expand insurance coverage. And yet, while the discussion has been ongoing for decades, nothing has ever been dramatically improved by this approach. In fact, things are arguably far worse than they were to begin with. So maybe instead of continuing to think inside the box, it’s time to completely change the conversation we are having.
Rather than looking to Washington to craft policy or mandate insurance coverage, we need to completely rethink the way we view health care. If we really want to foster an environment where innovation can occur, we ought to look to tech innovation, rather than bureaucrats. And this is exactly what has been happening elsewhere around the world.
In India, where health care innovation is progressing dramatically, telemedicine is a thriving market. In fact, it has been growing at a rate of 20 percent annually and is expected to be worth $32 million by 2020. Part of the reason the concept has taken off in India is due to the fact that there are so many people are living in rural areas without convenient access to a doctor or hospital. And with so many people in demand, the market for accessible was born out of need. Digital health care allows doctors to connect with their patients remotely, which in turn expands access to health care. And since digital visits also come with a lower price tag than traditional visits, this method of care is available to almost everyone.
The concept of telemedicine has yet to really take off in America, and there is almost no logical reason for this. According to the Pew Research Center’s 2017 data, 77 percent, or three-fourths of Americans own smartphones. And with these small devices, Americans essentially hold the entire world in the palm of their hand. Modern technology has given us instantaneous access to almost anything and anyone. It is almost astounding, then that we have not taken a digital approach to health care.
Telemedicine is not necessarily a new concept. In fac,t the term was coined during the rise of the telephone, though today’s concept is drastically different. To be sure, telemedicine is not the same thing as typing your symptoms into a WebMD search. Telemedicine utilizes smartphone apps and video communications to bring medical care to those without convenient or regular access.
When an 80-year-old rancher in rural Alaska begin to feel his lungs fill with fluid, he feared the worst. Years of dealing with a heart condition had taught him to pay close attention to problematic warning signs that trouble was coming, but visiting the emergency room was easier said than done. The nearest hospital was over an hour away and without fully understanding what was happening to him, he was uncomfortable getting behind the wheel. Of course, this meant he would have no other option left other than calling an ambulance.
Anyone who has ever been stuck with an ambulance bill knows all too well just how expensive it can be. In one instance, a man was shocked to learn that his two-mile ambulance ride came with a price tag of $2,700. Another patient was left with a bill for $3,600 for a four-mile ride. Understanding these costs, the rancher was reluctant to call 911 and have pay for an hour-long ambulance ride without getting a medical opinion first. Luckily, telemedicine came to the rescue.
The rancher picked up his smartphone and initiated a video call with his doctor. And after the doctor had assessed the situation and analyzed the vitals via a smartphone app, the rancher was relieved to learn that no emergency room visit was needed. Instead, the doctor prescribed new medication and improved within a few days.
But country dwellers aren’t the only people who can benefit from telemedicine. Seniors with difficulties moving around would benefit from the ability to communicate with their physicians without having to leave their homes. Additionally, this form of “office” visit would reduce the costs of care for everyone. This would also benefit younger adults who are less likely to have health insurance and who are also less likely to routinely visit the doctor.
Millennials and Telemedicine
The Obama Administration spent a great deal of time and money trying to convince millennials to sign up for Obamacare. But no matter how hip their targeted ads may have been, many young people were more willing to pay the fine instead of purchasing health insurance. While headlines touted that young people simply couldn’t afford health care, they neglected to mention that many of us just didn’t want it.
And while young people are less likely to have insurance coverage and less likely to schedule routine checkups than older generations, they are more likely to make use of telemedicine. Millennials have come of age in an era where everything we want is available on demand with merely a tap of a screen. This has led to an impatience when it comes to waiting on the government to innovate.
Previous attempts to make telemedicine mainstream have focused on older clientele, but the fact remains that millennials are five times more likely to use new technology than their older counterparts. And when it comes to digital health care, 60 percent of millennials are already using it.
Millennials have been dubbed the most stressed and anxious generation, and this appears to be true. Not only do young people have multiple side hustles, they also are engaged in many passion projects, making it hard to go out of your way to visit a doctor. But making doctors available through smartphones has been a game changer. In fact, the area where this has grown the most is in mental health. Thanks to digital therapists, many millennials have been able to bypass pricey mental health office visits with affordable options. And since telemedicine is so much cheaper, there is actually no need to purchase a traditional insurance policy.
Without insurance, an in-person visit to the doctor can cost up to $160 whereas telemedicine runs a cost of about $40- $50 per visit. Of course, this has actually resulted in Millennials using the service like Uber, scheduling visits every time there is a small concern. And while telemedicine skeptics have used this phenomenon to discredit it, the bottom line should be about consumer choice, not costs per visit, which is yet another reason why insurance should be left out of this.
When your choice is dictated by coverage, but since many millennials are choosing to pay out of pocket for the use of telemedicine, then it is no matter how often they are choosing to use it. Even so, millennials willingness to adopt this technology might be the key to broader adoption.
Why Hasn’t This Caught On?
It is shocking that this concept has not caught on quicker, given its cost benefits and quality of services. But there are certain elements holding it back. For starters, regulatory burdens have caused many states to step in and require additional licenses before physicians can engage in telemedicine. In certain states, Georgia for example, digital eye exams are prohibited.
Additionally, since many insurance companies do not offer coverage for digital visits, many people simply don’t know it is even an option. And since many people steer clear of care that isn’t covered, it has had a hard time catching on.
There are also concerns over the quality and safety of care, but telemedicine has been used by many doctors for years and has been proven to work. In fact, Doctors Without Borders relies on telemedicine. The Wall Street Journal reports:
“Five to 10 times a day, Doctors Without Borders relays questions about tough cases from its physicians in Niger, South Sudan and elsewhere to its network of 280 experts around the world, and back again via the internet.”
At this point there is almost no reason for this technology to be more widespread throughout the country.
The Future of Telemedicine
While many advocates of telemedicine envision a future where insurance companies provide coverage, maybe it’s time to start thinking of a time when insurance is not the end all be all for health care. Health insurance is such a mess, no one knows the cost of care anymore. I can’t ask my doctor how much it would cost to set a broken bone because it is completely reliant on my coverage. When care is covered by insurance, it ceases to respond to actual market demand. Currently, the cost of telemedicine is lower than a doctor’s visit without insurance and not much more than a typical copay with insurance. Allowing it to be included in coverage could very well result in increased prices.
Instead of trying to fix our broken system it’s time to practice some creative destruction and abandon the old ways in favor of new tech-centered approaches to health care.
Mention seasteading at a party, and you will likely get the same glassy-eyed stares that the topic of Bitcoin garnered five years ago. Of course, by now most of us understand the revolutionary implications of cryptocurrencies and blockchain technology. But the significance of seasteading is, unfortunately, still lost on some.
For anyone reading this with glassy eyes of their own, seasteading “is the concept of creating permanent dwellings at sea, called seasteads, outside the territory claimed by any government.” And while seasteading offers hope for a future where individual sovereignty is protected and out of reach of government abuse, it also provides ample opportunity to reinvent the way we view health care innovation.
Regulatory Burdens Inhibit Innovation
As developed and prosperous as America is, its health care system is severely lacking. And while supporters of government intervention will tell you this is because the private sector has too much power and influence over our care options, this is simply not the case. In fact, much of the reason that our health care system is both inefficient and overpriced is because it is one of the most heavily regulated sectors.
The approval process for new drugs, treatments, and medical devices is both pricey and rigorous. This makes it exceedingly difficult for any new progress to be made quickly. In addition to the 1,000 pages of paperwork that must be completed during the application process, it can take up to two and a half years for the government to grant approval. And this is assuming that the entire process runs smoothly which, given the nature of government bureaucracies, is not always the case. Not to mention, prior to 2012, all applications for new treatments had to be submitted through the mail, only adding to its length. It was not until recently that the FDA updated its process to allow online submissions, symbolizing just how outdated the government truly is.
As far as costs are concerned, the Tufts Center for the Study of Drug Development projected that the approval process costs a whopping $2.9 billion. This presents a huge financial strain for smaller companies that are not as well funded as larger pharmaceutical brands.
And while governments often defend this process by saying that they are responsible for protecting health care consumers against fraudulent or potentially dangerous treatments, the truth of the matter is that the regulatory burdens placed on the health care sector harm those who are in most need of care.
Accessibility of Care
And in the absence of FDA approval, patients suffering from life-threatening illnesses are forbidden from even experimenting with potentially life-saving treatments, lest they be viewed as criminals. “Right to try” laws seem to be gaining more popularity as of late, which is a good signal that many are starting to see the absurdity in telling terminally ill patients that they cannot take every step possible to ensure their survival.
But those facing the prospect of dying, and those living with chronic conditions, do not have the luxury of waiting on the laws to change or for the FDA approval processes to be completed. And this is where foreign governments have had an advantage. The use of medical tourism has surged over the last decade, as many North American and European health care consumers have chosen to go abroad in search of more affordable and higher quality care than is offered in their own countries.
India, for example, has become a beacon of state-of-the-art heart surgery. In America, heart surgeons are limited in the number of operations that can be performed each day. But free from the regulatory burdens that have prevented American physicians from being able to meet the demand of those needing heart surgery, Dr. Devi Shetty and his team of expert heart surgeons are able to perform around 300 surgeries a day. This is in contrast to the 32 surgeries per day performed in most American facilities.
Dr. Shetty’s famous Narayana Hrudayalaya Heart Hospital has also managed to dramatically slash surgical costs while offering higher quality care than we experience in America. This has resulted in many foreign patients traveling to India for cardiac care. Even when the cost of travel and lodging are factored in, these patients still save money traveling to India for heart surgery.
But what if patients didn’t have to travel so far to receive this level of care at an affordable cost? It was precisely this inquiry that led Dr. Shetty to open a medical facility on the Cayman Islands. Health City offers patients living in neighboring countries, and all over the world, a place to more easily travel to receive affordable, high-quality care.
While islands provide a more accessible solution than, say, traveling to India, the possibilities are still limited to existing islands. But seasteading, on the other hand, offers the possibility of setting up floating man-made islands almost anywhere in the ocean, drastically expanding the accessibility of care. And therein lies the beauty and potential for seasteading to disrupt the stagnation of not just the American health care system.
The Seasteading Solution
Currently, 45 percent of the earth is free from any government jurisdiction. And it is precisely this lack of governance that makes medical innovation possible. Since the sea is unclaimed territory, creating medical facilities, whether on ships or floating islands, allows medical innovators to bypass the regulatory processes that are keeping patients from receiving the care they need.
Two seasteading medical pioneers, Allison and Chris Heddon, are on a mission to show the world how seasteading can create a more innovative future for health care.
In Joe Quirk’s book Seasteading: How Floating Nations Will Restore the Environment, Enrich the Poor, Cure the Sick, and Liberate Humanity from Politicians, Allison, who is the vice president of Resonance Medical, which is described as a “software company that helps translate the sensory world into electrical signals that the brain can better understand” speaks of the importance of health care seasteads:
By taking our medical research offshore and partnering with the right individuals, we have a unique opportunity to efficiently and safely reshape the regulatory pathway… Through collaboration, we can set an example of how medical research can be conducted in the hopefully not-so-distant future. I believe that seasteading is the first step in a new regulatory paradigm that ensures patients have access to life-saving treatments without having to wait years for the drug or medical device to travel through the US regulatory pathway. In no way does this mean that testing and assessment on a seastead would be lax or haphazard. Rather, it is easier for a smaller organization to move quickly and with agility than a larger, government-run department.
Allison Heddon’s husband, Dr. Chris Heddon, who is the Founding CEO of Resonance Medical and an attending anesthesiologist, echoed her sentiments and spoke of the regulatory burdens placed on the medical sector saying:
If you’re in an industry like medicine, where I spent most of my professional life, you see that we have a bag of bricks attached to our legs. And that’s all regulation. I think it’s become obvious that one segment of business, namely Silicon Valley, is taking off, because they’re so much more efficient, and we’re left behind. There’s a disparity between the speed at which information technology is improving, the speed at which medical technology is improving, and it’s holding humanity back.
I think it’s important that we speed that process up and show people that there’s a better way. Seasteading is a way to illuminate that disparity, to become the lighthouse on the hill that everybody looks to for innovative medicine and other highly regulated industries. It’s very important. I think it’s a moral imperative.
While all this sounds great, there are still many who worry about medical research conducted without the oversight of a regulatory agency like the FDA. But just because medical research conducted on seasteads wouldn’t be subjected to the same laws doesn’t mean that quality would suffer. On the contrary, Allison said, “If the team is not unquestionably better than what the government has put together in the FDA, then it’s not worth undertaking.” She later added, “Obviously, safety and efficacy would be top priorities on a seastead research facility, just like the land-based IRBs [institutional review boards]…”
Backing up his wife’s statements, Chris added:
Only excellence and a proven safety record over time merit trust. The first people who choose to be treated are going to be pioneers, and it’s going to be up to them to do their own research on the team behind the seastead’s research. If the team is top notch and has excellent backing, that’s a good sign, but those criteria go for almost anything. I think that seasteads will have a higher burden of proof than a typical research institution, so it will be important to be extraordinarily open and welcoming to interested regulatory bodies. If you want to set yourselves up as a model for how things should be, you subject yourselves to scrutiny willingly.
In addition to a commitment to quality and excellence, Allison does not view the work she and Chris are doing as being at odds with the FDA and the federal government. Instead, she views their work as complementary to the that of the government:
Our proposed use of seasteading for medical research will be designed to supplement the FDA and shift some of the regulatory burden away from their overworked team and to a more agile regulatory option. If properly organized and with careful design, seasteading has the potential to alleviate some of the stress on regulatory agencies by taking on medical research. Today promising drugs and medical devices take years to get to the market. Unfortunately, this lengthy and slow process often keeps potentially life-saving treatments out of the hands of patients who could benefit greatly from them.
A Healthy Future
Our health care system is overburdened by regulation, and health care consumers ultimately pay the cost. But perhaps, if the government begins to recognize that American consumers are traveling abroad for care in order to escape the red tape and high price tag of the U.S. health care system, they will be encouraged to deregulate in order to compete. Either way, it is clear that the solution to fixing our broken health care system will not come from Washington.
But health care pioneers like the Heddons and Dr. Shetty are proving that medical care is not something that needs to be controlled by the state in order to benefit patients. But rather, real reform will come from the freedom to innovate and bring health care into the modern era. And seasteading provides the opportunity for a healthy future, where patients are in control of their care and free from government restraint.
Leaving the comforts of a salaried, nine-to-five office job and entering the world of freelance work was an exciting decision for me. But it also presents some unexpected challenges when it came to health care.
As someone who has always enjoyed employer-provided health benefits, the prospect of having to pay out of pocket for medical expenses was not something of which I had any prior knowledge. But finding myself in a position where I was more or less forced to get creative about my health care options has been an eye-opening experience.
As my last day in a traditional office setting drew closer, I began to worry about losing my health insurance. Making sure all my ducks were in a row, I placed one final order of contact lenses before I joined the ranks of the uninsured.
Feeling rather proud of myself for getting ahead of the problem, I was disheartened when 1-800 Contacts emailed me to let me know that they could not fill my order. While my prescription was still good for another month, the brand my doctor had prescribed to me had been discontinued. Normally, this would be an easy fix. All I needed to do was call my optometrist and have him write me a new prescription for a different brand.
But unfortunately, my regular doctor was not able to get me in for an appointment until after my insurance coverage ended. And without optical benefits, paying for a routine eye examination was going to be a huge financial burden. Luckily, the wonders of technology have given options to those who, like myself, find themselves without health insurance.
Without vision coverage, getting a new prescription for contact lenses was going to cost me several hundred dollars. And with only two lenses remaining in my reserves, my time and my options were severely limited.
After explaining my plight to a 1-800 Contacts customer service representative, he quickly responded that there were other options available. So long as I had ten minutes to spare, I would be able to take an eye examination online from Opternative for only $50. This seemed too good to be true and my first thought was: “is this legal?”
While some states do prohibit online examinations, many have embraced the practice. Not only is this more convenient for millennials, who are infamously flaky when it comes to visiting the doctor, but it has also helped to drive costs down significantly. A visit to an optometrist will cost you anywhere from $200-$300 without insurance. And even with insurance, it is often still well over $100. And this usually does not include the actual cost of contact lenses or glasses.
To be fair, chains like Target and Walmart have both offered similar services at varying locations, but this still requires an in-person visit. But for someone like myself who is both busy and carless, allowing this process to take place in the comfort of my own home is a huge benefit.
While sites like Opternative and its competitors offer affordable eye exams, their purpose is restricted to the prescription of glasses and contact lenses. This means that they cannot do a full checkup to make sure that your eyes are healthy, which is still an important element to an annual visit. But with the growth telemedicine has seen over the last several years, it may only be a matter of time before this is possible. And for those whose most pressing needs are new glasses or contact lenses, online eye examinations are huge game changers.
And while it is certainly wise to regularly see an optometrist to ensure the health of your eyes, for those who cannot afford such a costly endeavor, online eye exams offer a viable alternative.
How Does it Work?
As soon as I signed up and made an account, the site asked me to sync my phone with my computer in order to use my phone to submit answers for the vision test. The app then asks you to turn the lights down during the vision test, just like in an actual optometrist office. I was then prompted to give my shoe size, which seemed a bit odd, but this is how the site determines how many steps you should take away from your computer screen to ensure quality results. After measuring the proper distance between you and your computer screen, the guided test is ready to begin.
Just as in a doctor’s office, you cover one eye and read the letters on the chart, but instead of responding to the doctor, you submit your answer on your smartphone.
After the test is complete, which typically takes about ten minutes, your responses are sent to an optometrist where they are reviewed. Shortly thereafter, you will receive an email with your prescription.
When all was said and done, the entire process, including receiving the new prescription, took less than an hour and saved me hundreds of dollars. And thanks to the free market, there has also been an increase in subscription-based contact lens services that will ship contacts to you each month for a nominal fee. Where one box of contact bi-weekly contact lenses can cost upwards of $40, brands like Hubble ship daily use contacts to its users for only $36 each month.
While many consumers have been using and loving these digital services, large companies like Johnson & Johnson, who produce 40 percent of the world’s contact lenses, and the American Optometric Association have actually lobbied congress in an attempt to rein in digital eye exams. The companies have stated safety concerns as the reasoning behind this endeavor. But the reality of the situation is that these companies have enjoyed not having to compete in this sector. But just like cabs now have to compete with Uber and hotels have to compete with Airbnb, the decentralization of vision care is resulting in protectionism on behalf of the giants of the prescription lens world.
When it comes to health care, individuals are eager to try things differently. And in our modern, digital era, telemedicine is convenient and accessible.
As the workforce continues to see a rise in contractors and digital nomads, it will be increasingly important to find ways to accommodate those whose employment status does not come with health benefits. Thankfully, digital eye exams offered through companies like Opternative and subscription-based services like Hubble are helping to decentralize vision coverage, making it more affordable and accessible to everyone, whether they have insurance or not.
The birth control coverage issue is one that is rarely met with anything but controversy. But as the country argues over whether employer contraception coverage should be mandated by law, the real issue gets ignored: access to birth control should be far easier than it is today and the government is preventing this from happening.
State Control, Not Liberation
Many proponents of the Obamacare birth control mandate assert that it gives women more control over their lives. To be sure, the advent of birth control was extremely empowering to women as it gave them control over family planning and thus, their own futures for the first time in history.
Unfortunately, asking the government to mandate access to a product is in no way liberating. In fact, it is the epitome of control.
There is virtually no logical reason to explain why birth control is so difficult to obtain today.
If I have a minor headache or a muscle ache, I have the ability to go to my local drugstore and choose from a variety of products all aimed at making me feel better.
And while these products are relatively safe, there will always be a risk of consumers misusing or abusing even something as seemingly harmless as Tylenol. Knowing this, it seems odd that something, as commonly used as birth control, is still only available to women through state intervention.
Thanks to the FDA approval process and state control over prescription drugs, getting birth control is as strenuous as obtaining other medications with much harsher and potentially dangerous side effects.
Currently, women must find a doctor, rearrange their busy schedules to visit the doctor, and then sit through a rather intrusive line of questioning before they are handed a piece of paper that essentially gives them the state’s permission to use contraception.
This is similar to the process required for patients seeking antidepressant or psychotropic drugs which both come with a plethora of safety precautions and risks. Birth control is not only safer, it already fits the FDA’s own benchmarks for being sold over the counter. Yet, it has been routinely prevented from being sold over the counter.
It should also be highlighted that in countries where oral contraception is available over the counter, there have been no reported increases in negative health-related incidents.
The Over-The-Counter Solution
By allowing oral contraception to be sold over the counter, the corresponding costs would be free from the price distortion that always accompanies third-party insurance companies.
When you go to the store to purchase Advil, you don’t have to wonder about how much you will end up paying out of pocket. The price is listed on or near the product and you know exactly what you will pay when you reach the register. This helps keeps prices low as consumers understand when a product’s price is unnecessarily high, especially when they are able to do a side-by-side comparison to other similar products in the aisle.
When you are given a prescription for birth control from a doctor, you are given access only to that prescription and any generic version of that specific chemical compound. You only know what that one particular product will cost, which puts the consumer at a disadvantage since they cannot compare with other products on the market. A Google search can get you an idea of the general cost, but since this does not factor in individual insurance premiums, it becomes a giant guessing game.
In addition to cost, selling contraception over the counter would make it much easier for women to gain physical access to it. Instead of having to worry about getting to a pharmacy in between work and other responsibilities, women could go to any drug store, at any time and select their brand of choice. This would also help prevent the common issue of missing doses between contraceptive packs because consumers would have easier access that is not based on whether or not they have a prescription.
The movement to move birth control from a prescription drug to an over the counter drug has been growing over the last decade. However, it is the government and specifically the FDA that is dragging its heels on making this a reality.
In January, it was announced that Ibis Reproductive Health, a nonprofit organization had joined forces with the European company, HRA Pharma to further the efforts to make oral contraception available over the counter. But even though this sentiment is spreading, thanks to lengthy government approval processes, this is unlikely to happen within the United States anytime soon.
But thankfully, while the government is taking its precious time, the market has found a way to make birth control more accessible to more woman at an affordable cost. And they have done so in spite of the government.
Uber for Birth Control
The market is a resilient force. So long as demand exists, free enterprise will always find a way. Since its creation, contraception has been a product for which there is always high demand. But now, the sharing economy model is making it easier for women to bypass the traditional methods of gaining a prescription, without ever having to leave their homes.
There is almost nothing the sharing economy cannot provide for the consumer. From inexpensive rides and cheap short-term lodging alternatives to food delivery and even puppies on demand, this organic market force has become a huge source of convenience in our lives.
Over the last few years, and thanks to the telemedicine laws that allow doctors to visit with patients online, the sharing economy has expanded into the health sector, specifically contraception.
The San Francisco-based startup Nurx has been doing its best to make oral contraceptives more accessible for female consumers. The startup works by providing users with a birth control consultation online. After filling out the relevant health-related questionnaire on the site, consumers can either choose from a list of available brands or let the doctor choose for them based on their medical history.
For those without insurance, Nurx waives the consultation fee and provides its birth control options for just $15 a month. But its services do not end there. After the prescription has been written by a Nurx affiliated doctor, a three-month supply is then delivered to the consumer’s door within a day.
Under the Obamacare mandate, only those with insurance coverage were given the $0 copay for oral contraceptives. For those without insurance, one month of birth control can cost an obscene amount of money even reaching triple digits. But thanks to Nurx, uninsured women have options.
Nurx co-founder and attorney Hans Gangeskar commented:
It’s absolutely ridiculous the way the system works. We absolutely believe oral contraceptives should be available over the counter. This is one step on the way.”
Unfortunately, telemedicine laws vary from state to state, which precludes many from taking part in these market alternatives. But this model is catching on and while it isn’t perfect, it is still a major disrupter when it comes to shaking up the up the way contraceptives are distributed to patients.
The issue of access to birth control is important. But unfortunately, many people can only fathom solutions that fit within the framework of our current state-dominated system, instead of creating new and potentially revolutionary market alternatives. This usually means utilizing government authority to reach a desired end. But as Nurx is demonstrating, there are better options available now. Just imagine how much better these alternatives would be if the state wasn’t involved at all.
Women should absolutely have easier and more affordable access to birth control, but it should not come from a state mandate. The market is more than capable of dealing with the contraception issue and is doing so in a way that supports the female consumer without hurting other individuals or forcing private companies to pay for something against their will.
Health care is a delicate topic. So delicate, in fact, that comparing it to something as impersonal as the mass production of cars seems almost cold. But what if some of our most dire health care problems, such as the rising costs of surgical procedures, could be solved by treating the industry more like Henry Ford’s famous Piquette Avenue Plant?
In the 1920s, Henry Ford revolutionized the auto industry when he found a way to mass produce the automobile at a price that the middle class could afford. Prior to Ford’s Model T, automobiles were a luxury reserved only for the rich. But through economies of scale and the assembly line, Ford mastered the art of mass production. By maximizing his output of cars, he was able to reduce marginal costs, which in turn introduced the automobile to an entirely new class of people.
But what could Henry Ford’s Model T possibly tell us about making surgical procedures cheaper and more accessible to a wider range of people? As it turns out, quite a lot.
As American health care costs continue to rise, many are unable to pay for the procedures they so desperately need. In fact, someone needing an open heart surgery in the United States may be expected to pay nearly one million dollars in medical costs. And as politicians continue to argue over how to make health care more affordable, medical innovators are taking a page out of Henry Ford’s playbook. One such innovator is Dr. Devi Shetty.
A Different Kind of Doctor
Since he was a small boy growing up in southern India, Shetty knew he wanted to be a doctor. Throughout his childhood, he watched in amazement as local Mangalore doctors revived his father each time he fell into a diabetic coma. This gave Shetty and his eight brothers and sisters tremendous respect for the profession that repeatedly saved their father’s life.
When he was in the fifth grade, Shetty’s teacher excitedly informed the class that the world’s first heart transplant had been performed. And as his classmates marveled at this medical miracle, young Shetty had an epiphany: he was going to be a heart surgeon.
After completing medical school in India, Shetty left for England where he performed heart surgery at the prestigious Guy’s Hospital in London for six years. While he was content with his work, he decided to return home to India after a prominent industrialist offered him a position at a new heart hospital he was opening in Calcutta. This decision, and the experiences he encountered while operating in this hospital, would later redefine Dr. Shetty’s entire career.
Upon returning to India, Dr. Shetty rose to prominence after the world-renowned Catholic missionary Mother Teresa sought his care after suffering a heart attack. After she had received, and successfully recovered from, the lifesaving surgery administered by the doctor, the future saint then asked him to be her personal physician, an offer he could hardly refuse. And while this rather famous patient is what initially pushed him into the public spotlight, it is his unique approach to heart surgery that makes Dr. Shetty truly extraordinary.
As he continued to perform heart surgeries in Calcutta, Shetty was saddened to learn that most of his patients did not have the means to pay for the procedure. $2,400 was a lot of money for his patients and many simply didn’t have it. “When I told patients the cost, they would disappear. They literally didn’t even ask about lowering the price,” he once said. But Dr. Shetty was not content to simply stand by as his patients went without care. Instead, he found a way to entirely revolutionize the field of heart surgery by approaching it from an entrepreneurial perspective.
Much like Henry Ford, Shetty had a vision of taking what was considered to be a luxury item that only the wealthy can afford, and making it accessible to all people.
Economies of Scale
If Dr. Shetty was going to lower the costs of surgery he was going to need to cut costs while also maximizing output. But in order to have the authority to make those types of administrative decisions, he was going to have to start his own hospital. So he did.
In 2001, the Narayana Hrudayalaya Hospital opened its doors. Completely funded by private entities, the facility has over 1,000 beds. To understand how truly impressive this number is, in the United States, hospitals average around 160 beds for patients receiving heart surgery. This allowed the hospital to drastically multiply the number of surgeries that could be performed each day. It also drove costs down— way down.
As reported by Harvard Business School:
“The purpose of the hospital was to offer healthcare for the masses… The interesting aspect of its business formula was its ability to offer such complex surgeries as CABG (popularly known as bypass surgery) for about $2,000, which was substantially less than other similarly equipped hospitals in India.“
To put this price perspective, the same surgery in the United States would cost a health care consumer around $75,345. This is because in many countries, like the United States, there are regulations that restrict the number of surgeries that can be performed by each surgeon. For this reason, most U.S. hospitals only perform about 32 heart surgeries per day. But capping the number of surgeries performed each day goes against market demand and serves to keep the cost of surgery high by controlling the supply.
In Shetty’s hospital, the doctors respond to actual demand; if there are patients needing surgery, then they find a way to meet that demand. On average, Shetty and his team of surgeons perform over 300 heart surgeries a day. In fact, in the course of his career Dr. Shetty has performed over 20,000 heart surgeries himself. That number is about six times more than the average American surgeon is expected to perform in their lifetime. And at only 62, Dr. Shetty has many surgeries yet to perform.
Commenting on his unique health care model, Shetty said:
“Japanese companies reinvented the process of making cars. That’s what we’re doing in health care. What health care needs is process innovation, not product innovation.”
But while many are applauding what Shetty has been able to accomplish, there are others who worry that Shetty’s increase in quantity might result in a decrease in quality.
“On one level, it’s a damn good idea. My only issue with it comes from the fact that if you pursue wholesale volumes, you may give up something — which is usually quality,” Indian physician Amit Varma said. He continued, “I think he has reached the point where if you increase volume any more, you could compromise patient care unless backed up by very robust standard operating procedures and processes.”
And while there is some validity to Varma’s fears, in Shetty’s case, the opposite seems to be the case. Narayana Hrudayalaya Hospital has a 1.4 percent mortality rate as compared to the 1.9 percent average in United States’ hospitals. But even these comparisons don’t tell the full story, as the Wall Street Journal points out:
“It isn’t possible truly to compare the mortality rates, says Dr. Shetty, because he doesn’t adjust his mortality rate to reflect patients’ ages and other illnesses, in what is known as a risk-adjusted mortality rate. India’s National Accreditation Board for Hospitals & Healthcare Providers asks hospitals to provide their mortality rates for surgery, without risk adjustment.
…Dr. Shetty’s success rates would look even better if he adjusted for risk, because his patients often lack access to even basic health care and suffer from more advanced cardiac disease when they finally come in for surgery.”
When asked how his surgeons are able to perform such high numbers of high-quality heart surgeries, Dr. Shetty says:
“Practice makes perfect. There is learning by doing. The more times you do something, the better you get at it.”
The Future of Health Care
While he has already changed and saved many lives, Dr. Shetty is not content to stop at heart surgeries. As health care costs rise, medical tourism is on the rise as well. Since so many jurisdictions have strict health care regulations, innovation has been stifled. As a result, many American and European health care consumers are choosing to travel abroad in search of less expensive care. And with doctors with reputations like Shetty, who can blame them?
Continuing his mission to make quality health care accessible to all, Shetty is involved in a project called Health City. Located in the Cayman Islands, Health City is where many of Shetty’s proteges now practice. Offering medical services at a third of the cost as the United States, Health City has become a prime medical tourist spot. In fact, many of the procedures come in packages that include airfare and lodging all offered at a price far lower than the procedure would cost in the United States.
But there is something more to this location other than being a destination for Americans in search of lower cost health care: its proximity to places like the Caribbean, for example. As Shetty explains it:
There are 40 million people living in the Caribbean. Before Health City, the only option for serious medical care was the United States – assuming the patient could afford it. Now there is an alternative.”
By treating health care as a mass product, Shetty has been able to increase the quality of care, while making it financially accessible to a wider range of people. Instead of looking to government to fix our health care system, we should be looking to innovators like Dr. Devi Shetty.
Caring Hearts Personal Home Services is an organization in Kansas which offers nursing care and physical therapy to Medicare patients who, for health reasons, are unable to leave their homes and are considered to be “homebound.” Though Caring Hearts has been a huge help to many in its community, the organization recently found itself at odds with the federal government.
Since the organization caters to Medicare patients, it is subject to oversight from the Centers for Medicare and Medicaid Services (CMS). A recent audit by CMS led to claims that several of Caring Hearts’ patients did not meet the qualifications necessary to be labeled as “homebound.”
As a result, CMS was demanding repayment from Caring Hearts for all services that CMS deemed “unreasonable and unnecessary.” CMS asserted that Caring Hearts rendered $800,000 worth of services that did not meet the standards necessary in order to be covered by Medicare. However, as it turned out, CMS was unfamiliar with its own regulations.
One of the cases in question involved an 85-year old who weighed more than 350 pounds and who was, more or less, confined to a wheelchair. Currently, CMS regulations specify “homebound” patients as those who have a “normal inability to leave home,” while “leaving home must require a considerable and taxing effort.” According to the CMS, this wheelchair-bound patient did not meet these qualifications.
However, in 2008, when the care was given to this patient, “homebound” was defined by CMS to mean any patient who had a “condition due to an illness or injury that restricts their ability to leave the place of residence except with the aid of: supportive devices such as crutches, canes, wheelchairs, or walkers.”
Clearly, given the circumstances surrounding the wheelchair-bound patient, the care provided by Caring Hearts in 2008 met all the necessary standards in place at the time. However, CMS was so out of touch with its own regulations, it was not aware of the rule change that took place between 2008 and the present day.
“What happens if we reach the point where even these legislating agencies don’t know what their own ‘law’ is?” Judge Neil Gorsuch asked after the Tenth U.S. Circuit Court of Appeals ruled unanimously in favor of Caring Hearts.
The court held that CMS “seems unable to keep pace with its own frenetic lawmaking,” and that, “an agency decision that loses track of its own controlling regulations and applies the wrong rules in order to penalize private citizens can never stand.”
CMS’ inability to keep track of its own rules is not something unique to their agency alone. In fact, with over 175,000 pages of federal regulations in place as of 2014, it has become impossible for anyone to keep track of all the federal rules currently in place.
When the ever-growing bureaucracy of the federal government prevents businesses from being able to help their consumers, especially when the commodity in question is health care, there is a real problem with our regulatory system. Luckily for Caring Hearts, this story had a happy ending. But many other businesses are not so lucky.
There is almost nothing Amazon can’t do. From delivering nearly any item you can think of in two days to single-handedly reducing the price of certain Whole Foods’ products, Amazon has been a huge force for market innovation. And if not for the federal government’s interference, Amazon might have even been a leader in the drone delivery industry by now.
But according to recent gossip circulating around the business world, the online retail giant may soon be venturing into uncharted territory by entering the pharmaceutical business.
While these rumors are purely speculative for the time being, Amazon’s potential entry into the world of prescription drug care could be huge for consumers looking for alternatives to our country’s outdated, insufficient health care system. It would also be the realization of one doctor’s dream.
Prime for Prescriptions?
For several years, Dr. Josh Umbehr has been sending emails to Amazon CEO, Jeff Bezos every other week. An admitted “fanboy,” of Bezos and his successful business endeavors, Umbehr believes Amazon has the potential to completely change the way consumers purchase prescription drugs.
In one of his biweekly emails, Umbehr wrote:
Amazon could work with small pharmacies across the country to provide a huge value to Prime customers, on a regular basis (with) short delivery times, not to mention the effect it would have on competition that overcharges immensely.
While these emails have become routine over the last few years, Umbehr hasn’t necessarily been holding his breath waiting for a reply. However, there was a small inkling of hope when he recently received a response from an employee of Amazon who implored him to submit a business proposal to the company.
After submitting his proposal he was told that if his idea was accepted, he would most likely not hear back from the company. Fully expecting to have to continue writing his biweekly emails, Umbehr was shocked when he received a detailed email in January, explaining that his proposal had been forwarded to Amazon’s business development team for further consideration.
By the time May had rolled around, it was reported that Amazon was actively looking for a general manager to place in charge of the company’s potential pharmaceutical branch. While it is still uncertain what Amazon’s plans may actually entail when it come to breaking into this multibillion dollar industry, something is definitely brewing. And if Bezos has any doubts that this type of model could be successful, he need only ask Umbehr for advice.
A Different Approach
Dr. Umbehr has been leading the charge towards free market health care alternatives in the United States. Based in Wichita, Kansas, Dr. Umbehr, along with Dr. Doug Nunamaker, runs a direct-pay primary care health practice that does not accept insurance premiums.
By opting not to work with third-party insurance companies, Atlas MD has been able to dramatically cut medical costs for its patients. Instead of accepting an insurance copay like most physicians offices, patients pay a monthly flat fee for a membership subscription. These membership costs vary by age. For children, Atlas MD charges $10 a month. For adults, services range from $50-$75 a month. Senior citizens are charged the most at $100 a month.
For health care consumers who have purchased memberships, this allows them access to all the services provided at the Atlas MD office without having to worry about whether or not their insurance policies cover a procedure.
In addition to making the care and payment process easier to manage, Atlas MD also stresses the importance in using tech to communicate information to their patients. On its website, clients have access to numerous amounts of health information on their computer or mobile devices, allowing them to have more control over their personal health.
This revolutionary health care model hasn’t gone unnoticed either. Atlas MD has made headlines over the last several years not only because their concierge care model is so unique, but also because it works.
What Is Bezos up To?
In addition to looking for personnel to head up this potential pharmaceutical project, Amazon has also recently hired several professionals from the health care sector to offer feedback and advice for any future medical related projects.
Since this is all currently speculation, guessing is all anyone can really do when it comes to predicting Amazon’s next move. But according to some in the medical field, it would be in Amazon’s best interest to cater any future health-related endeavors to consumers willing to pay out of pocket for care. These are the same types of health care consumers who are attracted to Atlas MD.
Others weighing in on the issue have wondered if Amazon’s recent acquisition of Whole Foods provides some evidence to support the company’s intentions of getting in on the pharmaceutical game. Stephen Buck, who co-founded “GOODRX,” a company that provides consumers with coupons for costly prescriptions, said, “The acquisition of Whole Foods makes entry into pharmacy much easier for Amazon. Amazon could use this retail footprint for consumers to pick up prescriptions.” While Buck thinks that the 450 physical Whole Food locations provide an easy access point for health care consumers to pick up prescriptions, others are thinking bigger.
“Whole Foods creates an entry point to drug delivery,” analyst Morgan Stanley recently wrote. But whether the company chooses to have a pick up site or offer Prime delivery on certain prescriptions, or perhaps both, one thing is known for sure: Amazon is already selling prescriptions on its Japanese site. So Amazon moving into the health care world is not entirely out of the realm of possibility.
Additionally, and again this could merely be a coincidence, Gabrielle Sulzberger, Whole Foods chairwoman, is also on the board of Teva Pharmaceuticals, a huge drug maker in Israel.
It should shock no one that the most problematic obstacles standing in Amazon’s way are health insurers and government regulations. As physicians like Umbehr already understand, third-party health insurers often make the situation worse as it stifles the organic pricing process associated with demand for a certain product. It will be hard to compete for prices within a system that is already vastly distorted by third party insurance companies.
Likewise, the government has many restrictions in place for medications that require special requirements. In the instance of certain stimulants and opiates, delivery would not be an option as these require in-person pickups where the patient must provide government identification. But since Amazon hasn’t released any substantial information regarding its plans, there is really no telling what route they may take, if they take any at all.
Others who have chimed in on this new venture have insisted that there is no money to be made from the pharmacy business. Both CVS and Walgreens, two of the most well-known pharmacies in the country, have been experiencing falling stock prices this year. And many in the field have said that this would be a risky move since there is not a whole lot of money to be made in the world of generic prescription drugs.
But one thing the public is no stranger to is Amazon’s willingness to take experimental risks in the world of online retail. So while there may be much working against its favor, there is still hope, especially from Umbehr that Amazon will take on the beast that is the pharmaceutical company.
And while we wait to see if and how Amazon plans to execute an online pharmacy, it is hard to imagine any apparatus that is less effective than the current government controlled system.
The American health care system had become the perfect poster child for cronyism long before Obamacare went into effect. Insurance companies, health care providers, and the government have become so intertwined, it’s almost impossible to discern where one ends and the other begins.
While candidates of all ideological persuasions campaign on replacing, repealing, maintaining, or even expanding Obamacare, at this point public and private health care institutions have become so entangled there is almost no feasible way to untie the knot.
Instead of looking to Washington to fix a problem they are at least partially responsible for creating, the private market has taken matters into its own hands by providing options.
The Surgery Center of Oklahoma, for example, discovered that in order to offer patients the best quality care for the lowest possible prices, they were going to have to opt out of the traditional health care system altogether.
Prospective patients visiting the center’s website will notice that each procedure offered comes with its own set price tag. By choosing not to accept any insurance policies, the Surgery Center of Oklahoma is able to set its own prices, which often end up being more affordable than services rendered through a traditional hospital and then processed through a third-party insurance company.
To illustrate just how cost-effective this model is, in 2012 Reason compared the costs of a surgical procedure (a “complex bilateral sinus procedure”) performed by Dr. Jason Sigmon before he began working with the Surgery Center of Oklahoma, to afterward. While still working at a traditional hospital, the procedure costs a patient $33,505 not including fees for the anesthesiologist and surgeon. The same procedure performed by Dr. Sigmon at the Surgery Center of Oklahoma only cost his patient $5,885, which is all-inclusive.
“The pricing outlined on this website is not a teaser, nor is it a bait-and-switch ploy. It is the actual price you will pay,” the Surgery Center of Oklahoma’s website states.
For anyone who has ever tried to inquire about the cost of a surgical procedure at a regular hospital, it is almost impossible to get a definitive answer. This is because, in many cases, the hospital is able to charge more depending on the patient’s personal health insurance policy. Since each plan is different, they can charge different amounts for the same procedure..
By avoiding the endless red tape and bureaucracy innate with third party insurance companies, the Surgery Center of Oklahoma has been able to provide patient-centered care that is centered on free-market principles rather than government mandates.
One of the most appealing aspects of the free market is its resiliency. No matter how economically oppressive a government may be, the market has always found a way to meet consumer demands in spite of crippling regulation.
The more government involves itself in health care, the harder it becomes to find quality services at affordable prices. As the state has inserted itself more heavily into the health sector over the last several years, many Americans are left searching for alternatives to traditional services.
Luckily, as technology continues to advance far beyond anything our grandparents thought possible, health care itself is becoming more decentralized as individuals are now able to take personal control over their medical decisions.
While older generations may be content to wait on others to improve existing services, millennials are too impatient to let others change the world without taking an active role.
As America’s favorite scapegoat, the country’s youth is constantly being accosted for not caring enough about our futures and specifically, for lack of desire when it comes to buying health insurance. Proponents of nationalized health care will say just about anything to convince young Americans to buy insurance policies we have no interest in purchasing. But while we may not be purchasing health care premiums, millennials are doing something no other generation has done before: open-sourcing health care.
3D Print a Perfect Smile
Just last year, college student Amos Dudley was making headlines after he utilized his campus’ 3D printer in order to make his own orthodontic retainers. Unsatisfied with the appearance of his own teeth but unable to afford braces, which can cost several thousand dollars, Dudley spent his free time researching various methods of straightening teeth and applied that knowledge as he designed and 3D-printed several “invisible” retainers for his own use.
In a blog post on his personal website titled, Orthoprint, or How I Open-Sourced My Face, Dudley explains how he was inspired to take the appearance of his smile into his own hands.
“What if you had a chance to save money, make yourself happier, and stick it to the dental appliance industry, all in one shot?” Dudley’s blog post begins. Feeling as self-conscious as most young adults feel, Dudley was resolved to do something about his teeth but, as he puts it, “At the time of writing this, I’m an undergrad, which means that a) I’m broke, and b) I have access to expensive digital fabrication tools – definitely an unusual dichotomy.”
Utilizing his school’s equipment along with two essential books, Contemporary Orthodontics (5e) by William Proffit DDS, PhD, and Orthodontics at a Glance by Gill Daljit., he was able to correct his own teeth with minimal production costs.
But Dudley isn’t the only young American who is open-sourcing the health care industry.
Health In Your Hands
Alabama resident Dana Lewis’ inspiration for designing and manufacturing artificial pancreases was born out of her own struggle with type 1 diabetes.
Since diabetes patients do not enjoy a fully functioning pancreas, which helps produce and regulate the flow of insulin throughout the body, the trick is finding some sort of device that automatically monitors the levels of blood sugar in the body and then adjusts the insulin administered. As of now, nothing on the market or available through a physician is able to adequately perform the tasks of a real pancreas, which has caused many diabetes patients to take their health in their own hands.
Since there has been general dissatisfaction with the blood sugar monitors available to consumers, there have been previous attempts to open-source better products. Through the creation of smartphone apps that serve as alarms, these apps are meant to wake the diabetes patient up during the night when insulin levels typically drop.
While these were better than those on the market, they were still not getting the job done well enough. Which is why Dana and her husband had to ask the question:
“What else could we do?”
Dana and her husband utilized what is known as a Raspberry Pi minicomputer, an already existing medical device, and developed their own software codes that monitor blood sugar levels and adjust the amount of insulin delivered accordingly.
Thrilled by its success, the Lewises decided to offer the software code online to other diabetes patients for free. Supporters of Lewis began using the hashtag #Wearenotwaiting to express their dissatisfaction with the lengthy medical device approval process that prevents patients from getting the care they need. The “OpenAPS,” as Lewis named her artificial pancreas, was an instant success from the moment it debuted online.
By allowing others to have the software codes, over 250 diabetes patients have been able to utilize the Lewis’ innovative design. Lewis explained:
“Patients are changing the innovation pipeline. These technologies have to be ready faster.”
Which is exactly why millennials are taking the lead on health care innovation. Unwilling to sit still and gifted with tech-savvy skills, young people are using technology to become more self-sufficient and less dependent on government-riddled services.
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