Could the Netflix Model Be Good for Healthcare?

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Healthcare spending has increased from $355 per person in 1970 to $10,348 in 2016, according to Peterson-Kaiser Health System Tracker. If calculated in constant 2016 dollars, this increase has been nearly six-fold (from $1,762 in 1970 to $10,348 in 2016).

With healthcare spending increasing at a much faster rate than GDP and real wages, something has to be done to ensure the system doesn’t become overburdened. But what’s the solution?

Look around the medical industry, and you’ll notice that a Netflix-like model is making its way into the healthcare space. That’s because a direct-to-consumer method of getting care presents a way to reduce costs and increase efficiency.

Potential advantages of the Netflix model in healthcare

Netflix brings video content straight from producer to consumer–without the need for a cable service. It reduces costs by leveraging streaming technology and taking out the middleman.

When it comes to healthcare, this sort of model could offer similar benefits. As Susan DeVore, CEO of a multi-billion company that helps hospitals decrease expenses, states, employers are starting to say, let’s “bypass the insurer–they’re not really lowering the cost or driving the clinical improvement that I need.”

What employers will do instead is work directly with health care provider networks to design and negotiate health care plans. This strategy is actually at the center of how JPMorgan, Amazon, and Berskhire Hathaway plan to reduce healthcare costs. It has numerous potential advantages, including:

Reduction of wasteful spending caused by intermediaries

As an article published by Bloomberg notes, “the health venture established by Amazon.com Inc., Berkshire Hathaway Inc., and JPMorgan Chase & Co. will take aim at intermediaries in the health-care system as a part of a broad effort to reduce wasteful spending.” This, in turn, will reduce costs for employers and patients.

Enhanced accessibility and convenience

A direct-to-consumer healthcare model could function much like Netflix does, as mobile technology and seamless connectivity enable new ways to deliver medicine and enhance existing services. Since employers and the patients themselves will get the bill directly from the provider, there’s greater freedom in the way care is given, as there is no intermediary to consult or deal with. Now, technologies can be freely leveraged to guarantee 24/7 access, more effective scheduling, a better variety of choices, and more.

As a research piece by University of Pennsylvania Wharton Magazine attests, patients could enjoy on-demand health, the ability to stream daily data between themselves and doctors, telehealth services, and even self-service medicine.

Increased ability to customize healthcare plans

A direct-to-consumer model empowers patients to manage their health with personalized options. When this happens, studies suggest that health outcomes improve. With the help of human resources staff, healthcare providers, and others, consumers can choose from a menu of services and optimize their healthcare plan in a way that current standardized wholesale plans don’t offer.

Ensuring the direct-to-consumer model works

A Netflix-like model for healthcare holds the potential to decrease costs, save resources and ultimately improve patient outcomes and experiences.

However, it’s important to note that such a model places more responsibility on the shoulders of healthcare providers, employers, and patients. Also, a strategy for how such a model would work for those whose health insurance isn’t tied to an employer still needs to be developed.

With that said, pursuing a direct-to-consumer model is well worth it. The key for hospitals will first be to figure out the economics of such an endeavor, as it must make financial sense and resources must be conserved so that care can be maximized for all patients. Second, healthcare networks must bring in staff and doctors willing to embrace this model because they see the benefits.

If those two things can be achieved, the Netflix-type model just may be a solid solution for the currently overburdened healthcare system.

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