What is Digital Health?

Digital Health has big buzz this year. For example, it was a hot topic at both the Consumer Electronics Show (“CES”) and the more-serious JP Morgan Healthcare Conference. (“Digital Health” refers to products and businesses that apply modern digital technologies — the web, mobile, the cloud, miniature sensors — to healthcare.) There has been good buzz before, but now there is solid reason to think that digital health will have impact. At a high level U.S. healthcare faces three big problems: high prices, poor care coordination, and an onslaught of chronic disease. Digital health can address all three problems.

In a series of posts on U.S. health care costs two years ago, I analyzed the principal drivers of the “health care cost gap”: the difference between the $7,800 per capita (1) that the U.S. spends on health care versus ~$3,300 per capita spent by peer countries that have equally effective health care systems (2). As percentage of the total U.S. health care spending, the biggest cost gap drivers are:

• High prices for medical services in the U.S.: 19%
• Over-utilization of advanced medical services: 11%.

In addition, the U.S. is facing an onslaught of chronic diseases: diabetes, heart disease, dementia, etc. These are “lifestyle” diseases: partly caused by lifestyle choices we all make. We are not necessarily worse off than peer countries; the U.S. compares well on smoking prevalence but poorly on obesity versus European countries, for example. However, bringing lifestyle diseases under control would have a big impact on health care spending, not to mention health itself. Toby Cosgrove, the CEO of Cleveland Clinic, reckons that behavior (i.e., lifestyle diseases) accounts for about 40% of premature deaths in the U.S. (3). Smoking alone drives about 5% of U.S. healthcare spending and diabetes, for which obesity is a major risk factor, drives another 7% (4).

These percentages add up to 42% of the $2.8 trillion U.S. healthcare bill. There’s quite a bit of overlap between the categories. However, it’s reasonable to think that something like half a trillion dollars ($1,600 annually per capital) could be saved if we tamed these problems. That’s worth shooting for.

Here’s the exciting part: Digital Health gives us leverage on each of these problems.

CardioMEMS wireless heart sensor compared to a dime. (Photo credit: IntelFreePress)

High Prices. In the world of business, the “standard of care” for a bout of high prices is an effective market, fostering price competition, which health care largely lacks. Digital Health is a powerful tool for “marketization” of health care. Digital Health companies like CastLight, Pokitdok, Vitals, and ZocDoc are making options, prices, and quality metrics visible to consumers, and making it easier to book an appointment with an alternative provider (6). At the same time Americans are becoming much more exposed to the cost of health care. The health care exchanges, on which 25% of Americans are expected to buy insurance by 2020, are training Americans to be health care consumers, and the skin-in-the game motivates them to act like consumers

To continue reading this article visit http://www.forbes.com/sites/toddhixon/2014/02/03/why-digital-health-will-have-huge-impact/