URGENT MESSAGE: During the gold rush of the mid-1800s, miners and bartenders enjoyed a mutually beneficial relationship in which neither could survive the Wild West without the other. In the modern “gold rush” of U.S. healthcare spending, coordinators of population health and service/technology innovators are working together to improve outcomes and lower costs, propelling new business models—including urgent care.
Alan A. Ayers, MBA, MAcc is Practice Management Editor of JUCM—The Journal of Urgent Care Medicine, a member of the Board of Directors of the Urgent Care Association of America, and Vice President of Strategic Initiatives for Practice Velocity.
An abstract of: Dumont C, Subramanian S, Dankert C. Staking your claim in the healthcare gold rush. strategy+business. Autumn 2015:32-37.
The healthcare 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.
Ironically, these 21st century advances have triggered a gold rush not too dissimilar from the one that occurred in the U.S. in the mid 19th century. This one is having a substantial impact on the economy, and many are jumping in to stake their claims. But instead of jockeying for land grabs, today’s “prospectors” are trying to hit it big in the continually growing healthcare 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 Autumn 2015 strategy+business article Staking Your Claim in the Healthcare Gold Rush examines ways in which healthcare 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 healthcare’s expanding presence in the U.S. economy.
Technology Is Changing Provider–Patient Interactions
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 patient’s medical history. Today, patients and physicians are able to communicate more fluidly and more intimately through interconnected electronic medical records and smartphone applications.
Moreover, healthcare 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, 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, two new business models have emerged to address the changing demand of consumers.
Gold Miners and Bartenders
“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 include:
• Accountable care organizations
• Population health enablers
• Integrated delivery systems
• Primary care clinic-based delivery
• Bundled care
• Care optimizers/standardizers
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, such gold miners see added value by improving routine healthcare processes via 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 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 include:
• Customer targeting
• Wearables/health apps
• Mobile/personal diagnostics
• Patient communities
• Urgent care centers
New market entrants gravitate toward the bartender business model because of its consumer-oriented approach. Nonconventional 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, these two new models of business are not at odds with one another. In the 1840s, gold miners relied on bartenders just as bartenders relied on gold miners. This type of 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, 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 shift in 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, data are 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.
“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.