This week we're going to dig into the broad ecosystem that defines US health care. The purpose of understanding these trends is really intended to give you a sense of where are the current gaps in the health care system, where are the current pain points, where is the trend headed, so that you can begin to think of a framework in which potential digital health solutions may begin to redefine the landscape ahead. This is by no means meant to be comprehensive, but really meant to be a macro perspective of some trends that are defining our current environment from a healthcare delivery organization and financing perspective to shape your thoughts. Looking at it from a data orientation, there's a couple of things that are really framing the conversations in the current environment, both pre-COVID and have been accelerated in light of the COVID-19 crisis that we'll talk about later on in the course, but also that are meant to be trends that we expect to play out over the next 5-10 years in rapid cycles. From the broadest level, health care spending has continued to rise steadily over our nation's history. When you think about the growth rate, this is projected to continue to rise pretty steadily in the years to come. With the COVID impact, that pressure is going to be even greater on healthcare spending. The one thing to note here is when you zoom out and look at US healthcare in aggregate, we see that it's projected to be more than 20 percent of total US GDP. So health care really comprises a substantial share of our economy. Also suggesting there's a lot of opportunity in innovation and companies in the space. But from an individual consumer that is actually having to pay for health care and access to care, regardless of whether you are getting your coverage from Medicare, or Medicaid, or your commercial payer, or insurance company, the amount of money and dollars that individuals are having to pay for health care in this country has really reached a tipping point. The need for more affordable health care has never been more prominent in this country. There are a lot of statistics and numbers out there to really frame the magnitude of the affordability issue. But in the most simplistic sense, if you think about the average US household as being about 2.5 individuals and having a median household income of just under $50,000, really what the data shows us is that the average American family is spending anywhere from 40 to 50 percent of their total annual income on health care. That is just unsustainable. We can't continue in that way. So affordability continues to define the political dialogue and the policy dialogue in this country, not only from a Medicare and Medicaid and how do we provide access and coverage to American citizens, but also how do we curb the spending, and where are we spending our money on healthcare? How do we make the system more efficient? How do we drive cost-savings out of the system so that ultimately we are passing on less cost to the individual who's having to pay out of pocket? Zooming in further, when we think about the actual delivery side of who's paying the payers that are covering the medical services that individuals are receiving, one of the trends that has been under appreciated but will continue to accelerate in the years to come is this notion of the role of the federal government is expanding. What this graph shows is data from a sample of the largest 100 health systems, which is also known as a multi-hospital delivery network of sites of care. So not only hospitals, but could include urgent care centers, ambulatory sites, outpatient clinics, so it's kind of a network of sites of care. If you look at the largest 100 of those across the country, on average about half of all health system revenues are coming from government payers, which is primarily Medicare and Medicaid. You see that this rate has increased from 10 years ago and 10 years ago before that. What's interesting to note is the spread. The dots that you see along the vertical axis are really showing this the range. While there are some health systems that are primarily receiving their payments and revenue sources from commercial payers like the Blue Crosses of the world and Humana, you also have health systems like Montefiore Health System in the Bronx in New York that has close to 70 percent of all its revenue coming from the federal government. When you really think about that, and you think about all the policy discussions happening right now around the need for single payer and expanding Medicare benefits and Medicaid, the trend is already playing out. If you think about pure demographics, and we'll talk about the impact of COVID later on in the course, but this trend is projected to grow. So increasingly, more and more of who pays for care will be sourced back to the government, which will fundamentally change the economics and the business model of the health care system. Another dimension of changes to the business model and where we receive care, and how we receive care, is increasing into the shift from the inpatient setting. Inpatient in the context of jury traditional, think of the traditional hospital walls, coming into the ED, coming in to see your physician, and being admitted to the hospital, a big proportion of care has historically been inpatient. But over the last 10 years, we've seen these rightward shifts so that more and more of the revenues which is a proxy for the volume of care, of visits, and inpatient interactions that are occurring outside of the four walls of the hospital, which we call the outpatient or ambulatory care setting. It's starting to be about 50-50. Whereas a couple of years ago it may have been 70 percent inpatient, 30 percent outpatient. We're now trending towards, if you really play this out to 2020, we're closer to 60 percent of revenue coming from outpatient and 40 percent inpatient. Now, what that means, there are a lot of ways to dissect trend out, but what that is really reflective of is this rise to more responding to consumer needs, for more affordable health care. The one reason that outpatient care settings are very attractive is because there are lower-cost settings. You can set up freestanding emergency departments, freestanding imaging centers which are cheaper to manage, they're more accessible to the patient. Parking, things like parking aren't an issue. The patient can just drive up, drive-in and it's like going to a doctor's office. It's more consumer-friendly, and convenient. It's easier to locate these individual centers in a broader geographic range so that patients and consumers are not having to drive to only one location in a hospital to receive all their care. As we play this trend forward, we're starting to see and if you look at satisfaction scores and how well these outpatients sites are doing. Whether it's urgent care centers or freestanding imaging, patients are really liking it and it's driving costs out of the provider system that those are actually delivering that care. We expect to see a greater increase in outpatient care settings, which when you really boil that down means that the traditional delivery system model, kind of your traditional hospital or health system model is starting to become unbundled and deconstructed. No longer do you live in a world where a patient only has to go to their doctor's office, or only has to go to the emergency department to receive care. You don't have to go to a physical building, one big large building and wait through crowds and it's really confusing system, but they can really just go to, things like going to the store, go do something that's only five minutes away from your house versus ten minutes away. The outpatient care trend, which we'll talk about momentarily, is in some ways an extension of virtual care and telehealth, and other capabilities. Really what you should take away from this, is that there are many different care settings across the continuum of care from the time the patient. Regardless of whether they are just receiving a basic primary care checkup, or even received some specialty care, or all of the health care, it can be delivered in a variety of settings which is going to begin changing for the future and the opportunity for innovation moving forward. Wrapping all of that together, the other really key ingredient that makes the system work and has really changed the system in the last decade is the rise of data and digitization in the system. Back almost 10 years ago, we celebrated the anniversary of the HITECH Act which was a novel piece of legislation that essentially infused billions of dollars into our health care system to adopt electronic health records and get rid of paper charts the doctors used to carry around and make everything digital. We've spent the last decade really trying to convert patient data into an electronic format. There's been a lot of discussion which many of you, especially those of you who are clinicians are familiar with in terms of burnout and encoding and entering and using scribes to log records and to be able to see longitudinal patterns in the patient data. Weight one of these moves have more digital way of health care has really been complete. We're already into this new environment. What we will continue to see as the head is that we still have a lot of work to do. Yes, we have now increased the amount of data available to us as a health care system that are seen our patients and trends in their care and how to make better decisions. But we still need to figure out how to make that data usable and accessible. How do we make that data come out of the clunky physical computer in the hospital so that the patient or the consumer can have access to it on the smartphone? How do we do it so that different systems talk to each other? If you move between states or you switch to a different provider or go to an outpatient setting, we're impatient and your physician of choice is using a different EHR vendor or a platform. All the data is interoperable and can talk to each other in a way that it is seamless and usable so that the data can actually enhance the level of care and precision and what we have. This is a trend that has been playing out, but we'll continue to amplify and we'll see that data really is going to be the critical piece and all of this in many ways. That's why we need this course, data-driven digital health because, without data and the technology to enable that data, it's going to be very difficult to really track progress and measure areas of opportunity and really make health care more precise and effective.
