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Healthcare Horizons
By Dawn Carter
Consumerism is one of the biggest trends in healthcare transformation, and technology is a major driver of the trend. From diabetes to pregnancy, more and more consumers are investing in smart health devices, fueling a $16 billion worldwide market that could almost double by 2026.
Naturally, device makers can smell the money, and they are competing fiercely to reach consumers directly, without the aid or advisement of healthcare providers.
If you do a Google search for “best home glucose monitor,” you’ll be swamped with stylish, consumer-facing ads from manufacturers like Nutrisense, Signos, and Oura Ring. Those ads don’t come cheap: as of this writing, Google is charging $1.62 per click on the search term “best home glucose monitor.” By comparison, if you want to reach to consumers searching for “best vacuum cleaner,” that will cost you just 56 cents a click.
Clearly, device manufacturers have decided that health is more lucrative than housekeeping.
But where are hospitals and health systems in all of this? As far as I can tell, provider organizations are almost entirely on the sidelines, I think that’s a missed opportunity.
It may sound far out, but I see huge potential in hospital-based technology boutiques where knowledgeable experts can explain smart health devices from multiple manufacturers; arrange any clinical support that may be required; and seamlessly connect devices to the patient’s electronic health record.
Helping customers choose the right technology is a chance to build relationships and create immediate revenue streams with patient monitoring – but much more intriguing is the chance to create a wellness ecosystem with the hospital at its center.
Why is no one else talking about this opportunity? I think payer policies are the biggest reason. Currently, Medicare almost never covers the most sophisticated technologies – so-called “connected medical devices” that can automatically push data to healthcare providers. Private insurance isn’t much better, leaving consumers to pay for smart health devices out of pocket.
That’s a short-term obstacle, to be sure, but I can imagine many, many scenarios where consumers would decide to make the investment on their own. Let’s consider just one of those.
I’m thinking about a 78-year-old widower that I know. Let’s call him John. He has severe neuropathy, and falls are happening more frequently. He’s had diabetes and sleep apnea for years, but he’s not always consistent with his Trulicity or his CPAP. And recently, John developed atrial fibrillation that is noticeably affecting both his heart rate and blood pressure.
That’s a dangerous mix of health issues, and his kids know it. They’ve been researching options like assisted living ($250,000 just to move in) and home care ($4,576 a month), but their dad is resistant in both cases. John wants to stay at home with minimal fuss or disruption to his life – and that’s where smart health devices could make all the differences.
Imagine the sense of relief if this family could walk into the local hospital and find all the technology they need to remotely monitor all of John’s health conditions:
Private insurance may cover some of these items, but even without insurance, this family’s total cost – out-of-pocket and out the door – comes to $1704. That’s a lot of money, to be sure, but it’s just a fraction of the $4,576 they’d shell out for a single month of home care. Even with subscription fees, replacement supplies, and other ongoing expenses, connected medical devices still represent an enormous savings for consumers who would otherwise need higher levels of care.
Medicare, in particular, wants to keep older patients like John out of high-cost settings as long as possible, so I think it’s inevitable that we’ll see more coverage of smart health devices in the coming years. I’ll discuss payment issues in a moment, but first, let’s look at the case for hospitals getting into the business of technology retailing.
Why would consumers in search of home health technology turn to their local hospital? The most obvious answer is: There aren’t a lot of good options. You might go to Best Buy for a refrigerator or TV, but what does that kid in a blue shirt know about glucose monitors or respiratory assist devices? These are purchase decisions with a certain degree of life-or-death consequences, and hospitals might just be the one retail venue with the expertise and gravitas to earn consumers’ trust.
An on-campus tech boutique won’t be staffed by doctors, of course, but with clinical experts nearby for consultation and follow-up, hospitals can offer the kind of one-stop convenience that a big-box store can’t match. From prescriptions to counseling, the whole consumer experience can be more seamless and less stressful if retail boutiques are co-located with a provider practice.
One-stop convenience is something that’s sorely missing in the current market for medical devices. There are dozens of companies peddling hundreds of connected devices, making it very hard for consumers to know the options or cut through the advertising claims. In John’s case study above, I mentioned the ECG chest strap from Fourth Frontier, but similar products are available from Wellue, Qardio, Maxim, and more.
Not sure about a chest strap? Device manufacturers also offer wrist bands, smart rings, fingertip sensors, and cellphone apps to detect AFib and arrhythmia. In the ECG category alone, there are probably three dozen or more home medical devices aimed at consumers – but I don’t know of any retailers that feature multiple options in one place.
Hospitals and health systems are perfectly positioned to fill that gap in the market because they are device agnostic. A hospital doesn’t care which brand or which device a consumer might choose as long as that device can connect to the patient’s EHR. The good news is, such a connection is almost always possible.
Digital platforms such as Thryve and HumanAPI offer a single integration allowing hospitals to link their EHR systems with hundreds of different devices from thermometers to scales to smartwatches. Once the integration is established, a consumer’s data can “push” automatically into his or her health record for routine review by the care team (and soon, most likely, by an AI screener).
Nearly 75% of consumers say they’re willing to share health data with their doctor but relatively few actually do so. By getting into the retail business, hospitals can nudge consumers into making that all-important data connection. It can happen seamlessly at the point of sale with clear disclosures and no hassle. With an effective system in place to monitor incoming patient data, hospitals can increase patient touchpoints and build the kind of relationships that lead to better health outcomes.
As US healthcare transitions to a value-based model, longitudinal relationships become more important than one-off encounters. In a transformed healthcare system, hospitals can’t be simply a last resort for the sickest patients. More touchpoints, more communication, more lifestyle offerings – that’s how hospitals can create an ecosystem that keeps customers engaged across the spectrum of care.
We’ve written before about the huge financial potential of Chronic Care Management, and connected devices play an important part of making that business line work. In addition, Medicare is rapidly adding new reimbursement codes for Remote Patient Monitoring and Remote Therapeutic Monitoring. As I’ll discuss below, the rules are currently somewhat restrictive, but RPM and RTM do at least offer hospitals an ongoing revenue stream while they deepen all-important relationships with their customers.
At every stage of the customer relationship, connected devices can play a huge role. For example:
Thus far I’ve been focused on self-pay customers because public and private payers don’t cover the kind of sophisticated technology that we’re talking about here. If you go back to the example of John, he has two affluent, professional sons who would happily pay for smart health devices that allow him to age in place.
For too many low-income Americans – often people of color or those living in rural areas – that kind of out-of-pocket investment would be out of the question. If digital wellness devices increase racial and geographic health disparities, then I think Medicare will have to step up and offer payment for the most effective technologies. It’s largely a matter of data, and the datapoints are increasing:
The examples go on and on. As the evidence builds, I believe that political pressure will build quickly as well, and within five years I believe we’ll see Medicare coverage for at least some connected devices.
The market for consumer health devices is exploding. From 2015 to 2020, both digital health tracking and ownership of wearable devices increased by 300% or more, and new technologies will only accelerate the trend. Smart canes and smart inhalers have recently hit the market. Coming soon: a bra for detecting breast cancer, a VR headset for treating migraines, and much more.
Public policy is having a hard time keeping up, both in terms of health equity (see above) and provider payment. Smart health devices are generating valuable data on individual users, but monitoring or following up on that data takes time – and reimbursement policies may not reflect the value of that time.
For instance, under the payment policies for Remote Patient Monitoring (RPM), a practitioner is paid only $50, on average, for a 20-minute “dialogue” with the patient or caregiver (CPT 99457) – considerably less than other E/M consultations.
But focusing on clinician hours may be shortsighted. The big revenue opportunity for hospitals is CPT 99454, which covers data “monitoring” as opposed to follow-up. As long as a connected device provides 16 days of data each month, a provider is paid $50 to monitor that data. In 2021, CMS clarified that monitoring can be performed by “auxiliary personnel” under the “general supervision” of a practitioner. This is very similar to the policy for Chronic Care Management, where much of the monitoring work gets outsourced to specialized firms that split revenues with the hospital.
Based on all of that, here’s my prediction: One day soon, I think we’ll see smart health devices marketed and sold much like cell phones are today. Similar to Verizon or AT&T, I predict hospitals will underwrite the cost of a device in order to capture the steady, ongoing revenue of monthly monitoring.
Steady new revenue streams and deeper relationships with your patient-customers? That seems like a pretty good reason to take a closer look at hospital technology boutiques.
Research by Sneha Thirkannad, Ascendient strategy analyst
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