Want to ruin a shopkeeper's day? Just whisper "Amazon" in his or her ear.
The economic term for what's happening in retailing is disintermediation—the removal of middlemen from a supply chain or a series of transactions.
Healthcare providers are experiencing their own disintermediation moment. Advancing technology and the growing ability of payers and patients to instantly access information electronically is transforming nearly every corner of healthcare.
The practice of radiology is probably farthest along the disintermediation road. Highly trained radiologists traditionally supervised imaging, interpreted the results and offered advice to the physician who ordered the image.
Today, physicians are using handheld ultrasound devices and loading images into picture archiving and communications systems that can be read anywhere by anyone at any time. Their consulting radiologist may be laboring over a computer screen in Bangalore.
Fast-growing telehealth is expected to become a $30 billion market by 2020. Insurers are finally beginning to reimburse telehealth providers for an array of specialty services in short supply, such as behavioral health.
Centrally located doctors and nurses are providing emergency and operating room consultations to rural or smaller hospitals that can't afford 24/7 staffing. Patients are sending in blood pressure and glucose readings from home, enabling physicians to order medication adjustments without an office visit.
Advances in medical technology are also powering the disintermediation wave. Knee and hip replacements used to require anywhere from two to seven days in the hospital and a rehab facil- ity. Today, scores of ambulatory surgical centers are offering same-day total joint replacement in outpatient settings with rehab at home—at a fraction of the cost.
Wait three weeks for a routine doctor's appointment? Why bother when you can get your annual flu shot and your blood pressure checked at a nearby pharmacy.
The chains aren't stopping there. CVS Health recently announced it would expand the reach of its in-store clinics to include helping patients adhere to their medication schedules—a crucial strategy for improving outcomes and lowering the overall cost of treating patients with chronic conditions.
Most hospitals and physician offices, still stuck in fee-for-service arrangements, have been slow to implement medication adherence programs, a valuable population health management tool. Their incentives run in the opposite direction. Why pay for outreach nurses when the reward is fewer fee-for-service payments?
The employer community, which provides healthcare coverage for more than half the population, is fueling disintermediation. The latest survey of large employers by the National Business Group on Health reveals they're doubling down on sending employees into high-deductible plans.
Fully 39% of large employers will make high-deductible plans their only option for employees next year, up 4 percentage points from 2017. High deductibles prompt price-sensitive healthcare consumers to shop for discretionary services—from outpatient surgeries to office visits to imaging and lab tests.
Patient shopping poses a direct threat to the strategy behind provider consolidation, which presumed the upfront costs of achieving efficiencies of scale would be rewarded by capturing more of the premium dollar. Employers aren't stopping there. By the end of next year, nearly two-thirds of large employers will be operating on-site health centers. More than 80% already send their workers to centers of excellence for routine operations, where the promise of greater volume offers bigger discounts.
The U.S. still doesn't have an easily accessed, shared medical record system. Without one, disintermediation could become just another layer of cost in our fragmented delivery system.
But the evidence to date suggests disintermediation is exerting downward pressure on price and utilization. Employers report premiums will rise just 5% next year for the fifth straight year, a good thing for payers and patients.
But for providers, it means disintermediation may soon reach a tipping point where once reliable revenue streams have been mostly siphoned away. As in retailing, not all will survive.