Nurses looking into a room.

Healthcare Disrupted: Inside the human health and life sciences revolution

As communities seek “target sectors” to focus on in their attempts to grow their economies, the health and life sciences sector has been a frequent choice. In part, this is because the sector is growing – but the clean, impactful, knowledge sector jobs that characterize the sector are also highly desirable. But Jeff Elton and Anne O’Riordan’s 2016 book Healthcare Disrupted: Next Generation Business Models and Strategies  suggests that the sector is in for a major shakeup.

Resource Review TINAN 74

Essentially, Elton and O’Riordan argue that the very basis of our healthcare system is outdated. For the better part of a century, compensation in the sector has been based on volume, rather than outcomes. For example, doctors get paid for the number of patients they see or the number of immunizations they give. Hospitals get compensated for the number of surgeries they perform. In the future, an outcomes-based approach  will eliminate these models, and compensation will be based (for example) on the number of people who don’t get sick. Instead of being paid to treat people who have diabetes, say, by the “amount of insulin prescribed”, doctors and medical professionals will be compensated for the number of cases of diabetes they prevent.

There are a few factors driving this transition. First, whether in a public setting like Canada or a private setting like the United States, those who ultimately pay the medical bills are seeing costs spiral out of control. By focusing on outcomes-based approaches, the goal is to improve people’s health while simultaneously reducing overall expenditures. In essence, prevention is cheaper than treatment. Second, the rise of Big Data is now allowing us to study health trends and patterns at a population level, which means we can actually study and understand which measures work when it comes to prevention. Third, the rise of personal healthcare apps and tools – think of  Fitbit, for example – allows individuals to take a more proactive role in monitoring their own health and verifying to medical professionals that recommended actions are being followed.

This fundamental reorganization of the healthcare ecosystem will have far-ranging impacts on the entire health and life sciences sector. From education to facilities construction and management, and patient care to ICT infrastructure, the entire system is about to undergo some wide-reaching changes. For communities that understand this transition, there are significant economic development opportunities. To learn more, you can find a copy of this valuable book here.

This post first appeared in TINAN 74. Subscribe to TINAN for the latest economic development news and resources.