1. Obamacare is real – so what does it mean for healthcare IT?
If there were any doubts that parts of Obamacare may be repealed in the event of a Romney win, those
doubts have receded into the dim and distant past by now. Healthcare reforms are moving ahead and
will accelerate in the coming months. Defined contribution, health insurance exchanges, value-based
pricing, ACO’s – these terms may well be common parlance in a few years from now.
Healthcare has been relatively slow to adopt new technology in the past, and the good news is that this
may well be a golden opportunity to leapfrog into the future, just as many developing nations
leapfrogged landline phones with mobile phones in the late nineties.
Let’s look at a few big factors that will drive these changes:
- Consumerization of healthcare: We’re already there. HIE’s will be real in 2014. States have a
deadline to indicate if they intend to set up one on their own or opt for a Federally provided
exchange. Health Plans have the option to compete for new business from the 40 million or so
underinsured and uninsured Americans who will be required by law to buy insurance.
- Value-based payments: As defined contribution models become more common in the face of
escalating healthcare costs, health plans will put the squeeze on providers and practices to
accept value-based payments related to outcomes and population management. The Federal
Govt has committed itself to eliminating waste and drastically reducing healthcare costs,
especially in the Medicare programs. This will translate into enormous cost pressures for
providers – yet, at the same time, it will open new opportunities for revenue and profits through
emerging models like ACO’s for physician practices that can effectively manage population
health.
- Emergence of new and potentially disruptive players:Consumerization of healthcare is fertile
ground for innovative start-ups. Over the past few years, several new start-ups have started
redefining the way healthcare consumers relate to the healthcare system. Big money has
started flowing into this space from the VC community. New companies like ZocDoc and
HealthTap are addressing a long-standing gap in the interaction between consumers and the
healthcare system and are seeing an explosion in subscriptions and memberships, especially
from younger consumers. They are driving transparency in physician practices and are breaking
down the walls that prevented consumers from having any meaningful information about their
physicians. Other models that leverage remote care delivery will slowly replace the doctor’s
office as the meeting ground between patients and physicians. Many of these now give away
their services for free, or offer it in a “freemium” model.Big corporates like Walmart and
Amazon may well be able to utilize their physical and digital infrastructure to disruptively
engage with consumers for their healthcare needs.
Healthcare IT has to address the industry transition from a business model ,and also from a
technology perspective.

2. - Fundamental changes to the Information technology landscape: Cloud computing is here, and
is the de facto model for new software applications. New healthcare entities, such as ACO’s, will
be stood up on virtual infrastructure that requires minimal capital investments, and can be
scaled up or down on demand. BYOD is real, and healthcare workers will interact with their
employers through multiple devices, requiring IT to enable it while ensuring information
security. Analytics is the new driver of operating decisions and profitability, and analytics-as-a-
service will become the de facto model in a hybrid cloud environment.
- EMR’s and digitization of medical records: While we hear a lot about the millions of dollars
being spent on expensive electronic medical record systems, so far it has been used primarily for
meeting Meaningful Use requirements to claim additional reimbursements from the Federal
Govt. The real value, however, will be in how this information is made available to consumers
over the web and mobile devices anytime,anywhere so that consumers can actively manage
their health and wellness, and make informed decisions about their healthcare.
- Delivery of IT through in-house, outsourced, and cloud models: Gone are the days of the on-
premise, rigid, and monolithic IT organizations under a CIO. Indeed, the role of the CIO is being
redefined as the delivery of IT requires building a capability to source, integrate, and deliver IT
using a combination of in-house and vendor resources. This has immediate implications for
several constituents:
o As data centers shrink or disappear, IT workers will need to reskill themselves to operate
in a hybrid cloud environment.
o As IT becomes more democratized and business users take more active control of IT
capabilities, traditional IT functions will evolve into enablers, integrators, and policy
administrators.
o As traditional software and hardware is replaced by cloud-based apps and
infrastructure, outsourcing of traditional labor-intensive tasks will be replaced by new
cloud services. This has implications in terms of reduced volume of business – and new
opportunities- for traditional firms that operate using an offshore delivery model.
What may be some of the challenges ahead as we move into the brave new world of consumerism and
outcome-based medicine?
- The healthcare system is built around a financial model that pays on a unit of service today. It
will be a big culture change for providers of healthcare to change to an outcomes-based model.
This implies a redistribution of risk from payers to providers. Providers are not ready for this yet.
The Government recognizes the challenges around a wholesale implementation of the ACO
model and is keeping the options open to figure out which model would work in the best
interests of all participants.
- Transparency will be forced out of healthcare providers: For the most part, healthcare
consumers are flying blind today as it relates to obtaining any meaningful information about
their healthcare providers. In a hyper-connected world, physicians will be forced to embrace
transparency and open themselves to consumer ratings, electronic exchange of diagnosis and
treatment information, and easy accessibility.

3. - Healthcare IT is not quite ready for the brave new world of a consumerized and outcome-based
healthcare system. While the first HIE’s scheduled to go live a year from now, it remains to be
seen if the technology will be ready to support a large-scale migration of healthcare consumers
from no insurance or employer-based insurance, to individual insurance. In addition, risk
management systems may not fully be in place for participants looking to build products that
will adequately reflect the risk of signing up individual insurers.
Having said this, healthcare reform in the U.S is perhaps the opportunity of the century. There will be
big winners and big losers. As President Obama said in one of the Presidential debates, we are no longer
in a world of bayonets and horses. Just as the military adjusts to the changing world of warfare, so we
will adjust to the new world of healthcare.