The sharing economy is booming. With the rise of apps like Uber, Lyft, and Airbnb, people are getting paid for sharing, and consumers are getting access to services at a reduced cost. Industries are now looking to Uber (the poster child for this market revolution) to model their own game-changing service -- including the healthcare industry.
With the rise of smart phone technologies and development of lower cost health tech, there are more and more convenient and inexpensive ways to connect providers and consumers. There are in fact a growing number of services offering on-demand medical services like medication delivery, house calls, and tele-medicine (think Skyping with your doctor) --but none of these has shown itself as the clear front-runner in changing the face of health care services as we know it.
In other words, we haven't seen the new health-Uber yet. But why not?
By subverting the 'middle men', consumers and providers are avoiding the transaction costs that drive up the price of services like hotel rooms and taxi rides. Some institutional costs of doing business are also subverted by the sharing economy.
For example, Taxi drivers have to pay an exorbitant price for a license to do business. Costs like this are worked into the cost of a ride, i.e. the cost is passed on to the consumer. There is also a cap on the number of licences awarded in a particular city, increasing the value of these licenses even more while decreasing the number of providers in the market.
With apps like Uber, the driver only needs access to a smartphone and a consenting consumer, thereby lowering the cost of doing business significantly and increasing the number of potential providers that can enter the market. In turn, the cost of using the service is reduced at least two-fold.
Barriers to Uberfication
The current on-demand models of health care services are not nearly as profitable as Uber, and thus not as sustainable. Although the cost of a particular health care transaction will be significantly higher than what it costs to get a ride across town, the number of transactions per year will be significantly lower for on-demand health services than Uber rides.
The higher revenue does not compensate for the lower number of transactions.
In health care industries like Canada's, consumers are also less likely to pay out of pocket for health care services compared to other services. Unlike other on-demand services, consumers are also less likely to use an Uber-like app for health care because of novelty or convenience--the primary concern of consumers when seeking health care is quality.
Another impediment to the growth of this industry is its current inability to access the greatest marketing tool - word of mouth. Consumers are less likely to talk about their health experiences, which stops organic consumer awareness--this means it costs more to actually acquire customers.
Furthermore, customer feedback and experience becomes considerably more integral to the operation and dissemination of the services than the traditional shared economy service. A bad diagnosis or treatment is much worse for a service's reputation than a trip across town with a rude driver or staying in an untidy house.
The Possible Ramifications of Uber Health
If a provider is able to overcome all of the potential barriers to success with the Uber model for health care, then we should also consider who will stand to lose out. To say hotel chains and taxi drivers were upset by the rise of these sharing economy services would be a grave understatement. So who stands to be jilted in the uberfication of health care? Doctors? Hospitals? Insurers? In a universal system, would the government stand to lose?
In 'universal' health care systems like Canada's, uberfication could potentially create a stratified health care system where those who can afford premium on-demand services will have access to the best technologies, doctors and specialists -- much like a private payer health care system. The best doctors would have incentive to join the payer system to avoid significant overhead and gain more flexible hours, never mind profit.
The health care industry is also much more profitable than the taxi industry -- and with the potential for profit is the potential for nefarious partnerships and sponsorships from pharmaceutical companies, and affiliated research groups, which could impact the quality of care that patients are receiving.
Uber models help relieve poverty by opening up the market to those providers that would normally be priced out of offering their services. Sharing economy services rely on feedback from consumers, not regulatory bodies, which would be extremely problematic in the health care industry.
People want experienced doctors and quality health care, which requires expensive educations, licenses and regulatory bodies to ensure patient safety. There is considerable incentive for providers and consumers to keep the barriers to entry high. In this way, the health care industry is not likely be modeled after a sharing economy service like Uber.
Who will dominate the next game-changer in health care?
So who aims to win out in this 3-trillion-dollar industry? With the increase of medical data being digitized and the rise of health care monitoring technologies, some argue that whoever is able to use this new wealth of data is going to dominate, though how they intend to use it is going to determine the direction of the next shift.
Others have made the argument that those who are able to successfully scale the specialization tele-medicine model that already exists will ultimately win-out.
If a provider can reduce or at least maintain the current cost of the service, and still provide quality care on-demand, they will have a solid opportunity in the market. For now, at least in Canada it will be specialists, complimentary health care professionals and mental health care professionals who exist outside of the subsidized system that are destined to truly profit from this model.
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