Before the COVID-19 pandemic, hospitals and outpatient clinics accounted for 99% of all medical visits. That share has dropped during the pandemic to about 90% as emergency conditions stimulated the adoption of telemedicine and in-home treatment. As the epidemic recedes (assuming it does recede), medical care could well shift back to traditional settings in medical facilities.
Two George Mason University professors with the Mercatus Center argue that digital technologies are making it possible — and desirable — to push more care out of medical facilities and into the home.
“In an increasingly distributed, digital world, providing an overwhelming share of health care in a highly capital-intensive environment makes less and less sense,” write Philip E. Auerswald and Justin Leventhal in a new policy brief.
By nature, capital-intensive environments are burdened by high fixed costs. … Centralizing services in a hospital makes sense for procedures and types of care requiring bulk equipment, a sterile environment, or both, but advances in technology and the evolution of consumer habits now permit a larger share of healthcare to be delivered in the home, in retail clinics, and in other nonhospital and non-outpatient settings.
The shift to non-traditional settings could make healthcare more accessible and less expensive. But it will require making many regulatory changes, most of them at the state level. Whether Virginia’s powerful hospital and insurance lobbies will permit these changes to take place is an open question.
The debate over healthcare in Virginia has revolved mainly around the question of how to pay the ever-escalating costs of Medicaid expansion rather than making healthcare more affordable and accessible to all by fostering innovation and productivity. The result has been endless increases in cost and a safety net riddled with holes.
The rise of digital technologies has created an opportunity to change the game by moving a significant share of healthcare out of hospitals and into the home. The authors write:
Hospitals will remain a necessary part of American healthcare for the foreseeable future. But they are not the most efficient place to service all healthcare needs. Much of the healthcare provided in hospitals has high fixed costs and requires physicians to administer, and a lot of routine and nonemergency healthcare could be provided in less expensive but equally effective home and retail settings. Compared with hospitals, home and retail healthcare has lower fixed costs and less expensive staffing, specifically for routine or nonemergency care. Additionally, increased price and quality competition in these settings can act to drive innovation for somewhere between roughly 35 percent and 98 percent of healthcare services.
The authors point to five broad areas of regulatory reform, much of which must occur at the state level.
Scope of practice. “Restrictive regulations on scope of practice reduce the number of innovative, cost-lowering and quality-raising methods of healthcare delivery. Regulation at the state level should be amended to expand the scope of practice for licensed, nonphysicial medical personnel.”
Allowing Nurse Practitioners (NPs) and Phyisican Assistants (PAs) to perform house calls would increase the number of personnel who can provide healthcare in the home.
The authors also explore the idea of fostering a new medical specialty that might be called “digital health worker.” Digital workers would complement NPs and PAs by focusing on digitally supported record keeping and digital diagnostics.
Modes of payment. “The norm of third-party payment for healthcare services decreases price transparency, making healthcare provided outside of hospitals difficult to price. States should implement a legal structure supporting innovative modes of payment (such as direct payment) for healthcare and create a state medical price database.”
Having insurance provides no guarantee that medical facilities are within geographic reach, that physicians are willing to take on new patients, or that people have the money to pay insurance premiums, deductibles and copays. The problem, say Auerbach and Leventhal, is that health “insurance” really is not insurance at all: it has become a prepayment system for healthcare. Insurers (including Medicare and Medicaid) are slow to respond to innovations that provide healthcare in less expensive settings such as pharmacies or the home. Increasing care outside of hospitals requires a system that allows patients to pay directly for a greater share of routine care.
In the Direct Primary Care (DPC) model, patients provide a simple monthly fee for routine medical care instead of relying upon insurance to pay for it. Another emerging options is the Village model, in which seniors can age in place by helping each other pay for or perform simple chores and travel to medical appointments.
Medical devices. “Federal regulation for new medical devices is unnecessarily burdensome, and approval is slow, deterring investment and reducing the development of new medical devices. The FDA should adopt a faster approval process … and loosen restrictions on the personal use of noninvasive medical testing kits and biometric devices in particular.”
Faster FDA approval would encourage innovation in the field of biometric sensors, artificial intelligence diagnostic tools, and telemedicine technologies that would expedite the practice of healthcare in home and retail settings. As it is, to avoid FDA regulation, companies such as Apple and FitBit have actually dumbed down their devices to limit the data they can collect.
Data ownership. “Most states either fail to specify the ownership of patient health data or they grant ownership of patient health data to healthcare providers, complicating the development of interoperable patient health data systems. States should pass legislation that gives patients ownership of their own health data.”
Moving healthcare to home settings will require NPs and PAs to access patient health data held by hospitals and other providers. The cost of transferring those records is a major barrier. The goal should be to create what the authors call “fully portable, self-sovereign patient health data.”
Telemedicine. “Federal regulations restricted telemedicine options before the COVID-19 epidemic, and although some regulations have been relaxed during the pandemic, these changes may lapse.” Modifications to reimbursement policies and HIPAA should be made permanent with the explicit goal of promoting telemedicine.