Chris Surdak

by James A. Bacon

One day historians will look back upon the healthcare debate in the United States and marvel at how oblivious the politicians, lobbyists and pundits were to the massively disruptive changes to come. Congress battling over Obamacare and Virginia legislators grappling over Medicaid expansion will appear to future generations like so many dinosaurs hunting and munching and rutting, totally unaware that a meteor bearing down on them would bring them all to extinction.

In the view of futurist Chris Surdak, author of “Data Crush: How the Information Tidal Wave Is Driving New Business Opportunities,” the U.S. health care system is beyond reform. Massively entrenched special interests — physicians, hospitals, pharmaceutical companies, insurance companies, Medicare and Medicare recipients —  are deeply wedded to the status quo. “They are politically very powerful,” he tells Bacon’s Rebellion, “and rhetoric is all about self-preservation and self propagation. Who wants to see an unlicensed doctor? Who is against helping sick people?”

But that system is so dysfunctional and resistant to change that it will collapse as entirely new medical practice models emerge. Writing in HP Matter: The Healthcare Issue, Surdak identifies game-changing technologies that will give rise to new medical products and services that will deliver such better outcomes at less cost that they will render the old system obsolete.

New sensors are making it possible to track an ever-growing array of medical markers — temperature, pulse, blood pressure, glucose, cholesterol and virtually any kind of molecular compound — around the clock in real time, and then to transmit that data to central repositories where it can be subjected to predictive analytics. Soon, writes Surdak:

When you or I feel a bit sick it will be completely normal for us to stop by a vending machine at the mall, buy a disposable, $5 plastic cube (like today’s Square credit card reader), lick it, and then get an accurate diagnosis of our ailment in 10 seconds or less.  We’ll then get a coupon for the best treatment for that ailment and an invitation to consult with a five-star specialist in that condition, who practices medicine on a different continent. This will all be normal to us by 2020.

Existing health care providers will avail themselves of these technologies to make incremental improvements to the quality and cost of medical care, but they have no incentive to disrupt the system in which they are so heavily invested. Real change will come from entrepreneurs who build new business models around the technology. Healthcare incumbents can stifle domestic competition — although it is interesting to see how big players like drugstore chains are planning to disrupt the urgent care and diagnostics businesses — but they can’t quash competition from abroad.

Medical tourism, a large and growing industry, will explode, Surdak predicts. Instead of traveling outside the country for big-ticket procedures like open-heart surgery or kidney transplants, patients will consult with their doctors via FaceTime or Skype.

With telemedicine, it won’t matter where I live, or where my provider practices; we will simply log into a consultation session online. As a result, I will seek out the very best providers wherever they are in the world, and they in turn will work to market directly to me through online exchanges not unlike Angie’s List or eBay. This transformation is already taking place, and doctors who do not join such exchanges immediately will, again, find themselves providing commodity services to the least-common denominators in the market.

Traditionally, incumbent businesses have used their power to influence laws and regulations to protect themselves from competition. Change is moving so fast, however, that the politicians and regulators won’t be able to keep up, Surdak says. Much as Uber disrupts the transportation-for-hire industry by entering a market, developing a constituency and then asking for regulatory permission, the new wave of medical providers will develop powerful constituencies — new business ecosystems and, most importantly, happy patients — before the incumbents can shut them down.

If Surdak is right, and I think he might be, there will be a huge reshuffling of winners and losers. The biggest winners will be patients, who will get better medical treatment at lower cost, and the new wave of medical enterprises. The losers will be hospitals, insurers and physicians wedded to the status quo. If they don’t adapt, they will go extinct.

Insofar as state and federal governments pay for half the tab for the nation’s healthcare, governments will be big winners, too. The changes Surdak predicts could bend the medical cost curve radically downwards. Tens of trillions of dollars in future Medicare and Medicaid liabilities could evaporate. Boomergeddon will never arrive, and I’ll have to write a groveling apology.

I asked Surdak if there is anything that government can do to hasten medical disruption, especially at the state level. He suggested that we could get to work dismantling the barriers to change — professional licensure requirements, Certificate of Need regulation, mandated medical benefits — by which vested interests protect themselves. But from his Olympian perspective, he didn’t seem to think it really mattered. Disruption is coming regardless.

From a Virginia-centric perspective, I think it does matter. I draw an analogy with the deregulation of the banking industry in the 1980s. North Carolina got the jump on Virginia, enacting deregulation a couple of years before Virginia did. North Carolina banks started the process of consolidation and rationalization earlier than Virginia banks, eventually growing big enough to swallow the Virginia banks whole. Today, banking is a pillar of the North Carolina economy, not of Virginia’s. Similarly, if Virginia medical institutions are subjected to the full force of Surdakian disruption earlier than their peers in other states, they will have more time to adapt and innovate. They could emerge from the ashes stronger than before.

Will Virginians take up the challenge? I’m not optimistic. We don’t call ourselves the “Old” Dominion for nothing. But you never know. Medical miracles occasionally do happen.

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4 responses to “Medical Crush”

  1. To really be a futurist on this topic, you have to venture an educated guess where health care is headed in a post-genome-revolution, post-cheap-prosthetics, diagnostics-on-a-chip world. Jim, you and Surdak are right to ask, who will jump on this first and profit most from being first?

    But the deeply entrenched forces of the present health care system do not, for a moment, suggest that the debate will play out with tactics reminiscent of urban taxicabs versus Uber. Or that the protectionist ways of state and federal regulators will cease and desist after the merest protest.

    In short, I just don’t believe “the new wave of medical providers will develop powerful constituencies — new business ecosystems and, most importantly, happy patients — before the incumbents can shut them down.” It ain’t gonna happen.

    Anyway, so how should Virginia posture itself to take advantage of all that growth if I am wrong? We are already big on going after R & D – but you seem to have something else in mind? Softer corporate regulation in Virginia to attract big health care holding companies, perhaps? Seriously, what could we do?

    1. I don’t know what the state can do. All I can say for sure is that there’s a s*** storm coming and we can either be on the receiving end or the delivering end. I’m just trying to get the dialogue started.

  2. Two health care trends are already well underway:

    1. Divergence in family practice medicine. Family doctors, once known as General Practitioners of GPs, are going one of two ways in Northern Virginia. Some are establishing concierge medical practices whereby patients pay $1,500 or $2,000 per year (per family, I believe) to get preferred access and more time with the doctors. 200 families plunking down $1,500 per year nets the doctor a guaranteed $300,000 of gross income. Any additional recovery from insurance adds to that total. Other family doctors are selling out to hospital chains. I know one successful family medicine practice that is being actively courted by several hospital chains. Family practice practices are the “feeder system” for hospitals and those hospitals want to control the supply chain.

    2. Capped employer insurance payments. Rather than offering specific health plans with specific options employers will provide employees a set amount of money and direct the employee to the in-house health exchange. The employee will buy whatever insurance plans they want (subject to meeting Obamacare standards, of course). If they want more coverage then they have employer provided funds to purchase (likely) then they will have to use personal funds. Employers will raise the amount provided each year by roughly the amount of the CPI. When (not if) health care costs rise faster and force insurers to raise their rates faster than the CPI the employer will (correctly) claim that there is nothing the employer can do about the absurd escalation in health care costs.

    Concierge medicine for the wealthy, factory like, hospital run primary care for everybody else. Middle class wage earners with less disposable income as employers refuse to continue underwriting the ridiculous escalation of prices in our broken medical system.

    Single payer by 2020.

    1. Agreed. But neither trend is pain free.

      Concierge medicine — every doctor who takes the concierge medicine route reduces his patient count on average from about 3,000 to less than 1,000. It doesn’t take too many doctors making the switch before you start experiencing a major doctor shortage.

      Capped insurance payments — employees won’t like it. They’ll feel like they’re getting screwed. They’ll be right. But realistically there’s nothing that can be done about it.

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