“The Uber of Healthcare?”: It’s Not About the App, It’s About The Overhead.

For a very long time, one of the most valuable business assets in New York City was a yellow cab taxi medallion. With recent value in the $1 million dollar range, ownership of the medallion was a virtual cash annuity, combined with equity growth (in 2004 medallion prices were in the mid $200,000 range and have increased in value 15% year over year in the 9 years since). As one owner once put it “it even makes money for me while I sleep”, since the cars can be ‘rented’ when the owner is off shift.

Medallion owners tend to fall into two categories: Private Practitioners and Fleet Owners. Private Practitioners own their own car, have responsibility for maintenance, gas and insurance, and tend to use the cash flow to live while allowing the medallion to appreciate over the course of their career. They then cash out as part of their retirement plan.

Fleet Owners have dozens of medallions; they lease or buy fleets of automobiles and often have their own mechanics, car washes and gas pumps. They either hire drivers as employees or, more often, ‘rent’ their cars to licensed taxi drivers who get to keep the balance of their earnings after their car and gas payments.

In London, taxi drivers have to invest 2-4 years of apprenticeship before they can take and pass a test called “The Knowledge”. However, like NY, finally getting that a licence to operate a Black Cab in London is a hard-working but stable way to earn a living.

Now imagine that someone comes along that can offer all the services of the NYC yellow cab or the London Black Cab directly to the general public, but does not have to own the medallion, own the car or employ the driver. With as much as 70% lower overhead, they provide the same service to the consumer; in fact they are so consumer friendly that they become the virtual gatekeeper for all the taxi and car service business in the community.

How, you ask? Outsourcing the overhead and just-in-time inventory management; they convince thousands of people to drive around in their own cars with the promise of a potential payment for services driving someone from point A to point B. All these drivers have to do is meet certain standards of quality and safety. This new company does all the marketing and uses technology to make the connection between the currently active drivers and those in need of a ride; they provide simple and transparent access to a host of cars circulating in your neighborhood, let you know the price and send a picture and customer rating of the driver, all before he or she arrives, and they process the payment so no money ever changes hands.

This is the premise behind Uber, a very disruptive take on the ‘taxi’ business. As a recent article in Bloomberg News noted, the slower rate of growth in medallion value is already attribute to the very young company; a recent protest by Black Cab drivers in London resulting in an eight-fold increase in Uber registrations.

Now imagine that a new healthcare services company comes to your community offering population health management services on a bundled payment or risk-basis. They guarantee otherwise inaccessible metrics of quality and safety to both large employers and individual consumers. They employ only a handful of doctors, but do not own any hospitals, imaging centers or ambulatory care facilities.

However, they are masters at consumer engagement, creating levels of affinity and loyalty usually found with consumer products and soft drinks. They use a ‘don't make me think” approach to their technology, seamlessly integrating analytics and communications platforms into their customers lives, and offer consumers without a digital footprint a host of options for communications, including access to information and services via their land lines or their cable TV box. They leverage high-level marketing analytics to determine who will be responsive to non-personal tools for engagement, like digital coaching, and who requires a human touch.

Care Planning is done based on clinical stratification and evidence; population specific data is used to determine the actual resources required to achieve clinical, quality and financial goals (a mid-West ACO has more problems with underweight than obesity, do they need to maintain their bariatric surgery center?). Physicians serve as ‘clinical intelligence officers’, creating standing orders across the entire population, implemented by non-clinical personnel; they also create criteria for escalation and de-escalation of services and resource allocation based on individual patients progress towards goals. They employ former actors and actresses as health coaches and navigators, invest heavily in home care and nurse care managers and use dieticians in local supermarkets to support lifestyle changes (while accessing and analyzing the patients point-of-purchase data to see what they are really buying).

The ‘primary relationship' between patients and their health systems is with a low cost, personal health concierge: primary care physicians who agree to standards of quality and accountability get a guarantee of traffic based on predetermined eligibility criteria and are spared administrative burdens. Multi-tiered scenario planning for emergencies is built into the system. For professional resources only required on an 'as-needed' basis, such as hospital beds, surgeons and medical specialists, access is negotiated in advance based on a formula of quality standards and best pricing but only used on a just-in-time basis (Alert: ICU bed required in 6 minutes, who wants the job?).

They are not a payer, although a professional relationship with them is on a business-to-business basis. They are a completely new type of health system, guaranteeing health and well being, transparent in their operations and choosing their 'vendors' based on their willingness and ability to achieve those goals. In doing so, they significantly reduce the resources necessary to achieve goals for quality of care and quality of health across the entire population; they treat quality achievement as an operational challenge and manage their supply chain accordingly.

Am I suggesting this a new model of care? No, I am personally an advocate for physician-driven systems of care. But this kind of system is very possible, and there are companies working on models of “national ACOs” using many of these principles.

The Uber of healthcare will have much less to do with the “mobile app”; and far more to do with creating value by minimizing overhead, designing flexible operations, supporting goal-directed innovation and bringing supply-chain discipline to the idea of resource-managed care delivery. It will involve embracing models of care delivery that leverage emerging evidence on non-clinical approaches to health status and quality improvement, and focusing on designing goal-directed interactions between people, platforms, programs and partners.

I can hear more than a few of you creating very good reasons why it wont work (“you can’t put an ICU bed out to bid!”), but these scenarios are very do-able. If we want to revitalize the experience of care for patients and professionals, we must be willing to acknowledge and embrace dramatically different, often counter-intuitive, operating models for care that will require new competencies, forms of collaboration and reengineering the roles and responsibilities of those who comprise a patients ‘health-resource community’

© Steven Merahn, MD 2015