3 Reasons Why Health IT Won’t Be Disrupted Anytime Soon

Healthcare IT is an area that always seems to be ripe for disruption

It seems that every day I read a new article about disruptive technology. Accompanying those articles are more that detail how healthcare IT either lags way behind, or how the industry is just on the cusp of being disrupted.

However, despite all of the progress that technology has made, healthcare still seems to lag behind.

This post examines some of the reasons why health IT lags so far behind, and some of the challenges that either need to be overcome, or innovated around.

1. Sensitivity and Ownership of data

Personal health data is sensitive. When data breaches happen, the media loves to jump on and publicize them. Partners HealthCare, a healthcare system in Boston, recently announced that it is notifying 3300 patients about such an incident, in which healthcare data, including names, dates of birth, and even social security numbers were stolen through a deceptive email tactic known as phishing.

Although the vast majority of these cases involve some form of social engineering or human error (e.g., leaving an unsecured laptop on a train), the blame for the recent spate of data leaks is oftentimes blamed on Electronic Medical Records (EMRs). As a result, health systems, like Partners, are becoming increasingly vigilant in securing and protecting the data for the patients they care for.

Innovation in technology is often associated with the concept of “openness.” When healthcare systems are increasingly concerned about protecting their data, they have a disincentive to opening their IT systems up to outside developers. This usually results in more of the status quo. Because of the very nature of the sensitivity of healthcare data, it’s unlikely that any major health system will be willing to take the major leaps needed to transform the way that Healthcare IT is developed and implemented.

2. Regulations and reimbursement

The complexity of healthcare regulations and reimbursement in the US is one of the main drivers of the reluctance to innovate in the healthcare IT market. Ever wonder why Google hasn’t gotten into the market? The short answer is, it’s not worth the headache.

Taking on the task of understanding the complex environment and convoluted system that developing an EMR would require is a huge barrier to entry. Simply put, it’s unlikely that innovative companies are going to be drawn to an arena where rules and regulations are the norm; they’re more likely to focus their limited resources on industries that have fewer barriers.

3. Lack of a consumer marketplace

Unlike pretty much every other industry, healthcare does not have a transparent consumer marketplace. You often have absolutely no idea how much the services that you’re receiving actually cost until you get the final bill.

Innovation often seizes on an opportunity to make things easier for the consumer. Unfortunately for the healthcare industry, because there’s not that opportunity for a direct-to-customer market, it’s more difficult for the innovative companies to understand and capitalize on consumer needs.

The reason that healthcare IT hasn't produced any significant disruptions isn't for lack of trying. Jonathan Bush of athenahealth has specifically called on entrepreneurs to enter the space. However, there are a lot of industry characteristics that make it difficult for companies to do so. It's likely that certain aspects of healthcare delivery will have to change before it becomes worth it for truly disruptive technologies to get into the market.