Pressures on hospitals and health systems are mounting from all directions. Once the cornerstone of the nation’s healthcare industry, they increasingly are the target of innovative competitors seeking to siphon services by offering patients greater conveniences in the form of retail clinics, urgent and ambulatory care centers, virtual visits, and other telehealth services. Such competitors initially targeted low-intensity primary care, such as treating minor sprains and bruises, or offering flu shots and remedies for the common cold. In recent years, some have expanded into chronic care, offering to serve as a hub for patients managing complex conditions such as diabetes or high blood pressure.
Meanwhile, new entrants aim to draw away hospitals’ valuable imaging services. Smart Choice MRI, for example, advertises easier access to scans and readings by Cleveland Clinic radiologists at lower costs than local acute-care providers can afford to offer. Others, such as DirectLabs, offer easy access to lab tests with online ordering and results.
Amid this barrage of challenges, many hospitals and health systems have hunkered down, focusing on their long-standing core competencies—providing acute and specialty care. In the background, however, new threats have been growing that will test even these most fundamental hospital services. In this case, much of the disruption is coming from within, as large, well-established and respected health systems double down on their strong brands to offer patients the chance to receive even complex diagnoses from the convenience and comfort of their own homes.
Such services typically target patients looking for an expert second opinion to confirm or contest a local specialist’s difficult diagnosis or recommended treatment, such as cancer, heart disease, or neurosurgery. Organizations also market to physicians seeking consultations, and employers and health plans looking to control costs and reduce unnecessary care. While the trend of online expert second-opinion consults has not reached critical mass, its likely trajectory is not hard to imagine in an age when people are increasingly accustomed to the ease of ordering anything and everything via the internet. Some questions to ask are:
- How do hospitals and health systems prevent commoditization of their central acute-care functions?
- Should we anticipate national/international players transitioning from convenient and accessible second-opinion models to convenient and accessible first-opinion centers with contracted networks of providers to gather clinical data, collect specimens, and perform relevant and necessary diagnostic tests in or close to patients’ homes?
- At what point do local hospitals and physicians risk transitioning from being the experts driving and providing acute care, to conduits for care directed and driven from outside?
The Online Expert Medical Opinion Trend
Providing expert second-opinion consults online is not new. Such services have been around for well over a decade. Cleveland Clinic began offering expert second opinions online in 2004 through its MyConsult service, which advertises an expert second opinion from a top physician following a thorough review of medical records and diagnostic tests.
The Mayo Clinic offers specialty consults and expert second opinions to physicians and their patients, electronically and via video chat, through its Mayo Clinic Care Network. Since launching in 2011, the Mayo Clinic Care Network has grown to more than 40 healthcare organizations across the U.S. and Puerto Rico, as well as in Mexico, Singapore, and the United Arab Emirates.
In Boston, the Dana-Farber Cancer Institute offers expert second-opinions by its oncologists within eight to 10 days. The services are advertised as secure, convenient, and confidential: “The entire process is conducted online—including collecting your records—helping you avoid disruptions to your regular schedule, while also saving on travel and lodging costs.”
Other organizations advertising online expert second-opinion services include Johns Hopkins, Boston Children’s Hospital, Children’s Hospital of Pittsburgh, and the University of California, San Francisco, to name a few. Some health systems contract with broader online expert second-opinion services, such as Best Doctors, Grand Rounds, or SecondOpinionExpert.
Health systems offering the services typically advertise prices upfront on their websites. Houston Methodist in Texas, for example, offers the opportunity to “see a world-class specialist on your schedule, without having to leave your home” for $549, or an additional $150 for radiology or pathology review. Cleveland Clinic MyConsult is advertised at $565, plus an additional $180 for a pathology review, as required in most cancer-related diagnoses. At Dana-Farber, the cost is $750 for cancer diagnoses.
The major selling points for these online expert second-opinion services include promises of privacy, secure access, convenience, and peace of mind for patients struggling with difficult diagnoses. While insurance typically covers face-to-face expert second opinions, most plans (including Medicare) do not cover online expert second opinions. Unless such services are part of employee benefits, patients have to be willing to pony up the out-of-pocket costs or dip into their Health Savings or Flexible Spending Accounts.
This may change if these providers amass enough data to demonstrate that their services contribute to improved patient outcomes and lower costs. Many online expert second-opinion services claim these benefits. SecondOpinionExpert, for example, says it helps healthcare consumers optimize treatments and avoid unnecessary risks, including unwarranted surgeries. Grand Rounds advertises “a path to optimal health and healthcare, accessible to everyone, everywhere” with enhanced patient outcomes, and the opportunity “for employers to curb healthcare costs, without cutting corners.” However, research on the effects of such services on overall care is limited.
An independent study of nearly 6,800 Best Doctors cases found that patient-initiated second opinions led to diagnosis changes for about 15 percent of patients, and to recommended treatment changes for about 37 percent of patients. Yet, the study concluded that further research was needed to determine the ultimate impacts of the expert second opinions on clinical outcomes.
A Growing Demand
Health system executives report that demand is growing quickly as patients across the country and abroad seek access to medical opinions from experts at revered institutions, and companies looking to control costs incorporate such services in employee benefits. The number of patients using MyConsult has grown as much as 15 to 25 percent a year in recent years, driven in part by corporate clients and increasing demand from non-Ohio residents. At Massachusetts General Hospital in Boston, which has offered remote second opinions for about a decade, demand has grown to more than 10,000 cases per year, up from less than 1,000 cases per year in 2010.
Meanwhile, insurance companies are beginning to expand coverage for online services, and several states are changing regulations to allow patients greater access to telehealth consults. As online consults become more commonplace, and restrictions on such services ease, it is easy to foresee a time when they will become more the rule, rather than the exception. Given options, many patients likely would prefer to receive a scary cancer or cardiac diagnosis in the comfort of their own homes, rather than in a stark hospital room.
It’s a future that Teladoc is betting on. In June, the company announced plans to buy Best Doctors for $440 million in cash and stock. The acquisition effectively moves Teladoc beyond its focus on routine primary care to acute and chronic care. Best Doctors prides itself on developing new care models, and specializes in providing second opinions for complex cases. The deal expands Teladoc’s network with Best Doctors’ more than 50,000 medical experts in more than 450 specialties. Teladoc has said it aims to create a new paradigm for how patients access care by providing a single solution for addressing a complete spectrum of medical conditions, from non-critical, episodic needs to complicated, chronic conditions.
“With clinical capabilities that span the entire healthcare continuum, Teladoc will soon represent the first stop for many consumers around the world looking to resolve their healthcare issues in the most efficient, high quality, and cost-effective manner,” Teladoc CEO Jason Gorevic said of the deal. “By providing a single interface and intelligent guidance due to a full spectrum of clinical capabilities, tools, information, and guidance in the Teladoc portfolio, we will transform how the consumer accesses the healthcare system, providing greater convenience, better outcomes, and unmatched value.”
Key Steps
Hospital and health system executives must stay alert to these shifts in healthcare’s basic care delivery model. Three key steps are recommended to help organizations address potential encroachments on acute care:
Know your strengths. Many hospitals and health systems across the country have the geographical advantage, with long histories in their communities. Healthcare leaders should take a hard look at their organizations’ clinical strengths, and seek to bolster those services most needed and valued by their patients.
Identify services that are at risk of becoming commodities. Healthcare leaders also need to be introspective and acknowledge their organizations’ weaknesses. They should assess those services that are at risk of being commoditized, and identify the best go-forward options, including 1.) determining how to compete and win against the new entrants, or 2.) eliminating or selling those services, or 3.) exploring potential partnerships to strengthen the services with the help of highly regarded organizations in the region, nationally, or perhaps internationally.
Connect with your community. Taking a consumer-centric approach is essential in today’s rapidly changing healthcare environment. Healthcare executives must ensure that consumers’ demands are first and foremost to overall strategic plans. They should seek ways to build consumer insights, including collecting data and direct patient feedback, to identify current and future consumer needs.
At their core, these trends signify a potential coming change in the basis of competition for specialty services, as legacy organizations and innovative competitors leverage their brands to bypass traditional geographical boundaries and reach patients where they live. The implications for hospitals and health systems are significant.
As more patients turn to their laptops, tablets, and other devices for the expert advice of oncologists, cardiologists, radiologists, and other specialists in distant locations, local demand ultimately will diminish for those physicians, and/or their roles will change. It is not difficult to envision a future in which care diagnosis across the country, and perhaps even the world, is concentrated in a relatively limited number of “National/International Diagnostic Centers.” Such centers will have developed extremely sophisticated clinical resources—both human and technological—to offer treatment recommendations in a convenient and highly accessible manner for people facing significant health challenges. In the extreme scenario, local hospitals would essentially become production shops for administering treatment plans developed by clinicians in another city, state, or country.
Hospitals and health systems have a vital role to play in the rapidly evolving healthcare industry. Legacy institutions such as the Mayo Clinic, Massachusetts General, and Cleveland Clinic are in the driver’s seat, actively helping to shape the future business model. Healthcare leaders elsewhere should think hard about the implications of the potential new direction of healthcare and build strategies to ensure their relevance in the communities they serve, now and into the future.
Your comments are welcome. I can be reached at mgrube@kaufmanhall.com.
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