Five Ways Healthcare Can Learn From Finance

Can our new wave of digital health and services companies learn from Finance and apply some of the same lessons? Here are five ways we might be doing it already.

credit CB Insights

I argue that the world of Fintech (above) has been able to scale more ubiquitously than digital health because some core traits of the Finance industry.

Quick Intro

Since the 1990’s, Congress has stepped into the Financial sector by passing bills such as the Finance Modernization Act, helping ensure data privacy and correct usage. Also the industry has pushed itself to stay relevant and competitive with consumers by consistently offering new value-added services based on scalable infrastructure like a national ATM network.

In healthcare, we are are in the throws of building that infrastructure right now. Healthcare as an industry is probably 10–20 years behind the typical technology adoption curve of other industries. However in 2009 with the passage of the High-Tech Act and later the Affordable Care Act, Washington started to incentivize the modernization of healthcare. For example, EHR adoption went from 9% to 96% from ’08 to ’15, thanks to the government spending ~$650M in incentivized reimbursement.

What follows are certainly some broad sweeping generalizations, and I welcome your thoughts in the comments. On the face of it, these general trends and parameters are way in which Fintech has been able to leverage the platform that is core Finance.

Five Things Finance is Doing Right

  1. Finance has a consolidated credit score system. There is no “patient health score” for health. The asymmetry in information on how healthy a patient is leads unpredictable healthcare costs. Payers and Providers are constantly playing catch up to figure out a patient’s health history. How can you identify high risk patients when you have incomplete information?
  2. Finance can share basic data about you…like how much money you have in your bank account. We have a national ATM system in which banks can communicate with each other. Healthcare never decided on a common protocol for exchanging even the most basic information. A lack of interoperability within EHRs is seen as a causal factor for medical errors, which cost the country about $19.5B. How can we scale technology if systems cannot communicate with each other?
  3. Finance, while dominated by several behemoth banks, still has largely democratic access. Anyone can open an E-Trade account and trade stocks. Small investment banks have access to roughly the same capital market pools as JP Morgan. Fintech companies can at least purchase your lending history. Not even mentioning lack of access to care…will healthcare solve it’s lack of access to data and common resources?
  4. Finance is to a degree reliant on publicly available pricing data, such as interest rates, in pricing assets. Interest rates are centrally set by the Fed and trickle down through the economy. Healthcare doesn’t have a central nervous system which folks can point to and say “healthcare is cheap right now” the way we can say “money is cheap right now”. How should we value healthcare?
  5. Finance — mostly the loans industry — has more incentive alignment. When the bank issues you a loan, they want to pick the right consumer, bring them along, educate them, etc to make sure the loan is paid back in the timely manner in the right increments. In healthcare, it’s often unclear who the customer is, so how do you align incentives? As Bill Gurley put it in his recent post “In the U.S. healthcare system there is complete obfuscation and confusion regarding who the real customer is. The employee picks a provider from a plan picked by the employer from the insurance carrier. The consumer sees no prices as it makes choices and decisions.” How do we incentivize Payers and Providers to work together?

What is Healthcare doing today to apply each of these principles?

Healthcare is doing some things to modernize, but in each category we have a long way to go. As you read this, I urge you to determine which branch of modernization appeals to you the most and which cause you can help move foward.

  1. Healthcare is using “risk-adjusted scores” on a per-patient-basis to determine reimbursement in Medicare. One way the government uses these are for Medicare Advantage plans, in which the Payer and Government negotiate about the PMPM reimbursement based on demographic/disease/other factors of a patient. However recent research shows these risk scores may be inflated and certainly need some more work and transparency if they are to become ubiquitous.
  2. Healthcare has settled upon a common language in which structured medical data can be shared: FHIR. You can read more about it here…suffice to say that while progress has been slow, the government has done a noteworthy job of soliciting private sector input and there is evidence of early adoption. FHIR is a language that is compatible with APIs. You can actually contribute code and get involved here and help solve interoperability.
  3. Healthcare data, public and private, is becoming more accessible thanks to several key players. For several years now, athenahealth (the EMR company) has had its More Disruption Please program opening up data sets in an API format. On top of that, Athena spear-headed the little-known yet potentially very powerful Commonwell Health Alliance in which most all major EMR companies agreed to share data (sans Epic, of course). On top of all of this, CMS has over the last several years opened the floodgates of its data sources: see how you can use it. Data is finally becoming easier to find, share and use.
  4. CMS is modernizing the Fee Schedule. Medicare has the Physician Fee Schedule under which national reimbursement rates are set…but it’s widely agreed that those don’t always reflect the cost of care and that solving the code-journey for a patient is akin to solving The Maze in Westworld. However CMS is starting to get a little better at updating this schedule, for example in its modernization of adding a telehealth code. They are also looking to modernize the schedule in other ways. Lastly, we don’t just have to depend on CMS…companies like CVS Health are radically changing transparency in healthcare pricing with their menu pricing available on their website for minute clinic services.
CVS’s MinuteClinic menu pricing on their website (

5. Companies are ensuring the way they get paid helps the patient too. We all know the transformation from FFS to Value-based Care…but how about outcomes-based pricing for healthcare services? Listen to the last couple of minutes of this podcast from a16z featuring Sean Duffy of Omada and Rajeev Singh of Accolade…both of their companies get paid based on how the patient does health-wise as well as the overall engagement…these companies do not get paid based on enrollments, sign-ups, etc. Now that’s incentive alignment.

Whether your optimistic about healthcare or not, you’ve got to agree there are some shining rays through the dark clouds. If you’re at a digital health or healthcare services company most likely one of the five areas above applies to you. What matters most to you and why?