The Economics of Data Portability in Long Term Care
(Previously, I wrote about a technical implementation of data portability in the healthcare sector — taking a step back, I thought to discuss further about some of the benefits of data portability in a more generic context of the new data economy we sit in, and then look at a particular instance: long term care. After all, that’s where I was serving for the past 3 years before GovTech.)
What is Data Portability?
Data portability describes a state whereby individuals own the right to their own data, either held by themselves or by a data custodian. This also means that they are able to request for data transmission from one custodian to another, if they don’t already own their own data.
As you can imagine, this is a powerful concept in the new data economy we sit in. The data is at once more mobile to flow to where it is needed the most, and also belongs to the individual.
Of course, meaningful data portability in practice requires this data transmission to have a few features:
- Fast and Secure: no data loss, or data theft during the transmission — some kind of data transfer mechanism is required
- Hindrance-free: no hindrance from legislation, policy or technical operations — policy must move before all things
- Machine-readable: preferably system agnostic, to facilitate interoperability between different custodians. But this means that data standards must first be defined and agreed upon by a majority of the industry.
The Simple Case for Data Portability
From an economic point of view, data portability lowers the entry barrier for businesses where such sharing or transfer of data happens to be an important input for producing products or service delivery. In this sense, market allocation is optimised, and we move more towards a system of perfect competition.
My favourite example is Telco competition in Singapore. If fully implemented, data portability means that consumers like us will not need to key in our personal data when switching Telco providers, and we even retain things like our personal preferences. Overall costs of switching become lower, and the new providers are better able to serve our needs — in fact, if our consumer history were ported over as well, a new Telco entrant would be able to create new offerings just as efficiently as incumbents.
Or think about how easy it would be to leave your favourite social media platform (e.g. Facebook) and take all your content, settings and networks away with you to another platform. Data portability gives new entrants a powerful disruption ability.
(I’ve avoided mention of how data portability emphasises the new social compact we have: a world where the individual is empowered to monetise, share and use his data as he wants — that’s a value judgment, and not economics.)
In other words, there are two key effects of data portability, and we analyse all other impacts through this dual-lens:
- There is a reduction in the cost of transferring data; and
- Data can now be integrated across various sources.
What are the Market Effects of Data Portability?
To illustrate the market effects, let’s consider a specific and common example in the healthcare sector: the long term care sector — this is a highly fragmented sector where most of the service delivery is typically driven by over hundreds of charity societies and private organisations. Without full access to a consolidated healthcare IT system across the sector, most organisations have to treat each patient admission as a completely new one, even if the patient was previously receiving treatment at another long term care provider.
The implementation of data portability would immediately increase market output and productivity, in terms of both reducing wastage and improving the delivery of care. For example, a provider would not be able to know at the onset if its new patient had received health screenings at various outpatient settings or not. Potentially, this patient could be rescheduled again for multiple screenings, utilising precious healthcare resources, and making his experience rather unpleasant.
Positive externalities also result from data portability. When a patient first shares his historical records with a long term care provider, an immediate benefit might be the creation of a better coordinated care plan. But when you view this in the collective sense of many individuals sharing their data with the provider, the data aggregation allows the provider to draw insights, and potentially develop proactive interventions for patients with similar profiles, resulting in a positive externality.
Cost lowering is also another immediate effect of data portability. One of the key strategies to lowering the cost of healthcare is proactive preventive health and early interventions. To some extent, these are still possible when patients are utilising long term care services (e.g. rehabilitation services, management of chronic ailments, pre-diabetic identification). With access to a patient’s historical records outside of long term care (e.g. hospital or primary care records), long term care providers will be better able to recommend interventions, rather than reacting to patient healthcare trajectories. As a result, utilisation of acute long term care (e.g. disability homes, chronic sick units, dialysis services) is lowered, retarded or prevented.
(In fact, primary care institutions or hospitals could also benefit from data portability — long term care health records would also be able to flow into these systems, making population health as a whole possible.)
Perhaps one of the most interesting effect of data portability lies in what we call recombinant innovation. This refers to innovation vis-a-vis the creation of new services or products, as a result of data shared between many sources. In the long term care sector, innovation in the form of new insurance products and services would go a long way in ensuring healthcare affordability.
You see, long term care insurance is a difficult business in many countries. Take the United States for example: when long term care became part of the health care insurance industry in the 1970s, due to lack of data, there was a wild mispricing error arising from poor estimates of the future costs of care and how to right-risk pool individuals. The lack of data stemmed from the fact that insurers lacked access to national healthcare IT systems (naturally so, since they did not own the clinical relationships with patients). Today, many insurers have since abandoned the market altogether.
But with data portability, private insurers are better able to right-risk pool and estimate the future cost of care. In fact, private insurers will be able to participate in public-private sector preventive health collaboration through offering innovative incentive programmes (e.g. reduction of premiums for certain health commitments fulfilled), reducing the burden of preventive health on the government and mainstream clinicians.
Are We Anywhere Nearer Data Portability?
We definitely are. But data portability has wide ranging concerns as well, aside from the purported benefits described above. It will be very much a policy issue and a data standards issue.
But tech is ready, as are the economics of it all.
Here’s wishing us all an exciting 10–20 years in healthcare, tech and government.