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Healthcare is in Turmoil, But Technology Can Save Businesses Billions

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September 30, 2020 8 min read

Opinions expressed by Entrepreneur contributors are their own.

Chances are you’ve heard about and been personally affected by ballooning healthcare costs. It’s no secret that owners are facing a crisis paying for healthcare costs. In 2019, the average cost of employer-sponsored health insurance was $7,188 for single coverage and $20,576 for family coverage, according to study by the Kaiser Family Foundation. Employees covered $1,242 or $6,015 of the plan for single and family plans, respectively. In total, employers paid over $6 billion a year for employee health plans. The average healthcare cost per person in 2019 was $11,599, amounting to a $3.6 trillion healthcare market. Premiums will likely increase by 4 to 40 percent in 2021

These astronomical costs can hit small business owners and entrepreneurs particularly hard. To complicate the situation, any effort that a business makes to save on healthcare typically comes at the cost of harming employees. Increasing employee burdens and destroying employee satisfaction is a quick way to kill a business.

Adding to the problem of high healthcare costs is the issue of missed work. In America, employees missed 893 million days due to illness and lost an estimated 527 million days because of illness impacts on productivity, according to a 2018 study. There is a snowball effect of mounting healthcare problems if they are not dealt with appropriately. Take, for example, mental health. If an employee does not receive proper treatment due to embarrassment, the price of services or the cost of missed work, the problems get worse. Likewise, if an employee with an illness tries to come into work, they can very rapidly infect numerous other workers. Altogether, sick employees cost employers $530 billion a year.

Related: What Chadwick Boseman’s Death Tells Us About Workplace Healthcare

How technology can help

There are numerous problems with the healthcare market, but a huge problem is supply and demand. The demand for healthcare is much higher than supply. The existing deficit of doctors and nurses will likely get worse in the future. In some cities and at some times, we also have a shortage of hospital beds and medical devices. Medical devices and prescriptions are costly to develop and produce. Our healthcare demand is dramatically increasing as the population ages and, of course, as we deal with global health crises. Technology is critical to help overcome the supply and demand problem.

Technology can and will have a significant and positive effect on our lives in numerous ways. It can significantly reduce healthcare costs, improve patient access and improve and associated diagnoses. Everything from , to online medical records, to the exciting new uses of artificial intelligence (AI) can save money and increase health and well-being.

Related: 5 Companies to Invest in After the Health Crisis

Telehealth

About 90 percent of U.S. healthcare providers had full functioning or developing telehealth programs before 2020. Then, in the first half of 2020, patient adoption of telehealth services grew by 33 percent over the previous year. Telehealth funding could reach $185.6 billion by 2026. Employers could save up to $6 billion per year on healthcare costs by providing telemedicine technologies to their employees. When employers implemented a telemedicine program, they saved 11 percent on the benefits budget. In one study of cardiovascular patients, telehealth options reduce the patient’s monthly healthcare costs by $576. A telehealth program in Houston reduced unnecessary emergency visits by 6.7 percent, resulting in a $2,468 savings for the healthcare system for each unnecessary visit.

Telehealth saves patients over 100 minutes of their time compared to an in-person visit, and they can conduct each appointment anywhere in the world there’s a telephone or Internet connection.This time can be directly applied back into a productive workday or to increase an employee’s quality of life. For a number of technology and health and wellness companies, telehealth represents a vast, mostly untapped market. For all employees, telehealth enables increases in the company’s bottom line and improvements employee health and well-being.

It is incredible just how much virtual care can accomplish. It currently extends well beyond general medical and mental healthcare services. For example, one provider, Teledochealth, provides direct-to-consumer services, platforms that support the physician practice and platforms and models that help hospitals and health systems with everything from teleICU, telestroke and teleneonatal care. Teledochealth was able to help reestablish an entire practice, Paradise Medical Group, after the California wildfires destroyed all of its facilities.

Patients can send doctors a message online. The nurse can triage the questions and have the doctor answer the questions as needed when it is convenient for the doctor. The patient does not have to wait on hold or make an unnecessary appointment, which costs, on average, $150 per visit with insurance. Telehealth increases the number of patients healthcare providers can see while also improving patient access to valuable health information, which decreases costs by 11 percent. Teledoc has found that in some cases, doctors can increase the number of patient communications by as much as 800 percent. Imagine how much better healthcare could be if we were able to quickly and effectively get our healthcare questions answered by a healthcare provider instead of Dr. Google. Even better, telehealth visits have a 93 percent satisfaction rate compared to an 88 percent satisfaction rate for traditional, in-person doctor visits.

Saving time is an apparent reason for increased satisfaction. When patients were asked what would encourage them to book a telemedicine appointment, convenience factors, including easy-to-use technology (69 percent), communication (57 percent), online scheduling capabilities (47 percent) and immediate appointment availability (47 percent), were the main reasons. Instead of driving to an office and sitting in a waiting room (with other sick patients), all a patient needs to do is make a phone call or log into a website. The visits can be made at work or in the privacy of a patient’s home. Doctors can send prescriptions to the pharmacy and have the medications delivered directly to the patient’s home. These actions save time and money for the employer and the employee. When anything is made less complicated, people are more likely to do it. The simple process of making healthcare more accessible increases patients’ engagement with their health and increases the accuracy of diagnoses.

Related: Telemedicine is Laying the Roadmap for Healthcare’s Future

Other healthcare technology

If a healthcare provider has the right technology, they store patient information in the (safe) cloud. The access to data improves diagnoses, because all information is available for all providers that a patient sees. The data can then enable AI and other forms of predictive analytics to go to work helping the patient. Like so many parts of our lives now, technology advances that once seemed far-fetched now very much exist. With the correct information, AI can learn about a patient’s health by looking for trends and patterns. This is no different than Google learning your favorite stores and brands and then sending targeted coupons or ads. Mindstrong can detect depression by watching how a person uses their phone. Livongo uses AI and questionnaires to its users to manage diabetes, hypertension, mental health and weight control. Google and Apple have been using GPS during the past several months to see where people have been and tracking if people have entered high-risk areas or been in contact with infected people.

It seems like almost an obvious statement to say that technology can so dramatically improve our lives and a company’s bottom line. Healthcare has been one area slow to adapt to changes. Regulations and privacy concerns are two primary factors that have caused the delays. The global health crisis has pushed us to embrace health technologies in new ways, and now we’ve seen the positive benefits. We have decreases in sick leave and increases in health and well-being. And, of course, the big one, we see significant reductions in healthcare costs. Doctors are finding greater convenience, the ability to work anytime and anywhere, less canceled or skipped appointments and open access to more patients.

Related: 5 Technological Innovations Changing Medical Practice

What business owners can do

Business owners need to be advocates for themselves. They can negotiate for their health plans. Think of employee health plan purchases like any large business purchase and negotiate the best rates and the best specifications. Payors were once resistant to paying for health care technologies, and these negotiations were complicated.

However, the global health crisis has brought unprecedented demand for and use of virtual care, including support at the government level. The relief packages enacted in early 2020 allowed to cover telehealth and also waived some rules about crossing state lines with telehealth. The changes enable patients in high demand and/or low-supply areas to find care. Although the political environment can change rapidly, it currently looks like much of the relief packages are here to stay. The global health crisis has made some insurance companies more willing to negotiate.

Also, now is the time to make sure technologies are part of a benefits package. Entrepreneurs can insist that healthcare plans cover telehealth visits. They can also request that specific technology healthcare tools be available to employees. Education programs can help employees understand all the tools that exist to help manage health. These tools can lead to an empowered and educated patient, which leads to a more productive and effective employee — all of which saves billions of dollars.

Related: How Entrepreneurs Can Take on the Future of Aging Using Artificial Intelligence

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The Trump campaign celebrated a growth record that Democrats downplayed.

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The White House celebrated economic growth numbers for the third quarter released on Thursday, even as Joseph R. Biden Jr.’s presidential campaign sought to throw cold water on the report — the last major data release leading up to the Nov. 3 election — and warned that the economic recovery was losing steam.

The economy grew at a record pace last quarter, but the upswing was a partial bounce-back after an enormous decline and left the economy smaller than it was before the pandemic. The White House took no notice of those glum caveats.

“This record economic growth is absolute validation of President Trump’s policies, which create jobs and opportunities for Americans in every corner of the country,” Mr. Trump’s re-election campaign said in a statement, highlighting a rebound of 33.1 percent at an annualized rate. Mr. Trump heralded the data on Twitter, posting that he was “so glad” that the number had come out before Election Day.

The annualized rate that the White House emphasized extrapolates growth numbers as if the current pace held up for a year, and risks overstating big swings. Because the economy’s growth has been so volatile amid the pandemic, economists have urged focusing on quarterly numbers.

Those showed a 7.4 percent gain in the third quarter. That rebound, by far the biggest since reliable statistics began after World War II, still leaves the economy short of its pre-pandemic levels. The pace of recovery has also slowed, and now coronavirus cases are rising again across much of the United States, raising the prospect of further pullback.

“The recovery is stalling out, thanks to Trump’s refusal to have a serious plan to deal with Covid or to pass a new economic relief plan for workers, small businesses and communities,” Mr. Biden’s campaign said in a release ahead of Thursday’s report. The rebound was widely expected, and the campaign characterized it as “a partial return from a catastrophic hit.”

Economists have warned that the recovery could face serious roadblocks ahead. Temporary measures meant to shore up households and businesses — including unemployment insurance supplements and forgivable loans — have run dry. Swaths of the service sector remain shut down as the virus continues to spread, and job losses that were temporary are increasingly turning permanent.

“With coronavirus infections hitting a record high in recent days and any additional fiscal stimulus unlikely to arrive until, at the earliest, the start of next year, further progress will be much slower,” Paul Ashworth, chief United States economist at Capital Economics, wrote in a note following the report.

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Black and Hispanic workers, especially women, lag in the U.S. economic recovery.

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The surge in economic output in the third quarter set a record, but the recovery isn’t reaching everyone.

Economists have long warned that aggregate statistics like gross domestic product can obscure important differences beneath the surface. In the aftermath of the last recession, for example, G.D.P. returned to its previous level in early 2011, even as poverty rates remained high and the unemployment rate for Black Americans was above 15 percent.

Aggregate statistics could be even more misleading during the current crisis. The job losses in the initial months of the pandemic disproportionately struck low-wage service workers, many of them Black and Hispanic women. Service-sector jobs have been slow to return, while school closings are keeping many parents, especially mothers, from returning to work. Nearly half a million Hispanic women have left the labor force over the last three months.

“If we’re thinking that the economy is recovering completely and uniformly, that is simply not the case,” said Michelle Holder, an economist at John Jay College in New York. “This rebound is unevenly distributed along racial and gender lines.”

The G.D.P. report released Thursday doesn’t break down the data by race, sex or income. But other sources make the disparities clear. A pair of studies by researchers at the Urban Institute released this week found that Black and Hispanic adults were more likely to have lost jobs or income since March, and were twice as likely as white adults to experience food insecurity in September.

The financial impact of the pandemic hit many of the families that were least able to afford it, even as white-collar workers were largely spared, said Michael Karpman, an Urban Institute researcher and one of the studies’ authors.

“A lot of people who were already in a precarious position before the pandemic are now in worse shape, whereas people who were better off have generally been faring better financially,” he said.

Federal relief programs, such as expanded unemployment benefits, helped offset the damage for many families in the first months of the pandemic. But those programs have mostly ended, and talks to revive them have stalled in Washington. With virus cases surging in much of the country, Mr. Karpman warned, the economic toll could increase.

“There could be a lot more hardship coming up this winter if there’s not more relief from Congress, with the impact falling disproportionately on Black and Hispanic workers and their families,” he said.

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Ant Challenged Beijing and Prospered. Now It Toes the Line.

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As Jack Ma of Alibaba helped turn China into the world’s biggest e-commerce market over the past two decades, he was also vowing to pull off a more audacious transformation.

“If the banks don’t change, we’ll change the banks,” he said in 2008, decrying how hard it was for small businesses in China to borrow from government-run lenders.

“The financial industry needs disrupters,” he told People’s Daily, the official Communist Party newspaper, a few years later. His goal, he said, was to make banks and other state-owned enterprises “feel unwell.”

The scope of Mr. Ma’s success is becoming clearer. The vehicle for his financial-technology ambitions, an Alibaba spinoff called Ant Group, is preparing for the largest initial public offering on record. Ant is set to raise $34 billion by selling its shares to the public in Hong Kong and Shanghai, according to stock exchange documents released on Monday. After the listing, Ant would be worth around $310 billion, much more than many global banks.

The company is going public not as a scrappy upstart, but as a leviathan deeply dependent on the good will of the government Mr. Ma once relished prodding.

More than 730 million people use Ant’s Alipay app every month to pay for lunch, invest their savings and shop on credit. Yet Alipay’s size and importance have made it an inevitable target for China’s regulators, which have already brought its business to heel in certain areas.

These days, Ant talks mostly about creating partnerships with big banks, not disrupting or supplanting them. Several government-owned funds and institutions are Ant shareholders and stand to profit handsomely from the public offering.

The question now is how much higher Ant can fly without provoking the Chinese authorities into clipping its wings further.

Excitable investors see Ant as a buzzy internet innovator. The risk is that it becomes more like a heavily regulated “financial digital utility,” said Fraser Howie, the co-author of “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise.”

“Utility stocks, as far as I remember, were not the ones to be seen as the most exciting,” Mr. Howie said.

Ant declined to comment, citing the quiet period demanded by regulators before its share sale.

The company has played give-and-take with Beijing for years. As smartphone payments became ubiquitous in China, Ant found itself managing huge piles of money in Alipay users’ virtual wallets. The central bank made it park those funds in special accounts where they would earn minimal interest.

After people piled into an easy-to-use investment fund inside Alipay, the government forced the fund to shed risk and lower returns. Regulators curbed a plan to use Alipay data as the basis for a credit-scoring system akin to Americans’ FICO scores.

China’s Supreme Court this summer capped interest rates for consumer loans, though it was unclear how the ceiling would apply to Ant. The central bank is preparing a new virtual currency that could compete against Alipay and another digital wallet, the messaging app WeChat, as an everyday payment tool.

Ant has learned ways of keeping the authorities on its side. Mr. Ma once boasted at the World Economic Forum in Davos, Switzerland, about never taking money from the Chinese government. Today, funds associated with China’s social security system, its sovereign wealth fund, a state-owned life insurance company and the national postal carrier hold stakes in Ant. The I.P.O. is likely to increase the value of their holdings considerably.

“That’s how the state gets its payoff,” Mr. Howie said. With Ant, he said, “the line between state-owned enterprise and private enterprise is highly, highly blurred.”

China, in less than two generations, went from having a state-planned financial system to being at the global vanguard of internet finance, with trillions of dollars in transactions being made on mobile devices each year. Alipay had a lot to do with it.

Alibaba created the service in the early 2000s to hold payments for online purchases in escrow. Its broader usefulness quickly became clear in a country that mostly missed out on the credit card era. Features were added and users piled in. It became impossible for regulators and banks not to see the app as a threat.

ImageAnt Group’s headquarters in Hangzhou, China.
Credit…Alex Plavevski/EPA, via Shutterstock

A big test came when Ant began making an offer to Alipay users: Park your money in a section of the app called Yu’ebao, which means “leftover treasure,” and we will pay you more than the low rates fixed by the government at banks.

People could invest as much or as little as they wanted, making them feel like they were putting their pocket change to use. Yu’ebao was a hit, becoming one of the world’s largest money market funds.

The banks were terrified. One commentator for a state broadcaster called the fund a “vampire” and a “parasite.”

Still, “all the main regulators remained unanimous in saying that this was a positive thing for the Chinese financial system,” said Martin Chorzempa, a research fellow at the Peterson Institute for International Economics in Washington.

“If you can’t actually reform the banks,” Mr. Chorzempa said, “you can inject more competition.”

But then came worries about shadowy, unregulated corners of finance and the dangers they posed to the wider economy. Today, Chinese regulators are tightening supervision of financial holding companies, Ant included. Beijing has kept close watch on the financial instruments that small lenders create out of their consumer loans and sell to investors. Such securities help Ant fund some of its lending. But they also amplify the blowup if too many of those loans aren’t repaid.

“Those kinds of derivative products are something the government is really concerned about,” said Tian X. Hou, founder of the research firm TH Data Capital. Given Ant’s size, she said, “the government should be concerned.”

The broader worry for China is about growing levels of household debt. Beijing wants to cultivate a consumer economy, but excessive borrowing could eventually weigh on people’s spending power. The names of two of Alipay’s popular credit functions, Huabei and Jiebei, are jaunty invitations to spend and borrow.

Huang Ling, 22, started using Huabei when she was in high school. At the time, she didn’t qualify for a credit card. With Huabei’s help, she bought a drone, a scooter, a laptop and more.

The credit line made her feel rich. It also made her realize that if she actually wanted to be rich, she had to get busy.

“Living beyond my means forced me to work harder,” Ms. Huang said.

First, she opened a clothing shop in her hometown, Nanchang, in southeastern China. Then she started an advertising company in the inland metropolis of Chongqing. When the business needed cash, she borrowed from Jiebei.

Online shopping became a way to soothe daily anxieties, and Ms. Huang sometimes racked up thousands of dollars in Huabei bills, which only made her even more anxious. When the pandemic slammed her business, she started falling behind on her payments. That cast her into a deep depression.

Finally, early this month, with her parents’ help, she paid off her debts and closed her Huabei and Jiebei accounts. She felt “elated,” she said.

China’s recent troubles with freewheeling online loan platforms have put the government under pressure to protect ordinary borrowers.

Ant is helped by the fact that its business lines up with many of the Chinese leadership’s priorities: encouraging entrepreneurship and financial inclusion, and expanding the middle class. This year, the company helped the eastern city of Hangzhou, where it is based, set up an early version of the government’s app-based system for dictating coronavirus quarantines.

Such coziness is bound to raise hackles overseas. In Washington, Chinese tech companies that are seen as close to the government are radioactive.

In January 2017, Eric Jing, then Ant’s chief executive, said the company aimed to be serving two billion users worldwide within a decade. Shortly after, Ant announced that it was acquiring the money transfer company MoneyGram to increase its U.S. footprint. By the following January, the deal was dead, thwarted by data security concerns.

More recently, top officials in the Trump administration have discussed whether to place Ant Group on the so-called entity list, which prohibits foreign companies from purchasing American products. Officials from the State Department have suggested that an interagency committee, which also includes officials from the departments of defense, commerce and energy, review Ant for the potential entity listing, according to three people familiar with the matter.

Ant does not talk much anymore about expanding in the United States.

Ana Swanson contributed reporting.

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