We must adopt exponential thinking to see the value of digitalization

May 20, 2024
Digital Health

How to measure and evaluate the impact of digital innovations on the economy, healthcare systems performance, patient outcomes, and quality of care while navigating securely through the fast-evolving landscape of digital technologies—interview with Mr. Eric Sutherland, Senior Health Economist and Digital Health Expert at OECD.

Why should we consider digitalization in healthcare as an investment rather than a cost?

I look at health as an investment rather than an expenditure. A healthier population contributes to the community for longer and (arguably) more effectively.

Digitalization of health enables a shift towards person-centered, resilient and integrated health systems, fostering an efficient and equitable functioning of health systems. This transformation allows us to progress towards fully integrated learning health systems – with individuals at the center of this evolution. They are empowered to actively utilize their own health data derived from clinically approved apps and digital devices, enabling them to receive personalized information to achieve better health outcomes with the guidance of healthcare professionals.

As we lean towards preventive strategies, we will transition away from our current sick-care model, where individuals primarily engage with the healthcare system when they are unwell. Instead, we will evolve towards a system where individuals can reach better health outcomes and actively engage in disease prevention. All these preventative measures can help for early detection and avert the onset of chronic illnesses or comorbidities that often contribute significantly to escalating healthcare costs in later life.

By implementing proactive measures earlier in life, we can also significantly enhance both the quality and longevity of life for individuals while reducing the cost of healthcare treatment. Such an approach yields economic benefits and contributes to population wellness and health perception. So, you see why health digitalization is a substantial investment opportunity for me.

You've already highlighted the shift from a sick-care approach to a more healthcare or prevention-oriented model. When you approach a hospital manager with a digital tool, they often demand ROI to justify the investment. Is there a way to measure the economic impact of digital health solutions?

Yes, there certainly is a way to measure the economic impact, and evidence in this area is growing. For example, a study conducted in the US looked at hospitals nationwide and assessed their digital maturity using the Health Information Management Systems Society (HIMSS) maturity score. It demonstrated that hospitals with higher levels of digital maturity could achieve better health outcomes for their patients at a lower cost and with greater predictability.

Thus, digitalization reduces hospital length of stay and enables better prediction of staffing needs, optimizing resource allocation and leading to cost savings. Similar studies have been conducted in other countries like England's National Health Service (NHS), further supporting the economic benefits of digital health initiatives.

However, measuring the exact economic impact is challenging due to the combination of human and non-human factors, such as technology, policy, and funding capacity, which equally influence the ROI of digital solutions. Having said that, we have to shift from a linear value accumulation to an exponential accumulation through network effects. To illustrate, consider the analogy of the fax machine. The first fax machine had little value as it had no one to communicate with. However, as more machines were added, each one incrementally increased the value of the network while providing value for itself.

Similarly, in digital health, the ability to scale innovations contributes to the increase in the value of the innovation – and with every new innovation within the network. This dynamic makes it challenging to quantify the economic impact using traditional linear methods. Instead, we must adopt exponential thinking to fully realize the value of networks digitalization while ensuring adequate and responsible scaling of these networks.

Many hope that digital transformation can address the crisis in healthcare, including shortages of healthcare professionals, rising costs, and stagnant quality of care. Is such thinking legitimate?

It is, but digital health by itself is not the magic solution. I would say digitalization will contribute. Introducing new digital tools and technologies will augment the capabilities of health systems, improve the knowledge and actions of health professionals, and simplify some administrative activities. I'm sure it will also enhance productivity for the health workforce and empower individuals to understand how to achieve their health objectives and engage effectively with the system.

For instance, consider a digital triage system introduced into the healthcare workflow. It can contribute to lowering costs, improving productivity, and enhancing outcomes.

However, end-users' engagement remains crucial. Patients need to take action to support health professionals in providing meaningful guidance and support throughout their health journeys. Policymakers also play a critical role in overseeing the health system, monitoring population health, and preparing for future public health emergencies.

So, since digitalization offers many benefits, what are the components of effective digital health governance?

I would say there are many components to effective governance. Still, one aspect I'll emphasize first is the involvement of stakeholders impacted by digitalization. I mean health providers and the public. Their engagement in the governance of digital health transformation is crucial for fostering trust in new technologies. In other words, end-users must take part in the design of solutions from the outset.

Another critical aspect of digital health governance is measurement. We've discussed the importance of proving the economic viability of digitalization, but measuring the readiness and capacities of health systems to engage with digital health, as well as the usage and impact of digital health interventions, are equally important. For instance, it's one thing to measure the presence of patient portals, but it's more crucial to assess whether people are actually using the offered features and are satisfied with them.

The third component is legislation. Policies within and across regions must be compatible to enable data flow throughout the system securely and efficiently. We want to avoid laws and policies hindering data sharing or making it overly burdensome. Introducing data standards – such as HL7, FHIR, international patient summary, and coding systems like SNOMED, ICD, and LOINC – will facilitate interoperability within and across countries.

Additionally, incentives play a crucial role in digital governance. If incentives encourage innovation without considering existing solutions, they can lead to duplication and hinder collaboration. They should be built upon existing innovations to drive exponential growth in digital health.

One fundamental lesson that countries should learn from their digital transformation efforts is the value of data. Data collected, curated, and made accessible are assets that create long-term benefits for health systems. Technologies will evolve and be replaced, but curated data will persist and enable health systems to answer new questions and handle health emergencies as they arise.

This is crucial, especially in the context of artificial intelligence (AI): Data fuels AI algorithms, and leveraging data effectively through AI is critical for realizing meaningful benefits for the public.

So, from my perspective, effective digital health governance requires stakeholder involvement, robust measurement practices, harmonized policies and standards, and incentives that promote innovation and collaboration.

You mentioned two critical components: policy and incentives. Only a few countries have integrated reimbursed digital therapeutics into their national health systems, indicating skepticism toward evidence-based solutions. Is this the direction healthcare should pursue?

Yes. The potential of digital therapeutics, both now and in the near future, is poised for exponential growth. What these therapeutics can achieve today compared to what they'll accomplish in a year will likely be nearly unrecognizable.

A key challenge will be understanding the opportunities and regulating digital therapeutics to ensure that those entering the market are clinically valid, appropriately used, and compliant with data privacy regulations like GDPR.

DTx can empower individuals to manage their health by providing real-time advice and contributing to personal health records. Digital biomarkers are also collected and can inform healthcare providers to offer personalized guidance and support to patients.

Over the past few years, the digitalization of health systems in Europe has accelerated due to the crises triggered by the COVID-19 pandemic and investments enabled by the European Recovery and Resilience Fund. How can we sustain this momentum of digital transformation to prevent a return to a focus on traditional health structures, including hospitals?

A reduction in investment shouldn't necessarily be viewed as a negative development. We've already made substantial investments in technologies, software, and infrastructure. However, what requires additional investment is our approach to data utilization. Ironically, investments in data can be relatively less expensive compared to other technological solutions, while the value extracted from such investments can be immense.

Therefore, if there's a shift in focus away from large-scale purchases of new software solutions toward investments in tools and devices that unlock the value of existing data, I see it as a positive signal. Redirecting resources toward health data usage and governance could ultimately strengthen the digital health community and contribute to sustained momentum in our digital transformation efforts. This strategic shift reflects a more nuanced approach that prioritizes the effective use of data, which is fundamental to driving innovation and improving healthcare outcomes.

Healthcare is experiencing a profound wave of innovation accelerated by artificial intelligence. Given the novelty of many of these solutions, how should countries navigate the landscape of cutting-edge technologies?

This is one of the most pressing challenges we face. As one of my favorite yet unfortunate quotes goes, "The world has never moved this fast, and yet it will never move this slow again." The pace of change is accelerating rapidly, making it essential to navigate the current ecosystem with agility. By the time we fully understand today's landscape, it will have evolved even further. Therefore, solid partnerships, trustworthiness, communication, and networks are crucial. Building and strengthening collaborative networks enables us to identify valuable innovations, assess risks, overcome barriers, and unlock the potential of digital health. The success of our endeavors in this space will heavily depend on individuals actively engaging with each other to anticipate future directions and make informed investments.

One of my concerns is professionals becoming paralyzed by over-analysis, leading to inaction in the face of rapid change. It's crucial to strike a balance: ensuring appropriate safeguards are in place while generating value and driving progress. Taking prompt action enables us to adjust more effectively to evolving circumstances.

Another lesson is the need for highly adaptable structures. Given the unprecedented pace of technological evolution, our policies, processes, and governance frameworks must be agile enough to exploit new capabilities and respond promptly to emerging risks.

If we agree that investing in digitalization is beneficial, while healthcare budgets are constrained and prioritize investment in digitalization, where might health systems identify opportunities for savings?

It's a tricky question. There have been reports and studies highlighting areas where improvements could lead to increased productivity and financial efficiencies. Innovations in healthcare can free up valuable time for healthcare providers to deliver more focused and effective services. Estimates suggest that productivity gains could range from 10 to 30%. Studies have identified waste within healthcare systems, including duplicated or unnecessary tests, which could account for another 10 to 30% of overall budgets.

Shifting our perspective from healthcare expenses to investments could yield economic gains by keeping people healthier for longer. This shift benefits everyone: populations, individuals, and innovators alike. Leveraging these opportunities, along with improved prevention strategies and health systems, could help offset the costs of digitalization.

Still, achieving these goals requires a long-term vision or being seen as a generational investment, with returns expected over 5 to 10 years. The challenge lies in understanding that exponential returns often take time to materialize, initially yielding less than linear investments. Strong leadership, patience, a direct link to outcomes, and significant political will are necessary to navigate this journey.

With an aging society, rising prevalence of non-communicable diseases, and shortages of healthcare professionals, some argue that healthcare systems could face collapse. Is this scenario realistic, or just a way to advocate for digitalization?

I wouldn't necessarily frame it as a financial collapse, but it could indeed have detrimental impacts on the social infrastructures across many countries. The escalating costs of healthcare systems are outpacing economic growth projections, which could force policymakers to make difficult decisions regarding healthcare funding and other government programs.

To illustrate, let's consider an analogy with technology investments. When we invest in hardware technologies, they depreciate in value as soon as we acquire them – much like a car losing value once driven off the lot. We anticipate that within a decade, we'll need to replace all our health technology, equipment, and software due to evolving needs and evolving capabilities.

Conversely, investments in people have limitations. While we can nurture their knowledge, they will eventually reach a point where they seek retirement, and consequently, the gained value will decrease.

In contrast, data – when collected and curated effectively – increases in value over time. By linking and connecting data repositories, we can address tomorrow's questions promptly. Data, therefore, appreciates in value with time.

Data powers AI applications, magnifying their potential and emphasizing the growing value of data over time. Leveraging data through AI and analytics presents substantial opportunities to strengthen the financial sustainability of our health systems, lower cost structures, enhance health outcomes, and efficiently support healthcare providers. This approach empowers individuals by granting them access to their health data, unlocking possibilities for 8 billion people.