Why Technology Alone Isn’t Going to Transform Health Care

Daniel Perez, Hinge Health’s CEO and co-founder, kicked off the Movement 2023 conference in Chicago with a statement that might have surprised a few people:

“Technology alone is not going to transform health care. How people use technology is going to transform health care.”

Despite the billions of dollars that have been invested in digital health companies, technology has failed to deliver health care in many ways, he continued.

“If we use a relatively simple and enduring benchmark—cost, experience, and outcomes (the triple aim)—as a scorecard, I think the record is mixed. If any one of those is missing, you’re going to fail.”

But there’s hope—and it starts with benefits leaders, consultants, and employers like you.

Watch Perez’s full address to hear what he had to say about the current healthcare technology landscape and the role you play in technology innovation, or read the full transcript below.

A dynamic start to an even more dynamic day. We hope to see you at Movement 2024.

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As the founder of a technology company in health care, I wanted to talk to you today about technology in health care. But, I promise that will be the most obvious thing I say today, hopefully.

I’m going to start with the many ways technology has failed to deliver in health care. Because what might not be so obvious is that despite the billions that have been invested in digital health companies, and I think the many startups that are emailing you every single day to get included in your benefits offerings, technology alone is not going to transform health care.

How people use technology is going to transform health care.

And to date, if we take a relatively simple and enduring benchmark as the triple aim and scored health technology to that scorecard, I think the record is mixed.

The triple aim is cost, experience, and outcomes. If any one of those is missing, we're going to fail.

Let's score technology along the axes of the triple aim and let's see how well it has actually performed.

These days, I think everybody is talking about inflation. But I'd like to talk about deflation. If you think about technology, it is inherently deflationary. It lowers prices. 

In 1982, a 10MB hard drive would cost about $2,700 in 1982 dollars. That's about $7,200 in today's dollars. A 10 MB hard drive, that's about 4 to 5 photos on your iPhone. 

Nowadays, you can get a 4TB hard drive for about $70. That's 40,000 times more data at 1% the cost—about a 400,000 times price differential.

Now, that's technology at work, lowering prices. But it's not just computers.

If you look at the cost of televisions since 1950, the price of a television has dropped about 6% every year. You compound that across 70-plus years, and the price per square inch of a television has dropped by over 99%.

The average size of TVs has only gone up and up and up. And in fact, while TV repairmen used to do brisk business for Sears and others, nowadays, if our TV breaks, we don't repair it. We probably just buy a new one.

We see technology's deflationary effect on almost every industry in cars.

I drive a 2020 Toyota Camry. It would put to shame the finest Mercedes from 20 years ago because technology continues to advance everywhere we look.

Technology makes things better and cheaper, except in health care. In health care, technology has only raised prices. But why is that?

It's a complex problem, but there are a few reasons: 

• Technology in health care is often used as an excuse to raise prices. You have a new MRI machine with 2x the resolution. That's a really good reason to bump up the price just a little bit on that scan.

• Rarely does technology automate the manual tasks of a provider. That's because replacing unstructured physical tasks is very, very challenging to do.

• The reimbursement regime in health care is very rigid, very prescriptive. So CPT codes basically tell providers how to do their jobs.

In MSK (musculoskeletal care), for instance, a CPT code might read: “30-minute initial evaluation with a physical therapist.” That means it tells you how long the visit needs to be, what sort of evaluation it is, and who needs to deliver it. It's paying for actions, not outcomes.

So if software and hardware could deliver that same outcome in 10 minutes, it's not going to get paid for. Because the CPT code says “30 minutes,” you have to deliver that. You have to hone to the letter of the CPT code to get reimbursed.

That rigid regime is one of the biggest barriers to innovation in health care. It reinforces people simply doing the same thing only at 6% to 8% higher cost every year.

Let’s next turn to experience. In every other industry, technology has been able to power a consistent experience. It's technology that means a Chevy that rolls off of a plant in Ontario or South Korea or Bogota is built to similar or exact quality expectations as a Chevy that rolls off a plant in Detroit.

But that's not what we see happening in health care. If you see a doctor for your back pain in Milwaukee or Manhattan or Missoula, you're going to get three different experiences—and likely three different care plans. In fact, if you go to the same clinic in Manhattan on a Monday versus Tuesday, you're probably going to get two different care plans as well.

Technology has simply yet to deliver the promise of a consistently high-quality experience in health care.

I think the scorecard for technology in health care is spotty for costs and experience. But the third leg of the triple aim is outcomes. And I think technology would score better here. I think technology has undoubtedly improved outcomes in health care.

A century ago, we couldn't peer into the human body without cutting it open. Now we have advanced imaging.

A century ago, most of us died from infectious diseases and antibiotics changed that. 

Where I think technology hasn't delivered relative to other industries is ensuring equitable outcome distribution in health care.

Think about other industries and access to information. Thirty years ago, if you wanted to access the latest technical journals or new science or news, you had to pay for it. And it was quite a challenge to get access to that information.

Nowadays, if you have a $100-smartphone and an Internet connection, you could get roughly the same amount of information as someone standing in Harvard Square.

It's not perfect, and some countries are going to need a VPN, but you can pretty closely approximate the access to information from anywhere in the world with just a small smartphone.

But again, that's not the case with health care to date.

Technology has not led to equitable healthcare outcomes because policy changes are often needed to ensure access to that technology. The pace of policy development always lags the pace of technology such that the future is always somewhat unevenly distributed. And in health care, it is vastly unevenly distributed.

A lot of healthcare technologists and innovators are developing new delivery models that could improve outcomes, that could reduce costs, that could create a great experience, but people aren't getting access to it.

I think the record speaks for itself. Technology hasn't quite delivered to its potential in health care.

Unlike other industries, technology has not lowered costs in health care. It seems costs only go up.

Our vision at Hinge Health is to create a new healthcare system built around members. And I firmly believe there is no fundamental reason why health care has to remain the outlier industry where technology continually fails to deliver.

I think technology can lower costs in health care, but that will require automating expensive tasks delivered by expensive providers, along with some payment reform.

I think technology can create a consistent, unified experience that remains deeply personalized. We see that every time we open Spotify or Netflix. We know what we're going to get, and yet it's deeply personalized to us.

But making that sort of leap into health care is going to require innovators being willing to meticulously take on every step of a member's care journey, including those many, many steps that cannot yet be solved by software and connected hardware alone. 

Simply put, digital health companies are going to have to get comfortable thoughtfully weaving in in-person care, which many haven't been willing to do yet.

I firmly believe technology can lead to equitable outcomes, but not without some help.

I'll say it again, the existing reimbursement regime is the biggest barrier to innovation in health care and the biggest barrier to ensuring the successful deployment of new delivery models in health care.

But every benefits leader, consultant, and health plan innovator in this room is here because you are a believer in technology's potential in health care.

You're the ones ensuring equitable access to these new technologies. And you're the ones often pressing the guardians of the status quo within your own organizations or other organizations to adopt new technologies and new delivery models.

You're the ones who are launching these new solutions.

I always like to remind my team and anyone who will ask that the innovators who kicked off the digital MSK revolution weren't some investors in Silicon Valley. They were two guys in Colorado.

It was David Ganick and Grady Arnold—benefits leaders at Vail Resorts and Hinge Health’s first customers. They had 10,000 plan members and about $22 million in MSK spend.

They weren't going to wait for other people to start deploying digital solutions, sort it out, and then hop on the bandwagon.

They weren't going to wait for the CPT code regime to update itself with a digital MSK CPT code.

They weren't going to wait for the pioneers, they wanted to be the pioneers themselves.

And they were our first customer and have been a phenomenal customer for the past seven-plus years, and we're very, very grateful for that.

Webinar: How Vail Resorts saved $1.5M on MSK spend

So each of you is making healthcare decisions on behalf of thousands, if not millions, as employers, consultants, and health plan innovators.

You are the tip of the spear.

You're the ones who are evaluating so many early-stage ideas. And you're the ones who are able to unlock the biggest barrier to innovation in health care, which is often reimbursement, giving new innovations a chance to succeed.

And your willingness to adopt is what has been unlocking this innovation. So, I think movements could start with two guys in Colorado or two women in New York, and then they could fill an auditorium.

I firmly believe that the people in this room have the keys to transform health care and insurance, ensuring technology will make good on its promise in health care.

This transcript was lightly edited for clarity.