HHS Secretary Tom Price, an orthopaedic surgeon, stated weeks ago that he wants to “reimagine” the federal department. I would humbly suggest—and hope—that one of the items he “reimagines” is the process by which policy is implemented as it relates healthcare technology.
Since 2011, the healthcare IT (HCIT) sector has been severely hampered by policy uncertainty. Each year, new guidelines and certification criteria are presented. These usually receive some negative reactions from healthcare providers, and then amended as the timelines extend or change. Many times, the policies have been changed a mere two months before their scheduled start date. For providers, the noise around these policy changes creates an environment in which uncertainty avoidance becomes a priority. That means retiring early, merging with a hospital or a larger group to share risks, putting off expansion plans and capital expenditures, and other strategies. For HCIT companies, it means not funding innovation and being forced to focusing on more and more functionality that customers do not value.
In macroeconomics the term “C bar” refers to “the autonomous real consumption expenditures by consumers but as it relates to their confidence.” In layman’s terms, it is the current outlook that consumers have towards the economy and their own financial situation. It reflects their level of confidence or lack thereof. A good level of confidence increases consumers’ likelihood to spend and borrow (otherwise known as their marginal propensity to consume). A poor level signals economic contraction is ahead. It is affected by many factors in our complex economy like housing prices, unemployment, and inflation. However, nothing affects confidence more than uncertainty! In general, when consumers sense they are not reasonably confident of what the future outcome of something will be, they pull back from the table and wait.
You can see evidence of this exact macroeconomic principle in healthcare today. I would venture a guess that if we tracked healthcare’s C bar, we would see that we are in negative territory and likely have been for years.
What we need is stability and a clear direction forward: setting policy and requirements early, providing sufficient time to implement changes, and then not surprising the industry with last-minute changes or corrections. Once confidence is restored, I believe that both providers and HCIT companies will experience a mini boom as all of the delayed investments and innovations work their way back into the sector.