Dear Clients and Friends,
We all agree that the healthcare industry can learn valuable lessons from financial institutions, be it in risk management, security, developing standards or building collaborative business models. After all, these institutions are among the most technologically advanced companies in our economy. Granted the challenges in our industry may be different and standards are still emerging, but many HIT companies are successfully applying business models and technologies conceived and implemented within the financial vertical.
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This brings us to the subject of common standards and the phenomenon we call the “network effect”. As more people adopt a standard, the more useful it becomes, which spurs more people to use the standard; examples range from the telephone to credit cards. If our healthcare system can eventually bring providers, payors and patients together in a similar fashion to a credit card network, we will be well on our way to cutting billions of dollars of administrative costs from the system. A few visionary companies are, in fact, doing just that through successfully building payment networks, where providers receive reimbursements within 24 hours and patient payments are significantly expedited.
The more providers join the network, the more payors see the value of signing on. This is precisely the network effect that contributed to the massive success of credit cards. Perhaps, like the credit card business, providers (merchants) will someday subscribe to multiple payment networks. What is clear is that pioneering companies in this field stand an excellent chance of setting the standard and becoming the backbones of all healthcare delivery payments. Standardization is a key subject on our healthcare national agenda. Healthcare payment networks are a good place to start.