The exploding use of activity trackers, smartwatches and other consumer health wearables prompted three business school professors to pose a bottom-line question: from a competitive viewpoint, will incorporating patient-generated health data into the clinical workflow boost or bring down providers’ profits?
To answer that question, the researchers applied what’s known as “game theory,” a mathematical modeling that examines how different actors – in this case, competing health systems, consumers and tech firms offering a data integration platform – are likely to react in different scenarios. It’s an approach regularly applied to business decisions, legal strategy and fighting wars.
Game theory shouldn’t be confused with simple logic. Simple logic is clear, said Zafer D. Ozdemir, a professor of information systems and analytics at Miami University of Ohio’s Farmer School of Business and one of the three researchers, “I always had trouble understanding why a nation like this would not fully use digitized health data to improve patient outcomes,” Ozdemir told me.
Game theory, on the other hand, involves the kind of complex mathematical equations that get you published in the Journal of Theoretical and Applied Electronic Commerce Research, thereby becoming the type of Google Scholar source that periodically pops up in my email. Fortunately, the paper contained enough plain English to prompt me to reach out to Ozdemir to better understand what he and colleagues found.
The paper assumes that providers are paid on a fee-for-service basis, which data on actual paymentssupports as still the dominant payment structure. The paper also assumes consumers are interested in sharing their health data with their doctors, a position endorsed by a remarkable 91% of respondents to an October, 2023 consumer wearables survey. From there it goes on to structured scenarios which, while certainly simplified, focus on the kind of economic forces that inevitably influence decisions.
In the paper’s baseline case, for instance, none of the competing health systems integrate patient-generated health data by themselves or by using the platform. As a result, they’re economically better off since no provider has a competitive advantage, and they all avoid the cost of integrating and monitoring the data.
In other words, existing stakeholders can do just fine by not disturbing the status quo. Unfortunately, that sounds very real-world in health care.
The paper goes on to suggest a bigger health system could gain a competitive advantage by integrating patient-generated health data on its own, since it has a larger patient base over which to spread the cost. “They become more attractive as a destination, and it improves the perception that they take care of patients,” said Ozdemir.
However, smaller health systems are likely to feel forced to follow suit, resulting in a situation where all providers are spending more money but aren’t gaining any new patients as a result. Or as the paper put it, “The benefits of PGHD adoption are completely absorbed by the consumers.”
But what happens when there’s a third-party platform into which consumers can feed all their data and which providers can use for data integration ? Here’s where things get tricky. The researchers assume that consumers lose part of their “welfare gain” when a third-party platform is involved because they’ll worry more about privacy. (Concern about privacy was, indeed, prominent, in the 2023 consumer survey mentioned earlier.)
On the other hand, having your data reside in an outside platform makes it easier to switch providers. That’s a prospect that makes the largest health system nervous but is attractive to smaller competitors. As a result, said Ozdemir, smaller providers will be more eager to join a cloud-based platform, but larger players will have to be lured by attractive pricing or pushed by consumer pressure.
“You cannot afford to be left behind, especially with the changes in expectation of the younger generation growing up in technology,” he told me. “Regardless of any profit-related argument, integrating patient-generated health data will be forced on them.”
The researchers warn about “monopolistic practices” and urge legislators and regulators to pay attention to the security and privacy risks with third parties. They also note that “professionals’ views regarding high-quality health apps may not reflect patients’ views.”
“When it comes to patient-generated health data, everyone should be interested in better health outcomes with as fewer costs as possible,” Ozdemir said. But of course, in the real world, “a lot of it is about who controls the data.”
Whether consumers themselves win that game remains to be seen.
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