28 April 2021
Aged care billions light fuse on systemic changes to GP and tech sector
As the federal government gears up to spend $10 billion fixing aged care, big money is hard at work already. planning how they can use GPs and new technology to access this new funding pool
For good or bad, there are systemic changes in politics, technology and commerce now rippling inexorably towards the GP sector which are likely to affect all GPs in the not-too-distant future. The same forces are going to create significant changes to the local medical software industry as well.
Politics is seeding the change with a big investment coming in aged care. Big money groups such PE, VCs and private health insurers are planning their path to the money, a path which must include GPs in some way.
But GPs are stuck in a work and technology paradigm which won’t work for these new money types.
The money people are going to change the paradigm – for GPs and for likely for large swathes of our local health tech sector as well.
The changes afoot are imperceptible at this point of time.
As with climate change, nothing obvious appears to be changing around the system until the impact becomes suddenly obvious.
As with climate change there are likely to be deniers and holdouts.
As with climate change, the politics are all messed up, for GPs in particular at this time, but in many some respects, for tech vendors in Australia as well, who aren’t well understood (or thought about much) by the federal government.
The RACGP, the peak college for GPs, isn’t engaged in these issues either.
Inside the college leadership there is a fair degree of panic these days.
None of the panic is being triggered by any of these challenges unfortunately. Most of it is because the college is obsessed with losing its CPD monopoly, its eternal source of money, and through that, its power and status (or perceived status at least).
Healthcare provision responds first and foremost to money.
Follow the money and you’ll understand if changes are in the wind.
Healthcare is at once the most a government spends on its citizens – the fastest naturally growing budget item for all sorts of social, technological and emotional reasons – and, as a result, the hardest to tame.
In a post-pandemic world, or perhaps in a world where we don’t really ever go post pandemic for a very long time, the economics of most governments have been turned upside down.
Happily for now, modern monetary theory (MMT), in which currency has become a public monopoly, has arrived, at least in the short term, to help governments shore things up.
Money has never been cheaper, so governments are printing more of it to grease the system in a crisis.
It’s done on the premise that while interest rates stay low, they can afford to do it.
And when money starts to become more expensive again? When interest rates start rising, and inflation finally makes a strangely welcome return?
We aren’t in “budget surplus equals good economic management” Kansas anymore, that’s for sure.
But MMT or not, no economist believes governments can print money forever. There will be some form of reckoning – we just have no idea when and what it will look like.
As a result of all of the above dynamics, our federal government has become a split personality in terms of fiscal management.
On the one hand, it is happy to send billions of dollars into the ether on pandemic projects such as JobKeeper, without any audit trail to track down who actually used it properly or not.
But on the other, they are hard at work sending out nudge letters to a bunch of GPs who didn’t read some insane fine print on a new telehealth rule that it introduced less than a year ago to help manage the COVID crisis.
That, at a micro level, the government is pursuing such a small amount of money back from a group such as GPs in this insane manner, while on the macro level it is “spending like drunken sailors”, is problematic.
As some sort of counter-measure (or guilt over their loose spending) , the government believes it needs to keep its citizenry on their toes, through initiatives such as those the Department of Health (DoH) has just launched on GPs, or such as Robodebt.
In the last few months, the leadership inside the NDIS has shifted resources to go beyond attempting to control provider fraud, which tends to be in big chunks, and has started looking at end-user fraud, which of course is tiny so you need to apply data matching and analytics.
Is it any surprise that the two wunderkinds who helped develop Robodebt inside the Department of Human Services left their largely technical roles many months ago now, to work on optimising the NDIS by data matching and working out end user fraud?
This sort of stuff is rife in Canberra at the moment.
In this environment, it seems that if you put a billion at the end of a spending initiative which is politically expedient, the worst that will happen is that someone knowing, deep in the bowels of Treasury, will shake their head in disbelief, and keep going.
But happily for some folk, in the current political cycle, the federal government has some runway left to keep throwing macro spends on the table to secure the next election.
The big one, which is going to affect the general practice sector and our health tech sector in a big way, is aged care.
We are going to commit to spend more than $10 billion over the next four years to fix our aged care problem. And if we are spending $10 billion in the next four years, you can imagine we will need a lot more billions in the following years.
Here is the lighting of the fuse on major change in the coming 5-10 years for GPs.
Here is the lighting of the fuse also for a lot of tech vendors as well. Any vendor which remains bound to their server side software and servicing models, is unlikely to be able to access this new money. And it’s a lot of money.
There is much irony here in that of course we should commit a decent chunk of money to solving this appalling problem.
It’s just that it is a political fix driven more by a desire to win the next election, and not to actually fix aged care. If we’d wanted to do that, we would have responded a long time ago to a regime put in place by the Howard government to promote private sector investment that was obviously going to drive care down in order to optimise profits, and which many investigations prior to this last royal commission had already exposed.
There is already a lot of buzz among a lot of commercial stakeholders about this new “drop” of “no consequences” money. It’s a sort of Helen of Troy announcement. The news travels fast and a thousand ships are launched in pursuit of Helen, or in this case, this new bag of money.
Not much changes in healthcare without the money equation changing.
Before there is even any detail on how this $10 billion is going to be deployed there are already commercial players all over the country wargaming how to access this particular $10 billion.
A lot is already in motion but most of these big money types aren’t entirely over the tech side of what is going to happen.
Big C consultants are working out where they will fit in the scheme of almost certain new contracts to manage the process from the Canberra; private health insurance and healthcare groups are assessing the landscape for opportunity to reduce their exorbitant hospital bills; and private equity firms, many of which now own parts or all of big GP corporate groups, are mapping out their path to the money.
It’s hard to imagine your average 10 doctor GP practice meeting next week to discuss the same matter.
But they probably should.
A lot of change to GP land over the next five to 10 years is likely to get mapped back to this single political move to spend a significant amount on fixing our aged care system in the next four years.
The same is likely for the local medical software sector.
What is most likely is that the solutions required will be scale driven by big money, and that is going to require much better interoperability solutions within the context of our current aged care set up. This is almost certainly going to mean a shift to cloud based technologies for solutions.
The government will need to retain its split personality on big spending versus optimising systems for making savings in future budgets.
As our monetary policy thinking shifts in time, as it must, there will be money synchs in some places, such as aged care, but elsewhere there will be enormous pressure to bring efficiencies to the system and save larger and larger chunks of money.
If GPs aren’t aligned into this new money pool, they are likely to become victim to the requirement to make the money back somewhere else.
Same for the software vendors.
Your average GP is moving largely defenceless at this point of time into this split personality future.
If you are in a practice of anything fewer than 10 doctors today, you are going to be in a target zone for all sorts of plays to sweep up what should be core GP work.
Various groups are going to try to optimise and automate the servicing of a system trying to keep our ageing population out of expensive hospitals and aged care homes.
MONEY IS CIRCLING AND PLANNING
The cascade of events that comes off a decision to spend $10 billion in the aged care sector is almost impossible to map too far into the future. But to help you start planning, you can make some educated guesses as to what could happen.
One thing that is already clear is that a lot of this money is going to be directed at keeping our ageing population out of aged-care homes and, of course, hospitals. The government wants the ageing to stay at home for the obvious economic benefits to the system. Thankfully there are important social and emotional benefits to the patient as well here.
This seems like a no-brainer. They are awful institutions and even if they were properly publicly funded, they would continue to have systemic issues around process that affect a patients’ health poorly.
GPs could rightly initially think: great, keeping an ageing population well enough to stay out of aged care is one of my biggest jobs anyway surely.
Certainly, general practice is never going away.
That we need it more than ever is obvious even to the politicians. It’s clearly obvious to the money people as well. They are buying GP corporate assets up everywhere and circling other aligned and strategic assets.
But what will general practice actually look like when you put all that money in the water and release into the pool the white pointer money types that are private equity, venture capital, corporate GP providers, and the for-profit private health insurers?
Remember, most private health insurers have a burning platform of rapidly depleting membership and revenues at the moment. They are very active in seeking a better future for themselves.
How are they going to work with general practice to extract all this value being released into the system, while managing to pass a lot of value on to their shareholders?
Unlike the RACGP, these people understand lobbying in in Canberra. They are already wining and dining senior bureaucrats and ministers (professionally lobbying) seeding them with the best ways to move the system and this new money to optimise their plans, and solve the government’s budget problems.
Often the smartest people in the room turn out to be the smartest people in the room.
Roll ups of GP practices into larger and larger groups by PE and PHIs is a starting point. To make such groups effective new technology will need to be applied.
Managing GP and allied health networks at scale can’t be done with our old server bound technology set ups. These groups will look to cloud based solutions to solve allied to GP networking and interoperability.
Healthcare globally is at a technology tipping point created by new web sharing (read cloud) technology.
Overseas governments, particularly in the US and UK, are moving to facilitate new web-based data-sharing technologies in healthcare far more quickly than we have been in Australia.
This is causing our local health technology sector to develop its own split personality problem: an old server-bound tech ecosystem, which doesn’t share patient data well with other vendors and between providers, and patients, and cloud-based systems, which are designed to do the opposite (and do).
Unfortunately for GPs, they are mostly on the Mr Hyde side of the technology split personality for now; the older, server side.
The US government understands the issue of patient data sharing far better than our government does (or our government doesn’t see this as a priority to fix ) and is doing a lot more than we are to put patients in the centre of the health equation.
The US healthcare system is so messed up it really is a burning platform.
That’s why things are changing much faster there. They have a much bigger problem immediately.
In Australia who screams “aaargh, managed care, the US” whenever anyone points to anything in the US, is often just trying to scare you off changing the system.
But change the system we must. Or at least engage in how it is going to change. Because it is going to change.
The primary care sector in Australia was spoilt by the advent of a few very innovative and committed GPs who very early on built versions of electronic patient management systems to make their working lives better governed and more efficient.
Dr Frank Pyefinch, who started Medical Director (MD), and later Best Practice (BP) is perhaps our most trusted and famous innovator in this respect.
Around 1996 the government helped this process by paying GPs to buy computers and automate their patient management via electronic script writing (the original ePIP).
This meant Australia’s primary care sector computerised well before most other countries on good systems, which served doctors and patients better.
Today, we see in almost all sectors of modern society that web-sharing technology is revolutionising the relationship between a provider, like a bank or travel company, and a consumer.
But we don’t see it much in health care.
Health care is risky, complex, highly regulated (necessarily) and emotional.
Digital transformation has been slow to come to the sector as a result.
But it is coming now.
And we have some big problems here in Australia.
If you’re a GP you almost certainly work on BP or MD, both of which are very old technology that require local computers (servers) to operate (either in practice or off premise, but it’s the same, so don’t be fooled) and which, most importantly, are not architected to engage with the fast-developing open systems and web-based systems that are starting to become available to governments, corporations and individual doctors (if they are forward thinking enough) in health care.
Cloud-based PMS systems for GPs started being developed more than six years ago, but they’ve hardly made a dent in the market dominated by the older systems of BP and MD.
They haven’t made a dent for practical reasons. The old systems had many years to integrae with a lot of surrounding systems in a complex regulatory and payment environment. Integrations include several payments systems, secure messaging, Medicare, the MBS, pathology labs, specialists, booking engines, and an array of other applications.
The new cloud systems simply couldn’t build all those integrations to start with because it wasn’t economic. If you wanted a cloud system you had to make sacrifices to your immediate manner of working as a GP and no GP could easily afford to do that.
The cloud systems were architected to talk to other cloud systems but in Australia cloud in healthcare has been very slow to develop.
Building up to 35 integrations to talk to old technology, much of which had many version, which most cloud vendors knew would die a death in time anyway, was sunken money they couldn’t justify spending.
So the cloud vendors left GP land largely to its old and land locked ecosystem. Clinic to Cloud succeeded with specialists to some degree because their systems were much simpler and more specific.
The cloud vendors who actually had working solutons worked out another path to the future.
It’s s a path that looks like it will end up in the big money players. Using cloud systems to bypass a lot of the older established GPs using old technology.
Even today, the major PMS vendors are struggling to come to terms with building their cloud versions. MD built a cloud version called Helix, but it really was a custom-built hybrid system for their old owner to manage fast throughput bulk billing (a business model that is dying) , not a properly architected GP cloud PMS.
BP has promised a cloud system for years.
It’s still coming, according to the group. BP possibly understood the culture of GPs better than any of the vendors and understood they wouldn’t go for cloud early. So BP held off, and instead focussed on market share. It took massive share off MD while it has been owned by private equity and today is the biggest footprint in the country for access to GPs through their PMS.
You can see why these established vendors have waited to invest in the cloud,
Building a cloud version of your old software is risky, complex and expensive. And you might end up busting your old business model if you succeed.
The economics of running a cloud PMS vs a server bound PMS are 180 degrees different.
This is another reason GPs were reluctant to change: no one understood the economics.
The new cloud vendors, leaving the GP sector largely, turned to healthcare providers who wanted all the important attributes of cloud technology but in a closed ecosystem that they could work in. One which didn’t require the complexity of meeting all the old integrations needed to make a GP practice operate optimally. Ones which were being built for a more connected future.
These providers are typically either government,well-capitalised corporates looking for a version of automation, or well funded start ups, attempting to disrupt traditional business models.
They are all looking to extract the value that the cloud systems have in being able to share data seamlessly, most especially with patients.
The new cloud system attributes include the ability to scale at speed and with very low cost, highly secure data exchange and storage, direct and secure exchange with patients, speed and agility in development, and reasonably seamless connection to other cloud-enabled parts of the system.
Medicare, the MBS and the PBS are moving to the cloud which means cloud based systems will soon have significant connectivity and sharing advantages for data over the older systems.
It’s a worry because, as good as the reign of BP and MD has been for GPs, these systems now have them locked into their old way of life. It’s a way of life that still has a lot of cottage industry aspects to it. The biggest issue is these systems don’t share data easily or securely.
It’s a way of life that is about to be severely challenged by the money people, who are starting to specify the new cloud systems in order to create scale plays. They are going to build new systems which bypass the server bound GPs and service their groups in far better way. A way which will make it easy for them to access the aged care billions now on offer.
These plays will inevitably marginalise certain sectors of general practice running on old technology and in traditional ways.
Again, general practice will never die.
But you’d have to think that these forces are going to change its shape quite a bit in the near term.
To make this feel a little more tangible, imagine this scenario:
- A private health insurer buys half of a major corporate GP group, or a private equity groups buys all of one (this has already happened, of course)
- A private health insurer is trying to work out how it navigates its way out of a death spiral created by customer leakage on their core private health insurance business. A private health insurer’s biggest problem past customer bleed is the cost of hospitalisation of their patients. If their patients are far better managed at home, then the savings they make is going to start to offset their other business issues in a big way. If their customer goes to aged care, their chances of going to hospital escalate horribly, so keeping them at home longer is an all-round win.
- The government puts up $10 billion to solve its aged-care problem. They realise that the most efficient and socially acceptable strategy is managing an ageing population into better patients so they live much longer at home.
- The private healthcare group, and its soon to be private equity owned corporate group cousins, sit in their boardroom at their whiteboard, with $10 billion written in bold in red in the middle of the board with a big question mark next to it.
- How do they access this money, at scale?
Maybe, build a cloud-based patient management and engagement ecosystem for your business that meets the government’s and a patient’s needs, that shares data seamlessly and uses the data to optimise the whole process.
How many of these private closed-loop systems are being contemplated and built now?
There are a couple you can see if you look carefully.
Some have even been built by government agencies already.
But within a year or so we are going to see some really big ones being announced.
One in particular should shock the whole digital health sector in Australi when people understand its scale and ambition.
It is so big and so comprehensive that essentially its operational blue print will be applicable at a country level.
GPs, on MD and BP, are currently unable to take a meaningful part in this sort of ecosystem.
But the PE owners and perhaps the PHI owners will build GP networks with systems that will.
The legacy vendors can of course add web agents to their products that make them talk to these cloud systems, but it isn’t the same thing.
These systems are land-locked in terms of real data sharing and patient engagement capability. The clock is running on their time being at an end.
GPs are at the beginning of something very big and the fuse has been lit on all these processes by a government happy to throw $10 billion into the aged-care pot to help them win the next election.
The same money is very likely to shape the medical software sector in the country in the next decade.
It’s a confluence of politics, commerce and technology that is going to be seismic over time for many aspects of healthcare, probably initially more for GPs than any other professionals in the healthcare system, but for tech vendors as well.
In many ways, GPs and some tech vendors are stranded at present.
GPs have no one representing them properly in Canberra.
To a far better degree tech vendors are represented by the MSIA which punches significantly above its weight, mostly because of its CEO.
But the MSIA has a lot of internal conflict to deal with in helping its members navigate these stormy waters.
Until now you’d have to say that the weight of members who are legacy and server bound, has held the MSIA back. Most of its members aren’t proper cloud based vendors. Most have significant issues with being small and having to risk their livelihoods in investing in cloud, when the reality is that cloud could easily send their businesses broke in many ways: their old business models simply might not work in a cloud ecosystem; the investment and complexity might be too high; they are small and competing with VC and PE backed businesses that are able to make a loss to get to the future.
Stranded by the historical nature of their businesses and how they have been traditionally run, mostly as a small businesses, both GPs and many software vendors typically lack capital and the ability to scale.
How does the MSIA navigate this issue for their members now when most of their members are in this position?
If this seems a dim forecast, there is still a lot to play out here.
For one thing, whether they are defenceless or not, GPs will be the core of whatever develops, going forward.
And some of our current front running software vendors that are legacy like BP and MD, hold much intellectual capital in their products still, but most importantly, they still own GPs desktops, a position that will surely be interesting to some groups wanting to move faster to the future.
How GPs and tech vendors follow, understand, engage with and embrace these changes may determine where they sit in the system in five to 10 years’ time.
Declaration of Interest: the author is a non executive director of MediRecords