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Industry Voices—How Healthcare Organizations Can Navigate the Emerging Data Economy

The world is in the middle of a data explosion.

The quantity of data being generated and collected is exponentiating. Smartphones and sensors are ubiquitous. Cheap satellites, drones, and connected devices mean that almost anything that can be observed, is observed.

Every company is now a data company, obsessively measuring, tracking and storing countless bits of information about their operations, their customers, their partners, their suppliers and more. There is no transaction that happens in today’s economy that is not logged in some way by the buyer, the seller and various parties in between.

This flood of information enables something that has never been possible before: a real-time, bottom-up, granular view of the entire productive economy. No longer do you have to wait for annual government statistics or quarterly financial reports to understand who is doing what, where, when and how much.

Nobody has been quicker to take advantage of this new window into the world than Wall Street investors. From hedge funds using satellite images to forecast crop yields, to investment banks measuring mall foot traffic to estimate holiday sales, to asset managers counting insurance policy sales to track new car deliveries, investors are racing to identify and acquire new datasets, building data science and engineering teams to extract insights from these datasets, and applying them in a variety of capital markets settings.

“Alternative data,” as this flood of new information is widely called, is predicted to be a $7 billion vertical in 2020—incredibly rapid growth for a category that did not even exist five years ago.

And yet there is one industry that has largely resisted investor attempts to glean a data-driven edge. It is especially ironic because that industry generates, tracks and consumes perhaps more data than any other: healthcare.

Why is this the case? Why is healthcare so opaque to data investigators? Two obvious reasons spring to mind: privacy and complexity.

Patient privacy is sacrosanct, and rightly so. The implicit trade-off that customers make in many other verticals—I give you my data, you give me cheap goods and services or show me ads—simply does not exist in healthcare. In fact, even if patients want to share their information, regulatory frameworks in many countries prevent them from doing so.

Healthcare’s sheer complexity is the other factor making data extraction difficult. The web of interactions, permissions, transactions and information connecting patients, doctors, administrators, caregivers, hospitals, insurers, networks, Medicare, Medicaid, local government programs, regulatory agencies, pharma companies, biotech firms, device manufacturers, distributors and a myriad of more parties is intricate and involved.

But both of these are changing. Innovative approaches to anonymization and aggregation—some using new technologies like blockchain, others using new models of data rights—are allowing data users to extract valuable information without compromising patients’ rights or their privacy.

Wall Street investors do not care about individual patients, only about aggregate trends, so they are perfectly aligned with this desire for privacy; they are also abundantly cautious about data rights and compliance. Meanwhile, industry participants are waking up to the value of the data assets they collect and are forming data-sharing alliances to tap into this value.

These changes help everyone in the industry. For data providers, monetizing data gives them an opportunity to generate revenue from assets that are simply the byproduct of their day-to-day operations. In an industry that is constantly looking for ways to cut costs and boost earnings, this revenue can be material. Meanwhile, patients can benefit from more transparency and all stakeholders benefit from data-driven efficiencies.

Anonymized and compliant healthcare data sourced from industry alliances already drives investment decisions. This data spans the entire spectrum of the healthcare industry: patient and doctor behavior, new treatments or procedures, clinical trial results, brand-name versus generic drug usage, medical device sales, billing and payment patterns, geographical and seasonal patterns, revenue efficiencies, sector-specific growth and much more. Participants in this industry are just beginning to comprehend the depth and width of applications for the data they own.

As the data economy continues to grow, companies across all sectors are realizing the value of their data assets as a revenue stream. Monetizing data has become a big opportunity for forward-thinking healthcare companies looking to add to their bottom line.

Abraham Thomas is the chief data officer and co-founder of Quandl. He was previously a portfolio manager and head of U.S. bond trading at Simplex Asset Management, a multi-billion-dollar hedge fund group with offices in Tokyo, Hong Kong and Princeton, N.J.

 

This article was written by Quandl and Abraham Thomas from FierceHealthcare and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.