Saturday, August 23, 2014

Google, Amazon, Multiplier Effect, and Health Care Dilemmas

The vigorous, the healthy, and the happy survive and multiply.

Charles Darwin (1809-1882), On the Origin of the Species

Multiplication is vexation,

Division is as bad,

The rule of three doth puzzle me,

And practice drives me mad.

Anonymous, 1570

Google and Amazon are fighting a vigorous battle for dominance of online ads, which comprise the bulk of Google’s revenues, but not yet of Amazon’s.

These online giants are beneficiaries of the multiplier effect. They reach billions of people instantly, run ads on their content, sell products to billions of people.

A billion customers here and a billion customers there, and pretty soon you’re talking about real money.

Google has revenues of $66.7 billion, $50 billion of it based on search ad results, with many from its growing social network as more users move to mobile smartphones.

Ninety percent of Google’s revenues come from advertising; it has 52,069 employee;, and its operating profit is 27%.

The multiplier impact coupled with instantaneous speed and no need for bricks and mortar is Google-boggling.

Google’s revenues are larger than all but 40 U.S. companies; its net profits exceed all but three, and its market capitalization is one of the largest on earth, nearly $40 billion.

Now along comes Amazon, with $75 billion in revenues, the nation’s largest online retailer with 250 million customers, seeking more ad revenue to supplement its thin profit margins.

And so the battle is joined for first place to where consumers will go to shop for products and services.

Both Google and Amazon used text-base key words to attract health care shoppers and sellers.

Key words for health care today might include : ACA, Affordable Care Act , Concierge Medicine, Consumer-Driven Care, Direct Pay Ambulatory Surgery Centers, Direct Pay Medicine, Disruptive Innovation, Doctor Shortages, Healthcare. Gov, Health Exchange Plans, Health Savings Accounts, Leading Hospitals, Medical Innovation, Medical Trends, ObamaCare, Patient-Engagement, Self-funded Companies, Top Doctors, Women Physicians,Worksite Clinics.

But how to attract does one attract health care shoppers, payers, and providers?

Health care is a notoriously fragmented business, with individuals looking for individual doctors, more than 50% of doctors remaining in individual or small practices, and doctors insisting on retaining individual autonomy.

Besides, medicine is a one-0n-one business, while the Internet can take an unlimited number of orders and serve thousands of orders at once. It comes down to a matter of scale.

Telemedicine, mediated via the Web, is, of course, one answer to the one-on-one dilemma, but that is subject to fraud, abuse, and state regulations.

There are signs, of course, this autonomy is eroding the consolidation tides - hospitals buying practices, health plans forming and narrowing hospital and doctor networks, and doctors and surgeons spinning out of traditional practices to form direct concierge and ambulatory and diagnostic practices.

With doctors, multiplication of medical services can be vexing, for doctors and their patients resist standardization and homogenization of their behaviors, treatment of diseases, and mandating of health care choices.

I have little doubt that Silicon Valley will continue to rule the tech economy, that big data will increasingly dictate how hospitals and doctors practice, that the rule of three – big data, big Internet, and money – will prevail.

I believe that the division of providers into fragmented entities will continue to mystify and perflex Google and Amazon, for humanity does not automatically yield to technology nor can it easily be integrated into personal health care.

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