Understanding the Industry: Connections between Sectors
This is the third installment of the series: Understanding the Industry ~ If you haven't read the other two articles, please go to my newsletter homepage and start with reading part one.
In honesty and transparency, I did not know that there was a hidden sphere when I first began this journey in trying to lay out the healthcare industry. Nonetheless, trying to lay it out in a way that anyone can understand.
I really thought that I would finish off this series with explaining the sectors within the third sphere, and go about my day…alas, there was actually more to the story than what I’d initially perceived.
In this article, I will explain the connections between sectors, reveal which sectors are within this hidden sphere, and briefly touch on why they’re considered “hidden” in the first place (IMO).
(Get a snack, buckle up, and put your thinking caps on because this is going to be a good one!)
Recognizing that hidden sectors does not mean they are forgotten, it simply refers to the fact that they are both “behind-the-scenes” and critical to the overall system.
In the image above, you will see the current state of my “layout of the land” diagram.
(P.S. I am looking for a catchy, snazzy name for this diagram, so if you can think of anything please comment down below with your suggestions.)
I made a couple of changes since you saw it last, but it still contains both the first sphere sectors: Servicers, Providers, and Payors and the second sphere sectors: Regulators, Legislators, and Suppliers. I have added two new elements, the blue two-sided arrow between the Regulators and Legislators as well as the black dashed line between the first sphere and the Suppliers.
For the two-sided blue arrow:
This is meant to signify that these two sectors work veryyyyy closely together, which is generally a good thing. The Legislators want to make sure that the laws and policies passed can be monitored and enforced by the Regulators, and vice versa, the Regulators want to ensure that the laws and policies are achievable and beneficial to all parties involved.
In this way, these two sectors could be considered to be two sides of the same coin.
For the black dashed line:
This is meant to show that there are companies and organizations within this sector that “supply” the first sphere sectors with what they need to provide healthcare services to patients. Below, I’ve included three examples to illustrate my point.
1. Electronic Health Record System
An Electronic Health Record system, or an EHR system, is used to organize and contain patient files. These files can include a patient’s medical history, demographic information, and other health information. While some patients may be able to accurately remember and relay their past interactions with healthcare providers, they may not be fully aware of the specifics (i.e. medication dosage, duration of symptoms, length of stay, previous treatment, previous doctor’s name and information). So, an EHR is nearly mandatory to operate as an effective organization within the Servicers, Providers, and Payors sectors.
Though the transition from paper to electronic records has transformed the care delivery experience, the largest barrier to maximizing the beneficialness of EHRs is interoperability. Interoperability in this context refers to the ability to share and exchange (send and receive) patients’ health records, given that there is consent from the patient or their appointed medical guardian. Manyyyy companies have worked to address this issue because the absence of interoperability will lead to delayed or untimely care, subpar medical treatment, or even harm to the patient.
For California, the state government is working hard to bridge this gap through the Data Exchange Framework (or the DxF). You can learn more about this initiative here. But, essentially, the Framework aims to enable organizations to securely exchange both health information and social services information of patients. Their goal is to provide Californian patients with safe, effective, and whole-person care.
2. Medical Devices Manufacturer
Medical Devices manufacturers produce the physical apparatuses and tools needed by some in order to maintain good health. At the lowest and simplest level, one could make the argument that band-aids fall into this category. In reality, this industry niche refers to the production of pacemakers, blood pressure cuffs and machines, or even surgical robotic arms.
For some, the invention of these medical devices has life-altering and even, life-changing. Our advanced technology makes the American healthcare system extremely innovative and trail-blazing, and also, the most expensive. The more complicated your medical conditions and treatment, then the more vital it becomes to have a comprehensive health insurance plan.
And yet, can you imagine a world where an individual with high blood pressure can be denied health insurance coverage? Simply denied because the health insurance company wanted to avoid the increased costs that this patient would bring to their business. All this changed when the Affordable Care Act (ACA, also colloquially known as Obamacare) came along in 2010.
The summary above puts it all together better than I can, but to bring it all back to the diagram:
Servicers act as a place of distribution - where these medical devices (representing the Suppliers in this case) are utilized or given to patients. Providers are the ones that green light the use and/or distribution of medical devices, basically attesting to the fact that it will be good and beneficial to the patient’s health and wellbeing. Meanwhile, Payors cover majority (if not all) of the costs involved so that patients can access all this care and interaction at an affordable price.
P.S. I am aware that this isn’t always how it works out in the real world. But, my intention here is to show the ideal and to help you understand the basic mechanics between these sectors in the healthcare industry,
3. Pharmaceuticals
Though I would firmly place Pharmaceutical companies within the "Suppliers” sector, technically they are a hybrid.
Before I continue, can you guess what their other sector would be?
That’s right! They would be considered a hybrid between the Suppliers and Researchers sectors.
Big Pharma has a unique incentive to always be on the cutting-edge of medical treatments, drugs and therapies:
Pharma discovers a new medication that vastly improves a certain patient’s quality of life.
Patient really wants that medication for that exact reason.
But, since Pharma invested a lot of money and time into R&D (or Research and Development) for said medication, they want to make some of that money back.
So, Pharma lists that medication at a price that requires a good chunk of change.
Whether Patient has a Payor to back them or not, someone has to pay that price.
Plus, Pharma gets to have exclusive legal rights on this medication for an established period of time so that no other Pharma company can produce it. (This is called the patent period)
Though it may be complicated in the real world, overall, pharmaceutical companies work to find new ways to improve the lives of patients.
Now that we better understand these inherent connections, let’s reveal what’s included in the hidden sphere!
In what I’m dubbing as the “hidden sphere”, there are the Supporters, Educators, and Researchers sectors.
To reiterate, just because these sectors are more “behind the scenes” doesn’t mean that they are any less important or critical to the healthcare system. In fact, I don’t think we would even have a working and operating healthcare system without these three sectors.
To learn more about what these sectors, which organizations belong in them, and more, be sure to subscribe so that you’ll receive the next article directly in your email inbox.
If this article was helpful for you, leave a comment down below!
What are your thoughts on the new and improved layout of the healthcare industry?
Which sector has been your favorite to learn about?
Are there any other connections that you would add between these sectors?
The Healthcare Dynamic Diagram