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Use data from National Digital Health Mission to help healthcare providers, insurers get better picture of patients: Economic Survey

The Indian healthcare sector could take a leaf out of the banking and financial intermediation sector for ideas to address the problem of information asymmetry between patients, healthcare providers and insurers, proposes the Economic Survey 2020-21. It suggests the use of data from the National Digital Health Mission (NDHM) be used to help healthcare providers and insurance providers get a better picture of the patients. It also calls for the use of artificial intelligence and machine learning algorithms to process this data. 

The Survey notes that due to the nature of the healthcare sector, patients don’t often know what services they are availing. At the same time, patients themselves are known to indulge in behaviour that is dangerous to them, which increases the burden on the healthcare sector. Essentially, the Survey says that healthcare providers and insurers need to have a better picture of their patients. It also seems to argue that the government needs to play a key role in “shap[ing] the structure of the healthcare market” to address both information asymmetries.

“Given the market failures stemming from significant asymmetric information, an unregulated private healthcare system is clearly sub-optimal compared to a system where policies mitigate the problem of asymmetric information. Parallels can be drawn from banking and financial intermediation – another industry that suffers from significant market failures due to asymmetric information – to design policies for mitigating these market failures.” — Economic Survey 2020-21 (emphasis added)

Problem: Patients ‘indulge’ in risky behaviour, healthcare providers don’t know enough about them

People tend to indulge in risky behavior that may not be in their self-interest, the Survey says.  Examples include smoking, eating unhealthy food, delay in seeking care or even not wearing masks during a pandemic. “Such individual behavior may not only be sub-optimal for the individual but also create negative externalities for the entire healthcare system through higher costs and poorer outcomes,” notes the Survey.

—Solution: Use data from National Digital Health Mission with the aid of AI, ML algorithms

The Survey suggests that patients could be assessed in a manner similar to how credit bureaus assign credit scores to borrowers. Credit help mitigate information asymmetry faced by the lenders (banks and financial institutions). In the healthcare context, the Survey argues, “healthcare providers suffer from similar information asymmetry about the patient”.

“[D]ata from The National Digital health mission can be utilised even within the framework of data privacy. By utilising such data with the aid of artificial intelligence and machine learning algorithms, the predictive aspects can be used to mitigate information asymmetry with respect to the patients. Therefore, information utilities a la the credit bureaus should be evaluated and considered.” — Economic Survey 2020-21 (emphasis added)


Read: All You Need To Know About The National Digital Health Mission


What’s new about this: Readers should note that the use artificial intelligence (AI) and machine learning (ML) algorithms has always been envisioned as part of NDHM, and has been mentioned in the National Digital Mission Blueprint as well. The NDHM claims that emerging technologies such as AI, ML. blockchain and so on can improve healthcare outcomes. However, this seems to be the first suggestion as to how these technologies can be actually used in the healthcare sector. In this case, this suggests the use of citizen data to aid insurance companies and healthcare providers. It remains to be seen how this data usage will be regulated by the imminent data protection law. 

Problem: Patients don’t know what they are buying

In healthcare markets, the Survey says, buyers of information (patients) rarely know the value of the information until after it is purchased and sometimes never at all. For instance, patients availing a skin care from a dermatologist may know what to expect as an outcome. For such services, providers will have to keep prices competitive.

“In contrast, patients who must undergo open-heart surgery may find it very difficult to evaluate its quality and have to therefore rely on the reputation of the hospital/doctor as a proxy for the quality. For some services such as preventive care and/or mental health, patients may never know for sure whether their provider did a good job.”

The Survey also notes that when little information is available on the quality of a product priot to purchase — healthcare, in this case —, and the quality of the product is uncertain, the quality deteriorates to the lowest level in an unregulated market. It adds that ” the design of healthcare systems must account for this market failure, which can otherwise lead to loss of consumer faith and resultant under-investment in healthcare.”

—Solution: Rate healthcare providers, à la credit rating agencies

Credit rating agencies mitigate information asymmetry faced by investors investing in a firm). They assess the likelihood of a firm repaying the debt it takes from investors.

“Similarly, healthcare policymakers should consider creating agencies to assess the quality of the healthcare providers – both doctors and hospitals.” — Economic Survey 2020-21

The Survey suggests an approach akin to Quality and Outcomes Framework (QOF) introduced in the United Kingdom by the country’s National Health Service (NHA), wherein there are national standards for major chronic diseases, annual appraisal of doctors and widespread use of clinical audits to compare practices and even the public release of data. “These should be evaluated carefully and considered for implementation.”

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