There is a significant rise in, advertised profit making, genetic and device based medical screening (e.g. BRAC1, whole body CAT scans, etc). What effects will this evolving industry have on healthcare? How do organizations like the American Cancer Society plan for the growth of this trend?
The early market for innovative fee for service diagnostic testing will largely be the worried well, a group that accepts their eventual mortality but has a higher than usual interest in putting it off. While a large number of people fit this profile, the cost and the risk of the new diagnostic technology will mandate that the early adopters have considerable financial resources or access to high-end health benefit programs.
We are entering an era where early adopters of new high tech diagnostics will face considerable risk. These risks include the potential discovery and concomitant treatment of anomalies that may never have become serious disease. Any serious or potentially expensive conditions found will complicate the preexisting condition profile of their health insurance coverage and thus carry the potential to either require considerable future resources or great optimism about the future of universal health care.
From a business planning perspective there are two possible business models to tap the market for these new diagnostics;
Targeting Early Adopters. The economics of this type of testing will make it valuable for a limited number of independent or corporate practitioners who understand and can efficiently target and service individuals in a highly a targeted medical market. As with any technology if this one provides perceived customer benefit, the market size will grow over time. This is the business model we are seeing now.
Screening Inorder To Acquire Patients. Hospitals are reimbursed for needed and covered procedures, such as surgery and radiation what is required is a set number of patients necessary to provide cost effective treatment. Some of the new diagnostic tests will, while expensive to establish, produce a need for profitable after test treatments. In these cases the tests could become effective loss leaders that generate profitable business. In the 1980’s hospitals began free cholesterol screening knowing that it would increase the number of heart surgeries and thus revenue that would more than compensate for the marketing and program costs associated with the free tests. Whole body scans could prove viable in this patient acquisition model.
As marketable tests for more and more diseases become available, the government, employers, and health insurance providers will confront the economic reality that the additional tests result in increased care and rising costs, and the debate over health care rationing will grow more strident. However the health system’s ability to create costs and the private and public sectors inability to pay determines the ultimate outcome. The more that rationing of some procedures becomes acceptable the more acceptable the rationing of others will become.