Introduction
The European Commission describes eHealth as “a set of tools based on information technologies and communication tasks used in prevention, diagnosis, treatment, monitoring and management in health and lifestyle.”[1] The term can encompass a range of services that are at the edge of medicine/healthcare and information technology such as:
- Electronic health records: Enable easy communication of patient data between different healthcare professionals, e.g., general practitioners, specialists, care teams, and pharmacies
- Telemedicine: includes all types of physical and psychological measurements that do not require a patient to travel to a specialist. When this service works, patients need to travel less to a specialist or conversely the specialist has a larger catchment area.
- Consumer health informatics: both healthy individuals and patients want to be informed on medical topics (think: WebMD).
- Healthcare information systems: software solutions for appointment scheduling, patient data management, work schedule management and other administrative tasks surrounding health.
- Virtual healthcare teams: consist of healthcare professionals who collaborate and share information on patients through digital equipment, e.g., for transmural care.
- mHealth: includes the use of mobile devices in collecting aggregate and patient level health data, providing healthcare information to practitioners, researchers, and patients, real-time monitoring of patient vitals, and direct provision of care.
Implementing eHealth as a large-scale tool of public health policy could lead to a range of costs, benefits, and levels of effectiveness depending on any number of extant conditions in a given economy such as the extent that a particular country suffers from “digital divide,” mobile telephony usage rates, population size and growth rates, the number of health care practitioners and professionals, etcetera.
eHealth’s role in the realm of health policy is certain to grow in coming years but it remains a largely under-studied issue. Literature on the subject is rather sparse so including the sort of quantitative analysis to which economists are accustomed to seeing is not something upon which this author will touch. Having said that, there are certain economic underpinnings – namely those of health economics – that can be addressed in this paper. These can lend themselves to make reasonable inferences as to the way that eHealth could redress several public health concerns. This paper will examine eHealth’s potential impact on aging populations, the increase in demand for healthcare service, the increasing expectations of consumers in developed economies, the change in expectations in emerging economies, and the provision of basic healthcare in undeveloped economies. But before we delve into these issues, a bit of background.
Primer on Health Economics
In a 1963 article, American economist Kenneth Arrow became the first eminent academic to examine health-care through an economist’s lens.[2] In this paper, Arrow posited that the apparent existence of stochastic elements, namely, disease incidence and the efficacy of treatment made health-care related issues worthy of formal economic study.[3] Subsequent research led to the appearance of other characteristics[4] – i.e., externalities, informational asymmetry, and the lack of a competitive equilibrium – made health-care a formal branch of economics.
Perhaps what makes health-care most interesting of all is the fact that individuals must allocate resources in order to consume and produce health. This dichotomy is perhaps more clear when you think of health as both an investment and consumption good.[5] Health is a consumption good in the sense that it provides direct utility to us; we enjoy being healthy. It is an investment good very much in the same way as other forms of capital: It enables production and the more you invest, the more productive you are. However, health capital investments are expensive. Going to the gym, consulting a nutritionist, and regularly seeing your physician and dentist are all examples of health capital investments and all have accounting and economic costs; they all require time, money, and effort that require us to miss work or forego other activities.
Once we reach a certain age our health stock begins to deteriorate more rapidly, hence the phrase, “In my prime.” To abate this deterioration, we must investment at an increasing rate, thus our healthcare costs rise explicitly. They also rise implicitly: Older Employees generally earn more than their younger colleagues, so each day of work missed due to illness or to visits to the doctor is more expensive.
In the context of health economics, as the investment rate and the depreciation rate of our bodies increase with age so too does the demand for healthcare[6]. This will be a recurring theme throughout this paper.
What we can the following away from this discourse: Time represents a major element of healthcare costs. The more time that we dedicate to maintaining our health, the less time we have to write our blogs, travel the world, or watch football with our friends. So any measure that reduces the amount of time we spend getting healthy will boost productivity in other areas of our lives.
Attribute of eHealth: Time Saving
Google Health, a free, electronic health service launched in 2008 is designed to reduce the amount of time spent by consumers as well as health practitioners on healthcare. Our health records can quickly be imported and stored which means no more sifting through paper-based copies. These can then quickly be shared with our doctors. This may not represent a high added value for those of us who have long-standing relationships with family doctors, but in the event that you need to find a new doctor either due to the retirement of your family’s primary physician or because you need a one-time service such as wisdom tooth extraction, the electronic service may be quite helpful. Last summer I had did in fact have my wisdom teeth extracted. My dentist had recommended an oral surgeon who was well-renowned in the D.C. metropolitan area but who unfortunately did not accept my insurance plan. Instead I had to find another surgeon with whom my coverage was compatible. I spent a few hours engaged in correspondence between my dentist and the new surgeon who did not have a preëxisting relationship requesting record sharing before and after the surgery. Needless to say, an internet-based record sharing service would have made my life easier.
This past week, Barcelona hosted the 2010 eHealth week, where several new technologies were unveiled: a SMS-based medication deliver system, remote surgery and others that represent time-saving tools as well as new advancements in medical technology. The use of mobile telephony in healthcare, such as SMS reminders when your prescription is running low, is on the rise and not just in the developed world.
Tool of eHealth: mHealth
The use of mobile technology among doctors in the developed world will only provide marginal benefits to patients. We are talking about seconds and minutes saved. But in poorer economies, the benefits will be substantial as they will not only save time, but will help doctors deliver basic health services to the populace. Cell phone use has risen over 500% in Africa since 2004.[7] Today, approximately 350 million Africans have subscriptions with perhaps millions more using rechargeable credit services.[8] On March 21st, Rwanda’s President, Paul Kagame, delivered on his promise to provide community health workers with 2,500 mobile phones.[9] Subsequently, the speed with which doctors communicate with patients, other doctors, and medical service providers, e.g., EMTs can decrease considerably. As a practical example, the sooner a doctor knows that that an ambulance is on the way, the sooner they can move on to other patients. This means that each patient is less burdensome to the next and to the doctor.
For the Rwandan doctors, less time spent caring for a particular patient means that they can see more patients during the day. There is an underlying economic principle here: Shadow cost. The shadow cost measures the strength of a constraint. In the preceding example, time is the constraint. Due to the time saving associated with mobile telephony, doctors can increase their coverage areas. More patients tended to means greater overall health. And healthy people are more productive. As you can see the benefits of mHealth to Third World countries are immense.
The mobility of doctors has another economic implication: infrastructure, rather the lack thereof.
Tool of eHealth: Telemedicine
Time Magazine recently published an article about the rising use of Skype among psychiatrists in the United States.[10] Telepsychiatry, as it is known, allows patients and their mental health professionals to communicate in real time and offers the same face-to-face interaction without the need to commute. This translates to time and cash savings for both parties. Whether telepsychiatry is as effective traditional psychiatry remains unknown. In fact, the National Institute of Mental Health has offered a generous grant to Children’s Hospital in Seattle, to study the effectiveness of telepsychiatry.[11]
One of the potential implications for eHealth generally and telemedicine specifically is infrastructure requirements will lessen. A therapist in the United Kingdom may not need to rent office space when she can practice from home. Moreover, her catchment area will increase as web-based communication is not bounded by distance.
Changing Expectation in the Developing World
The provision of mental healthcare seems to be a luxury item. That is, the demand for it increases only when a certain wealth threshold has been passed. This is perhaps evidenced by the recent rise in demand for mental health services in India, which represents one of the fastest growing economies in the world. The incidence of depression, anxiety, and other mental health concerns has risen sharply in India.[12] Yet, the number of psychiatrists and therapists cannot meet the demand. A simple Google search yields several recent news items that point out the inadequacy of mental health services in India.[13] To date there has not been a formal analysis that examines the correlation between rising wealth and demand for mental health services. Therefore, we will examine a case at the other end of the wealth spectrum.
My fiancée who is an audiology resident at New York Presbyterian Hospital told me one evening in a conversation on Skype that the demand for cochlear implant surgery was virtually nonexistent in the Dominican Republic (many of her patients have been Dominican émigrés) but quite high among her more affluent patients. The reason in economic terms seems simple enough: poorer patients can afford to forego the surgery (which by the way is covered by Medicaid, a Federal program designed to help the poor obtain the medical services they demand). Much like poorer patients can afford not to seek mental healthcare. In fact the same Google search we performed earlier but this time for the Dominican Republic does not yield any hits that relate to shortages of mental health practitioners in the Dominican Republic. While this analysis is sophomoric the lesson is clear: Healthcare expectations change with wealth much in the same way that demand for environmental health rises with income – something that is universally-accepted among economists.
So how do changing expectations fall within the context of this paper? For starters, public health officials can better craft health policy to meet foreseeable needs. If telemedicine booms, for example, hospitals can amend the budgets accordingly. Less spatial requirements in mental health wing will free up space and money to be used to develop other branches. Governments may allocate public funds that would have be used in the upkeep of these hospitals to purchase additional bandwidth or additional cell phone towers so that information continues to move swiftly.
As the number of doctors increases so too will the number of patients and governments must be properly equipped. mHealth in the developing world for instance will increase the coverage areas of doctors and in order to meet increasing demand additional infrastructure will be required. Roads to travel from town-to-town and to transport patients for instance will become an increasingly pressing issue.
Difficulty with Implementing eHealth: The Digital Divide
The general ageing of the world’s population is one of public health’s primary concerns. As we saw earlier, healthcare costs increase with age. So on a global scale, the demand for healthcare is also increasing. There is a major underlying problem, however, much of the elderly population is subject to a condition known as the Digital Divide.
In a nutshell, the Digital Divide “refers to the gap between those who benefit from digital technology and those who do not.”[14] The problem encompasses inaccessibility to computers and the internet as well as mobile telephony and applies to the affluent and impoverished alike. As visible in the graphic to the right, the disparity in internet use is quite high between the developed (blue) and the undeveloped worlds (red).[15] Fortunately, the picture is not so grim for mobile telephony.[16] So while web-based eHealth solutions may not be realistic in the undeveloped world, mobile phone-based solutions are.
Still, the Digital Divide remains somewhat of an issue even for richer countries.
A 2002 study by the Nielsen Norman Group, a company that helps corporations extend products via the web by improving website usability, found that the internet was twice as hard for seniors to use as compared to their younger counterparts.[17] For a group that already has to invest more time to maintain their health maintenance, dedicating more time to deciphering the web is quite cumbersome and not a realistic option. A 2005 report published by the Kaiser Family foundation corroborates this. The report relied upon a random, digitized survey with 1,450 respondents aged fifty and older. According to the survey, less than one-third of Americans ages sixty-five and older have ever used the internet.[18] What is more, only one-fifth have searched for health information on the internet.[19]
This presents an interesting problem: In the developed world, seniors have the most to gain from taking advantage of eHealth tools yet they do not. Redressing this problem will require a lot of resources such as making websites more usable and educating the millions of senior citizens on the benefits to be had from using web-based health tools and resources. It is just as important for governments to help increase internet usage rates in order to cope with the ever-increasing demand for healthcare.
Concluding Remarks and the Path Forward
In this paper we have examined the economic theory behind the eHealth movement. Namely, how digitized and electronically-based medicine can lead to productivity gains and reduce investment requirements for people as we attempt to maintain our health stocks. We also looked at some specific tools of eHealth and how they can benefit patients and providers alike regardless of socioeconomic status. eHealth is going to change people’s expectations and governments must be ready to help deliver these services to people.
With improved healthcare comes another economic issue that we did not touch on in this paper: Population growth. Improved healthcare is largely behind the population boom seen in the 20th century as infectious diseases were nearly eradicated. This places an ever-increasing burden on public health professionals because an unmanageable ailment could lead to catastrophe above and beyond anything Thomas Malthus could have foreseen. So the use of eHealth to better serve and protect people is just as important form them as it is for physicians. [1] “What is eHealth”, European Commission March 2010. Available electronically at:
[2] See: Arrow, K. (1963), "Uncertainty and the Welfare Economics of Medical Care", American Economic Review 53 (5): 941–973
[5] Grossman, Michael (1972), "On the Concept of Health Capital and the Demand for Health", Journal of Political Economy 80 (2): 223–255
[6] Ibid
[7] “Africa calling: mobile phone usage sees record rise after huge investment.” The Guardian 22 October 2009. Available electronically at: < http://www.guardian.co.uk/technology/2009/oct/22/africa-mobile-phones-usage-rise>
[8] Ibid
[9] “Community Health Workers Get Cell Phones.” The New Times 22 March 2010. Available electronically at: <http://allafrica.com/stories/201003220001.html>
[10] “Telemental Health: Videoconferencing as Psychiatry Aid.” Time Magazine 21 March 2010. Available electronically at:< http://www.time.com/time/health/article/0,8599,1974196,00.html>
[11] Ibid
[12] “Inequality and Poverty Cause Mental Health.” Info Change India 9 April 2010. Available electronically at: < http://infochangeindia.org/2001010980/Health/Features/Inequality-and-poverty-cause-mental-illness.html>
[13] Web-based search via Google.com: “number of psychiatrists in India.”
[14] “Digital Divide: What it is and Why it Matters.” Digital Divide.org Available electronically at:
[15] “Global ICT Developments.” International Telecommunications Union. Available electronically at:
[16] Ibid
[17] Nielsen, J. and Pernice K. (2002), “Web Usability for Senior Citizens: 46 Design Guidelines Based on Usability Studies with People Age 65 and Older.” Nielsen Norman Group. Available electronically at: <http://www.nngroup.com/reports/seniors/>
[18]“ e-Health and the Elderly: How Seniors Use the Internet for Health – Survey.” The Kaiser Family Foundation January 2005. Available electronically at: <http://www.kff.org/entmedia/upload/e-Health-and-the-Elderly-How-Seniors-Use-the-Internet-for-Health-Information-Key-Findings-From-a-National-Survey-of-Older-Americans-Survey-Report.pdf>
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