Wearing your health on your sleeve


Chris Brooking and Tom Kennedy, healthcare liability underwriters at Barbican Insurance Group, discuss with HRMR the potential benefits and the risks of embedding wearable technology into healthcare services.

Wearable technology is widely expected to become an increasingly common part of our lives, whether it is in the form of fitness bands, iWatches or most recently smart glasses such as Google Glass. The market is growing at a phenomenal rate: Deloitte’s TMT Predictions 2014 Report anticipates that the 10 million units expected to be sold in 2014 will rise to 170 million units by 2017.

The sharp increase in the use of such devices is helping generate large amounts of health-related data and there is a growing awareness of the potential this affords not only from a general well-being perspective, but also in the context of general healthcare.

Alleviating the pressure

According to Chris Brooking, underwriting manager for healthcare at Barbican Insurance Group, while wearable technology does not currently play a significant role in the provision of healthcare services, it clearly has the potential to do so.

“Hospitals and Accountable Care Organizations (ACOs) are currently under extreme resource and financial pressures as they face up to the challenges of an ageing population—particularly in the Western world—coupled with a sharp rise in cases of chronic illness,” says Brooking.

“They are having to focus much more on the management of long-term conditions, which require round-the-clock care and constant monitoring of patient vitals. The costs associated with maintaining this level of care are huge and the use of wearable technology has the potential to play a role in helping alleviate some of the costs and reduce the resource pressure these organizations are under.”

World Health Organization World Health statistics  2014 estimated global expenditure in 2012 at $6.5 trillion. Between 2000 and 2011, the per capita total expenditure on health in the US rose from $4,790 to $8,467. This upward trajectory looks set to continue, with the National Health Expenditure Projections 2013–2023 report published by CMS.gov (Centers for Medicare and Medicaid Services) forecasting health spending growth for 2014 of 5.6 percent, and an average 6 percent growth rate for the period 2015–2023, “largely as a result of the continued implementation of the ACA coverage expansions, faster projected economic growth, and the ageing of the population.”

A technology driver

While the Patient Protection and Affordable Care Act may be contributing to an increase in healthcare expenditure in the coming years, it is also being seen as another key potential driver for the use of wearable technology in the sector. This is particularly the case given the fundamental shift in the reimbursement of healthcare providers which the act has introduced. Moving healthcare providers away from the longstanding ‘fee for service’ approach, the new procedures are based on a ‘fee for outcome’ approach, under which the reimbursement structure is based around how you improve healthcare outcomes, rather than how many services the organisation offers.

“This move from ‘fee for service’ to ‘fee for outcome’ is a significant change,” explains Brooking. “All of our hospital clients in the US are very much focusing on enhancing and expanding the steps that they can take to improve the overall health of the populations that they serve. These steps have included offering ‘drive-thru’ flu jab facilities as well as opening up gyms for patients.

“It would seem to be a natural progression that such healthcare providers would also look to incorporate wearable technology as part of this process, capitalizing on tools such as health bands to help maintain health levels and identify potential health issues much earlier on in the patient monitoring process.”

The potential benefits of wearable tech to facilitate improved healthcare outcomes has also formed part of a recent legislative proposal. A new bill, The ACO Improvement Act (HR 5558), has been introduced by Representatives Diane Black (R-TN) and Peter Welch (D-VT) which seeks to improve the ACO reimbursement model by providing additional incentives for focusing on healthcare outcomes and increasing doctor/patient collaboration. One part of the proposal calls for qualifying ACOs to be permitted to provide telehealth and remote patient monitoring services.

Reducing readmissions

Wearable technology also has the potential to play an important role in reducing readmission rates through better patient monitoring, with a knock-on financial benefit of preventing any related fines. One area, for example, is in improving the ability of hospitals to monitor whether recently discharged patients are taking their medication as instructed. According to the World Health Organization, half of all patients globally fail to take their medicine properly, with adverse drug-related events ranking among the top 10 causes of death in the US and estimated to cost the country in the region of $30 to $130 billion each year.

“This could be in the form of using wearable tech to make patients aware of when they should take their medication, while also requiring the patient to confirm that they have done so,” says Brooking. “Hospitals currently face significant issues in terms of monitoring patients once they leave the hospital environment.”

One recent development on this front was the launch by Proteus Digital Health of a digital health feedback system, which involves the patient taking an ingestible sensor at the same time they take their medication. A wearable sensor records the time the medication is taken and also monitors the patient’s physiological responses to the medication which can then be relayed to the relevant medical staff.

The benefits of wearable technology, from both health and financial perspectives, are therefore to be gained at either end of the healthcare process, explains Tom Kennedy, also an underwriter within Barbican’s healthcare team.

“The ability to monitor physiological data can play a major role in helping to flag up warning signs of potentially serious health issues much earlier in their development, thereby enabling much more effective steps to prevent the onset of the particular illness. At the other end, it can be used to monitor outpatients or those recently discharged to ensure that they are progressing as expected and to limit the need for readmission,” he says.

The claims perspective

The ability to monitor the health of the patient population more closely and to have instant access to more detailed medical information also has the potential to deliver benefits on the medical liability claims front.

“One of the biggest areas for claims in any hospital environment,” says Kennedy, “is in the emergency department. In this environment, doctors have very little time to decipher the medical condition they are facing, which of course heightens the potential for misdiagnosis—a major contributor to malpractice claims.”

Being able to access up-to-the-minute data from health bands could play a significant role in providing doctors with a much better basis from which to begin their diagnoses—“particularly when they are dealing with a patient who is either from outside of their healthcare population, or is unresponsive.”

However, while such technology may in the future contribute to a decline in the frequency of claims in the healthcare arena, it should not be seen as a panacea for the current challenges. As with any new technology it brings with it its own unique set of risks and exposures.

“You have to be conscious of the fact that all forms of technology have the potential to fail,” warns Brooking. “Wearable technology is no different. What happens if the system shuts down, or there is a mix-up with the health bands and the medical practitioner receives the wrong information on the patient they are assessing?

“There is also the very real risk of cyber breach—for example, a malicious attack could result in all of the data stored on the system being recalibrated without the hospital being aware of the fact. The repercussions of such an occurrence would be devastating. While it can be argued that wearable technology has the potential to reduce the frequency of claims, it can equally be argued that it has the potential to greatly increase the severity.”

Getting the balance right

As with most situations, the key is getting the balance right. The data insight that wearable tech can provide into the health of an individual or a healthcare population must be balanced with the medical insight of an experienced nurse or doctor.

“There is always the risk that as we move towards a more data-dependent healthcare system, that this will lead to an over-reliance on equipment such as wearable tech and a knock-on reduction in the quality of the medical staff actually delivering the care,” Brooking warns.

“This cannot be about turning the hospital environment into a type of garage where the patient is wheeled in and undergoes a plug-in diagnostic check, which results in the required drugs being administered or procedures being undertaken. Such technology must be used purely to enhance the ability of the healthcare provider and by so doing improving the overall health of the population.”


Chris Brooking is underwriting manager—healthcare at Barbican Insurance. He can be contacted at: chris.brooking@barbicaninsurance.com

Tom Kennedy is underwriter—healthcare at Barbican Insurance. He can be contacted at: tom.kennedy@barbicaninsurance.com

Chris Brooking, Tom Kennedy, Barbican Insurance Group, HRMR, Deloitte, TMT Predictions 2014 Report, ACOs