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Risk Insider: Jeff Driver

Hooba-Dooba! Digital Health Care Reality: Part II

By: | August 15, 2017 • 4 min read
Jeff Driver is the Chief Risk Officer- Stanford University Medical Center and the Chief Executive Officer - The Risk Authority, LLC. He can be reached at [email protected]

As discussed in Part I, digital health care use is on the rise, and while in many ways rewarding, is not without risk. At TRA Stanford, we identified cyber security, misdiagnosis, and informed consent as three pressing issues risk managers will face.

Cyber security: As medical devices are increasingly connected to the internet, hospital systems, and other medical devices, there is a higher risk of hackers collecting sensitive information, or worse, interrupting “life critical systems” that protect human life.

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In 2015, the FDA and Department of Homeland Security provided a warning that medical devices could be tampered with by hackers.  Devices, such as IV pumps, could be accessed remotely through a hospital’s network which would allow an unauthorized person to control the device and change the dosage of medication delivered to the patient.  The vulnerability is the same for digital health apps and wearables.

A variety of clinical risks may arise through the use of digital health apps.  One such concern is informed consent and the question regarding what consent means when care is supplemented through the use of digital health apps.

The risk mitigation strategies between medical devices and the devices used to transmit or receive data through digital health apps and wearables are very similar. Due diligence efforts should ensure that digital health apps are provided through HIPPA compliant platforms and appropriate security measures are in place. Some measures include, for example, a technology backbone and infrastructure to support the function, remote device integration with real-time data sharing, reporting and cross data correlation; interoperability, data analytics and big data management, and privacy and security. A thorough risk analysis of all potential vulnerabilities is indispensable.

Misdiagnosis: While rife with potential for preventative health care, many apps have been developed without being validated for diagnostic accuracy or utility using established research methods. The use of digital health apps and any technology requires an overhaul of existing processes and procedures, as well as a process to evaluate and revise workflows. The following due diligence may help mitigate operational risk related to validity and ethicality:

  1. Research whether the app does what it says its going to do. Developers should be able to provide information about testing and provide disclaimers that their apps are not medical devices and are not approved by the FDA, when applicable.
  2. Prepare the patient, practitioners and organization to utilize the digital health app.
  3. Carry out a mock trial run of a patient encounter utilizing the technology before it is actually incorporated into patient care.

Informed consent: A variety of clinical risks may arise through the use of digital health apps.  One such concern is informed consent and the question regarding what consent means when care is supplemented through the use of digital health apps.  For example, patients may be given a code to download a specific app.  When the patient downloads the app, does that mean the patient consented to the use of the app?  Of course the clinician should complete the risk and benefit conversation with the patient, but when is consent complete?

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Clinicians should follow existing guidelines for informed consent and revise the process as necessary to conform with the unique nature of incorporating technology into patient care.  There are multiple criteria for informed consent that are applicable to this process, such as:

  1. Evaluating and documenting the patient’s competence to understand and to decide.
  2. Voluntary decision-making.  This is important because the patient should not be coerced into using this technology if he/she does not want to.
  3. Disclosure of material information is a key component of the consent process. It should be clear to the patient how the information gathered will be used in their treatment plan.
  4. The patient should expressly, in writing, authorize the plan.  The plan should include when and how the patient should access the digital health app, and a process should be in place to follow-up with the patient to determine whether the patient has accessed the app at the designated time and whether the patient has been able to utilize the app as intended.

Digital health apps will quickly become a regularly used tool to complement existing patient care practices.  There are many upsides to the risk, including more expeditious care through transmitting information in real-time, greater patient satisfaction, greater practitioner satisfaction, chronic disease management, and opportunity for competitive advantage. There are potential risks, too, but these risks can be effectively managed when proactively identified.

More from Risk & Insurance

More from Risk & Insurance

Insurtech

Kiss Your Annual Renewal Goodbye; On-Demand Insurance Challenges the Traditional Policy

Gig workers' unique insurance needs drive delivery of on-demand coverage.
By: | September 14, 2018 • 6 min read

The gig economy is growing. Nearly six million Americans, or 3.8 percent of the U.S. workforce, now have “contingent” work arrangements, with a further 10.6 million in categories such as independent contractors, on-call workers or temporary help agency staff and for-contract firms, often with well-known names such as Uber, Lyft and Airbnb.

Scott Walchek, founding chairman and CEO, Trōv

The number of Americans owning a drone is also increasing — one recent survey suggested as much as one in 12 of the population — sparking vigorous debate on how regulation should apply to where and when the devices operate.

Add to this other 21st century societal changes, such as consumers’ appetite for other electronic gadgets and the advent of autonomous vehicles. It’s clear that the cover offered by the annually renewable traditional insurance policy is often not fit for purpose. Helped by the sophistication of insurance technology, the response has been an expanding range of ‘on-demand’ covers.

The term ‘on-demand’ is open to various interpretations. For Scott Walchek, founding chairman and CEO of pioneering on-demand insurance platform Trōv, it’s about “giving people agency over the items they own and enabling them to turn on insurance cover whenever they want for whatever they want — often for just a single item.”

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“On-demand represents a whole new behavior and attitude towards insurance, which for years has very much been a case of ‘get it and forget it,’ ” said Walchek.

Trōv’s mobile app enables users to insure just a single item, such as a laptop, whenever they wish and to also select the period of cover required. When ready to buy insurance, they then snap a picture of the sales receipt or product code of the item they want covered.

Welcoming Trōv: A New On-Demand Arrival

While Walchek, who set up Trōv in 2012, stressed it’s a technology company and not an insurance company, it has attracted industry giants such as AXA and Munich Re as partners. Trōv began the U.S. roll-out of its on-demand personal property products this summer by launching in Arizona, having already established itself in Australia and the United Kingdom.

“Australia and the UK were great testing grounds, thanks to their single regulatory authorities,” said Walchek. “Trōv is already approved in 45 states, and we expect to complete the process in all by November.

“On-demand products have a particular appeal to millennials who love the idea of having control via their smart devices and have embraced the concept of an unbundling of experiences: 75 percent of our users are in the 18 to 35 age group.” – Scott Walchek, founding chairman and CEO, Trōv

“On-demand products have a particular appeal to millennials who love the idea of having control via their smart devices and have embraced the concept of an unbundling of experiences: 75 percent of our users are in the 18 to 35 age group,” he added.

“But a mass of tectonic societal shifts is also impacting older generations — on-demand cover fits the new ways in which they work, particularly the ‘untethered’ who aren’t always in the same workplace or using the same device. So we see on-demand going into societal lifestyle changes.”

Wooing Baby Boomers

In addition to its backing for Trōv, across the Atlantic, AXA has partnered with Insurtech start-up By Miles, launching a pay-as-you-go car insurance policy in the UK. The product is promoted as low-cost car insurance for drivers who travel no more than 140 miles per week, or 7,000 miles annually.

“Due to the growing need for these products, companies such as Marmalade — cover for learner drivers — and Cuvva — cover for part-time drivers — have also increased in popularity, and we expect to see more enter the market in the near future,” said AXA UK’s head of telematics, Katy Simpson.

Simpson confirmed that the new products’ initial appeal is to younger motorists, who are more regular users of new technology, while older drivers are warier about sharing too much personal information. However, she expects this to change as on-demand products become more prevalent.

“Looking at mileage-based insurance, such as By Miles specifically, it’s actually older generations who are most likely to save money, as the use of their vehicles tends to decline. Our job is therefore to not only create more customer-centric products but also highlight their benefits to everyone.”

Another Insurtech ready to partner with long-established names is New York-based Slice Labs, which in the UK is working with Legal & General to enter the homeshare insurance market, recently announcing that XL Catlin will use its insurance cloud services platform to create the world’s first on-demand cyber insurance solution.

“For our cyber product, we were looking for a partner on the fintech side, which dovetailed perfectly with what Slice was trying to do,” said John Coletti, head of XL Catlin’s cyber insurance team.

“The premise of selling cyber insurance to small businesses needs a platform such as that provided by Slice — we can get to customers in a discrete, seamless manner, and the partnership offers potential to open up other products.”

Slice Labs’ CEO Tim Attia added: “You can roll up on-demand cover in many different areas, ranging from contract workers to vacation rentals.

“The next leap forward will be provided by the new economy, which will create a range of new risks for on-demand insurance to respond to. McKinsey forecasts that by 2025, ecosystems will account for 30 percent of global premium revenue.

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“When you’re a start-up, you can innovate and question long-held assumptions, but you don’t have the scale that an insurer can provide,” said Attia. “Our platform works well in getting new products out to the market and is scalable.”

Slice Labs is now reviewing the emerging markets, which aren’t hampered by “old, outdated infrastructures,” and plans to test the water via a hackathon in southeast Asia.

Collaboration Vs Competition

Insurtech-insurer collaborations suggest that the industry noted the banking sector’s experience, which names the tech disruptors before deciding partnerships, made greater sense commercially.

“It’s an interesting correlation,” said Slice’s managing director for marketing, Emily Kosick.

“I believe the trend worth calling out is that the window for insurers to innovate is much shorter, thanks to the banking sector’s efforts to offer omni-channel banking, incorporating mobile devices and, more recently, intelligent assistants like Alexa for personal banking.

“Banks have bought into the value of these technology partnerships but had the benefit of consumer expectations changing slowly with them. This compares to insurers who are in an ever-increasing on-demand world where the risk is high for laggards to be left behind.”

As with fintechs in banking, Insurtechs initially focused on the retail segment, with 75 percent of business in personal lines and the remainder in the commercial segment.

“Banks have bought into the value of these technology partnerships but had the benefit of consumer expectations changing slowly with them. This compares to insurers who are in an ever-increasing on-demand world where the risk is high for laggards to be left behind.” — Emily Kosick, managing director, marketing, Slice

Those proportions may be set to change, with innovations such as digital commercial insurance brokerage Embroker’s recent launch of the first digital D&O liability insurance policy, designed for venture capital-backed tech start-ups and reinsured by Munich Re.

Embroker said coverage that formerly took weeks to obtain is now available instantly.

“We focus on three main issues in developing new digital business — what is the customer’s pain point, what is the expense ratio and does it lend itself to algorithmic underwriting?” said CEO Matt Miller. “Workers’ compensation is another obvious class of insurance that can benefit from this approach.”

Jason Griswold, co-founder and chief operating officer of Insurtech REIN, highlighted further opportunities: “I’d add a third category to personal and business lines and that’s business-to-business-to-consumer. It’s there we see the biggest opportunities for partnering with major ecosystems generating large numbers of insureds and also big volumes of data.”

For now, insurers are accommodating Insurtech disruption. Will that change?

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“Insurtechs have focused on products that regulators can understand easily and for which there is clear existing legislation, with consumer protection and insurer solvency the two issues of paramount importance,” noted Shawn Hanson, litigation partner at law firm Akin Gump.

“In time, we could see the disruptors partner with reinsurers rather than primary carriers. Another possibility is the likes of Amazon, Alphabet, Facebook and Apple, with their massive balance sheets, deciding to link up with a reinsurer,” he said.

“You can imagine one of them finding a good Insurtech and buying it, much as Amazon’s purchase of Whole Foods gave it entry into the retail sector.” &

Graham Buck is a UK-based writer and has contributed to Risk & Insurance® since 1998. He can be reached at riskletters.com.