Walk into any one of the nation’s 4,840 community hospitals or 1,825 rural community hospitals, and it’s easy to forget how these institutions first started. Modern hospitals have emerged as a necessity, thanks to the advent of modern medicine. The increased need for larger and more complex diagnostic equipment, the advent of anesthesia and the operating room, and expanding knowledge and specialization of healthcare necessitated what has now become known as the “modern” hospital. But in a modern world of low latency, high speed internet, autonomous vehicles, remote monitoring, and artificial intelligence, what does the future hold? Why does the healthcare industry gather sick people together into one place, despite risk of infections—and mistakes?

The future of healthcare does not have hospitals, at least how we know of hospitals today. The healthcare industry needs remote monitoring and autonomous Uber drivers as ambulances—not the status quo. The future “hospital” is a connected network of entities that share information instantly, coordinate care, and meet patients where they are. The future “hospital” will have babies at birth centers (not labor wards), home monitoring (not observation floors), phone imaging (not imaging centers), and cancer care at the drug store (not infusion centers).

Tomorrow’s patient may never actually step inside a physician’s office. We recently published extensive research through our brand company, Lippincott, about what this may look like. As an example, the “customer of the future”, which they named Dawn, is perhaps the new normal. Dawn, a 25-year-old who lives in the not too distant future, goes to the physician every week, but she’s never sat in a waiting room. There’s no way Dawn wants to go to today’s “hospital.” If Dawn wants overnight care, she wants it to be specialized, customized, and de-centralized – not industrialized and homogenized.

As care migrates beyond the hospital walls, those remaining patients will be sicker. Patients in hospitals are already sicker than they were a few years ago Total admissions nationwide at registered hospitals increased by nearly 100,000 from 2017 to 2018, exceeding 35.1 million in 2018 compared to the year prior.

The healthcare industry may soon be 80% service and 20% physical location. Many facilities and organizations are reimagining how they’re designed to become a retail-based wellness hub of sorts, with valet parking and enhanced ambulatory services. But the natural trend will eventually be one of continued fragmentation, after the healthcare industry passes the point of peak consolidation of hospital systems.

The Road from point A to B is rocky

Mount Sinai, for example, is replacing its nearly 800-bed hospital with a 75-bed state- of-the-art facility including outpatient, home and community resources. Mount Sinai is one of many hospitals on the forefront of this change – not just acknowledging transformation, but paving the way for innovation. Nearly five years ago, Mount Sinai announced potential plans to merge with Continuum Health Partners. But opening in 2020 will be not a hospital as we know it, but a new state of the art facility—with not just 75 beds, but with outpatient, home, and community resources, as they seek to align themselves with their community’s needs.

But how does the rest of the industry get to this Point B? Given the industry’s existing footprint, and current financial support system for hospital construction, today’s hospital system is already struggling with overcapacity. The United States has 5,534 hospitals, with an average of approximately 2.9 hospital beds per 1,000 patients (similar to the United Kingdom). Should the healthcare industry hope to one day see an improved ratio, even with fewer beds, like Mount Sinai’s initiative?

These forward thinkers seeking to answer questions such as these have great potential to become industry innovators who win share from traditional models by exceeding normalized expectations of experience and care quality.

Artificial intelligence may get us from A to B

Artificial intelligence will allow dramatically more efficient, effective care delivery to be performed outside of the hospital. Just as it will soon become irresponsible to drive your own vehicle, it will soon become irresponsible to not let Alexa read your chart.

Consider China’s radiologist shortage. China asked the firm Skymind to analyze radiologist images to provide physicians with better leverage. When machine results were compared to human results, it was discovered radiologists work most efficiently and accurately first thing in the morning, but by late afternoon, their work is riddled with mistakes. It’s a quality of care issue—which artificial intelligence can solve.

The healthcare industry has much to learn from a developing world quick to adopt new technologies, as lack of physician access means reliability on remote assistance. Take Dr. Devi Shetti, founder and chairman at Narayana Health. Devi reinvented economics with cataract care costing $25 and open-heart surgery costing $1,500—with better reported quality outcomes than the nation’s top hospitals. Both models focus on “industrialization” where the single discipline hospital creates process steps that are repeatedly delivered by the lowest possible cost resources resulting in high quality repetition, standardization, and volume.

This is important to note as merely one example of what’s potentially to come; many pre-op steps are performed by low cost labor, where a medical procedure is done by the skilled surgeon—but only that part requiring a particular skill.

What’s next around the patient-centered bend?

What else is to come for the healthcare industry? Expect continued fragmentation amidst a current wave of industry consolidation via the death of the department store. Expect the evolving electronic health record. Future consumers will own their data, once current systems are superseded. They will become like the Siebel for CRM to Salesforce transition. If hospitals become more like intensive care units, families’ needs may soon outweigh patients’ needs for creature comforts.

Just as each bank may encrypt someone’s financial information independently from the next bank, the future hospital may do the same. The healthcare industry is arguably heading down that path. The Internet of Things has transformed hospitals by integrating IV devices and monitoring equipment into electronic medical records. Patients will own their data like they own their financial plans, and will transport information between advisers, just like they do now when they visit their nearest bank branch. This greater transparency will lead to healthier patients making appropriate lifestyle changes, such as independently identifying a primary care provider or willingly educating themselves on chronic conditions.

And, printing out devices, implantables, and robots for home monitoring will soon become the norm. For example, the Japanese company Winsun can 3D print 10 entire houses within 24 hours—and that was four years ago. The days of printing anything—even printers—is here.

The inherent footprint of a hospital cannot be radically changed without significant investment. But for investors in the “hospital of the future,” opportunity may be in creating a more cohesive health system of the future that leverages seamless experience across inpatient and outpatient settings, with room for even greater scale. The future of hospitals depends on it.

Tom Robinson is a Oliver Wyman Health & Life Sciences Partner Oliver Wyman where this blog originally appeared.

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