Advances in technology have resulted in the availability of more data, and for healthcare organizations, monetizing the data is a potential benefit as the industry finds its footing in this digital landscape.
Simply stated, data monetization is realizing a measurable impact on business revenue through data.
The volume and variety of data being created by healthcare organizations as well as the ability to analyze the data to improve or prove performance makes data monetization one of the most relevant topics in healthcare.
Data monetization is a growth strategy for most businesses, often with the financial executives leading the charge on discussions and strategies for their organizations. The end goal is to ascribe value to organizations’ data to be accounted for on the balance sheet like any other asset. An initial step in reaching this goal is to acknowledge that the resources that are allocated and dedicated to data management cannot be summarily rolled into a traditional cost center. There must be a more creative construct to account for both costs and gains.
For example, if through data and analytics, the health system has reduced costs in the supply chain for cardiac stents through the reduction in variation of suppliers and standardization of practice, these “wins” should count as revenue wins not only for the interventional cardiologists and their practicing locations, but for the data and analytics team that helped drive these performance improvement results.
However, it might be difficult for health system leaders to realize how analysis of data led to standardized care protocols around cardiac stenting, resulting in better outcomes across all providers that perform cardiac stenting, or how it reduced the rate of readmission or complications resulting from stent procedures.
This is one example of indirect monetization, but there are so many more that are likely accounted for somewhere and somehow, but not in the context of data monetization and a purposeful shift in accounting strategies.
Until there are formal accounting standards for data, like those that emerged some years ago to account for brand value, for example, today’s healthcare finance leaders should embrace the opportunity to innovate their accounting constructs and schema for data and its monetization.
As healthcare organizations begin to explore their own data caches, they also should understand the benefits of both indirect and direct monetization of their data.
Models of Monetization
Indirect monetization encompasses the ways that data can impact revenues without the data ever leaving the organization. Using data to enhance offerings, introduce new offerings, or improve operational performance are examples of indirect monetization.
Healthcare CFOs are examining more data than ever to find and eliminate redundancies and deviation in contracts or the supply chain, or to identify new or optimize existing service lines. Indirect monetization can also be realized through the collaborative use of data as providers and payers explore and implement new payment and integrated delivery models. The vast possibilities for indirect monetization are realized when creativity meets analytics capability.
Direct monetization—selling data for profit—likely springs to mind in conversations about data monetization. Direct monetization is not limited to selling raw data, however. While direct monetization is fraught with complexity and controversy, it is happening all around us and big dollars are at stake.
One example of direct monetization is bartering or trading data in return for performance benchmarking or data enrichment services, such as a registry. This is a common practice in healthcare. Another example is to sell analyzed data or other “processed” information products. This practice is becoming more common among health plans, software as a service vendors, and emerging data as a service companies.
Provider organizations, electronic health record (EHR) vendors, and medical device manufacturers are increasingly refining their data strategies to include direct monetization. Population health, personalized medicine, machine learning, and artificial intelligence (AI) advances are dependent on large data assets to fuel innovation. Many organizations are finding ways to work within the boundaries of applicable legal and regulatory considerations to monetize the same data that supports those initiatives.
Case Example in the News
A recent agreement between GlaxoSmithKline (GSK) and 23andMe is the first publicly disclosed example of direct monetization. Although it is being promoted as a collaborative use of the genetic data in 23andMe’s possession, many have concluded that the data was sold to a high bidder. In the agreement, GSK invests $300M in 23andMe in exchange for access to the genetic information of its five million customers, with the goal of accelerating treatments and cures.
There is no doubt that the potential scientific value of genetic data is significant, particularly at such scale. However, the agreement raises concerns around consumer privacy, potential data misuse, and potential theft as these high-value data assets move between 23andMe and GSK systems. The agreement also raises the question of who should profit from a transaction like this. After all, there is no more personal data than one’s genetic information. Who else could truly own it? Should the windfall, at a minimum, be shared?
Opportunities and Legal Considerations
Every healthcare entity has an opportunity to monetize its data. That opportunity should be defined in an enterprise data strategy. The legal and regulatory considerations set forth in HIPAA and the 21st Century Cures Act must be considered in any enterprise data strategy. Emerging state laws must be considered as well. The problem for the industry and patients alike is that the new healthcare data economy is outpacing regulation. The use cases for data and its monetization are already pushing the boundaries of current regulatory guidance. Further, the goals for interoperability, transparency, and patients’ data rights established by CMS create more challenge.
Unfortunately, healthcare’s first real lesson in data monetization has been learned through data breaches. Hackers and the dark web have set the market value for a medical record at around $250, according to Trustwave’s 2018 “The Value of Data Report”. The cost of a data breach rose to $408 per record, according to the recently published Cost of a Data Breach study by the Ponemon Institute. These studies substantiate the tangible value of healthcare data and how it is being monetized on the dark web.
For these reasons, a clearly articulated data strategy crafted by a multidisciplinary team, including legal and risk management leaders, is critical for organizations looking to initiate or advance data monetization activities. In the world of data monetization, ownership—not access—is everything.
Stephanie Crabb is co-founder and principal at Immersive, Panama City, Fla.