Co-founder Dr. Simon Lorenz discusses his experiences in the healthcare industry, the factors which drove him to found Klara and the problem he's seeking to solve. An insightful read on the state of healthcare, and the imminent need for communication transformation within the industry. Read “How I Met Klara” below:
I grew up in a family full of doctors. Only recently did I realize how much this actually influenced me as a person. I smile when I think about how my parents supported me when I decorated my room as a doctor’s office as a teen. I started supporting the nursing team at 14. First, I was able to watch my father during the operations, then came the time when he told me to assist him during the operations. My fantasy to become doctor was soon put to rest by the reality of how frustrating the healthcare system is. In reality, a doctor’s day is composed of bureaucratic and frustrating work: endless documentation for doctors and their medical assistants to fill out, constantly looking for information in the paper charts of patients.
It seemed to me that doctors spent more time dealing with the bureaucratic and administrative hurdles, instead of focusing on the quality of treatment.
After this, I decided to collect work experience outside of healthcare. I quickly saw the better process within operations-focused industries. I decided to not become a physician despite the family dynasty. I understood my family’s frustration about increasing administrative work, and wanted to find a solution to the problem. I began my professional career at a management consulting company because I wanted to learn from other industries to see which concepts could also be applied to the healthcare space. I wrote both my Master thesis (at the ESCP-EAP) and PhD thesis (Technical University of Munich) on how to improve quality and efficiency of healthcare by looking at operationally savvy industries.
In a nutshell two major factors are influencing the decision-making: demographic evolution (proportionally the number of elderly people is increasing and the number of younger people are increasing), and advances in medical treatments and cures have allowed us to live longer. This has caused an imbalanced healthcare economy where fewer young people are paying into the insurance system, and more elderly people requesting medical ca**re. **
The only ways for insurance companies to mitigate this imbalance are: (1) magically create new young people, (2) decrease demand for healthcare services, (3) make the delivery of healthcare more cost efficient. Option 1 is probably off the table. Option 2 takes decades of public health initiatives to achieve. So insurance companies are left with option 3, where they put pressure on healthcare providers by complicating reimbursement.
Insurance companies had a big influence on policy makers when the reimbursement system changed from a “cost based” reimbursement to a flat rate reimbursement (feel free to read more about DRG and ICD if you want to dig deeper). This means that hospitals were no longer paid based on how long the patient stayed at the hospital (like paying per night in a hotel), but on a fixed amount per diagnosis/treatment. Their monetary incentive changed from giving the patient the most extensive care to the most cost-efficient care. Providers could find loopholes: like increasing the number of diagnoses per patient to increase reimbursement for a single treatment. I like to call that “opportunistic coding.” The ultimate outcome was that physicians packed their offices with unhealthy, unhappy patients, while compromising on the equipment, procedures, and staffing involved in their care. Insurance companies are incentivizing providers to deliver quick, cheap care that often results in poorer outcomes for patients.
Legislators have begun to embrace the concept of value-based care, which focuses on the “value” received from an intervention. Value-based care is the right step towards a quality focused care. Value is measured by either improvement in (1) quality of life or (2) length of life for the patient. The individual patient’s perception of these two measures are a major factor in the determinant of value, allowing the patient to be a vital member of the care team.
Therefore, the success of value-based care depends on doctor-patient communication.
Companies like Amazon, Airbnb, and Uber have been able to reduce inefficiencies (waiting, calling, traveling), improve transparency (documentation, comparability) and boost quality of service (convenience, instant satisfaction ratings). The healthcare sector is just beginning to embrace technology as a means of achieving efficiency while maintaining quality.
At Klara, we believe in something even bigger. Our vision is to improve the efficiency of care by simplifying and fixing communication. We are building a central nervous system that connects doctors, caregivers, and patients in one place. We are building a platform that easily integrates into the healthcare workflow and streamlines each process along the way.