I was intrigued, when I heard Pete Celano, the Director of Consumer Health Initiatives at the Medstar Institute for Innovation say he lost sleep over disintermediation. Honestly, I was initially clueless what he was talking about! Thanks to Google I quickly got up to speed. Disintermediation basically means cutting the middleman. Why would a director of a healthcare innovation center lose sleep over that? Should you be worried?

Cutting the middleman

Searching for pictures to accompany this post, I got the result shown above for “middleman”. A poor headless man, caught in the middle. Scary, but I am 100% sure that was not what Celano meant!

Disintermediation in retail

The Huffington post article on the New Disintermediation was most helpful to understand the term.

Disintermediation can be perfectly illustrated by considering consumer behavior over the last two decades as it moved away from brick-and-mortar retailers and toward eCommerce platforms that connect wholesalers directly with customers. Sports Authority’s closure of more than 460 retail stores last year is illustrative of this trend, as is Amazon’s massive new hiring campaign.

On the surface then, disintermediation shields buyers from potential price increases and predatory pricing. It also allows consumers to buy at wholesale prices rather than with retail markups. There are also the added conveniences of 1) not having to leave the house when shopping and 2) having access to a larger selection of goods because they are no longer filtered through typical retail channels.

However, consumers may discover that their transactions are less personal, and the services they typically pay more for, such as in-person customer service, do not exist. Less tangible, but still important to many consumers, is the understanding that disintermediation contributes to lost jobs for thousands of retail workers.”

Disintermediation in healthcare

What would disintermediation in healthcare imply? Are healthcare providers indeed middlemen? Will it be possible for patients to get treatment without healthcare providers? Can we, as savvy consumers, figure out on our own what the best treatment plan is?

The complex stuff

For complex diseases and treatments, probably not. If you need your hip replaced, the orthopedic surgeon is not just a middleman in helping you decide when it is time for the replacement and what kind of new hips you need. The orthopedic surgeon and his team also take care of the delivery. Getting a hip-prosthetic into your mailbox would not do you any good. It takes a lot of skill, an operating room full of expensive equipment, and a lot of pre-and after care to get these prosthetic in correctly.

The simple stuff

However, what about simple things? Such as your flu shot? The latter you can get at any pharmacy and even the grocery store! No physician needed to get a prescription for this shot. So, disintermediation has indeed already started in healthcare. The question is what will be next and where will it end.

There are certainly also other pockets in health care, where it will be possible to bypass both insurance and healthcare providers. For instance, in the Netherlands it is possible to get your contact lenses now from the Hema (an equivalent to the Target in the US). No prescription needed. One day lenses of various prescriptions, just like reading glasses. Will it be possible one day, to visit a kiosk, rest your head in a machine and it puffs and peeps till you get your prescription, including your chances of glaucoma, diabetes, and all other common eye problems you may encounter? And a green light when all is okay?

In a recent Washington Post opinion article, I argued that tech companies cannot upend healthcare that easily. As a patient, I currently still prefer my doctors to give me personal advice and keep my health record safe. However, if too many hurdles are put in place for a simple prescription refill, it makes you wonder.

With hospitals and clinics full of expensive equipment and highly trained physicians, will they be able to stay ahead of their game and benefit from what is currently possible? Or will they become victim of the current status quo?

Disintermediation in other professional services

From my own experience, I could come up with three examples that may resonate. Hopefully they inspire you to take action and protect yourself against possible disintermediation.

My bank

Interestingly, not brick-and-mortar stores but banks were the first confronted with disintermediation. The term was originally applied to the banking industry in 1967. Disintermediation occurred when consumers avoided the intermediation of banks by investing directly in securities (government and private bonds, insurance companies, hedge funds, mutual funds and stocks) rather than leaving their money in savings accounts. In other words, online brokering.

As a business owner, there are nowadays many interesting options to bypass your bank – from receiving online payments to getting loans.

Banks claim that their integrated services and personal advice is unmatched compared to available online alternatives. However, I am only willing to pay so much for their advice. In addition, the scandals about banking advice used to advantage themselves, make that I am actively avoiding their banking services as much as possible. 

My dentist

Our dentist practice, Clark, Delaney and Associates, decided to cut the middleman themselves. They realized that dental insurance is a middleman and that there are advantages – for them and their patients – to be an insurance broker for their dental services themselves. Hence, they now offer a dentist subscription, that includes all the services they provide – from your bi-annual check-up to any dental work that is needed. It means that would I no longer need dental insurance. I also will be assured that the dentist will take good care of me. As it is in both of our interest to keep my teeth healthy and in good shape.

My software and website consultants

When I started, I needed a developer to build my website. For some of the software we developed, we also relied on an external IT team. However, nowadays, we update and modify our website ourselves using templates and plugins. It makes it so we can iterate really fast, update content when needed, and can do (for the most part) exactly what we like.

For app development, similar tools are coming in vogue. These are so called low-code or no-code application development platforms. These platforms make it feasible for me to develop our tools. I no longer have to explain to a project manager what we need. After which this information is passed on to developers in India. When they are finished, I end up getting something different back. Maintenance is easier too, it is just one integrated platform (no provider, host, database manager, or challenges with keeping these systems in sync when each update independently). By cutting the IT professional as the middleman, I suddenly have control over my own creations and in addition, it simplifies my operational and maintenance costs.

Clearly, such platforms will impact IT professionals and their role as consultants. This is not necessarily a bad thing. For example, Agustin Chanfreau and I are now working on much more interesting stuff.  

What does disintermediation mean for you?

What does disintermediation mean for you? Can you take out the middleman and move up and closer to your clients, like our dentist?

I remain optimistic and would love for every professional to take on the role of disintermediator and have a bright and prosperous future.

However, I also start to understand why Celano has sleepless nights over the disintermediation of his health system. Do you?




P.S. If you think disintermediation is not for you, because you have a strong brand and the economics are in your favor, you may be interested in reading this article.