Becker's Hospital Review

86 Thought Leadership A new analysis shows the incredible speed and intensity of Uber's encroachment on the traditional taxi industry. In just 15 months, between January 2014 and March 2015, Uber's share of business ground transportation increased from 14 percent to 47 percent, while the traditional taxi share fell from 86 percent to 52 percent, based on expense reports submitted through Certify software. At an unprecedented pace, consumers are vot- ing with their feet for the overall experience and frequently lower prices of Uber. This is not just a shift in carriers; it is also a shift in dollars from one set of providers to another. Like most indus- tries faced with a drastic loss of income, the taxi industry is not taking this change lying down. Some taxi companies are following Uber's lead and offering apps for riders to schedule pick-ups. However, the taxi industry appears to be focused less on reinventing itself to better serve consum- ers and more on using regulation to protect their existing business. Despite heavy protests from the taxi industry, Uber has made significant inroads across the country. The last major battleground appears to be airports. In New York, a new Taxi and Limou- sine Commission proposal would prevent Uber vehicles from meeting riders within established pickup areas at LaGuardia Airport. According to the Commission, the rules are designed to pro- tect consumers "while leveling the market play- ing field." In Chicago, the Mayor's office recently announced it is not planning to allow Uber to serve the city's airports, alluding to Uber's efforts to "game the system," an apparent reference to widely reported tactics that Uber drivers use to escape detection while picking up passengers at major airports. One attraction of Uber for air travelers is the ability to bypass long airport taxi lines. A rep- resentative of Chicago taxi drivers commented, "Even though the waits are very long, O'Hare is the place where we know we can make money… We've already had plenty of money taken from us on the streets of Chicago. We can't allow it at the airports." Similar stories are pervasive in healthcare. One example involves independent freestanding emer- gency departments (IFEDs). Like hospital-affiliat- ed EDs, IFEDs are staffed by physicians and are open 24 hours a day. Unlike hospital EDs, IFEDs limit their services to minor emergencies. Al- though IFED prices are similar to those of tradi- tional EDs, IFEDs tap the desire of consumers to have emergency care closer to home and to avoid the long waits of traditional EDs. The number of IFEDs is growing dramatically. Nationwide, the number has increased from about 145 in 2009 to more than 400 in 2014. Since 2010, 145 IFEDs opened in Texas, which was the first state to license freestanding EDs not oper- ated by hospitals. First Choice Emergency Room, the nation's largest freestanding ED company, increased its locations from 14 in 2012 to 67 in 2015. An industry analyst said that First Choice works at "the sub-ZIP code" level to identify loca- tions that provide desired demographics, traffic, and visibility. Legacy forces have opposed regulatory changes that would relax restrictions on non-hospital- owned EDs. In California, where a proposed bill would allow distressed hospitals to be replaced with IFEDs, a California Nurses Association rep- resentative called IFEDs "a fraud on the public" because they do not provide the same level of emergency care as hospital EDs. A similar bill in Illinois designed to permit an IFED to replace a closed hospital met with opposition that pointed out there are 10 hospitals within 10 minutes of the proposed IFED site. A similar example involves nurse practitioners, who play a key role in efforts to enhance access and lower costs. Between 2003 and 2014, the pipe- line of new nurse practitioner graduates increased 180 percent—from 6,611 to 18,484. Between 2013 and 2014, growth was 15.3 percent. However, the growth of the profession has been accompanied by struggles to achieve legislative authority for fully independent practice. Currently, 29 states limit the scope of practice for nurse practitioners and require that they have either on-site physician supervision or a contractual relationship with a physician, which generally involves a fee. Pennsylvania is one state requiring a contractual agreement between nurse practitioners and physicians. Bills recently intro- duced in the Pennsylvania House and Senate call for an end to that requirement with the intent to "provide more accessibility and more affordable healthcare" in rural communities, according to State Representative Jesse Topper. The president of the Pennsylvania Medical Society, however, expressed concern about the lack of oversight of nurse practitioners, saying that "the physician should be the leader of the team because of the education, knowledge, and clinical experience that they have." Ultimately, a strategy designed to thwart change and innovation is futile. In our economic soci- ety, consumer preference will prevail. Consumers will not choose to wait in a long line to ride in a bumpy taxi when, with the touch of a button on an app, they can be met promptly by a nicer car—often at a lower price. Similarly, people with a minor emergency in the middle of the night will not choose to travel to a hospital emergency de- partment when they can receive treatment faster in a more congenial environment closer to home. Nor will consumers choose to visit a physician's office for a routine matter that can be handled by a nurse practitioner in a retail clinic or through an app. Consumers are rarely moved by exhortations to protect the income stream of legacy providers whose services they find inconvenient or that they no longer desire. In addition, the regulatory tide inevitably will turn toward accommodating innovation. After a period of operating outside the existing regu- latory framework, Uber's regulatory battles have been fierce, but they have achieved notable suc- cess. Uber currently operates in 163 cities and metropolitan areas throughout the U.S., and in 57 other countries. As of January 2015, 17 U.S. cities and four states have passed ordinances that favor Uber. A similar momentum exists in healthcare. Proposed regulations related to IFEDs are de- signed to relax restrictions rather than heighten them. In the past four years, seven states have adopted full-practice authority for nurse practi- tioners. Today, 21 states and the District of Co- lumbia have that model of regulation. Also within the past few years, a growing number of patient advocacy groups, employers, hospitals, and others have endorsed legislation providing full-practice authority for nurse practitioners. The core rationale for resisting innovation is less about consumer benefit than economic protec- tionism. Efforts to use regulation as a weapon to fight healthcare innovations usually are presented as protecting the quality of patient care. However, when innovations support quality, have the po- tential to reduce healthcare spending, and repre- sent enhanced consumer access and convenience, efforts to resist them are more likely rooted in protecting existing income. It comes down to this: Here is what Uwe Rein- hardt, one of the smartest economists in the country, says about efforts of legacy providers to resist change and innovation. His comment per- Protectionism is Not a Strategy By Kenneth Kaufman, Chair, Kaufman, Hall & Associates, LLC

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