Healthcare isn’t exactly at the forefront of technology. At some hospitals, nurses still fill out forms with pens and doctors use pagers. Bruce Broussard, chief executive of Humana (hum), the health insurance giant, sees technology playing a much bigger role than it does today. In an interview with Fortune, he discussed the impact of Big Data, the promise of telemedicine and the limits of Silicon Valley's disruptive influence. (The interview has been edited and condensed for clarity.)
There’s a lot of talk about using big data to improve individual health care, but we’re far from it. Why?
We’re very early. We're probably in the second inning of a nine-inning game. If it’s just around big data and the analysis of it, it’s not really helpful until you reach to what we call the moment of influence—the point at which doctors have the best chance of nudging patients to change their behavior. We do it today at Humana. When people join, we try to understand everything going into their health. If we can’t do it through technology, we actually send somebody to their home to understand what’s going on in their lifestyle. Then once we understand that, we can use predictive models to figure out what’s happening to them based on populations that we’ve seen before. That gives us insight in how we need to reach out to them and also what kind of care plan we develop for them.
We do the same thing on the healthy side, too, through Humana Vitality. It’s a rewards program where, if you exercise or eat right or do a preventative test of some type, you get rewards. And those rewards are like a frequent flyer program—they accumulate and you can buy things with them. It’s a motivator.
Do you have to manually enter that information?
This morning, I wore a Garmin heart monitor and watch. I went back to my hotel room, synchronized it with my phone, and my phone then uploaded it to Humana Vitality. We have a similar relationship with Wal-Mart (wmt). If you shop there today with your Humana card, and you buy lettuce and tomatoes and fruits, you’ll get a discount on those foods. We can then start capturing that information.
How do you use that data about what people are buying?
We do collect the information, but we use that more for motivating. Food data is not something that we are using right now, but we anticipate that we will use it over time.
In the future, if you see that an asthmatic has bought cigarettes, what will happen? Will you send them an email or text saying, “No, stop”?
Brian LeClaire, Humana’s chief information officer, interjects: We could email, notify their provider, or send a text.
Do you think insurance rates will ever be tied to that?
With Humana Vitality we actually do that. If you get to a certain status, we grant discounts. We also work with employers, and if their employees get to a certain level, we then start rebating money back to them.
But will it become the norm?
I think it will be marginal. I don’t think legally they will allow you to get there. But on the margin, you can motivate people. I don’t think it will be like the GPS in your car that some auto insurers use to follow you around.
Can you give some examples about other kinds of information you’re collecting about customers?
When we have conversation with an individual, we might have an outbound call and find out that they have a dog named Sam, or they have a caregiver, or they have a particularly hobby. We’ll put that into our system so we can start to understand them. Health isn’t not only what was genetically given to you, it's also about your environment and what you do on a day-to-day basis. The more we understand that, the more we can personalize it, and really it requires us to have more and more data about the individual.
Part of this is a cost savings goal for you, right? For example, someone who earns less than $50,000 may be more likely to visit an emergency room rather than their doctor. That's more expensive.
It’s about continued influencing of that individual for their best health. But usually their best health means that there are cost savings. But it’s not a cost savings discussion.
What do you think about the potential for telemedicine?
We’re doing a test in Florida right now where if you go to your primary care doctor, and they notice you have a mole, they take a picture of your mole and ship it off to the dermatologist. You never have to go to the dermatologist.
We have telemedicine where if you come into our office, you can go downstairs and there’s a machine there and a nurse there, and you talk to a doctor who works from a clinic down the street. It’s just going to make a great health care system in the long run. We just have a lot of pains go through.
In terms of telemedicine, haven’t insurance companies been a bit of an obstacle as they figure out how to pay doctors?
A little bit. I think the larger challenge is the laws on the books today. You can’t have a doctor go across state lines, so it becomes little more restrictive. For us, we do pay. I can say for us, we’ve embraced telemedicine. But the laws today will have to evolve because they were written at a time when we didn’t have this technology. Privacy will be a big conversation and medicine-related laws. There will also be discussions between services that telemedicine interferes with—sort of like what’s happening between Uber [the personal transportation service] and taxi companies [which are battling Uber for customers].
The health care industry seems so backwards. At many hospitals you have nurses filling out paperwork by hand and doctors using pagers. Why?
It’s never needed to change. I think what you’ll see over time is more forced competition. The consumer has had very little choice over the years to deal with what you just talked about. You go to the hospital because you gave to go the hospital. There are a few choices you have. You might pick one over the other, but they’re all the same. What we’re seeing with the healthcare exchanges [through the Affordable Care Act, commonly known as Obamacare —Ed.] and Medicare Advantage is that there’s more competition, and that competition will drive more change. But it will be slow. Healthcare has never been a taker of technology. But there are organizations and hospitals that have become more progressive.
What about the paradox that all this technology will make medicine more efficient, but ends up making it more expensive?
What you’re going to see is less use of the more expensive part of healthcare for a few reasons. We talked about distributed access [such as telemedicine]—that’s going to reduce hospital use. Technology and some other industries are going to replace that. Consider radiology. Technology is going to reduce the use of those machines because doctors aren’t going to need to send patients two or three times for radiology. They’re going to have access to what the previous specialist took. There’s also going to be devices that are coming out that are much less costly.
A high-profile Silicon Valley venture capitalist has said that most diagnostic medicine can be done by machines, not doctors. Agree?
I don’t think it will ever replace the personal touch of a physical or the personal touch of a nurse. It’s going to allow the physician to be leveraged in a different way and the nurse to be leveraged in a different way. I think self-diagnosis will be popular thing too. You’re not gong to self-diagnosis lung cancer. But there’s devices coming out for your home that can take your blood pressure and take your temperature. You’ll be able to upload it into an application that can diagnose the problem or send the information to a provider. It might not be your provider. It might be other doctors at a central location who look at information to give you feedback.
Silicon Valley is always talking about disruption. I don’t see the insurance industry being disrupted. Is there any threat from Silicon Valley that you can imagine?
There’s always a threat. We're always looking at what’s coming in the side mirror. We need to be challenged. It’s going to be hard to disrupt the industry in the short run. Listen, we have $14 billion of capital sitting in states throughout this country. If you’re going to insure someone, you have to set aside 10% of every dollar you make. There’s no company out here that’s going to replicate that model. But you know what? We need people biting at our heels to make us better. I look at technology as a way for us to engage with and help our customers. If we don’t do it, someone else is going to.