Winning the Hardware Software Game Winning the Hardware-Software Game - 2nd Edition

Using Game Theory to Optimize the Pace of New Technology Adoption
  • How do you encourage speedier adoption of your product or service?
  • How do you increase the value your product or service creates for your customers?
  • How do you extract more of the value created by your product or service for yourself?


Latest Comments

  • Anonymous said More
    nice analysis, thanks Wednesday, 21 October 2020
  • Anonymous said More
    The fact that CBD from marijuana is... Sunday, 14 June 2020
  • Anonymous said More
    This was excellent and extremely... Tuesday, 21 April 2020
  • Anonymous said More
    Well written. Well constructed. Tuesday, 13 August 2019
  • Ron Giuntini said More
    As always a good read.
    I have always... Thursday, 25 January 2018

Consider how the different groups of players in the healthcare system are connected to one another:

hc game

Healthcare Industry Trends

Trends in society and in the healthcare industry over time have led to 

  • Increases in medical information 
  • Increases in numbers and specialties of service providers
  • Increases in numbers of available medical devices and pharmaceuticals
  • Increases in malpractice attorneys and healthcare regulations
  • Consolidation of payers
  • Consolidation of providers
  • Increases in consumer access to healthcare insurance
  • Increases in incidences of chronic disease in consumers

All these trends in the healthcare industry have led all the different sets of players to become more interconnected to one another in their actions and payoffs. As players become more interconnected, small changes to one piece of the system increasingly ripple through and affect all other parts of the system. In other words, you cannot change one part of a system without that change rippling through and causing changes in other parts of the system.

The healthcare system has become an intricately interconnected web of players. Furthermore, each player acts in seemingly perverse ways — given his particular set of incentives — to optimize his payoffs. Actions in one of the system lead to unexpected outcomes in other parts of the system.

Factors Attributable to Patient Health

Before we move on, it is important to understand the factors contributing to a patient’s health. According to The Kaiser Family Foundation,

  • Only 10% of the risk of premature death is attributable to access to healthcare. 90% of this risk is due to the patient’s behavior, genes, and environment.
  • Increases by the patient in his healthy behavior have the largest impact on his health.

factors effects health


Examples of How Changes Ripple through the System

Now let’s consider a few examples of how changes to the environment faced by one set of players ripple through and affect other players. 

Service Providers

  • Increases in salaries of specialists relative to GPs => too many specialists relative to GPs
  • Increases in costs (regulations, technology, malpractice) => decreases in margins => increases patient loads to make up for lower margins => less time per patient
  • Decreases in reimbursements (public and private payers) => decreases in margins => increases patient loads to make up for lower margins => less time per patient
  • Increases in consolidation of providers
    • => increases in leverage of providers relative to patients and payers => increases in costs to patients and increase in reimbursement rates to providers
    • often => increases in fragmentation of care = decreases in continuity of care
  • Increases in the incidence of chronic disease => increases in patient demand for provider services => increases in profits

Goods Suppliers

  • Increases in costs (regulatory, legal) => decreases in margins => medical equipment and medications less available and more costly
  • Increases in incidences of chronic disease => increases in patient demand for healthcare goods => increases in profits

Legal System

  • Increases in availability of insurance => increases in demand for healthcare services => increases in delays in treatment, given prices and supplies of providers


  • Increases in consolidation of payers => increases in leverage of payers relative to providers and patients => decreases in reimbursement rates to providers and increases in insurance costs to patients
  • Increase in incidence of chronic disease => increases in patient costs => increases in insurance costs to patients

New Information

  • Increases in information => increases in specialization => increases in patients’ fragmentation and variability of care and decreases in continuity of care


Implications of Healthcare System Interconnectedness

A couple of implications of the interconnectedness of the healthcare system include:

  • Patients’ healthcare will not improve substantially unless they improve their own behavior.
  • Problems in the system cannot be fixed using piecemeal changes. Rather, the system needs to be redesigned at the system level, accounting for rippling of effects.
  • The consolidation of providers and payers largely serves to benefit providers and payers at the expense of patients. Competition is essential among providers and payers for improving patients’ well-being.
  • As more healthcare information becomes known, providers are led to increasingly specialize. Of course, knowledge and specialization can improve patient care. However, we must recognize that specialization creates fragmentation in patient care. We must therefore take steps to better coordinate care.
  • Increasing technology, regulatory, and legal costs are large contributors to increases in both healthcare prices in general, as well as to perverse behavior by individual players in particular.

More Blogs

Cannabis Cultivation: Seeds vs. Clones

26-09-2020 - Hits:1602 - Ruth Fisher - avatar Ruth Fisher

Cannabis plants are dioecious, that is, they are either male or female. Plant reproduction occurs naturally, when male plants pollinate female plants, causing female plants to produce seeds. New cannabis plants can thus be cultivated by collecting seeds from fertilized females and replanting them, or by buying seeds generated by...

Read more

Cannabis Cultivation: Indoor vs. Outdoor vs. Greenhouse

22-09-2020 - Hits:1295 - Ruth Fisher - avatar Ruth Fisher

There are three basic locales for growing cannabis: indoors, outdoors, or in greenhouses. Greenhouses enable growers to benefit from natural light, while also being able to strategically block out light to induce quicker flowering. Budget-friendly greenhouse operations are more subject natural climate variations, while higher-end greenhouses are more similar to...

Read more

Would the Endocannabinoid System Have Been Discovered Earlier without the Ban on…

10-06-2020 - Hits:1528 - Ruth Fisher - avatar Ruth Fisher

Cannabis was used medicinally in the Western world from the mid-1800s through 1940, even though doctors did not understand cannabis’s mechanisms of action. The Marijuana Tax At of 1937 Federally banned the use of cannabis in the US for either medical or recreational uses, and it restricted scientific studies of...

Read more

How Regulations Shape the Cannabis Industry

16-05-2020 - Hits:2249 - Ruth Fisher - avatar Ruth Fisher

  The cannabis industry is highly regulated, and the various regulations play a powerful role in shaping the structure, and thus outcome, of the industry. This analysis examines the following questions: How do cannabis market regulations shape market structure? Are the resulting outcomes favorable to suppliers and/or consumers? What are the pros and cons...

Read more

Cannabis Industry Rollouts: Lessons Learned from States’ Experiences

27-04-2020 - Hits:1710 - Ruth Fisher - avatar Ruth Fisher

Bart Schaneman from MJ Business Daily recently released, “2020 Cultivation Snapshot: U.S. Wholesale Marijuana Prices & Supply.” The information contained in the report helped cement certain insights I’ve had about the evolution of the cannabis market. Background info In addition to the myriad other laws and regulations, all states essentially have two...

Read more

A Data-Generating System: A Framework for Data Assessment

14-04-2020 - Hits:1026 - Ruth Fisher - avatar Ruth Fisher

Suppose I gave you, the Data Analyst, a dataset of information on sales of Ford automobiles, and suppose I told you to use that dataset to predict total national sales of Ford automobiles for next 12 months. What would you want to know about the data you were given? If you...

Read more

Hemp and CBD Market Supply

06-04-2020 - Hits:1794 - Ruth Fisher - avatar Ruth Fisher

The information in this post was compiled in an attempt to understand 2 issues: Does the cultivation of hemp differ depending on the hemp product supplied (fiber, seed, or flower)? Is the CBD produced from hemp (cannabis with ≤ 0.3% THC) identical to the CBD produced from marijuana (cannabis with > 0.3%...

Read more

Trends in Cannabis Patents Over Time

08-12-2019 - Hits:2306 - Ruth Fisher - avatar Ruth Fisher

Patent Counts by Year I searched the USPTO patent database for all patents for which the patent abstract contained any of the following terms: cannabis, cannabinoid, marijuana, tetrahydrocannabinoid, or cannabinol. My search yielded 914 patents. As seen in Figure 1, there were only a handful of cannabis patents each year until the...

Read more