High Frequency Electronic Trading Methodologies And Algorithms Work Their Way Into Healthcare With Human Bodies Losing Liquidity
Posted Jan 03 2011 9:07pm
Ok so reading this title one might say what in heck is this all about? That’s a good thing as now I have your attention. This is a quite thorough and lengthy article in the New York times but what I am addressing here is the fact that these same methodologies are crossing over into Health IT infrastructures. I have taken a couple quotes from the article below and the first statement says it’s a technological arms race, the same applies with healthcare and I have said this many times myself in referring to the fact that us as citizens have swords and daggers while the opposition (folks denying claims) are sitting fat and happy with machine guns, anyway that makes the point very clear, or least it should.
“It is a technological arms race in financial markets and the regulators are a bit caught unaware of how quickly the technology has evolved,”
Regulators do not know how to manage insurance companies any better than they do with Wall Street as we had a prior administration asleep at the wheel for 8 years and it’s catch up time in big way. On top of that we have some in law making capabilities that can’t get out of the 70s and started talking about abortion bills, please give me a break and take a computer class. We have a ton load of technology in healthcare, way over done and that leaves us with the ability to not be able to effectively manage it. HHS is working hard to get their own IT infrastructure up to date as the only ones who have the current business intelligence and capabilities are the insurance companies, so they are the high frequency traders in the case of healthcare with algorithms and processing claims and instead of curiosity entering the lawmaking areas we get witch hunts.
Sometimes, too much technology without the ability to manage it effectively can yield some unintended consequences.
Health IT stands very well to be the next bubble to burst. In doing this blog I see this in the news every day and the expense of transactions and keeping this notion going that we need more innovation. Innovation will take care of itself as there are tons of innovative people around, but the key is collaboration and we don’t do that very well except sit around like a bunch of magpies and talk about it.
I have kind of funny way of describing this paradigm here and it has kind of stuck “Magpie Healthcare” and that’s about what shuffles down to the end line half the time. Innovation keeps on going without collaborated direction at the top and by the time all this falls to the bottom it’s too darn complicated and every starts to hate the systems.
Wall Street didn’t have a whole of interest in social networks until today when they saw the opportunity at Goldman to make money at controlling a IPO for Facebook and secondly they like the idea that it keeps everyone distracted with entertaining themselves while they build even more powerful applications and algorithms to attain more money, as stated above it’s technological warfare.
The Need for Speed in processing medical claims is upon us all the time too as in the last couple years, care in Healthcare has swung from a clinical approach to a financial approach, read the news it’s all there. There has to be a balance and the sooner we get out of the river of denial and get IT literate, then we can start buying some machine guns too.
With high frequency trading all the action takes place in New Jersey, not on Wall Street for executing their orders and in healthcare it makes you wonder where all the action is taking place too, it’s in the servers when it comes to decision making information a lot of the time and it evaluates cost so a least cost routing system can go through and pick out the cheapest care, the cheapest drug and then the cheapest hospital, so in the world of high frequency healthcare is this some day going to yank you out of a hospital bed and send you to another facility and switch your drugs all via an algorithm? Think about tit as this is where the numbers are going and stranger things have happened for the sake of saving a buck.
Now you have no liquidity left in your body when the algorithms are running as you don’t own the decision making processes half the time.
We just don’t want our care to hanging on a flash crash. Have you noticed sometimes how difficult it is to get information on your claims? It may not be on the insurer’s server at all but rather overseas being processed with more algorithms to check, check and check again and all these “check” or transactions make millionaires out of companies that do this. Certainly they deserve to make a profit, but not at the levels we see today which brings me back to the bubble once more.
Back on track this is how claim processing is somewhat being modeled to mirror high frequency trading when you stop and think about and of course those insurers are traded on Wall Street so any algorithms generated that create profits and run in the shortest amount of time seems to be where the focus is at and the the loss of ethics in remembering this time we are focusing on human lives. It’s not the need to save money as that is there anyway and cutting some of the high frequency methodologies in healthcare with machine guns might help and get some better design, but it’s rather the methodologies they use and that makes a case that part sucks for everyone who becomes a patient as you feel like a commodity laying in that hospital bed.
The SEC has their work cut out for them for sure as we remember Harry Markopoulos handing over information to them, and they didn’t have the IT knowledge to know to do with it, technological warfare in our faces and they need some top notch Algo Men. BD
Even the savings of many long-term mutual fund investors are swept up in this maelstrom, when fund managers make changes in their holdings. But the exchanges are catering mostly to a different market breed — to high-frequency traders who have turned speed into a new art form. They use algorithms to zip in and out of markets, often changing orders and strategies within seconds. They make a living by being the first to react to events, dashing past slower investors — a category that includes most investors — to take advantage of mispricing between stocks, for example, or differences in prices quoted across exchanges.
One new strategy is to use powerful computers to speed-read news reports — even Twitter messages — automatically, then to let their machines interpret and trade on them.
By using such techniques, traders may make only the tiniest fraction of a cent on each trade. But multiplied many times a second over an entire day, those fractions add up to real money. According to Kevin McPartland of the TABB Group, high-frequency traders now account for 56 percent of total stock market trading. A measure of their importance is that rather than charging them commissions, some exchanges now even pay high-frequency traders to bring orders to their machines.
“People are going over the lake and through the church, whatever it takes,” he says. “It is very important for these algorithmic traders to have the most advanced technology.”
But there was a role played by some high-frequency machines, the investigation found. As they detected the big sale and the choppy conditions, some of them shut down automatically. As the number of buyers plunged, so, too, did the Dow Jones Industrial Average, losing more than 700 points in minutes before the computers returned and prices recovered just as quickly. More than 20,000 trades were ruled invalid.
“It is a technological arms race in financial markets and the regulators are a bit caught unaware of how quickly the technology has evolved,” says Andrew Lo, director of the Laboratory for Financial Engineering at M.I.T. “Sometimes, too much technology without the ability to manage it effectively can yield some unintended consequences. We need to ask the hard questions about how much of this do we really need. It is the Wild, Wild West in trading.”