"Want to stir up controversy? Bring up health care. Everybody has a
story to tell–something that went wrong, someone left in the cold,
something the government or an insurer failed at. Everybody has an
opinion about all the current proposals too. And everybody has a
solution they'll happily (or angrily) defend all night long."
That's the opening paragraph for my latest article as a columnist for Forbes "Fixing Health Care: It's Time to Experiment". I recommend using White Space projects to let market participants determine a better approach to paying for health care in America. Since businesses pay for most health care, given our largely employer-paid system, the biggest burden is on American business. If we don't develop a better solution that controls cost, America's competitiveness could seriously falter.
Why would we want lawyers to try "designing" a better answer, when we could let all of us participate in solution development if we open up some market tests? What we need from the government is permission to work around existing rules allowing the tests, and some resource commitment to conduct them. America's health delivery system isn't bad – if you have access to it and can afford it. The broken part has to do with access and cost – not the capability of providers to do a decent job. Those are business problems, not health care problems. We aren't talking about "product" problems, we're talking about "distribution" and "pricing" problems. If we use good business practices, especially White Space to foster creativity, we could develop a new and uniquely American solution that is far better than the current accident of history.
Hope you enjoy. And hopefully we'll be able to move from our currently Locked-in, and amazingly expensive, health care payment system to something that meets more people's needs while bringing rationality back to cost.
Is White Space model similar to blue ocean strategy and disruptive innovation models?
Hi Lucian, White Space is described much more fully in the book “Create Marketplace Disruption.” It builds on the ideas in Blue Ocean and Christensen’s disruptive innovation ideas by focusing on implementation. People can conceptually understand getting into a blue ocean – but they struggle considerably to actually do it. We learned that the two critical issues are getting PERMISSION to operate in different ways and having the RESOURCES to actually do so. When you set up White Space effectively then it is possible to have radical success with innovation.
If the goal of health reform or health insurance reform is to reduce costs, then I agree with the Forbes article it is time to experiment, but believe there is a better solution. Given that 70% of all health costs are behavioral caused, it would be far more cheaper and better to invest in changing people’s behaviors by a combination of rewarding healthy behaviors e.g. thru lower premiums, penalizing unhealthy behaviors thru higher premiums and developing people so that they can learn how to make better decisions thru consistent goal achievement. In this way, the efforts can focus on the 90% who will migrate into the 10% who are responsible for 90% of health care costs.
When change is initiated from external drivers and no internal drivers are present to maintain sustainability, the change will experience a quick death and then another initiative will take its place and eventually succumbing to the same fate. Look at education, we spend 3 times more to educate now than 50 years ago and have worst results. Unfortunately, many have been conditioned that more rules and regulations from the government is the only solution.
We are not only looking at the wrong end of the horse, but are holding the reins to the wrong horse.
Yes. Current surveys show two issues: (1) transportability of your health plan if you lose your job through no cause of your own, and (2) coverage for pre-existing conditions. A bill of just those two items without 1,000+ pages of complex restructuring that no-one reads nor the public wants would pass tomorrow without any public outcry or debate from taxpayers
We do need to cut health care costs in order for our businesses to be able to compete in the world’s marketplace. I do believe in trying new approaches and seeing what really works.
I also agree with the comment above about people having to be more responsible for their health and that we need to reward heathy behavior. We should not have the responsible have to pay for the irresponsible.
Health care reform does require a lot of research into what has been shown to work in the past and in other places in the world along with research in the present to find out what will and will not work.
Sometimes one has to make hard decisions that are good for our country as a whole, even if not everyone likes the results. Doing nothing is not a good choice in regard to health care. We should not need a really strong crisis in the future to force us to take drastic action to reform health care.
Congratulations on the article Adam. I could talk about health care all night long, as well. I can’t believe the ridiculous town hall debates, and the recent hint at gutting the program by eliminating the public option.
I really enjoyed your analogy about WWII ship building. It is great to see government solutions work as well as free market solutions I think the reality is that either direction cannot work with out the other to balance it out.
Jason Sanders
Managing Partner, Global Consulting Forum
Helping Consultants and Consulting Firms Grow
http://www.globalconsultingforum.net
A basic problem is that there is no ‘market’ for health care in the way we would appreciate. Though there are huge disparities in performance among practices, clinics, and hospitals providing similar services, distinguishing one from the other is nearly impossible for patients and payers.
The result? The best providers are penalized, the worst are undeservedly rewarded, patients experience avoidable suffering and the costs are out of hand.
Were we able to access the best and avoid the worst, the savings would be hundreds of millions of dollars per year and the avoided human suffering would be astronomical.
That none of the reform proposals includes transparency for the purposes of allowing informed choice is a big compromise in achieving the mutual goals of improved quality, access, and affordability.
Yours,
Steve Spear
http://chasingtherabbitbook.com
http://blogs.harvardbusiness.org/now-new-next/
Automobile Insurance carriers are able to sell policies to their customers across state lines because they have no gov’t regulations preventing them from doing so. Health insurance is a gov’t protected and mandated PRODUCT.
Health Ins is a product because it is so heavily regulated and mandated to stay within the state they have acquired a gov’t mandated license to operate in along with the gov’t granted “privilege” to conduct business in the Health Ins Policy sales industry. HEALTH INSURANCE is regulated far more than any other PRODUCT (such as a TV), yet the companies are afforded none of the benefits that someone shopping for a TV may experience.
The 2008 “election” was a special interest group bonanza and ACORN promotional gimmick and little else. As soon as the millions dead people and millions of multiple voters need health insurance, we can discuss the real situation and not the AP wire outlook. The AP is controlled by far left zealots who proposed an deal with far left Universities in order to acquire their credentials as reporters. ACORN and other like minded anti-American groups are heavily involved here as well.
These are the same people who earn their doctrates and such by conducting Gov’t paid research on man made global warming via grants also handed out by the far left zealots and wack jobs.
Sure.. Sick people need healthcare and the rest of us could use medical insurance… Allowing Ins companies to cross state lines would help us afford to pay for insurance and a gov’t rebate would be a nice bonus for us folks in the working class and would help productivity… The poor get no cost care from the county. The rich should never be forced to pay for those who already receive gov’t healthcare.
AND, no one should lose their right to choose or not to choose and be forced to participate in a gov’t taxed healthcare plan. NOR should we be forced to give up our privacy and our way of life for a healthcare plan that helps so few.
THINK about what you are saying before you blindly support such a rediculus health care plan that will rob you of your rights and elslave your children and grandchildren.
JL Mealer
Mealer Companies LLC
http://mealercompanies.com
America’s Next Major Automaker
& 100% Renewable Energy Device MFG
A few years ago Micheal E Porter, competitive strategist wrote a book called Redefining Health Care. His premise is that normal competition (rather than insurance dictated models) would let the cream rise to the top and as demand increases so would efficiencies and competition would help to keep costs and prices in line such as it has in almost every other industry. I am struggling to think of one government run business (i.e. postal service) that has not been proven to be better left to competitive forces and the ingenuity of capitalism. I advocate fairly priced health care for all but there must be better ways.
Adam:
Before the federal government takes over the US health-care system, we would all be better served to define the real problems and fix them in an incremental manner.
Some of the key issues that should be thoroughly framed include:
1. The high cost of malpractice insurance.
2. The ability of insurance carriers to selectively offer coverage. If a person uses too much health-care, they get dropped. If they have the wrong type of medical condition they can’t even get insurance. By creating risk pools that all insurance carriers need to cover then everyone will have access to coverage.
3. Understand and manage the prices of supplies and equipment and drugs.
4. Reimburse physicians based on patient outcomes and not simply for looking at them.
5. Let’s find out the real drivers for people who are not covered by insurance and focus on that. Look at how Medicare is spending money and address that. Let’s focus on covering US citizens and not illegal immigrants.
These are just a few examples of the big issues facing the system.
In general it would seem that the best solution for health care reform will arise from maximum input, but the associated problem is that maximum input is likely to frustrate agreement if there is no central authority to resolve disagreement. That gets to the question of strategy, which presumes that there is such a central authority or interested party organizing this effort or in whose name it is being conducted.
So, who wants health-care reform, who doesn’t, why, and who will speak for these parties?
One of the problems in this debate is that those with specific interests in this issue are attempting to bypass or gloss these questions so that they can advance their own agendas. That’s a typical and an acceptable enough tactic in many debates, but not a sustainable way to approach a subject like this in a society like ours.
It might be nice if, instead of imposing deadlines that may be arbitrary or tied to issues unrelated to the subject at hand, a bi- (or multi!) partisan blue-ribbon panel be organized to examine this issue using the questions and approaches recommended by others, such as those commenting above, who are struggling with this issue. This would permit the real interest groups and agendas to surface, helping us to get a fix on what our questions and their answers really mean to those affected by them. This will enable us to appreciate our societal strategic identity with respect to this matter, and then to organize a strategic aim, upon which we can then build a strategic plan.
Probably not because the NHS in the UK is about need and not wants. I’m looking at this from a free at the point of need perspective. The NHS is ineffiicient but commercialisation is not the answer. Not everything on the NHS should be free if you deliberately lead a toxic life-style. Smoking, excessive drinking, over eating etc. The UK spends 40 billion a year on the NHS due to the alcohol related problems associated with the night time economy. That cannot be right. Yearly, the UK NHS is becoming less free at the point of need due to bureaucrats who think they business people. The commercialisation of joined up working between our public services diverts funds away from services that everyone needs.
http://bluechipfables.blogspot.com/2009/06/nhs-less-free-at-point-of-need.html
From what I can tell, everyone here is on the same page for the most part. Sure, our views come from different sources such as business experience, personal medical, countries we live and more. Bottom line, all of these experiences lead to the same end view point. Social Health plans won’t work. The problem is beaurocrats. Most beaurocrats are not business people are are incapable of handing even their own personal finances much less running a multi billion dollar industry. (Please review finances on the above mentioend USPS, Medicare, Medicaid and our beloved Social Security)
How is your experience when you go to the DMV? Have you ever gone to DHS to collect food stamps or WIC coupons? I have. I don’t even live in a major metropolitan area and I still spent 2-4 hours of my day waiting in line while over weight, under paid, undereducated and angry people provided me with the coupons for my financial aid. Add to the fact that the building is old and out dated, their technology is atleast 10 years old and information management system is archaic at best and you have a very unpleasant experience. Talk about adding insult to injury! However, despite my comment about the staff, the redeeming part of my trip was talking to my councilor. She cared about the people she delt with and through empathy and intelligence, gave the post possible scenario for help. That’s one out of maybe 5 employees I dealt with on any given day.
So we’re going to expand this business model to encompass health care. Currently experience with my current general provider is very pleasant. The office is clean, I hear contemporary Christian music playing (It’s peaceful. Not a preference. Just mentioned it to point out it was a preference they are still able to exercise. Think that will change with Govt control?), the receptionist knows my name and my doctor is extremely involved in my curch. They even made changes to accept my particular insurance. I am very blessed to have them as my provider. I’m also a type 1 diabetic. When I can’t afford my meds, they give me samples, pins, test strips and anything else they can. It’s not always available as I’m not the only one they help. But still. what a relief!
And Obama and co. want me to trade this, for the DMV or DHS experience.
I was going to ask Deborah, the Canadian that expressed frustration at our lack of openmindedness to the social concept, a few questions. Then the network went down and I came here instead. I’ve a few rumors I’d like dispelled as well about Canadian health care. Perhaps some of you folks can help me out.
1. Are doctors salary capped? Do they have a quota to meet to make that salary and, if so, are they permitted to stop seeing patients once that quota is met?
2. If I needed an emergency MRI, would I be able to get that service within an hour or two like I can in the US?
3. Why are there so many hospitals along the US/Canadian border? And why do they spend so much money advertising advanced surgery techniques, special pricing and other high end services in Canada? Can’t Canada perform all these? Is there a long wait or something?
4. What percent of the Canadian population works for the government anyway? I heard approx. 40%, is this true? What’s the % tax withheld on the average Joe? I bet it’s higher than 18% that I pay. Oh, did I mention I get almost all of it back? (Except state. Arkansas isn’t on board with giving my money back.)
4. A friend of mine from Montreal is in his 50’s. I met him through my mom who met him on Pogo of all places. Long/short, he is affluent and has the cash to pay. Last year he had a stroke. I remember him doing his hospital stay in Buffalo, NY. Why is that? He would rather travel 100+ miles, after being stabalized, to stay in Buffalo?
I’m just curious. Sure, I focus on the negative. I know there are many good things about Canadian health care. I just like ours better.
Last thing, just thought of it. I hear on a conservative talk radio show, think it was Dave Ramsey, (don’t hold me to it) that the Canadian health care system is on the verge of collapse because of more money going out than in. Please dispell this rumor too if you can.
I really have no first hand info on these topics. I talk to people and listen to the media like 99% of the people out there. The comments above are the rumors that stand out the most. Clarification would be great.
Thanks!
http://www.denverpost.com/opinion/ci_12523427
Reading this now. Looks like it’s dispelling rumors as we speak. No clue as to the accuracy of the post but it is logical.
I still don’t support this pork laden bill though.
Always learning something…
Thanks!
Looking at the language, I fear we read too many business books. Beside that, it is quite an intellectual challenge applying free market principles on a domain that is fundamentally of a public nature. Yes, competition is obviously best, but to apply in a public domain with stakeholders and interests that are not market-driven, you need to think twice on the how to do it properly. That is where it went wrong.
Hi Adam,
As far as market research goes, it would be nice if we could bring our government into the 21st century, wouldn’t it?
I just wonder if it’s possible, given how corrupt — i.e. decayed — our government has become.
Case in point. The US Dept of Agriculture was established under Lincoln as essentially an information-gathering/dissemination organization for farmers.
http://bit.ly/3HUd96
Today, the USDA is a sprawling bureaucracy with a huge budget that serves a byzantine collection of special interests, many of which have little to do with agriculture (Food Stamps? Wetlands preservation? A “Healthy Forests Initiative”?)
http://www.whitehouse.gov/omb/rewrite/budget/fy2008/agriculture.html
The problem is that the mindset of our political class doesn’t accommodate anything as benign (or dare I say, useful? ;-)) as the objective gathering of data.
Even when they have the data — as in the 2007 Congressional report I cited in the LinkedIn thread — they don’t use it. Who knows why not. Some of them, I’m sure, willfully ignore it, since the findings don’t support actions that conform to their political objectives. Others (guilty parties no doubt including certain Congressional reps who admitted they hadn’t read the hc bill itself before deciding to wholeheartedly support it) probably don’t even know it exists.
For anyone here who didn’t see the LinkedIn thread: the report compares a number of healthcare metrics across the 30 members of the Organization for Economic Cooperation and Development; buried at the bottom you’ll find that the United States has the third-highest percentage of the population that reports their health status as being “good,” “very good,” or “excellent.”
http://assets.opencrs.com/rpts/RL34175_20070917.pdf
In other words, we’re very happy with the outcomes of our healthcare systems.
Do we spend more? Yes. But that’s largely (as the report notes) due to the fact that we’re relatively rich — we have the money to spend.
If a business person were to survey his/her company’s customers, and discover that their satisfaction ranked as a “top three” relative to comparable service offerings, the last thing he/she would think was “hey, here’s an idea! Let’s replace our services with something completely different, something too complicated for people to understand, and let’s do it without warning — within, say, the next three weeks.”
Nobody in business would ever be that dumb.
So yes, it would be nice if our policies were based on actual data instead of murk, but for that to work you’d also need political leaders who can think through problems logically, who understand basic economics and for that matter human behavior.
I’m heartened, however, to see some intelligent debate on the issue. Perhaps this issue will give the American people the political/economic education we don’t get in our schools.
Healthcare is not a consumer good like a TV. I can buy a TV anywhere I want, at any price point. I don’t have to buy it through my employer with no real “choice.” If I break it, I can buy a new one – no price increase, no increased deductible, no worries about pre-exisitng conditions, denial of service, or clains mitigation department. And the need to buy a TV doesn’t keep me from switching employers. As for auto insurance being a better comparison, it works a lot better than health insurance: mandatory coverage, little change of having it revoked, big choice of providers, unlikely to let me go bankrupt.
Last time I checked, we DID do MR on this, and it was called the 2008 Presidential Election.
Perfect vision, Adam.
Debat is the instrument, created to overstep the long and expensive way of trying out. But this also the reason why debat is a hinder for innovation.
The reason debat is created, came from people who are good in debat and that excludes most business people and also the consumer.
This is ok if the goal of the innovation is restricted ( military equipment is not a consumers-issue and a managing costs is not a business-issue).
Would also not be a problem if there was an open communication / relation to consumers or business and debat was seen as a democratic method as important as each other method..
Both this is not the case; business is commerce and sick people are no consumers, health is seen as a battle against sick people and managing costs in healthcare is an operational reflex if things become expensive.
Debat is the remaining method (besides the new co-create or even ‘ individual route’ marketing of the ‘ experience-economy’, in wich the user of the innovation is co-creator and owner of the innovation).
In Dutch Healthcare is debat the dominant method and the greatest hinder for (my) innovation. You mention, Adam, that it is not possible to predict which innovation will be sucessfull, but this statement is not true.
It is possible to innovate without long experiments and without debat or even co-creation but this talent will create a new ‘elite’ and that’s a hinder for innovation.
I live in the Netherlands and we have a innovation-platform created by our goverment. The leading innovations are created by those institutions who use debat and theoretical research as the only way to make innovations.
In the netherlands we blame sick people and overwhelm them with advizes, services and products in such a way, that they have to feel ashamed about their own care and leave care to the debat-elite. The introduction of the electronic personal medical files is destructed by debat. The original owners of personal records can only respond to the single suggestion the goverment gives and no company is asked by the goverment to give their experiences, solutions or products.
This elite system has been honoured by your democratic president.
My statement; use debat for those who are familiar with that, use the information for this debat from directed experiments as you propose, Adam and give the conclusion to the users and let them play with it to let it erode to the most functional form that is perfect in daily life.
I made a product that uses the best solutions that are available now, the most new technics and communication-providers to let user and healthcare have the most up-to-date information in each contact, it has a standard equipment that allows people to co-create the optimal functions for their daily life, to be owner of their personal records, logs and identifications, it gives several businesses the opportunity to built out parts of the product so the product develops and improves by using the experimental innovations other companies discover and every debat or discussion about costs or good healthcare has a real product to use as a practical test for managing healthcare.
I used the priciples you mentioned, to develop this product that is democratic, that is cheap and functions perfectly for daily-live healthcare. I listened to innovation-debats, I used innovations from companies and I used the inovative drive consumers have and created an innovative product.
Why hinder of innovation; this product is not the conclusion of the only method of debat, it is linked to commercial business and it gives the user of healthcare an important place. So my conclusion: Healthcare needs other people, real innovators and above all the user of Healtcare and debat will take an hour; that’s the way to manage costs.
What a great time to be reconsidering business models…not only for health care but for autos, financial services and housing as well. Other candidates? Given the difference between business models and business strategies I too find myself wondering what role strategists have in raising and contributing to this topic.
All the bailout activity seems to be perpetuating models whose time has past…that’s strategic tragedy and the real “cash for clunkers” program. Consider health care and autos…oh, and rental cars. Two guests recently descended upon us in Zipcars…a no-lot, no-designated auto business model that uses technology to let you buy transportation…not specific cars…on an as-needed basis. Some operations research problems for scattered sites and rural areas, to be sure, but rather than put blow-out patches on the GM (Chrysler, Ford, etc) system, why not explore buying transportation services the same way we buy cell phone services…by the minute or mile; blow up the existing channel system and all the baggage that goes with it. Or how about Zipcare? All the talk about health care reform is health care financing reform…more money (or less with rate controls) for the same chassis. How about using what we know…living wills, nurse practitioners, tele-diagnostics, informed mothers, electronic medical records…an all-out re-engineering of a one-third wasteful (in the US) system using least costly interventions. If this is truly a “strategic infection”, let’s dig underneath the perpetuation strategies and stimulate some yeasty discussion about finding new ways to satisfy the needs for which we “hire” these old business models. And yes its macro rather than micro: every hospital, home health care agency and medical practice has a “strategy”…all of which make sense in the context of a larger framework that makes no sense. Hell, I ran a managed care company…with a robust strategic plan…but like Meryl Streep, I doubt…
Since I posted similar musings in a linkedin strategy group several weeks back with one lone taker I, like Adam, wonder: where should “its the model, stupid” get said if not by folks who think strategically? Most of the serious and apparently intractable challenges exist outside organizational boundaries…or cross them. There’s the blue ocean for strategists.
My other thought on health care reform is about process (yawn, I know), but having “facilitated” 100 or so group gropes for “different” in a variety of environments I’ve gotta believe team-O could be doing a better job building the case for change and bringing the masses up to speed with the issues and alternative futures…Jay Leno’s “street walkers” notwithstanding. Public hearings that prematurely sell rather than listen never go well…and I’ve conducted lots as a former state commissioner. This is a public policy question first and a market question second. Rather than evangelizing a non-specific plan with Joe-the-plumber rhetoric, why not take the time to truly engage the electorate rather than this “yes/no” stump-grinding that throws first one industry, then another under the bus and simply replaces fear of terrorism with fear of socialism? I for one can’t understand why you wouldn’t want to harness private capital against such a costly and enduring issue; I can’t imagine a difficult circumstance where rationing isn’t applied…who gets admitted to Berkley…its a question of how. The strategy field could do much to identify and hold such questions.
At the end of the day, its unlikely there will be a consensus solution…not because of the “special interest groups”; face it, all interests are special interests. Closure will require tough decisions, sacrifice and leadership. I just believe there is a time for divergent thinking and a time for convergent thinking. We know this from our collective experience with organizations. Enough of my Dennis Miller rant for now.
At the outset I don’t believe that one profession over another will solve the healthcare crises. The politicians have demonstrated what happens when vested interests enter the discussion – the drive for re-election is a strong aphrodisiac. Debates and market testing are essential to move the dialogue from screaming to legislation. In many respects discussing the issue at this level is relatively premature.
Understanding the current state of the healthcare industry and business models which enable to industry to operate is, pardon the expression, job #1. Clayton Christensen in The Innovastor’s Prescription does a great job outlining the issue of conflicting business models as the core strategic issue creating the need for reform. Once this building block has been established and agreed to, there is an ample canvas on which to create multiple pilots for industry change. In the Forbes article a key statement for my read is: “Businesses have an enormous vested interest in getting healthcare right…the best move business leaders fan make now is to engage with the government in experimenting to test new options.” Business’ vested interest is based on legislated tax regulations stemming from a historic need to provide the greatest amount of insurance coverage possible – creative taxation of funds supporting healthcare costs.
The lack of concensus concerning the healthcare industry and its maladies enhances the opportunity for argument and name calling. If various options are piloted, the testing requires definition of the current state and business model; otherwise it will be impossible to measure and track the impact of the pilot and its eventual evaluation.
brandonaroger.com
I don’t understand why there is a debate about free medical care in the US. Here in Canada, despite the occasional griping about wait times for non-essentials, it’s sacrosanct. A member of my family had a brain tumour and needed a delicate operation and detailed continuing care, all of which would have bankrupted us had we lived in the US.
You guys don’t know what you are missing…..
Yes, something needs to be differently within our medical system; however, there are many obsticles that need overcoming. Strategy development needs to be part of an overall business system that is blended with scorecards and business improvement in general, where strategy is not step 1 in this overall system. If this is not done, overall business orchestration is lacking and chaos and/or much wasted effort can result.
A 9-step system where strategies are analytically/innovatively developed in step 5 of the overall system that is described in “C-Suite: The Need to Re-think our Business System’s Strategic Planning, Scorecard Creation, and Process Improvement Efforts” ( http://www.smartersolutions.com/pdfs/online_database/article128.htm )
In this described system, benchmarking is an integral part of the analytical process where lessons are learned from other health care providers throughtout the world so that best practices can be considered for implemented; i.e., we are not reinventing the wheel. Also, in this system, experimentation is an integral part of this overall methodology, which helps health and other businesses move toward achievement of the 3 Rs of business; i.e., everyone doing the Right things, and doing them Right, at the Right time.
Washington, both Republicans and Democrats are disconnected from what the public needs. They are clearly finding this out in the town hall meetings. The public wants affrodable health care and health care for those who do not have it today. Period. For independent businesses, health care is the second highest cost behind salaries and wages. The debate is not black and white, and we do need business to weigh in on the solution. Not business that has a profit agenda, but business, especially small independent business, that is closing its doors partially due to high health care costs.
Does this mean we need reform, to some degree. But I am not sure it means a complete overhall. The solution is not government spending more money or time reforming medicaid or medicare. Government should challenge business, insurance companies and the legal community to reduce costs, with minimal impact on quality and service. They do not leave the room without an acceptable solution. I beleive these parties would welcome the challenge.
Governmnet should focus on a solution that privdes health care to those who do not have it. They can provide an annual physical, dental and eye exam.they can pay for clunkers, why not pay for people, our most valuable asset.
The one thing that makes healthcare different than any other “business” is that the comody is human life. Everyone wants the best and the most but no one wants to pay for it – or maybe they simply don’t have the means. With the rise of obesity in the US and other countries there is more demand for services and not enough healthy people in the insurance pool to pay for all the care they need. I think if asked no one wants to be “uninsured” but if the cost of coverage outweighs the benefit (no risk if they don’t have any assets) the uninsured will probably choose to forgo coverage. They know we have to take care of them if something goes wrong and many providers end up footing the bill. I think many of the discussions happening in the reform debates are necessary and a step in the right direction. We have to get to a base level of care for everyone and we have to agree what that base level of care is going to be. The Federal Employee plan being touted as a model is a government plan administered by for profit health plans. I haven’t used it personally, but I have had patients use the FEP plan and they seem to have adequate coverage. As a Canadian that received excellent care under a social plan, I am not concerned about a government run healthcare option.
Today, the healthcare-banking industry operates as an arbitraged cross-subsidy and service denial model across demographic groups to minimize net cash outflow to subscribers in order to maximize subscriber funds flow to major bankers for overnight lending. Therefore, the business metrics are aimed at current retained cash flow, not at health outcomes. Net payout ratios by HMOs to their subscribers were some 95% in the early 1990s, and now are in the 76-79% range. When an HMO’s payout ratio rises much above 76-79%, that firm’s stock is hammered. When HMO’s cull subscribers by 0.5% annually because that group represents some 20% of their payout, it’s not personal, it’s just business. That’s one impetus for a change in the overall healthcare framework.
As a policy matter, as Adam noted, the other impetus for change is that a proven prevention and wellness program can provide sustainable economic advantage to a region and the country. In turn, this provides substantial economic benefits to firms and employees, families, underinsureds, and uninsureds. Healthier people simply do not need to demand as much high-cost care—it’s the opposite of the current MCO-based service denial and rationing approach. The key is knowing how to shift significantly more health spending to accountable, incentivised front-end prevention, wellness, and protocol tracking, away from back-end bill paying. In addition to dollar savings, one significant firm-level result is increased labor productivity due to less absenteeism and presenteeism, and more work team cohesion, reliability, and training effectiveness. The macro effect is to enable economic survival from increased global competitiveness due to lower labor and social overhead and increased productivity.
That bears repeating… Use case data show we can cut some 40%+ from the net health spend, reduce labor’s health cost and our social overhead, improve our health and productivity, and grow US global economic competitiveness.
The work is in the details. The good news is that better models are emerging, especially among larger self-insured employers. These models usually involve taking one or more of several steps. These steps include acting at the firm-wide and statewide self-insured employer level (private and public employers), including transfer agencies. Without adding fresh money to the system, the core tactic is to use back-end budgets for anticipated acute care to pay for front-end, patient-centric, team-based health care aimed at prevention and wellness, and to connect payments with accountable incentives, coaching support, and integrated network medication oversight that enable personal behavior needed to reduce acute demand. The result is a decline in the net year-over-year health spend. As a market opportunity, the integrated healthcare network across multiple doctors, dentists, specialists, and pharmacists for any given patient will increasingly need interoperable medical records, telemedicine, and action alert technology.
The more complete models also are beginning to address care cost balancing where providers agree to accept payment for overall data-driven, network-wide, patient-centered results (note: this includes consults, and is not capitation). For all but the most standard care, this replaces payment for service and unit-level service billing. Universal unit-level service billing is ruinously expensive to run, it fractures care by separating it from health, and as often occurs with cost-plus contracts, it contributes seriously to provider-driven care overutilization.
So yes, there’s room for a marketplace response to the current healthcare scenario. But as implied by Adam’s post and Forbes article, it requires more nuanced, learning-based framing than simply saying, “OK, have at it.”
PS: MCOs are managed care organizations, of which HMOs and PPOs (Health Maintenance Orgs and Preferred Provider Orgs) are examples, created by the HMO Act of 1973.