February 8, 2012
Healthcare Disruption: Providers Are Making Newspaper Industry Mistakes
by Dave Chase
Whether the innovation comes from within or from non-obvious competition such as employers or pharma companies, there's a distinct advantage in having a blank slate where cost effective systems and models of delivering care can be delivered. For the providers, they'd be well advised to develop their own innovation teams unfettered by the current model so they can develop models that will ensure the provider's long-term survival.
Since the latter half of the 90’s, the handwriting has been on the wall for newspaper companies that media’s future was digital. Heck, the newspapers’ own business sections reported on this trend. Despite this, the majority of the industry focused on traditional strategies such as taking on debt to acquire other newspapers or investing in new printing presses, leading to disastrous consequences.
To be fair, there were some digital investments made, including hiring top-drawer talent. However, over time, the digital teams were marginalized and ultimately the talent that had the capability to transform these organizations left for opportunities where their hands weren’t tied. In other words, the commitment wasn’t deep enough to effect a true transformation.
Now consider healthcare in the U.S.: There’s a clear understanding that the industry must shift its focus towards outcomes from “do more, bill more” orientation. If ever there was an industry that should understand that it’s more effective to address underlying conditions than treating the symptom, it should be healthcare. Or, as a famous early newspaper publisher stated, “an ounce of prevention is worth a pound of cure.” Prevention-focused countries such as Denmark have dramatically lowered the need for hospitals. Once at 155 hospitals, they are at less than a third of that today. I find this easily-known fact is news to healthcare providers I speak with.
Whether they don’t know these facts or are ignoring them, the fact is there are incredibly large capital investment projects on the docket for many health systems. Since 62% of hospitals are mission-based, non-profit organizations, it’s astonishing that they are more focused on capital projects than addressing the overall health of their communities. No one has made the case, for instance, that chronic conditions that consume 75% of the $2.6 trillion tab in the U.S. is best addressed by building more buildings. Some make the case that there’s a growing healthcare real estate bubble while costs of chronic conditions continue to expand.
In healthcare, it’s as though we are building better firehouses and investing in more firefighting equipment while we do the equivalent of leaving oily rags around, letting kids play with fireworks on dry hillsides, and building structures with one exit. We may have the best “firefighting” tools and talent in the world but we’d be much better off if we prevented those “fires” from starting in the first place.
Dr. Ted Epperly recently finished his term as the head of the American Academy of Family Physicians and runs the Family Medicine Residency of Idaho program, which includes 80 physicians serving over 20,000 patients. On a tour of his facility, he stopped to comment on the scene in the waiting room of their biggest clinic, something that’s typical of the many doctor’s office waiting rooms we’ve all experienced. He described the scene as a failure compared to the vision of what he’s planning on implementing.
In Epperly’s vision, he describes a dashboard that pulls from the registry of all of their patients. Rather than reactively waiting for someone to present himself or herself in the clinic, he envisions a system that proactively is monitoring the array of conditions his patient population experiences. For example, it will ensure diabetics are having regular foot and eye exams and blood glucose levels are being consistently monitored. If someone hasn’t scheduled an appointment already, it will proactively reach out to him or her rather than waiting for some health crisis.
Epperly has been a leading proponent of a concept in healthcare called the Patient-Centered Medical Home (PCMH), akin to the philosophy that Denmark has adopted so successfully. In many respects, the Patient-Centered Medical Home is simply an updated version of the Marcus Welby model of medicine with more of a team-based model coupled with technology.
While some may have noticed that there are several Patient-Centered Medical Home pilots that were included in the federal health reform law, there’s a little-noticed facet of the law the CTO for the United States, Aneesh Chopra, points out in this video segment. That is, if the payment models that reward positive health outcomes over activity proves out in the eyes of the Actuary for Medicare and Medicaid program to be cost savings, there is carte blanche authority to expand these models broadly to entire Medicare population. This could rapidly expand the deployment of the Patient-Centered Medical Home concept and accelerate the need for the associated HealthTech. The video below explains this in more detail and explicitly speaks to the opportunity for startups.
Another healthcare provider plans to send home patients with an array of personal biometric devices. The output of these devices will be a more complete view of an individual’s health. There’s an explosion of personal biometric devices ranging from personal blood pressure monitors to some being built into clothing and widely deployed in places such as Denmark.
For the cost of a small wing of one of these new Taj Mahal structures, healthcare providers could have a team of innovators working on scenarios such as those described above and many others. Those that avoid sticking to the old tried and true methods of differentiation that worked in the past will be light years ahead as the transformation of healthcare takes hold. If they don’t, employers who are paying the bulk of healthcare costs are taking matters into their own hands and building their own onsite clinics.
Whether the innovation comes from within or from non-obvious competition such as employers or pharma companies, there’s a distinct advantage in having a blank slate where cost effective systems and models of delivering care can be delivered. For the providers, they’d be well advised to develop their own innovation teams unfettered by the current model so they can develop models that will ensure the provider’s long-term survival.