Tag Archives: dave chase

Wellness Works? Prove It–and Win $$$

The reward for showing your wellness program works is now $3 million!

As almost everyone in the wellness industry knows, we have offered a $2 million reward to anyone who can show that conventional annual “pry, poke and prod” wellness saves money. I’m feeling very generous today, so let’s make the reward $3 million.

Even more importantly, let’s loosen the rules — a lot —  to encourage applicants. You’ll find the $3 million reward is not just more generous but also far easier to claim than the previous $2 million reward.

Loosening the Rules

Except as indicated below, the rules stay the same as in the previous posting, but with the following relaxed standards. Most importantly, I’ll now accept the burden of persuasion. It is my job to convince the panel of judges, using the standard civil level of proof, that you are wrong, as opposed to you having to convince them that I am wrong.

Next, let’s expand the pool from which the judges can be drawn. It wasn’t very nice of me to allow you to choose from only the 300 people on Peter Grant’s exclusive healthcare policy listserve, because obviously no one invited into a legitimate healthcare policy listserve thinks wellness saves money.

See also: Should Wellness Carry a Warning Label?  

In addition, you can also choose among the 100-plus people on Dave Chase’s email list and the 70 people on the Ethical Wellness email list. (www.ethicalwellness.org)  To make things totally objective, we will add as judges whatever two bloggers happen to be the leading dedicated lay U.S. healthcare economic policy bloggers at the time of the application for the award, as measured by the ratio of Twitter followers-to-Twitter-following, with a minimum of 15,000 followers.

So judges are chosen as follows: two bloggers chosen by objective formula, plus we each choose six people from among the other 460, with the other party having veto rights for five of them. That gives a total of four judges, who will choose a fifth from among those roughly 500 people.

The original rules included the requirement of defending Wellsteps’ Koop Award.  After all, the best vendor should be exemplary, right? A beacon for others to follow? A benchmark to show what’s possible when the best and brightest make employees happy and healthy?

However, now you have another option. You could instead just publicly acknowledge that the Koop Award committee is either corrupt or incompetent, as you prefer, because that possibility cannot be ruled out as a logical explanation for Wellsteps winning that award. Your choice….

Next, you may bring as many experts with you to address the adjudication forum as you wish to bring. I, on the other hand, will be limited to myself.

Further, you no longer have to defend the proposition that wellness as a whole has saved money. You can, if you prefer, simply acknowledge that most of it has failed…except you. Meaning that, if you are a vendor that has been “profiled” on this site in the last two years, you can limit your defense to your own specific results. You don’t have to defend the swamp.

That new loophole allows companies like Interactive Health, Fitbit, Wellness Corporate Solutions, etc. — and especially Wellsteps — to get rich…if what I have said specifically about them is wrong. I have $3 million that says it isn’t.

Special Offer for HERO

Ah, yes, the Health Enhancement Research Organization (HERO). The belly of the beast.

Let me make them a special offer. Paul Terry, the current HERO Prevaricator-in-Chief, has accused me of the following  (if you link, you’ll see they had enough sense not to use my name, likely on advice of counsel, given that I already almost sued them after they circulated their poison pen letter to the media):

I’m convinced responding to bloggers who show disdain for our field is an utter waste of time. I’ve rarely been persuaded to respond to bloggers [Editors note, in HERO-speak, “rarely” means “never” — except for that intercepted Zimmerman Telegram-like missive], and each time I did it affirmed my worry that, more than a waste, it’s counter-productive. That’s because they’ll not only incessantly recycle their original misstatements, but worse, they’ll misrepresent your response and use it as fodder for more disinformation.*

Tell ya what, Paul. let’s debate disinformation, including your letter. Aside from the standard 10% entry fee (used to pay the judges honoraria, reserve the venue and compensate me for wasting my time with your THC-infused quixotry), all the economic burden falls on me.

The only catch: I have asked you on multiple occasions to clue me in as to what my alleged disinformation actually is, if any. That way, I can publicly apologize and fix it, should I choose to do so.  Before applying for this award, you need to disclose this alleged disinformation. You can’t just go around saying my information is made up, etc. without specifying what it is.

By definition, “disinformation” is deliberate misrepresentation. To my knowledge, as a member of the “integrity segment” of the wellness industry, I have never, and would never, spread disinformation.

On the other hand, if I did spread inadvertently incorrect information by mistake, it seems only fair to let me fix it — especially given that I have been totally transparent and generous with my time in explaining to you what yours is, and how to correct it. (I might have missed some. Keeping up with yours is a challenge of Whack-a-Mole-meets-White-House-press-correspondent proportions.)

See also: Wellness Vendors Keep Dreaming  

So perhaps it is time to man up, Mr. Terry.  You and your cronies claim to have been collecting my “disinformation” for years, without disclosing any of it. I’m offering you a public forum and $3 million to present it.

Otherwise, perhaps you should, in the immortal word(s) of the great philosopher Moe Howard, shaddap.

A couple other mid-course corrections to the previous award offer.  Someone wondered if this offer is legally binding, so if your attorney’s knowledge of contract law matches your knowledge of wellness economics, they can voice their likely spurious objection. I will publish the objection and address it if need be, to make the reward a binding offer.

Another commenter whined that maybe I just won’t pay the reward. I’m sure that’s the reason no one has applied. (Not.) So, put 10% of the entry fee down, and I’ll attach a lien.

How Advisers Can Save Healthcare

Of course, insurance advisers can’t save healthcare alone, but they will play a pivotal role.

We must first recognize the key players:

  • Employers (purchasers of healthcare via health insurance)
  • Employees/dependents (consumers of healthcare)
  • Physicians/hospitals/clinics (providers of healthcare)
  • Insurance carriers (financiers of healthcare)
  • Insurance brokers/advises (role varies dramatically)

To truly save healthcare will require collective change from at least four of these five groups. I’ll let you decide who may be the odd-player-out.

By now, you are, or should be, aware of a new trend in the design of benefit programs: moving away from traditional carriers/networks and toward direct-pay programs where purchasers/consumers are contracting directly with the providers of care. While this approach has been producing real results for several years in isolated situations, the trend is still in its infancy.

As you might expect, with some of the players’ self-interests at play, its eventual maturity is anything but certain, and certainly not imminent.

It is a path to maturity for which brokers/advisers need to be paving the way.

In a comment he left on one of my LinkedIn updates, where I partially reflected on the emerging trend of these direct-pay programs, Robert Nelson, MD (spokesperson for the Georgia chapter of the Free Market Medical Association) made the following request:

I would love to hear the perspective from the supply side that actually performs the care and interfaces with brokers & TPAs on price-transparent direct contracts, from a position of owner (provider of service).”

In response to Dr. Nelson, Dr. Keith Smith (medical director at Surgery Center of Oklahoma) observed:

The rate at which a physician (or facility like mine) transitions to a 100%-pure, non-insurance model will, and should, vary depending on the degree to which the local practice environment functions like a cartel. In areas of the country where large hospital systems and abusive carriers exist predominantly and work together, the speed with which a disruptor can achieve independence will be slower than in areas that are not so cartelized.

“I am aware, however, of DPC (direct primary care) practices that have successfully launched in highly cartelized environments with tremendous success, partly because the physician(s) had decided that if their venture was unsuccessful they were going to quit practicing anyway.  At the Surgery Center of Oklahoma, we worked with insurance for years but do not at this time. 

“Once a mutually beneficial arrangement with a self-funded employer (or a cash-paying individual) makes its entrance in a practice or facility, the abuses and coercion of the carriers cannot as easily be ignored or tolerated. One ‘win-win’ arrangement creates a desire for nothing but ‘win-win’ arrangements, and the journey to a pure model has begun.”

See also: High-Performance Healthcare Solutions  

Sean Kelley (president at Texas Free Market Surgery & MedSimple) then added the following observation:

“I agree with Dr. Smith about the impact of market conditions on adoption of new, non-insurance, direct pay models. The cartels have erected competitive barriers over time with just this type of disruption in mind; the opacity at every level and supported by the entire cast of characters in the healthcare value chain are testaments to this fact.

“(1) Most doctors want to see a new model emerge and will support it, some more energetically than others who fear a backlash or are at the end of their careers. DPCs have the most risk while independent specialists are able to straddle in our model and Dr. Smith’s. 

“(2) Many broker/consultants desire change, though only a select few are risking their existing accounts; they are more likely to use a new direct pay model as a wedge to gain an edge with new prospects.

“(3) Purchasers are unprepared for this type of disruption; the health plan data they get is highly summarized, making it impossible to compare what they currently pay for services to direct pay providers like Texas Free Market Surgery or Surgery Center of Oklahoma. Additionally, health plan purchase decision processes are mostly ad hoc, with multiple leaders holding tacit vetoes over direct pay contracting.

“(4) Given this landscape, it takes years to create a few ‘win-win’ arrangements with the true innovative purchasers before the rest of the market will even start to pay attention. Many of the status-quo incumbents believe that almost any new model will eventually asphyxiate and go away. I firmly believe adoption of the direct pay model is mostly constrained by the demand or purchasing side. Purchasers hold the key; if there are enough purchasers, open and willing to enter into direct pay contracts with transparent, high-quality healthcare providers, most will react to the change and flock to the new direct pay model.”

For me, this was an unbelievably insightful exchange.

Some of my key takeaways

From Dr. Smith:

In many markets, the providers of care and the insurance carriers operate in a cartel-like fashion to protect their own interest and to slow, if not outright halt, disruptive (direct-pay) innovations.

However, once a provider is able to break the stranglehold of the “cartel” and experience a win-win with the purchasers/consumers of healthcare, this new structure is addictive, and the traditional approach becomes unacceptable.

From Sean Kelley:

He agrees that this cartel-type behavior is real and all too common.

Both providers of care and brokers/advisers desire to see change take place but are afraid of its consequences on their respective practices. Many providers may only become drivers of the change as they approach the end of their careers, while many advisers will only become drivers when pursuing new business; they are not so willing to put existing client relationships at risk.

Purchasers need access to THEIR data, a key to becoming comfortable in changing the way they make their purchasing decisions.

The rate at which the direct pay trend reaches maturity is largely dictated by demand from the purchasers. With increasing demand, and the subsequent success stories sure to follow, there will soon be a tipping point at which the rest of the market will follow suit.

This is exciting stuff!

We are on the cusp (okay, that may be overly optimistic, but we can kinda, sorta see the cusp) of fixing one of the most challenging issues facing our country and our economy. But the solution requires change, sharing and collaboration at a level that I’m not sure many industries have ever experienced.

If Sean Kelley is correct, and I believe he is, the biggest key to driving this trend to maturity is demand from purchasers. And, the key to increasing that demand is education of those purchasers.

This is where brokers/advisers become the linchpin

Advisers, your job as educators for your clients about how to most effectively finance the purchase of healthcare has never been more critical. Of course, you can’t educate them until you have spent significant time studying the issues and solutions yourself.

The curriculum for your education is already being built. But, just know, as with any emerging trend, the curriculum continues to evolve. There are conversations taking place every day on LinkedIn that should be required reading for you.

There are many generously sharing their ideas and experiences online. In addition to the people already mentioned above, here are a few others to follow to help get you connected to the larger community working to drive these changes in the healthcare system:

And members of our Q4iNetwork who are deeply involved:

In addition to the daily, online conversations, you NEED to read Dave Chase’s book, “CEO’s Guide to Restoring the American Dream.”

Before we are truly prepared to educate the purchasers, there is a lot of collaboration that needs to take place within and between the groups of interested parties.

See also: Healthcare: Need for Transparency  

Providers of care need to collaborate and communicate with one another to ensure the right access to care and infrastructure are in place. Benefit advisers need to collaborate and communicate with one another to ensure there is the necessary critical mass taking this approach to their respective clients. And, the providers and advisers must collaborate and communicate with one another to help make this transformation of healthcare as smooth as possible for the purchasers.

Change is never easy, but this change comes with particularly complex challenges. Not the least of which is changing a purchasing pattern that drives one-sixth of our economy. This change can’t happen in a vacuum (one employer at a time) if it is to be sustainable and rapid. We have to ensure it scales, and scales quickly.

As my friend Josh Butler recently observed, change is only scalable through collaboration. All interested parties must come together as part of the solution or find themselves on the outside, victims of the solution.

This article originally appeared on Q4intel.com.

Wellness Isn’t the Only Scam in Healthcare

Healthcare meets Network.

That is the one-sentence summary of Dave Chase’s new book, A CEO’s Guide to Restoring the American Dream: How to Deliver World-Class Healthcare to Your Employees at Half the Cost.

Dissecting the title, the “restoring the American Dream” reference is as follows: While wages have barely budged in the last 20 years, employee compensation has risen quite a bit — with most of the increase being the health benefit. Dave’s observation is that if the health benefit were managed much more tightly, wages could climb noticeably for the workforce without increasing the total employee compensation budget.

As for “half the cost,” that number may be overstated…but not by much. For instance, I just saw a wellness vendor send 2/3 of a company’s employees to the doctor because they have “conditions” they didn’t know about, that this vendor “discovered” by — you guessed it — screening the stuffing out of them by flouting clinical guidelines. This employer could save about 3% simply by firing the vendor and not consigning all those employees to the treatment trap. (Of course, there has been no measurable improvement in outcomes from all these doctor visits.)

This employer and others could save another 0.5% simply by not insisting that their employees and spouses get annual checkups (and “well-woman” visits) because as readers of this site know, they have no value. The good news is that checkups are not likely to harm employees, which is more than can be said for many wellness programs.

See also: Wellness Vendors Keep Dreaming  

So we are already saving 3.5%, and we haven’t even done anything hard yet, where “hard” is defined as “something that does not delight employees, like getting rid of ‘pry, poke and prod’ programs.” In other words, “hard” isn’t really hard.

Slightly harder opportunities

In addition to an expose on wellness, Dave Chase exposes some scams that make wellness look like child’s play. (Wellness is child’s play, in the sense that any fifth-grader knows more arithmetic than a wellness vendor. And a 14-year-old knows more about BMI.)

In no particular order, we’ll start with PBMs. Their stock prices have exploded — literally, 300-fold — in the last 30 years.  You think they achieved that growth honestly? They make wellness vendors look like Boy Scouts. They obfuscate everything, with “rebates” and “formularies” and under-the-table payments from drug companies, and all sorts of other things that we probably don’t even know about. Here is a New York Times article that casts just a little light on the subject…but more than enough light to indict the entire industry.

It isn’t easy to ditch a PBM, but increasing numbers of alternatives are popping up. A good rule of thumb is, the thicker the contract with your PBM, the more you are getting ripped off.  I invite folks who offer one of these new alternatives to add a comment at the bottom of this posting or on LinkedIn following this posting.

Then there are the carriers, who typically make more money, the more money gets spent. The number of scams is mind-boggling. For example, consider Dave’s explanation of what happens when a claim is overbilled:

Another fee opportunity is so-called “pay and chase” programs,
in which the insurance carrier doing your claims administration
gets paid 30-40 percent for recovering fraudulent or
duplicative claims. Thus, there is a perverse incentive to tacitly
allow fraudulent and duplicative claims to be paid, get paid as
the plan administrator, then get paid a second time for recovering
the originally paid claim.

Good luck trying to ferret your own claims data out of carriers so that you can do your own analysis on them and change policy accordingly. I do quite a bit of work for top-flight carriers, measuring their wellness-sensitive medical events. They always seem to have the data at their fingertips. We can complete the analysis for the year within weeks after claims run-out ends, meaning sometime in April. Meanwhile, I’ve got a Fortune 50 client whose carrier, Optum, still hasn’t managed to provide them (at an extra fee!) with their own event rates for 2016, a delay which more than coincidentally will make it impossible to implement any cutbacks in Optum’s services for 2018 if the event rates show that — hang onto your hats — Optum didn’t achieve anything.

Don’t get Dave started on providers, who find highly creative ways to snooker employers and employees.  Like staffing in-network facilities with out-of-network doctors, who then bill patients ridiculously high charges. You need to re-contract with your carrier and put that one on them.  Or, if you’re large enough, recontract with the hospital.

And speaking of hospitals, why have Leapfrog D- and F-rated hospitals in your network at all? If a geographic necessity, then at a minimum educate your employees that it might be worth the extra drive to avoid some major complications.

Providers also bill companies what they think they can get away with, rather than what a buyer would expect to pay given what others in the area are charging. Because the company is generally not the decision-maker (the employee or doctor generally decides where to go, not based on price), providers often get away with it. An entire chapter is devoted to provider pricing scams and the importance of transparency.

See also: A Wellness Program Everyone Can Love  

Or, my own personal favorite provider scam, disguising emergency rooms as urgent care centers. (A rather naively idealistic Colorado legislator tried to make freestanding ERs disclose that they are not urgent care centers, but the provider lobbyists prevailed.)

A sidebar: Quizzify trains employees to be on the lookout for these scams, which is helpful for the 0.1% of the 150,000,000 commercially insured employees who actually have access to the quizzes. The other 99.9% are on their own.

And yet it all comes back to wellness

Employer obsession with wellness has caused them to take their eyes off these many other balls, because wellness was supposed to solve everything (including industrial waste, according to HERO stalwart Bruce Sherman). Truly, wellness has been the Maginot Line of healthcare cost containment strategies. While a vastly disproportionate share of resources has gone into wellness, PBMs, carriers, providers and various middlemen simply circumvented these efforts, to dig right into your pocketbooks.

I can only scratch the surface here — just go out and buy the book, and then you’ll understand both why when it comes to scamming employers and employees, wellness vendors have a lot to learn, and also why you should be mad as hell and not take it any more.

Is This the Largest Undisclosed Risk?

The Employee Retirement Income Security Act (ERISA) has been around since the Ford administration. Most people know the law in relation to retirement benefits, but it’s emerging as an unexpected, yet high-potential, opportunity to drive change in the dysfunctional U.S. healthcare system.

The law sets fiduciary standards for using funds for self-insured health plans, which is how more than 100 million Americans receive health benefits. Health plans for wise companies with more than 100 employees are self-funded because they are generally less costly to administer. As a result, more than $1 trillion in annual healthcare spending is under ERISA plans or out-of-pocket by ERISA plan participants. While it’s roughly one-third of healthcare spending, employer/union-provided health benefits likely represent more than two-thirds of industry profits as they wildly overpay for healthcare services because of the misperception that PPOs help save them money. In reality, PPO networks cost employers/unions dearly.

This overpayment makes ERISA plans an attractive target for operational efficiencies. Healthcare is the last major bucket of operational expenses that most companies haven’t actively optimized (they’ve already optimized operations, sales, marketing, etc.). For those that don’t get on top of this, it could also be a source of significant potential liability for companies and plan trustees. We are already aware of the ripple effect on benefits departments — one entire benefits department (with the exception of one person) was fired when the board realized the lack of proper management.

See also: ERISA Bonding Reminder  

ERISA requires plan trustees to prudently manage health plan assets. Yet very few plans have the functional equivalent of an ERISA retirement plan administrator who actively manages and drives effective allocation of plan investments. This person (or team) would have deep actuarial and healthcare expertise to enable them to deeply understand and negotiate potential high-cost areas of care, something traditional human resource departments lack.

At the same time, it’s broadly estimated that there is enormous waste throughout the healthcare system. The Economist has reported that fraudulent healthcare claims alone consume $272 billion of spending each year across both private plans and public programs like Medicare and Medicaid. The Institute of Medicine conducted a study on waste in the U.S. healthcare system and concluded that $750 billion, or 25% of all spending, is waste. PwC went so far as to say that more than half of all spending adds no value. It’s impossible to imagine any CEO/board allowing this in any other area of their company.

Increased outside scrutiny on how ERISA-regulated health plans spend their dollars could create immense potential liability for both company directors and health insurers across the country. Nationally prominent lawyers, auditors and others are catching on to this and are taking action to get ahead of it or are advancing potential new categories of litigation that could result in hundreds of billions in damages.

In just the last couple of months, we at the Health Rosetta Institute — a nonprofit focused on scaling adoption of practical, nonpartisan fixes to our healthcare system — have learned of some key events that will likely further increase scrutiny on ERISA fiduciary duties.

First, two Big Four accounting firms have refused to sign off on audits that don’t have allowances for ERISA fiduciary risk. A senior risk management practice leader at one of those firms told a room of healthcare entrepreneurs and experts that ERISA fiduciary risk was the largest undisclosed risk they’d seen in their career. As more accounting firms start to require this, it will change how employers manage ERISA health plan dollars.

Second, independent directors have quietly sounded the alarm to three company auditors about this growing issue, recognizing the potential for personal financial liability that director and officer insurance policies may not cover. We expect to see more of them focusing on this issue, given that healthcare spending is roughly 20% of payroll spending for most companies.

Third, attorneys are building litigation strategies around employers filing suits against their ERISA plan co-trustees (the plan administrators who actively manage the plan’s health dollars) alleging they breached their ERISA fiduciary duties by turning a blind eye to fraudulent claims. We expect the first of these cases to be brought this year and expect to see significantly more in the next couple years. One firm we’re aware of is working on cultivating dozens of these cases.

The implications of this third trend could be enormous. If boards and plan trustees know fraud could exist and don’t take action to rectify the issues, they could open themselves to liability from shareholders and plan beneficiaries. The scale of damages just for fraudulent claims could be on the magnitude of lawsuits over asbestos and tobacco. A very conservative estimate of what percentage of claims are fraudulent is 5% (many believe 10-15% is more accurate). Employers spend more than $1 trillion per year on healthcare. If you take the low-end estimate (5%) and extrapolate over the statutory lookback period for ERISA (six years), that would be $300 billion.

These legal threats could force employers to actively manage health spending the same way they manage other large operational expenses. We’ve already seen companies doing this, reducing their health benefits spending by 20-55% with superior benefits packages.

Employers use a variety of approaches, but most are relatively straightforward and focus on proven benefits-design solutions that make poor care decisions more costly and better care decisions less costly to encourage the right behavior. Most importantly, they don’t focus on shifting costs to employees. This cost-shift to the middle class has devastated the American Dream and was the backdrop for the populist campaigns that were badly misreported (in terms of their root cause).

See also: Solution to High-Cost Indemnity Payments?  

Three high-potential areas for improvement include actively managing high-cost care to move it to high-quality, lower-cost care settings; directly addressing drug costs; and creating incentives for wise care decisions. Here are a few repercussions these changes may have for companies and investors:

  1. As more procedures move from expensive hospital settings to lower-cost independent ambulatory surgery centers, this means lower margins at for-profit hospitals, threatening return assumptions on hospital revenue bonds and growth potential for ambulatory care categories.
  2. Tackling pharmacy spending puts downward pricing pressure on pharmacy benefits managers. An indirect example of the consequences of this is the face-off between drug middleman Express Scripts Holding Company and health insurer Anthem. In the next quarter, a statewide health plan is doing a reverse auction to select their next PBM. It’s hard to imagine the incumbent PBM will be willing to drop its pricing and rebate games for a high-profile public entity.
  3. More active management of healthcare, self-insurance and lower costs by employers reduce revenue and margins at public insurance companies, threatening core revenue streams. This is compounded by self-insured employers moving to independent plan administrators not tied to traditional insurers.

Surprisingly, the most sustainable and high-impact of these approaches will benefit employees, as well. Most wasted spending in healthcare that directly affected patients is the result of overuse, misdiagnosis and sub-optimal treatment.

Time and again, we’ve found that the best way to slash costs is to improve health benefits.

And isn’t better healthcare at a lower cost the best outcome for all of us?


This article was also written by Sean Schantzen, who was previously a securities attorney involved in representing boards, directors, officers, and companies in securities litigation and other matters including some of the largest securities cases in U.S. history.

An earlier version of this article was also published on MarketWatch.

3 Trillion Reasons Against Change

With 3 trillion reasons ($$) to protect the status quo, it should be no surprise that employing frontal assault on healthcare would be laughably ineffective. This would be like the revolutionaries battling the British army via a frontal assault. One could argue that top-down, governmental efforts to reform healthcare are experiencing what happens through a frontal assault — fierce resistance, rage and lobbying to name a few. Rather, there are two overriding drivers to how the Health Rosetta Institute (HRI) is approaching the daunting challenge of attempting to transform an industry that is remarkably adept at preserving a wildly under-performing status quo.

Healthcare is already fixed. Join us to scale the fixes

As we state on the Health Rosetta Institute’s website, “Healthcare is already fixed. Join us to scale the fixes.” The genesis for the Health Rosetta was my seven-year quest to find all of the solutions that are actually working. The great news is that we’ve found a wide array of pioneers who’ve proven what works in rural and urban settings, in the private and public sector, in large and small organizations and in every corner of the country. They’ve shown how to tackle even the most vexing health challenges with extremely demanding populations. These are the sorts of things I capture in my forthcoming book, CEO’s Guide to Restoring the American Dream: How to deliver world class healthcare to your employees at half the cost. This is a contrast to what’s happening in DC, which is largely moving deck chairs around on the Titanic debating who pays for a “morbidly obese” healthcare system that is the third leading cause of death (due to preventable medical mistakes) despite pockets of brilliance in our system.

Community-driven change from the bottom-up: A network of networks

We believe in community-driven change from the bottom up. Central governments have largely reached the limits of what they can achieve, so community-level change is where the real action is. Bruce Katz articulates this in his book, “The Metropolitan Revolution: How Cities and Metros Are Fixing Our Broken Politics and Fragile Economy.” Social-impact-investing pioneer Chris Brookfield has put this approach into effect in areas ranging from microfinance to local food production. “Community” can be defined as an employer and its employees, a town, a neighborhood or a group of five women. These are local networks able to drive change in their sphere of influence.

See also: A Caribbean Hospital: Healthcare’s Solution?  

Nothing about the Health Rosetta is employer-specific or even U.S.-specific. However, employers and unions are two communities that have an imperative to change. The smart ones are embracing that opportunity and spending 20-55% less on health benefits with spectacular benefits packages. A key reason that the goal of universal care is feared by some is that both the private and public sector versions of healthcare in the U.S. have out-of-control costs. Government entities themselves are huge employers. With few exceptions (Kirkland, Milwaukee and Pittsburgh are examples of how to do things right), public sector employers are just as bad at purchasing health benefits as any private-sector employer. Even when there is political will, such as in Vermont, efforts at universal coverage failed as unaffordable. For those seeking universal care as an objective, a logical path is for it to start with public-sector employees in high-value benefits programs. Once proven there (like Kirkland, Milwaukee and Pittsburgh), extend to state-based programs such as Medicaid, and then there will be a large body of evidence that it won’t bankrupt citizens. In fact, it will do quite the opposite if the smart path is chosen.

The Season of Resilience

Speaking broadly, Brookfield points out how 1950-2001 was the Efficiency Era – or what he calls “The Great Moderation” that had key attributes such as conglomeration and centralized production and control. 2001-2016 was about hierarchies fracturing with tumult such as Brexit and American populism that led to the success of the Sanders and Trump campaigns. Hierarchies are fracturing in healthcare such as an explosion in employers taking control of their healthcare spending and doctors leaving insurance-centric practice models — in both cases, they’re cutting out middlemen that are out of touch with specific communities.

Looking forward from 2017 is what Brookfield calls the Season of Resilience, where geography is resurgent and grassroots is the dominant lever of change. Just as the electrification of America happened at different rates in different locales, the move toward Health 3.0 will happen in some geographies faster than others. However, we draw from the lessons of the Internet and open, distributed systems, which is a network of networks. For too long, healthcare has operated as a set of isolated tribes with limitations on tribal knowledge being passed around slowly. We believe the Health Rosetta Institute’s greatest value is serving as a network of networks to accelerate the dissemination of proven approaches that can then be adapted to local market conditions. The first network we’re building, due to their outsized influence on the health ecosystem, is benefits consultants. Despite not promoting it at all and it being buried on our website, we’re getting tremendous interest in our first phase rollout.

One of the individuals most responsible for the explosion of Internet growth was Tom Evslin who has a blog called Fractals of Change. The depiction of fractals show how a fractal is a never-ending pattern (click for an interactive version). Fractals are infinitely complex patterns that are self-similar across different scales. They are created by repeating a simple process over and over in an ongoing feedback loop. Driven by recursion, fractals are images of dynamic systems – examples include trees, clouds, coral reefs and the Internet in a virtual context.

Another visual is at the heart of the approach we’re taking with the Health Rosetta. The non-profit institute is gathering and sharing insights in an open, distributed manner. It has a sister organization, the Health Rosetta Group (HRG), that is focused on bringing capital to ideas that fuel the positive transformation of the health ecosystem. Brookfield created the graphic depiction below to describe how his social impact investing approach is replicated in a distributed manner. Health and healthcare are very local but there are approaches that can be shared to rapidly accelerate transformation.

Graphic courtesy of Chris Brookfield

The HRG believes sustainable investing requires focus on a particular region/sector with an eye towards social and economic benefits that reflect aligned values. It has a long-term focus that taps motivated local entrepreneurs to create businesses that enhances economic resilience which creates sustainable economic development (“Economic Development 3.0”). These emerging organizations are strengthened through local business and ultimately can create value for investors that ensures long-term resilience of local interests. We believe the path to optimizing health is a move away from centralized massive assets whether that is massive food production producing low-value food or massive medical centers that produce high volumes of low-value procedures (e.g., where 90% of spinal procedures were of no help). A strategy that is more aligned with community interests will deliver resilience, variability and locality that is part and parcel of Health 3.0.

See also: Healthcare Buyers Need Clearer Choices  

I wrapped up by TEDx talk with the following that seems appropriate here:

For too long, we’ve let healthcare crush the American Dream. We can’t stand for 20 more years of an economic depression for the middle class. No country has smarter or more compassionate nurses and doctors and no country has more innovators that have reinvented our country time and again. In every corner of healthcare, people went into healthcare for all the right reasons but perverse incentives and outdated approaches have shackled them. Whether we knew it or not, we all contributed to this mess. Now, it’s on us to fix it. When change happens community by community, it’s impossible to stop. Yes, healthcare stole the American Dream. But it’s absolutely possible to take it back. Join us to make it happen in your community.

We are working on catalytic events to accelerate the change. The institute is helping raise awareness of the rising risk to corporations and boards that will compel them to act. In parallel, we continue work on The Big Heist film (think The Big Short for healthcare) that will wake up America to the greatest heist in American history.

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