Back to List

Straight Talk
A weekly update from management on the issues that matter most.

Jul 26, 2018
“Healthcare is a terminal illness for America’s governments and businesses. We are in big trouble.” This provocative statement is from the 2009 book The Innovator’s Prescription co-authored by Clayton Christensen, Harvard Business School’s famous professor noted for creative destruction. Disruption, while not necessarily good for incumbent providers of services and products, is typically positive for those who are beneficiaries of these deliverables. In healthcare, the beneficiaries are patients who are also the ultimate payers for care. Wages, taxes, and/or direct payments from patients fund the system.

Broadly considered, healthcare has six major industries or entities that are considered incumbents.  Major category #1 comprises payers who should desire lower costs.  These funders are federal, state, and local governments (46%), employers and private businesses (27%), uninsured and underinsured (15.5%), and the remaining (11.5%) who pay on their own.

 

The next five segments of the healthcare complex provide services or products: (2) physicians/non-physician care-givers, (3) hospitals/healthcare systems, (4) drug companies, (5) device manufacturers, and (6) insurers.  The business model for drug companies, device manufacturers, and insurers needs additional explanation.  Drug companies and device manufacturers’ prices are based on either what the market will bear or the cost to produce.  Insurance companies take the premiums paid by individuals or companies, and then manage risk, profit from investments, and take significant remuneration before returning the leftovers to the system.      

 

The common dynamic among entities two through six using our current model is a dependence on continued illness and disease.  Imagine a 70% decrease in sickness, resulting in extending life expectancy coupled with a compassionate end-of-life experience.  In that scenario, the care-givers, healthcare systems, drug companies, device manufacturers, and insurers would all be relegated to the Maytag repair man (basically not busy) or need to repurpose their businesses to succeed.

 

Prevention works.  Tobacco accounts for about 90% of lung disease.  Obesity contributes to heart, cancer, orthopedic, and metabolic diseases.  Three million people in forty-two communities in nine states are enjoying longer life expectancies and lower health care costs.  Locally, we have years of objective knowledge with large businesses, including NCH, lowering healthcare costs about 50% and not raising premiums for years.  Entire communities and diverse socio-economic populations ranging from coastal Naples to food deserts and from pre-school children to drug court participants are all benefiting from prevention.

 

“It is difficult to get a man to understand something when his salary depends on his not understanding it,” Upton Sinclair wisely wrote almost a century ago.  Getting all six entities on board with prevention is challenging.  The payers have the power and incentive to disrupt by paying for prevention for the ultimate benefit of all.    

 

Disruption happens; we are better off with an initiation by altruistic insiders than an invasion by mercenary outsiders.  Let’s now unite in changing our model to spend less on sickness and more on prevention to help everyone live a longer, happier, and healthier life.  

 

P.S.  DO YOU HAVE A COLLEAGUE OR FRIEND WHO WOULD BE INTERESTED IN UPDATES?  Please enter their email address at nchmd.org/straighttalk, and we will add them to our complimentary mailing list.  

 

AUTHOR

Allen Weiss, MD

President and CEO

You may contact Dr. Allen Weiss and The NCH Healthcare System by clicking here.