How do we save healthcare?

From a conversation I had with squashed:

The only way to save healthcare is to mandate broad, sweeping changes to turn all of the US healthcare industry into a Kaiser-like, closed-loop, true Healthcare System designed to function as a whole with incentives aligned amongst all players to practice quality medicine, not quantity medicine. The System must take financial accountability for maximizing a population’s health. In order to change a culture and an industry that consumes 1 in 5 dollars spent in America, it will take decades and decades and decades with baby steps.

Every 8 years, health insurance premiums double. This is a fact with as much data as you’d like to back it up. We don’t have time before mandates are simply financially impossible for the American people.

We know that healthcare can be delivered with higher quality and half the cost. We see this in the top 10 functioning Healthcare Systems in the world, as measured by the World Health Organization. They do this by creating a closed-loop, 100% aligned System to render the proper care, not the most care. When incentives are aligned to deliver the most care, you get the US healthcare industry…double what other countries spend and ranked 37th in the world.

The question is this…is this possible to do with a private system? Nobody has the long-term, population-level data to prove that closed looped systems can function cost-effectively with higher quality in the United States, outside of Kaiser and the other bit players across the country. Do the research. Search Health Affairs and any of the other health policy journals as long as you’d like. The data doesn’t exist. There have been short-term pilot projects trying to test new ways to deliver healthcare with a few thousand people. These studies have been done for decades. However, the outcomes and recommendations from these studies change the business model of healthcare delivery in America. Since there has never been a reason to reinvent the business model of healthcare in America (and a mandate will not do this either), none of the players have tried. They would disrupt themselves. No industry will voluntarily decrease their revenue and profitability. And mandates sustain and increase that profitability. They do not curb it. However, Kaiser changed the business model of healthcare decades ago into a closed loop…and that’s why they function with much more efficiency and quality and cost-effectiveness than the rest of the United States.

Therefore, all of this stuff I’ve been talking about in the past few years is theory and speculation. It’s my opinion. Just like the bills circling through congress. It’s strategy based on opinion. I actually support the vast majority of the concepts of the main bill. If we did everything in that bill, with 100% participation amongst the main players, we’d be on the road to glory. But as we’re seeing, the vital components that were included to disrupt the current business model of healthcare have been and continue to be systematically fought against by the healthcare industry.

Death panels? Why did this start? Because 80% of the industry’s revenue in a person’s life comes from the cash cow of the dying old person. The industry wants to keep old people alive as long as possible. They rake in cash from prolonging death. Therefore, let’s create the concept of the Death Panel. It’s genius. Powerful. People are terrified. And the Industry prevailed.

This should be an era of healthcare experimentation. Not sustenance for a broken system. It doesn’t matter who pays for healthcare. If the business model of healthcare is unsustainable, changing who pays for healthcare will do very little, if anything.

We need broad, sweeping change to cut healthcare in half. Handouts simply won’t do this. In fact, handouts will prolong the death of the industry and hasten our country’s financial demise. We need disruptive innovation:

Disruptive innovation, a term of art coined by Clayton Christensen, describes a process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves ‘up market’, eventually displacing established competitors.

An innovation that is disruptive allows a whole new population of consumers access to a product or service that was historically only accessible to consumers with a lot of money or a lot of skill.  Characteristics of disruptive businesses, at least in their initial stages, can include:  lower gross margins, smaller target markets, and simpler products and services that may not appear as attractive as existing solutions when compared against traditional performance metrics.

Because companies tend to innovate faster than their customers’ lives change, most organizations eventually end up producing products or services that are too good, too expensive, and too inconvenient for many customers.  By only pursuing “sustaining innovations” that perpetuate what has historically helped them succeed, companies unwittingly open the door to “disruptive innovations”.

Some examples of disruptive innovation include:

Cellular phones
Community colleges
Discount retailers
Retail medical clinics

Fixed line telephony
Four-year colleges
Full-service department stores
Traditional doctor’s offices