The Road to Wellville: Design Observer by Jay Parkinson

Here are my thoughts on designing healthcare around our country’s health needs, rather than history and profitability published today in Design Observer (and that’s no coincidence). I think Design Observer is one of the most relevant sites on the internet.

I grew up outside St. Louis, Missouri. When I was a child, my grandparents lived in northern Arkansas. I made that road trip countless times. I distinctly remember riding in the backseat as we crossed the state line and noticing that the two-lane Missouri highway became almost gravel the second we entered Arkansas. I always wondered why the road had to change just because we traversed a border. I now know the reason. When decisions and processes are left up to the whims of individuals and municipalities, a patchwork of solutions results. Such decisions feel and act different. They are often dysfunctional. They don’t work together to form a true interoperable, efficient system focused on an excellent experience for each user. Our healthcare “system” is a perfect example. Unlike the interstate highway system, which did produce smooth roads across state lines, healthcare wasn’t designed. It just happened. And you, the patient, had no say in it.

One hundred years ago, our nation’s health looked totally different from today. The six leading causes of death in the U.S. were pneumonia, influenza, tuberculosis, diarrhea, heart disease and stroke. The average life expectancy was 47 years. Ninety-five percent of all births took place at home. People who called themselves doctors hung up their shingles and used the latest potions to heal their neighbors. They got paid when their patients were sick and wrote an entire medical history on a 3×5 index card. Only 10 percent of all U.S. physicians graduated from college. The best doctors who had degrees merged and formed institutions that eventually became Johns Hopkins and Harvard and all the other greats.

In the past 100 years, we’ve sure come a long way. We invented antibiotics and cleaned our water, so there’s much less pneumonia, flu, tuberculosis and diarrhea. The average American dies at 78 years, although a 65-year-old today will live only six years longer than a 65-year-old did a century ago. The 30 extra years of average life expectancy can mostly be attributed to our ability to save young people with antibiotics, clean water and vaccinations. Healthcare has always been best with relatively simple problems: illnesses that can be mitigated with a pill, prevented with a shot, or cured by a scalpel. In fact, that’s why hospitals were built — to treat people with acute conditions such as tuberculosis and pneumonia. Now we’re left with a bunch of infrastructure designed for acute problems but a country full of complex chronic behavior problems — obese elderly folks who’ve terrorized their bodies for a half-century with processed food, stress, and couches. And we don’t have a pill that erases 50 years of unhealthy behavior.

Doctors still have very little idea about how to get you to change your behavior and live better. That’s not what we’ve historically done nor is it part of our training. Also, there’s no money in preventing office visits and surgeries. We prescribe and we operate as much as we can. That is our healthcare “system.” The more diseases individual doctors can diagnose or invent, the more they make from the insurance companies that pay your bills. In reality, our system wasn’t designed to keep you well; it was designed to profit off your sickness.

And how we deliver healthcare hasn’t changed much in the past 100 years. You still see the doctor in an exam room, after you’ve become sick. Doctors still get paid for your sickness. We operate with robots and write about it in your paper chart — only 20 percent of doctors use computers. You call to make an appointment for a mammogram two months out. In the waiting room for your preventive visit, you’re infected by people who are there to be cured of their diseases. The traditional exam room and sick visits made sense when we, as a nation, suffered mostly from acute illnesses. But our country now has different needs.

Let’s pat ourselves on the back. We solved the simple acute problems. Now we have to tackle the complex chronic problems. Currently, healthcare delivery in America is a messy business full of convoluted processes that tries to provide all things to all people. We need to clean up how we deliver healthcare and start creating focused services that allow all players to do what they do best. We need a system designed around our nation’s health needs — chronic care management, prevention and acute care treatment — not history, doctors and their profitability.

We need designers to create from the ground up a new, sustainable, healthcare experience that’s split into three arms, each paid for with different business models than are applied today. Most important, these three systems should be focused on your needs, interoperable and powered by a platform that looks and functions like a secure Facebook designed to power health communication. You would be able to schedule your own appointments and email, IM, and videochat with your health professionals. You’d also have a guide, an expert in medical triage, to show you what kind of professional you need, how much you should spend, and who would be best for you in your area.

The first arm is run by doctors and focuses on acute illnesses like appendicitis and broken hips. We’re really good at solving those problems. Ninety-five percent of the time, a hip replacement is a standard process, much like manufacturing a car, without costly surprises. So these would be paid for by a flat rate per fix with bonuses for efficiency and quality.

The second arm focuses on prevention. This would be run by wellness experts. Doctors aren’t good at keeping you well, nor are we trained in it. So we would turn this duty over to experts who are paid for prevention. Also, if you’re well, why should you be sharing examination or consultation space with sick people? There would be recommended preventive services for each age and gender. These services would be yearly fixed costs. Wellness experts would be paid on a per-member, per-year basis with bonuses for volume.

The third focuses on treating and managing behavioral-based chronic diseases like diabetes, obesity and congestive heart failure. In this system, doctors would only be involved in the treatment of complications of chronic disease, not the day-to-day management of disease. Currently, you spend only about 1 hour per year with your doctor and 8,765 hours on your own. Again, we’re no good at changing behavior. So we would turn this over to professionals who’d keep you out of our office by managing your diseases on an everyday basis. This is the most important arm because 75 percent of $2.5 trillion comes from chronic diseases. Disease managers who can help you with education and support on an almost daily basis would run this system. Doctors would be paid a flat rate per fix when disease management failed. Disease managers would be paid on a per-member per-year basis depending on the complexity of individual patients, with bonuses for keeping you out of the sickness industry.

We should start designing this system now. It currently costs employers about $13,000 per employee per year. In 2019, it will cost $28,500. That’s simply not sustainable. Soon only the wealthy will be able to afford today’s version of healthcare. And the only way to save our nation’s health is to redesign how we pay for healthcare in conjunction with innovative, intelligent, user-centric healthcare delivery. Many say this is impossible. But it’s simple supply and demand. You, a nation of people wanting a better, more affordable experience that keeps you well, are the demand. This new system is the supply. Demand something better, and someone will supply it. Isn’t that how the world works?

The Road to Wellville: Design Observer by Jay Parkinson

Yesteryear’s healthcare pilot projects are inadequate for today’s problems.

I just finished reading Atul Gawande’s latest article in the New Yorker, Testing, Testing: The healthcare bill has no master plan for controlling costs. Is that a bad thing?

He draws parallels to the history of agriculture in America:

At the start of the twentieth century, another indispensable but unmanageably costly sector was strangling the country: agriculture. In 1900, more than forty per cent of a family’s income went to paying for food. At the same time, farming was hugely labor-intensive, tying up almost half the American workforce. We were, partly as a result, still a poor nation. Only by improving the productivity of farming could we raise our standard of living and emerge as an industrial power. We had to reduce food costs, so that families could spend money on other goods, and resources could flow to other economic sectors. And we had to make farming less labor-dependent, so that more of the population could enter non-farming occupations and support economic growth and development.

The economic similarities sure do make sense. Food was bankrupting us. And a hundred years later, after many pilot projects:

“What seemed like a hodgepodge eventually cohered into a whole. The government never took over agriculture, but the government didn’t leave it alone, either. It shaped a feedback loop of experiment and learning and encouragement for farmers across the country. The results were beyond what anyone could have imagined. Productivity went way up, outpacing that of other Western countries. Prices fell by half. By 1930, food absorbed just twenty-four per cent of family spending and twenty per cent of the workforce. Today, food accounts for just eight per cent of household income and two per cent of the labor force. It is produced on no more land than was devoted to it a century ago, and with far greater variety and abundance than ever before in history.”

The government acted as a 20th Century platform to enable our farmers to do their jobs better. This is a perfect example of Government 2.0 existing in the 1.0 world…the government as platform.

I’ve been saying for quite some time that this should be the age of experimentation with the government acting as VC fund for hundreds to thousands of these pilot projects that foster disruptive innovation.

One major difference between today and 1903 when the government started to move in the agriculture space, is that they had decades to solve the problem with successful results over 100 years later. I personally don’t believe we have this kind of time in healthcare. In the next 10 years, insurance premiums will rise over 160% and even more so the decade after that. It doesn’t take long to understand that very few people will be able to afford those costs in 10 years.

So how can we put these experiments in hyperspeed? How can we learn what we need to learn in just a few years? And how can we empower those doctors and hospitals who want to experiment with payment and delivery processes with the tools, the time, and the money to do so? Can we take lessons from agile development and apply them to healthcare delivery? Can we create a Gov 2.0 platform to analyze new payment and delivery methods to quickly understand if they’re working and whether or not they’ll be profitable in the near future? Can this platform quickly and fluidly organize doctors into virtual groups to provide new collaborative ways of delivering healthcare? Can this platform gather the requisite data to make sense of success or failure?

But then again, it’s been quite a challenge building Hello Health. One of the biggest challenges has been concurrently building new technology to power new ways of delivering healthcare. Building smart, high quality, robust, and secure software takes serious time. And learning through real life healthcare delivery that we need to redo something or rethink something that took months to develop has been frustrating. We’ve done our best and we’re going to shine, but it’s been very, very difficult. After being open for nearly a year and a half, things are getting better and better. But how long did it take Amazon to figure out their technology and their physical processes? How long did it take them to do the same thing we’re doing in healthcare? How many times was Bezos laughed out of VC pitches because he had what sounded like an impossible idea? How long did it take Amazon to be profitable?

Seven years.

Delivering healthcare to a large population of people in totally new ways paid for by totally different methods is uber complex, much harder than selling books online. Large scale pilot projects in healthcare have traditionally been much shorter than seven years. Why? Multiple reasons but mostly because pilot projects to rethink healthcare have been half-baked and small grant funded. Also, the amount of money people are potentially losing through experimentation is too large to risk a seven year investment and there’s little incentive to buck the system and create new ways of paying for or delivering healthcare. All of the healthcare success stories we have in America– like Kaiser, Geisinger, and Intermountain– evolved from thoughtful leaders that bucked the traditional system because they knew tradition didn’t make sense. How can we foster this kind of innovation in physicians all over the US who know things are broken and there’s got to be a better way?

Healthcare experiments and pilot projects need to be rethought. We need the government to foster new platforms that markedly reduce communication overhead, much like Hello Health and the NHIN are doing. We need the government to create innovative new ways to act like a VC fund, much like Rafe Furst is trying to rethink funding:

Inspired by Nassim Nicholas Taleb’s book The Black Swan, some friends and I have begun to rethink how to most effectively fund innovation, whether it be purely for profit, not-for-profit or social entrepreneurship.

As it stands today, the market for venture seed capital is broken. Most individual angel/seed investors will only do on average one deal per year. Their portfolios lose money 40% of the time due to insufficient diversification. Even premier angel groups like the Band of Angels say they only do about 8 deals per year. Our math and simulations say you need to do 125 to achieve good diversification. On the other side of the table, only 14% of innovators who want seed funding will find it. Those that do will spend about 6 months looking for money instead of building their businesses. All-in-all this is a sorry state of affairs for a market where the overall annual return is roughly 25%.

To address the gap we are working on four new models which complement one another:

  1. Black Swan Fund – Index-style equity investment for startups needing $250K – $1M, prior to a VC round or cash flow positivity.
  2. Equity Micro-Funds – Smaller versions of (1) for startups needing $25K – $100K.
  3. Nano-Investments – One-off, option-on-equity investment for pre-startup pilot projects lasting 1-3 months needing $5K-$25K.
  4. Personal Investment Contracts – One-off, lifetime equity investments in individual superstars at the beginning of their careers.

Feeding a population is a bit simpler than delivering healthcare. The strategy the government used 100 years ago in farming needs to be leveraged today, but updated with today’s potential. We don’t have another 100 years of financial solvency to deal with healthcare. Forty five thousand people are dying every year due to lack of insurance. One million people have been forced into bankruptcy. There is a healthcare famine in America today that needs to be solved quickly.

A clinic with two doors– the future of healthcare in America.

At the Lenox Hill clinic, on the insurance side, Helen waited 15 days to get an appointment. On the day of her mammogram, she stood in line at the reception desk in a crowded waiting room. An elderly patient wandered the reception area in her hospital gown, pleading for someone to help her. In the changing room, Helen’s gown was the usual thin seersucker. The technician was friendly and efficient, though Helen didn’t see a doctor. She went home not knowing whether she was healthy or not, and waited nine days for her results. But it was good news, a clean bill of health. Though the list price was $350, Helen’s insurance paid the clinic $140 and she paid nothing, because her health insurance covers preventive care such as mammography. At the Private Imaging clinic — the boutique side — Linda was able to get an appointment in two days. She was greeted immediately in the private reception area. She changed into a comfy spa robe. Her technician was also friendly and efficient, then the doctor read the scan after a few minutes, reassuring her, “Your mammogram’s negative. Nothing to worry about. See you next year.” Linda walked out carrying a copy of her X-rays. Linda wrote a check to the clinic for $350; if she’d had the same insurance plan as Helen, Linda’s net cost would have been $210.

This is the future folks. If you use insurance (whether public or private), you’ll be treated like a number, you’ll have to wait for rationed care, and you’ll get the same old poor quality, inefficient sickcare from massive institutions that care more about profiting off your sickness than maximizing your health.

If you pay cash (remember, 85% of America spends less than $5,000 on healthcare usage in a given year), you’ll get a well designed customer service experience and high quality, informative, communicative healthcare.

The faster we can pull our money out of the traditional health insurance game and start spending that money on purchasing healthcare as we need it, the faster the sick care industry will fall. Become true consumers by purchasing high deductible, catastrophic plans and watch what your money will buy you. Put the difference you save in monthly premiums in a bank account and build a buffer. Invest it and make interest on that money for when you get old and your health fails. Stop throwing it away to monopolies who care nothing about you and your health. (Remember…Let’s say you’re a 22-year-old single employee at my company today, starting out at a $30,000 annual salary. Let’s assume you’ll get married in six years, support two children for 20 years, retire at 65, and die at 80. Now let’s make a crazy assumption: insurance premiums, Medicare taxes and premiums, and out-of-pocket costs will grow no faster than your earnings—say, 3 percent a year. By the end of your working days, your annual salary will be up to $107,000. And over your lifetime, you and your employer together will have paid $1.77 million for your family’s health care. $1.77 million! And that’s only after assuming the taming of costs! In recent years, health-care costs have actually grown 2 to 3 percent faster than the economy. If that continues, your 22-year-old self is looking at an additional $2 million or so in expenses over your lifetime—roughly $4 million in total.)

Critics will say this theory is anti-social. I will say you can’t have both. You must sacrifice either experience, communication and accessbility in exchange for “everyone being financially covered.” Is it more important that we’re all financially covered for sick care or is it more important to receive high quality, communicative, accessible health care?

The future of healthcare in America should be about a true consumer-centric health experience. Monopolies don’t care about experience. You can’t have a  health experience with insurance– you aren’t the customer paying the doctor. They’ve proven that with 50 years of history. If you pay the doctor directly, you are purchasing good communication and understanding from a reliable consultant who can help you optimize your health. If you don’t get this from one doctor, you have the freedom to go anywhere else and give your hard-earned money to a doctor who does provide that experience.

A clinic with two doors– the future of healthcare in America.

Get vaccinated to help your friends.

Equal rights for all races, genders, and sexual orientation. Do not litter. Don’t drink and drive. Give money to charity. Etc, etc, etc.

Why do these things? Because it’s the right thing to do as a society. The vast majority of us do these things because we care about other people. We want to help others. We don’t litter because it makes the world ugly. We don’t drink and drive because we could kill ourselves and others. We eat local and buy Priuses because it helps the environment.

There is a strong history of branding an individual problem in order to change our behavior to benefit society. The Don’t Mess With Texas campaign is credited with reducing litter on Texas highways 72% between 1986 and 1990. Smoking in public has been markedly reduced because it harms other people. Just watch Mad Men to see how society has changed. We now look at the world in a more connected way. We behave differently because, through marketing, we now know that the way we behave makes a difference in the world.

Vaccines work because of herd immunity. In diseases passed from person-to-person, it is more difficult to maintain a chain of infection when large numbers of a population are immune. The higher the proportion of individuals who are immune, the lower the likelihood that a susceptible person will come into contact with an infected individual.

Not getting vaccinated is therefore a social problem, like driving drunk, littering, equal rights, and smoking around children. For every person who does not get vaccinated, more people in our society are at risk of serious illness or death.

In 1904, there was a Supreme Court case called Jacobson vs. Massachusetts. Massachusetts at the time had a law mandating smallpox vaccination. Jacobson didn’t want to be vaccinated. He sued. The court ruled against Jacobson:

“in every well-ordered society charged with the duty of conserving the safety of its members, the rights of the individuals in respect of his liberty may at times, under the pressure of great dangers, be subjected to such restraint, to be enforced by reasonable regulations as the safety of the general public may demand.”

They ruled it was in the public’s interest for the state to enforce the law. It was a top down, creepy implication that in order for the public to be protected, we should all be required to risk death as a complication of a vaccine. While I don’t agree with this top-down approach, we’re smarter today. And vaccines are much, much safer today than injecting powdered smallpox scabs. They ruled properly, but mandates aren’t the answer.

Making vaccination a social cause is the answer. Doing things for others makes us feel really good. Getting vaccinated not only protects me, but it protects the herd of awesome people around me, so none of my friends or strangers die a preventable death.

What they should have been taking away all of this time – and have increasingly begun to – are the concepts of the constant beta and agile development,” he says. “Marketers need to abandon the time-limited campaign online and start to think of it as a constant application of a rigorous discipline. They should think of their marketing the same way that Facebook puts out a new feature every two weeks, tweaks it, changes it, and re-releases it. It’s not a coincidence that’s brought Facebook 400 million users and Twitter 40 million. We’ve been applying them to for three years now and have seen results beyond anything that a single campaign could do on its own.

Need a hernia surgery? That’ll be $2500, $5000, or $20,000.

The other night I met a really awesome general surgeon here in NYC at my regular haunt, Hotel Delmano, to discuss Hello Health and what it means to surgeons. His name is Dr. Evan Goldstein and his practice is Tribeca Surgical. Should you need a surgeon, you’d be hard pressed to find one better than Evan. He’ll give you his email and mobile number and communicate like a normal human being. On top of that, he’s got passion and a desire to do his part to fix this healthcare insanity from the ground up.

I asked him what his most common surgery is he performs. Answer: Hernia repair. I then asked him how much it would cost him to perform the surgery. Evan operates at two places here in NYC. One is the typical major academic institution. The other is a lovely, small, highly focused surgical center that can operate at a fraction of the cost of the major institution. The turnaround time between cases at this “focused factory” is about 10 minutes. Turnaround time at the bloated mess facility is about an hour and a half. When he operates on someone at the large institution, the hospital bills a person’s insurance company about $5,000 for the procedure. If you don’t have insurance, you’ll get a bill for about $20,000 for the procedure.

Contrast this $20,000 with the bill you’ll receive from him when he does the surgery at the small center: $2,500 for an uninsured person. How can this be? It’s called personalized service minus the bloat from a physician who gives a damn about you. Large hospitals are like antiquated factories that were built to produce anything. They’re like a car parts factory that was built 50 years ago to produce 50 different parts– grossly inefficient with assembly lines that snake all over the place. Compare this to a car parts factory built a few months ago designed exclusively to efficiently produce 3 parts with highly consistent quality.

That’s the network we’re building with Hello Health. The doctors who care, the doctors who want to do the right thing, the doctors who know there’s gotta be a better way, the doctors who truly love being doctors and want to help their patients be well, the doctors who don’t want the hassle and the bloat…they’re coming out of the woodwork to find us, to meet us for beers, and to say I want to join you.

This is the future healthcare system. A bottom up network of doctors and patients who care about relationships, simplicity, affordability, and a better experience.