Pharma leaders caught wind of the open source Health Rosetta project I catalyzed as well as the 95 Theses for a New Health Ecosystem. They asked me to draw on those insights and the experience of having founded or been a part of the leadership team of two $1 billion new businesses inside of a large corporation (Microsoft) as well as being one of the relatively few digital health exits. Now that I've built an investment thesis around the precepts of the Health Rosetta and 95 Theses in my position as Managing Partner of Healthfundr, these pharma companies may become partners or acquirers of companies we're investing in so they want that perspective as well.
The 95 Theses for the New Health Ecosystem provides the guiding principles for how winning organizations across the entire health ecosystem will approach the overhauled health ecosystem and deliver the components of the Health Rosetta. Contributors to the 95 Theses include household names such as Bill Gates while others are well-known industry figures such as Dr. Eric Topol, Susannah Fox, Jonathan Bush, and Esther Dyson. Others are not broadly known figures yet are doing extraordinary work in their fields. They include people such as Dr. Tom Delbanco, John Wilbanks, Lygeia Ricciardi, John Grohol, Jan Oldenburg, Shannon Brownlee, Dr. Bryan Vartabedian, Dr. Clay Johnston, Dr. Rushika Fernandopulle and many others whose thinking will shape the industry for years to come.
Leonard Kish and I have spent the last 18 months curating thinking from many of the most forward-looking minds in healthcare. We've been flattered that some have compared the 95 Theses for a New Health Ecosystem to the Cluetrain Manifesto...
In the United States, direct primary care (DPC) is primary care offered directly to the consumer, without insurance administration. It is an umbrella term, incorporating various delivery systems that involve direct financial relationships between patients and healthcare providers outside of the volume-driven insurance-based model. It can be implemented in a range of practice models from solo practitioners to organizations national in scope.
Direct Primary Care (DPC) is primary care model that offers patients, physicians and purchasers an alternate to fee-for-service (FFS) payment arrangements. In traditional arrangements primary care physicians are paid in FFS model, meaning they are reimbursed by the volume of services they provide. DPC offers a meaningful alternative as healthcare purchasing shifts from a volume to a value model.
DPC typically charge a membership fee on a monthly, quarterly or annual basis. This membership fee covers all or most of primary care services including acute and preventive care. The fee is paid for individuals out of their own pocket or via a sponsoring organization such as employers/unions or via health plans managing government programs such as Medicare Advantage. Most commonly, the practice is devoted to the particular sponsoring entity (e.g., a near site clinic for employers/unions or a Medicare Advantage-based clinic devoted to seniors).
DPC should not be confused with concierge primary care. Concierge care often adds a layer of enhanced access and amenities, paid for on a subscription basis, to a base of traditional fee-for-service primary care.
Recently, headlines screamed about UnitedHealth threatening to leave the ACA Exchanges. As Bruce Japsen reported, United is losing hundreds of millions on the public exchanges. Meanwhile, virtually no one has noticed perhaps the smartest move I’ve seen any health insurer make — build a de novo value-based primary care model from the ground up that is optimized for the consumer and small business market that the exchanges target. A proper primary care model is foundational to the Health Rosetta now guiding wise healthcare purchasers.
It should come as no surprise that most health plans aren’t doing very well with consumers. After all, health insurers have the lowest Net Promoter Score (NPS) of any industry. As I’ve pointed out many times, the status quo health benefits couldn’t be worse and there is catastrophic misalignment of resources to have a successful population health program. It’s not uncommon for some health insurers to actually have a negative NPS. Meanwhile, there are startups who have tackled healthcare’s most vexing problem — pricing failure — via Transparent Medical Networks. It can make one wonder what all those health plan and benefits people have been doing while a startup could slay the healthcare cost beast relatively easily. The evidence is crystal clear that health plans have made no dent in making the country healthier, improving the consumer experience or controlling costs and we know how doctors feel about dealing with insurance. This is highlighted in the New Health Plans, New Health Benefits section of the 95 Theses for a New Health Ecosystem...
Last week, the Wall Street Journal reported on 20 large companies forming an alliance to target healthcare costs. As big companies are wont to do, they are unnecessarily complicating things. They can save themselves a lot of time and money by understanding two simple items that have proven to slay the healthcare cost beast.
- Massive pricing failure is the biggest factor in out-of-control healthcare costs. In contrast to most markets where price correlates with value, it is often inversely correlated in healthcare.
- Primary care has been massively undermined in this country. IBM studied the impact of their annual $2 billion spend on health benefits around the world. The results were conclusive -- the countries where there were the most robust primary care models existed delivered the greatest value. This is why they dedicated Dr. Paul Grundy to lead the renaissance of primary care.
Few would argue with my characterization of the current healthcare payment model as a Gordian Knot designed by Rube Goldberg. I spent much of the early part of my career trying to make sense of it on behalf of providers as it caused them fits. Despite that, it’s remarkable how there is an implicit assumption that we’re stuck with that mess until the end of time.
Hint Health is a company that radically simplifies the payment process for providers and employers who pick up the tab for the majority of the workforce...
A Transparent Medical Network offers employers and organizations such as unions a set of fair and fully transparent pricing for medical services/procedures ranging from a specific treatment (i.e., knee replacement) to a specific condition (i.e. diabetes). Providers provide up-front pricing at significantly reduced rates in exchange for increased patient volumes, quick pay, reduced friction and the avoidance of claims/collections problems – all factors that allow for providers to have greatly reduced prices while netting a similar amount to standard insurance billing. Services and procedures are typically bundled, meaning there is just one bill for the all the services rendered across a specific treatment or condition, multiple providers and sometimes multiple settings. Another dimension of transparency is that the network is open to any provider who has sufficiently high quality indicators and is priced fairly...
Let's face it, your health benefits stink. Given the massive amount of money spent by employers on health benefits, it's brutal to look at just how bad the status quo is for health benefits. Great people are operating inside of a horribly designed system as this NY Times doctor/columnist/patient painfully describes. Far more resources have been directed towards administrative overhead designed to optimize revenues than to optimize the Quadruple Aim. Fortunately, smart employers such as a small manufacturer and a small hotel chain have proven how you can spend 30-50% less per capita AND provide great benefits.
The fact is that most payroll increases for companies have gone to pay for healthcare's hyperinflation, rather than wages. Forward-looking organizations recognize that we can expect much more from this large of investment.
The Health Rosetta is the model health benefits package that wildly outperforms the status quo. The positive impact for employees and their community are breathtaking when they are employed. In contrast, we see teacher strikes with health benefits being a core issue of contention. The cost of healthcare's hyperinflation on a typical American family's nest egg has been $1M. Most people haven't made these connections, nor do they know how much better things are when the health benefits are optimized. This is a core reason behind thedocumentary I'm working on -- i.e., to catalyze a movement that is a partnership between increasingly dissatisfied clinicians and individual citizens (aka patients, consumers, people)...
Open Sourcing What Works in Health & Wellness
HEALTH TOO IMPORTANT NOT TO OPEN SOURCE
Few argue that we have a fully optimized healthcare system. In fact, many argue the opposite. The horrible under-performance of status quo health benefits points out just how bad it is. However, I have good news for you. All of the components of a high achieving health ecosystem have not only been created — they have been proven with solid evidence backing them up. When an organization employs components of the Health Rosetta, the results are breathtaking. For example, a small manufacturer saved 30% per capita on health benefits costs versus their peers while a hotelier saved 50% per capita versus their peers.
[Update: Since originally publishing this piece, the Health Rosetta has become the call-to-action for a documentary being directed by an Academy Award nominated filmmaker,investment thesis for a venture fund and business coalitions have structured their annual conference agendas around the Health Rosetta.]
For an example of how the Health Rosetta would flesh out a particular area, see Transparent Medical Network, Value-based Primary Care or Concierge Style Employee Customer Service. These three examples were prioritized first as they have the shortest ROI period and can be layered in at any point during a benefits period (i.e., no need to wait for annual benefits changes)...
There have been open source projects in healthcare for a long time. No doubt, many companies are like Avado when we used open source components in our product. Most people think of open source as limited to software code. However, the ethos of open source is being used more and more. The following are examples of innovative doctors using the ethos of open source to advance health and wellness:...
For the last several years, I have been closely analyzing the consequences of healthcare’s under-performance. The waste and sub-par performance have convinced me that there is no greater immediate threat to the American way of life and the American Dream than if we continue the status quo healthcare system. Naturally, there are other threats (e.g., climate change) but none that are not only severely impacting the nation today but have a negative impact that is growing far more rapidly. Further, if we solve healthcare it frees up resources to address other challenges facing (education and climate change being at the top of the list)...
David Contorno is a leading benefits consultant that reported on a visit a group of employers and unions made to Florida and the Cayman Islands. They collectively represented 24 million people and are frustrated by what Leah Binder calls "Subprime Healthcare" in her piece about a breakthrough business alliance. These are the early adopters of the components of the Health Rosetta including the Transparent Medical Network portion.
Contorno captured the paradox of employers stepping over dollars to save pennies in New Way to Lower Healthcare Costs.
“Managers are more likely to limit rental cars to $30 a day than limit an open heart surgery to $100,000 — for ethical and regulatory reasons, many executives steer clear of involving themselves in healthcare decisions, other than selecting the broadest possible network access. But few expenses that executives know so little about matter more than those involved in healthcare do.
This article speaks to a cultural shift that could provide tremendous impact for employers. They can now lower costs while also improving outcomes.”
— David Contorno
The kicker in the article is his summary: ....
