All eyes are on the hullaballoo created by the challenges at Healthcare.gov and several of the states’ public insurance exchanges. Yet all the while, like in a magic show, attention has been diverted from the real action going on elsewhere. Quietly and in a relatively drama-free way, the private health insurance exchanges are busily taking over the world of insurance and, in my opinion, portend a radical set of changes in how our health insurance system operates.
Several years back, a number of companies began building private health insurance exchanges to initially help companies offload the incredible burden of retiree benefits. Companies such as Extend Health (now owned by Towers Watson), Senior Educators (now owned by Aon), and several others provided a way for large employers to get themselves out of the business (and balance sheet liability) of providing group benefits for retirees, instead providing them with money to purchase their own individual health policies through then small, now large companies. The private exchanges went about the business of building websites that work, call centers that buzz and a wide array of insurance product offerings at various prices. Now, several years later, hundreds of thousands and possibly millions of individuals are out there shopping their little hearts out, choosing their own plans, and dealing with the consequences of high deductibles and the like.
These various private exchanges are now poised and ready to begin serving active employees in 2014 as guaranteed issue (the requirement that all can be insured and no one turned away) goes into effect as a result of the Affordable Care Act. And lest you think this is a small marketplace, you are wrong. In 2008 there were about 120 million total employed workers and just over half of these worked for companies of 500 employees and above (39 million worked for companies with 5000 employees or more). In other words, we are talking about nearly half of American adults and that doesn’t even include the dependents they bring along into their insurance plan.
Interestingly, such large US employers as Walgreens and Petco and DineEquity (parent company of Applebee’s Neighborhood Grill & Bar® and IHOP® restaurants) are all-in on the private exchange program, committing to transfer all of their employees from group plans to the exchange to purchase individual plans come January 2014. The exchanges of Towers, Aon, Mercer, Buck Consultants and a plethora of others are alive and well and open for business at exactly the time when employers are trying to figure out how fast they can reasonably get out of the middle of health insurance administration and run for the hills.
Continue reading “While Healthcare.gov Struggles, A Different Story Plays Out On The Private Exchanges”
Filed Under: Tech, THCB, The Business of Health Care
Tagged: Employers, Extend Health, Health Insurance Exchanges, Lisa Suennen, Private Exchanges, The Affordable Care Act, Wal Mart, Walgreens
Nov 3, 2013
As of last week, the heart of Obamacare is upon us with the opening of the health insurance exchanges (HIXs). And while some think this represents the heart of darkness, it is hard to imagine that anything will stop January 1, 2014 from coming and, with it, a new legal requirement for all Americans to have health insurance.
Ushering in this new world order, the HIXs are essentially a “Match.com” to put people together with insurance products, representing a way that, for the first time, Americans will directly purchase healthcare without the prospect of being denied coverage or having their employers buy on their behalf.
In fact, the new HIXs create a direct relationship between consumers and health insurers in a way that has never existed before, and with that comes the need to fundamentally disrupt traditional methods of delivering health insurance products. Not since the advent of employer-paid health insurance after World War II or the start of the Medicare program in 1966 has there been such a broad-scale opportunity for health system transformation.
There are few markets that are mandated by law to include virtually every single American man, woman and child, making the opportunity particularly juicy to investors. For those entrepreneurs who figure out how to transfer the secret sauce from cheeseburgers that impair health to insurance-related products and services that improve it, the next few years offer an opportunity to turn market confusion into gold.
Among the biggest opportunities are investments in technologies and services that power the new healthcare exchanges. Venture-backed companies, such as GetInsured.com, have emerged to provide the various state-sponsored exchanges with the back-end technology that enable comparison-shopping, financial transactions and enrollment support essential to operating the HIX marketplaces.
But while state and federal healthcare insurance exchanges are the main topic of conversation this week, much of the real action has and will continue to take place in private exchanges serving the large and small employer market, particularly as employers do the math and figure out it may be in their financial best interest to end their role as benefit plan intermediaries.
Continue reading “Out of Chaos, A New Beginning”
Filed Under: THCB, The Business of Health Care
Tagged: Entrepreneurs, Health Insurance Exchanges, Lisa Suennen, Private Exchanges, the business of healthcare
Oct 7, 2013
Today marks the beginning of the 8th annual Healthcare IT Week. Healthcare IT Week was started and continues on as a collaborative forum for public and private healthcare constituents to discuss the value of health information technology (health IT) for the U.S. healthcare system.
It is amazing to see how far health IT has come over the last 10-15 years. It has its own week! If, a decade ago, you told people that health IT would be a core focus of investors, entrepreneurs and everyone else in healthcare, the energy produced from the eye rolling alone could power the lights on the Las Vegas Strip for a month. The basic sentiment back then was this: Why would anyone invest in, think about, care about health IT when the consumer Internet was rocking and companies selling online dog food could get started on Monday and sold on Friday for a bull mastiff’s weight in gold?
Today it is quite clear that healthcare IT is a hugely significant part of any success we are having and will continue to have in transforming our healthcare system from one where 30% of cost and care is wasted or the result of error to one where value reigns supreme. We do not believe anyone rational would now argue that healthcare IT is non-essential to improving the quality, productivity, efficiency, cost and outcomes we produce in our healthcare system, although the path is not always smooth.
And it’s about time. Technology has been used to optimize and redefine virtually every key industry except healthcare. Manufacturing has gone from human assembly lines to robotics; banking has gone from tellers to home banking; travel has gone from agents with brochures to Travelocity; and yet in many ways, the fundamental practice of medicine hasn’t changed in decades.
Continue reading “Can Entrepreneurs “Cure” Health Care With Technology?”
Filed Under: Tech, THCB
Tagged: David Shaywitz, digital health, Entrepreneurs, HIT, Lisa Suennen, National Health IT Week 2013
Sep 15, 2013
The U.S. Bureau of Labor Statistics came out with its June jobs report this week and, consistent with usual trends, healthcare jobs are booming. In June 2013 there were approximately 20,000 new healthcare jobs in the U.S., ¾ of which were in the ambulatory care sector and ¼ of which were in hospitals. Healthcare jobs represented 10% of all new jobs created this month.
The June growth in healthcare jobs matches up to the average 19,000 new healthcare jobs we have seen created in each of the prior months of 2013 and the 12% job growth we have seen over the last five years. In a country where new jobs are viewed as even better than baseball, apple pie and mom herself, these new jobs should elicit a huge round of applause, or at least a stadium style wave, right?
Or should they?
Change the channel and a different set of policy makers, employers and industry experts will tell you that the only way to save our economy from ruin is to cut healthcare costs. Cutting healthcare costs means making the people who work within the system vastly more efficient, eliminating unnecessary medical care (and thus reducing the labor that goes along with it), and helping empower consumers to do things for themselves, including taking a more active role in reducing their own demand for healthcare services and, in some cases, doing at home what they might previously have used the healthcare system to do (e.g., diagnostics, home care, etc).
Continue reading “It’s the Jobs, Stupid. No, Wait. It’s the Stupid Jobs.”
Filed Under: Hospitals, OP-ED, THCB
Tagged: Costs, Employers, Employment, health care jobs, Hospitals, Lisa Suennen, spending
Jul 8, 2013
Two weeks ago I had the good fortune to be invited back to the South by Southwest Conference (SXSW) to participate as a judge of a digital healthcare start-up competition. SXSW, which takes place in Austin, TX, is historically an indie music gathering that has evolved into a massive mainstream music conference as well as a monumentally huge film festival, like Sundance times twenty. There are literally hundreds of bands and films featured around town. There has now evolved alongside this a conference called Interactive that draws more than 25,000 people and focuses on technology, particular mobile, digital, and Internet.
In other words, SXSW has become one of the world’s largest gatherings of hoodie-sporting, gadget-toting nerd geniuses that are way too square to be hip but no one has bothered to tell them. Imagine you are sitting at a Starbucks in Palo Alto, CA among 25,000 people who cannot possibly imagine that the rest of the world still thinks the Internet is that newfangled thing used mainly for email and porn. SXSW is a cacophonous melting pot of brilliance, creativity, futuristic thinking, arrogance, self-importance, ironic retro rock and roll t-shirts and technology worship. One small example: very hard to get your hands on a charger for anything other than an iPhone 5 because, seriously, who would have anything else?
Continue reading “The Napsterization of Health Care”
Filed Under: Tech, THCB
Tagged: Clayton Christensen, CommonWell Health Alliance, Downloaded, EHR, HIT, Innovation, Interoperability, Lisa Suennen, Napster, Open platform, SXSW, SXSW 2013
Mar 26, 2013
Patient monitoring outside the hospital has been a hot topic (and also a not so hot topic) for the past 15 years.
Starting back in the late 1990s with companies like Health Hero Network, a company whose products for patient home monitoring are still in use today, company after company has sought to bring a successful product to market. The holy grail: finding an easy, non-intrusive, and continuously reliable way to predict patients’ potentially serious medical problems when it is early enough to do something about them and prevent an acute and expensive episode of illness. Some of the newer companies are focused more on the wellness and tracking side of the equation, such as helping individuals see progress from an exercise or other preventive/health-inducing regimen.
So far this whole area has been a very tough nut for businesses to crack in the US in particular. While some studies have shown great positive effect, others have not. Insurance payment for these programs has been spotty at best and non-existent at worst; most of the current vendors are stuck in pilot hell without significant long term and widespread commitments from payers. There is a belief, veracity unknown as yet, that the proliferation of risk-based entities such as Accountable Care Organizations will change this and lead to broad adoption of ambulatory patient monitoring tools, angels will sing and a large number of hospitalizations and rehospitalizations will be avoided. That may be true, but remains to be seen.
Continue reading “Is In Car Health Monitoring the Answer? Maybe? Maybe Not So Much?”
Filed Under: THCB, The Business of Health Care
Tagged: Ferrari, Ford, Health Hero, Lisa Suennen, Mercedes S-Class, Sensor Technology, Wireless
Dec 25, 2012
So I read an article the other day about a new company called Rap Genius. The company consists primarily of a website that relies on crowdsourcing to explain rap lyrics to the masses who are not down with the urban vibe (aka, people over 30). The company takes lyrics such as these from Kanye West’s Gold Digger….
“She was supposed to buy your shorty Tyco with your money
She went to the doctor got lipo with your money
She walking around looking like Michael with your money.”
…and explains that they mean, to wit: The ex-wife was supposed to buy your baby some toys with the child support money but instead spent it all on so much plastic surgery that she looks like Michael Jackson (presumably before he died―my edit).
Here’s another example: Nelly’s song Grillz gets explained thusly: “Got 30 down at the bottom, 30 more at the top, all invisible set in little ice cube blocks” refers to the fact that Nelly is wearing “grillz” aka jewelry worn over the teeth, which are worth $30,000 on the top and another $30,000 on the bottom, with diamonds set right into the gold. So now you know.
According to the article about the $15m investment that venture fund Andreesen Horowitz put into Rap Genius, the company’s goal is to “annotate the Internet” and, beyond rap music, “the company is slowly spreading to other categories such as literature, political speeches, and science papers.” Let me just digress for a moment and say that the website I would love to see is the one that turns political speeches into rap lyrics―wouldn’t it be sublime to see Joe Biden and Paul Ryan speak jive?
Continue reading “Health Care Reform Gangnam Style”
Filed Under: THCB
Tagged: ACOs, Andreesen Horowitz, Lisa Suennen, market opportunity, Medical jargon, Rap Genius, The Affordable Care Act
Nov 25, 2012
While the evolution of the digital health ecosystem has seemed at times almost painfully contrived, it now appears to have reached the point where it requires but a few sprinkles of magic fairy dust to be truly alive.
The basic idea behind digital health is pretty clear: we can (and must) do health better, and technology should be able to help,
There’s also an ever-increasing amount of support for early-stage innovators in this space. A remarkably large number of digital health incubators have sprung up around the country, as Lisa Suennen captured with characteristic verve in a recent Venture Valkyrie post.
On top of this, a slew of corporate VCs have now emerged – many from payors, but some from communication companies, and even a few from big pharmas such as Merck – all keen to invest strategically in the digital health space.
Deliberately, many of these large corporations also represent likely buyers for the products or services that will be produced, so it really does seem like an example of the savvy external sourcing of innovation.
So we’re good, then – right?
Well, not so fast.
It turns out that many high profile VCs continue to eschew this space, other than perhaps an occasional investment or two. The reason? As one extremely well-regarded VC – with extensive healthcare experience – told me yesterday, “I haven’t seen a viable business model yet.”
Translation: how do you make (serious) money here? Where’s the revenue?
Continue reading “Digital Health: Almost a Real, Live Business”
Filed Under: Uncategorized
Tagged: Andy Grove, Big VCs, business model for digital health, David Shaywitz, digital health, Facebook of Health, Google, Google of Medicine, Intel, Lisa Suennen, Merck, Microsoft, Oracle, VCs, Venture Valkyrie
Oct 15, 2012
This week I had the occasion to be at UCLA for a very interesting meeting (more on that in a future post). As I arrived at LAX to return my rental car, I drove past a huge billboard at the corner of 96th Avenue and Airport Blvd (just across from the Renaissance Hotel) that made me do a double take. The billboard, said in gigantic white letters on a red background: “This year thousands of men will die from stubbornness.”
Naturally, my first thought was this: Why thousands? If men can die from stubbornness, aren’t they all doomed? If stubbornness is the proximate cause of death, we are looking at a wipe-out of society on a pretty imminent basis. The bad news: no more future generations. The good news: no one will hassle us women about buying too many shoes and all the top-paying private equity jobs will soon be available.
So figuring that I had misread this billboard, I actually made a U-turn and drove past it again (not sure what made me do it: alarm or wishful thinking). What I noticed on my second pass was the very fine print, which said, “Learn the preventative medical tests you need. AHRQ.gov.”
The billboard is apparently part of an U.S. Government Agency for Healthcare Research and Quality Department ad campaign targeted to get men to stop avoiding the doctor and to go and get the medical screening tests recommended each year, such as those for cholesterol, diabetes, high blood pressure, cancer and other illnesses. Continue reading “Stubborn”
Filed Under: The Insider's Guide To Health Care
Tagged: AHRQ, Lisa Suennen, prevention, Screening tests
Apr 20, 2011
A few weeks ago I wrote a post about the unbelievable cost associated with Alzheimer’s disease and how large a population it is likely to affect. According to an op-ed piece written by Sandra Day O’Connor, among others, it is estimated that by 2050 approximately 13.5 million Americans will be stricken with Alzheimer’s, up from five million today, and that the cumulative price tag for treating Alzheimer’s, in current dollars, will be $20 trillion. In contrast, remember that the cost of our ENTIRE healthcare system today is around $2.4 trillion.
This week there was a follow-up piece in the NY Times entitled, “Tests Detect Alzheimer’s Risks, but Should Patients Be Told?” The article described how new diagnostic tests have become available that make it possible to detect early Alzheimer’s and, more interestingly, to predict more accurately one’s likelihood of getting Alzheimer’s in the future. The focus of the article was the moral and ethical dilemma presented by the availability of this knowledge.
Since there is no known treatment for Alzheimer’s and none on the short term horizon, physicians with knowledge of a patient’s Alzheimer’s risk are put in an interesting spot. If they tell their patients the bad news, it may have a profound negative effect on their psyche and lead to debilitating depression; if they don’t tell, they are withholding information that might enable a person to prepare their life more effectively to deal with the oncoming challenges. As the article so well articulates:
“Modern medicine has produced new diagnostic tools, from scanners to genetic tests, that can find diseases or predict disease risk decades before people would notice any symptoms. At the same time, many of those diseases have no effective treatments. Does it help to know you are likely to get a disease if there is nothing you can do? “
Continue reading “Don’t Tell, Don’t Ask”
Filed Under: The Insider's Guide To Health Care
Tagged: Alzheimer's, Lisa Suennen, Research
Dec 21, 2010