An Impending Hanging: Will Health 2.0 Be Compromised By The Economic Downturn?

Nothing focuses the mind like an impending hanging. — Samuel JohnsonBrianklepper_2

I’ve been preparing for tomorrow’s 3rd Health 2.0 conference in San Francisco, where I’ll join my pals Matthew, Indu Subaiya, Jane Sarasohn-Kahn and Michael Millenson amid a Who’s-Who cast of health industry luminaries. I spent part of Monday reviewing the attendee and sponsor lists, impressive indeed, testament to how seriously this topic is being taken throughout health care.

The meeting is sold out at 950 participants. It’s worth remembering that, before the first Health 2.0 conference 13 months ago, Matthew, who with Indu took enormous professional and personal financial risk to pull this off, told me he’d be surprised if 75 people showed up. There were almost 500, many of them with genuine influence.

That meeting was spark to kindling, but its a bonfire now, with all
kinds of conference imitators trying to cash in by hawking Health 2.0,
Medicine 2.0, Hospitals 2.0. That may be fair enough, given everyone’s
right to play on the term Web 2.0.
But the real power rests in the knowledge of who’s doing what, whether
each effort in question matters, and the principles that underlie the
dynamics of this powerfully transformational sector.

These are critical question and, in the face of an economic firestorm, they couldn’t be more germane. Consider an article in yesterday’s Financial Times that recounted the woes of Silicon Valley firms hunkering down with the
rest of us in the recession, hinting that this was a pin aimed at the
bubble of the current wave of Web 2.0 ventures.

By contrast, The Times Online’s Jonathan Weber takes us through a more grounded and optimistic argument in Fear and Opportunity in Silicon Valley.
He sees the current circumstance as inevitable, a "healthy corrective"
that will winnow the weaker players and give the stronger ones – the ones
that bring genuine value – more breathing room. I agree.

As David Kibbe pointed out recently, the signs are everywhere that the health care
bubble is being strained to bursting. (I mean "bubble" in
this context as inflationary growth explainable not by
conventional market forces, but by irrational forces, like misaligned
incentives (e.g., FFS reimbursement), the market’s structural flaws (e.g., pricing/performance opacity) or external influences (e.g., support/subsidy of goods/services achieved by lobbying, rather than value demonstrated in the market).

We’ll explore
this issue in another post soon. For now, suffice it to say that if
you look at elective consumer purchases of office
visits, drugs and surgeries; the
diminished ability of employers to access credit lines to buy new coverage; shrinking health benefit structures and coverage purchases; rising hospital bad debt and uncompensated care loads; skyrocketing hospital bond interest rates; changes in health system net revenues
related to investment income; and other measures of how the health care
economy is ticking along, things aren’t look very promising in health
care right now.

Not so with Health 2.0, which might be described as leveraging two big ideas. One is that consumers and professionals can collaborate – exchanging information within and across communities – over the Web. Independently of what happens in the economy, the Web isn’t going away. And we’ve learned over the last few years that the Web offers by far the most flexible and efficient mode of communication developed so far. Short of national catastrophe, its unlikely we’re going back to postcards.

The other big idea is that the Web can facilitate the efficient aggregation and reformulation of knowledge and data to create new information that is not only descriptive, but prescriptive, evaluating complex situational configurations and recommending next steps based on current best knowledge and experiential data. Health care is fundamentally an information-based discipline, and the Web catapults us way beyond individual expertise to the organically evolving wisdom of mass collaboration.

Health 2.0’s value lies in its ability to empower everyone connected to the Web with nearly every activity that relates to health care information. Patients can quickly learn about their conditions, meet others with the same issues and become more involved in managing their own care. Clinicians can tie into instantly accessible knowledge and decision-support, and also check their quality and financial dynamics against those of colleagues. Purchasers of all types – consumers searching for a 16-slice CT scanner, clinicians considering which treatment approaches consistently deliver the best outcomes, health systems benchmarking their own performance, health plans trying to rank benefits by their value, or employers trying to assess which health plans actually fulfill their promises of managing the care process – will shortly have access to unprecedented transparency and decision support.

In an industry as out of balance as health care, where we know that one-third to one-half of all care and cost is waste, Health 2.0’s spectacular opportunity is to become the engine for rationalizing the process. The industry is characterized by two kinds of companies. First are enormous firms – Google and Microsoft are the obvious ones – who understand that they can create value and win by identifying the waste. The others are organizations, mostly start-ups, at the margins of health care, who hope to win by bringing transformational elements to the table.

The losers in all this will mostly be traditional health care firms that have come to expect that the waste is legitimate, and organizations whose value propositions are only marginal. These companies could be savaged if Health 2.0, combined with  performance-based reimbursement, promotes higher levels of appropriateness in care delivery.

In this sense, Health 2.0 is a true game-changer, redefining how winning will be accomplished. We’ll see many big established health care firms at tomorrow’s meeting, not just because they want to monitor the techniques that could ultimately be used to compromise their current business practices, but because they’re trying to figure out how to incorporate these new processes to advantage.

In a down-turned economy, the winners will be those that sell risk and cost reductions, or that bring enhanced quality for the same dollars. This economic downturn will hurt or kill some organizations.

But in general it will focus health care, favoring approaches that drive enhanced value across the vastness of its constituencies. That is precisely what Health 2.0 is focused on.

Brian Klepper is a health care analyst and commentator, and a principal in the newly formed Health 2.0 Advisors.

3 replies »

  1. James, you can check the agenda at http://www.health2con.com. I don’t believe there are any Medicaid-specific sessions, but that shouldn’t really matter. The material is typically applicable to any population. Also, you might want to check in with Fred Goldstein of US Preventive Medicine (fgoldstein@uspreventivemedicine.com). His company, SDM (which was acquired by USPM), developed more Medicaid DM experience than any other vendor nationally, to my knowledge.
    TCoyote, astute and interesting comments as always. I’ll pass along your regards at the conference.

  2. Crucial difference between 1.0 and 2.0 is that 2.0 is not IPO driven. The “health” part of 1.0 lasted a little over two years, and ended an 80% fall in the NASDAQ. The IPO market is in a COMA- no deals in more than two months, the longest dead air in this market since 1980. The fact that people don’t have three month time horizons between their killer PowerPoints and a liquidity event should give people time to sort out the business model conundrum and build out their businesses. Despite the economic uncertainties, this is a way better time to experiment. Have a fun conference. . .

  3. Does the event have a panel that looks at how Health 2.0 might impact the Medicaid program? If so, is there any chance this panel’s presentations might be made available to Medicaid agencies?