Let’s Face(book) the Hard Truth About Healthcare

‘In the time when new media.

Was the big idea.’

These two lines at the end of the album track  ‘Kite’ earned U2 a place in a recent list of suspect popular song lyrics. Some Health 2.0 vendors are also struggling to get ‘social media’ to rhyme with  ‘healthcare’ but will no doubt carrying on trying to do so. With Goldman Sachs throwing $1.5 billion in Facebook’s direction it makes sense for anyone in the online health business to position themselves as close to the social media company as possible, on the off chance that they will be able to pan a few nuggets out of the fast flowing stream of cash.

While no doubt some of the funds the bank is putting together will be used for healthcare related applications it is not immediately obvious what Facebook can do that Google and Microsoft have not already tried. Both these companies are trying to sell to healthcare providers whose business models if they do exist are confused and, in some cases failing. One way to gain a better understanding of the healthcare market is to view it as a mathematical equations that can be solved by eliminating one variable at a time.

So What If The UK’s National Health Service Did Not Exist?

You log on to NHS.uk and are greeted with a message saying “Sorry, this service has been discontinued. The UK government can no longer afford to provide you with healthcare.” And that is it, apart one last piece on advice. “Please take care.” This presumably aimed at Darwin Award candidates who were hoping to break the land speed record using fireworks and a skateboard and fully expect the local hospital to fix any resulting damage. Also perhaps directed at anyone with a grumbling appendix thinking of entering a baked bean-eating contest. (More about these people later.)

So what difference would it make if there were no healthcare provider? For a start everyone in the UK, apart from the 1.3-million ex-NHS workers, would be £1600 a year better off. A young person leaving school would have saved enough to pay for their university education. A young couple in their mid twenties would have saved enough to put a down payment on their first house. OK average life expectancy would fall and the last couple of years (or most likely months) of a person’s life would probably be more unpleasant, but the proceeding sixty five or so years would be a lot better. There, two of the government’s major economic headaches eliminated in a stroke – an unfortunate turn of phrase in this case. With an extra £100 billion per annum sloshing around in the economy most of the 1.3 million former NHS employees would be able to find new jobs.

The big winner would be the government, which would no longer be held to ransom and subjected to Mafia style threats along the lines of the recent ‘Stay out of our territory or the old man will never walk again’ warning. (Apparently if the government presses ahead with its planned reforms some hospitals will have to stop performing knee replacement operations). With the National Health Service out of the way there would be no need to make decisions about who was treated – because no one would be treated. Well, that is not quite true. Given that everyone has an additional £1600 of income each year it is a safe bet that if people desperately needed their appendix removed some enterprising company would have a stab at it (so to speak). The same is true with drugs: most people would be able to afford the drugs they needed to ward off common diseases and pharmaceutical companies would be happy to supply them. The price of those drugs would drop considerably in a free market for medication where the customer had to put their hand in their own pocket.

Before we put the healthcare provider back into the equation let us ask how it got there the first place.

Steel Yourself For This One – Health Provision In An Industrial Based Economy.

Let us go back over one hundred years to Essen in Germany. Standing at the window of his mansion is the industrialist Alfred Krupp. He looks out over rooftops of the city, barely visible through the smoke belching from the chimneys of his iron foundries. In those slums Krupp’s workers led short miserable lives, suffering from disease and malnutrition. He returns to the breakfast table, sits down and places his head in hands. “Something must be done to improve our worker’s lives,” he says, And something was done; Krupp built company houses, workers were given free meals and could buy cheap bread from a works bakery. Alfred also set up a pension scheme and a free healthcare service. Otto von Bismark, the first Chancellor of Germany, copied these initiatives when he embarked on a nationwide program of social reform. Since then most state healthcare services, including the one set up by the UK government in 1948, have been based on the one created by Alfred Krupp.

Alfred, however, was not a philanthropist in the mould of Cadbury or Kellogg if fact his family were bought to book for using forced labour both during the first and the second world wars. When he sat down at the breakfast table, if there were and tears falling onto his ham and soft-boiled eggs they were not shed because of the poor health of his workers but the poor health of Krupp’s profits. The company was suffering because skills and expensive training were being buried when workers died prematurely. Steel making is a heavy industry and workers who are fainting from hunger find physical exertion difficult. As well, those diseases that were spreading through the unsanitary and cramped houses of Essen eventually found their way into the works itself causing absenteeism and lost production. Healthy workers meant healthy profits, so Krupp had a vested interest in keeping his workers healthy. As hard as people have tried it has not been possible to alter the basic model of healthcare and social care that Krupp designed to serve industry. Even the NHS with its universal treatment, free at the point of care aspirations struggles to move beyond the Krupp model.

So should healthcare and welfare be regarded as a constant in the healthcare equation? The answer is ‘no’ because the industry they were designed to serve has changed and healthcare and welfare provision have changed along with them. The ‘heavy’ has gone out of most industry and where it does exist automation, rather than muscle power, takes care of it. Most of the hammering in the workplace today is on a computer keyboard rather than a forge. Working in a service industry does not need the high calorie intake provided in the canteens of steel works – a bagel will keep an office worker going until lunchtime, then they can send out for a sandwich to keep them fed for the rest of the day. For today’s worker the focus is on staying awake and alert – so out has gone the expensive canteen and in has come the vending machine full of candy bars and caffeine laden drinks.

Healthcare provision has also changed. The initial impact of Krupp’s healthcare scheme was a reduction in disease in the workplace and a rise in average life expectancy – initially due to a fall in infant mortality. Over the years innovation within the healthcare sector itself has seen an increasing number of once life threatening conditions become treatable. This brings us on to another key variable in the healthcare equation – the patient.

A Long And A Healthy Life (Unfortunately, we are sometimes talking about two different lives)

Innovation in healthcare had a long-term impact on the working population that Krupp could never have anticipated.  Before Alfred introduced free healthcare illness and disease posed two major threats to his workers; they would most likely kill them or they would render them unable to work and leave them destitute. In a little over one hundred years a person who would have gone to church each Sunday to pray that no one in his family was struck down by cholera can now stand on a skateboard with industrial strength fireworks strapped to the side of their heads worrying less about their health than whether their friends will remember to upload the video clip to YouTube after dialing 911.

As average life expectancy has increased people have become cavalier about their health and now expect to live longer and for that extended life to be healthy – all thanks to advances in medical science. Unfortunately many people could end up being disappointed.

The late sixties and early seventies were probably the sweet spot with regard to longevity. During this period most manual effort had been taken out of industrial work and an increasing number of people were being employed in service industries. However companies still had works canteens and the diet of most workers was still relatively healthy. As well, there was a growing awareness of the dangers associated with smoking and the first government-backed campaigns to encourage people to give up cigarettes were underway. It is people working during this period that are now living longer, helped by a combination of a healthy lifestyle and advances in medical science. But this may be as good as it gets as few of the next generation of workers will have see the inside of a works canteen or eaten a balanced meal and exercised on a regular basis since leaving school. This generation is relying solely on the healthcare provider to keep them alive into old age.

So far the healthcare provider has done quite well and still claims that cures for a range of diseases are ‘just around the corner’. In fact it sometimes seems as though the healthcare sector is running out of diseases and conditions to cure or eradicate. ‘Cure for the common cold is a matter or years away’ it claims – trying to justify wasting money turning a minor ailment, which is no more than a punishment mammals receive for not hibernating in winter, by pointing out that millions of working days are lost through the common cold. (The ghost of Alfred Krupp is still echoing in the healthcare machine.)

Complacency about their health and a misplaced faith in medical science to repair the damage caused by lifestyle choices is not the result of some conscious decision but is something that arises due to the mere presence of a healthcare provider. In fact, judging by the number of NHS workers with elevated body mass indexes and the large proportion of GPs who still smoke, it seems that the more exposure you have to a health provider the more likely it is you ignore obvious health risks.

Such is the suppressed perception of risk of illness and disease that there is near hysteria over epidemics of influenza, even though the effect of even the most powerful strains is dwarfed by the number of people who will be laid low in any given year by lifestyle related diseases. The combined effect of the industrialist’s loss of interest in their worker’s welfare and the public’s lack of interest in their own health should have been a signal for the healthcare provider to stop promoting a service it can no longer provide – certainly not as an ‘all you can eat for free’ service.

Here, out of all the major healthcare providers, the UK’s NHS is most vulnerable. Kaiser Permenente in the US, like Krupp, has a heavy industry heritage and worker’s welfare in its DNA. However the NHS is something of a bastard child bought into the world and raised by the British Labour Party. As a result the Labour Party believes the NHS owes it something and is there to support it in its old age.

When the coffers of the last Labour government began to swell with tax receipts from the financial services industry it decided to use the NHS as a convenient way to boost the UK economy. The state healthcare provider was stuffed with cash and people, which both improved care, reduced unemployment and, unfortunately, raised the public’s expectations of what can be achieved by an all you can eat free of charge healthcare service. All the poor child got for its trouble was a new computer, called the National Program for IT, which, as it turned out, did not work.

Since the credit crunch what had seemed like a win, win, win proposition has now become a triple whammy. The NHS is about to become a major source of unemployment, it is responsible for a large proportion of the public spending that the UK can no longer afford and, perhaps most critically, it cannot meet the unrealistic expectations of its customers or continue to patch up bodies damaged by decades of unhealthy living.  If the new IT system had worked things may have been different. The NHS would have still be a major source of unemployment but at least patients would not have to wait for hours to see a consultant while their medical records are hand walked through the outpatients department by three different members of staff. But as it turns out soon even the most techno phobic patients will start to draw unfavourable comparisons between the complexity of arranging a hospital appointment and the one mouse click it takes to book a fourteen day holiday.

The Conservative Party are no fans of the Labour Party’s love child and on occasions, when they get it on its own, have taken it behind the bicycle sheds and punched its lights out. When it came to power this time as part of a coalition government it stole the NHS’s pocket money and threw its new computer in the trashcan. If fact the NHS attracts the ire of other right wing parties and has even drawn criticism from the other side of the Atlantic. The Tea Party portrayed the UK healthcare provider as an organisation that routinely decided which patients were treated and which were left to die. The claim that the current reforms to the NHS would lead to some hospitals ceasing to carry out knee replacements was designed to pick up on Sara Palin’s comments and embarrass the government.

A Health Warning

Before we look at where healthcare, and the NHS, is going next and what part social media is going to play in transforming the industry here is something of a health warning (within a health warning) about Health 2.0. It comes in the form of a question. Are we in the Health 2.0 industry becoming the 21st century Alfred Krupps? Is the IT industry building a healthcare system for the IT industry? Will Health 2.0 based services deliver healthcare to the fit and sleek in Silicon Valley but be largely beyond the reach of the rotund and run down ex factory workers in the rust belt?  Krupp was not the first to target healthcare and welfare at those perceived to be the most economically valuable in society. After all it was the skilled artisans who got to live within the city walls in medieval times while the gofers took their chances on the outside. And most likely, in the Stone Age, it was the guy who knew how to make spears that got to sleep at the back of the cave. Krupp, as well as Kaiser Permenente, merely introduced the concept to the industrial age and we may be inadvertently modifying healthcare for our own ends in the Internet age.

OK, that is our social consciences clear, now lets look at how we can make a shed load of money out of next generation healthcare.

A lot of GPs in the UK are about to become toast. They are going to be at the sharp end of the new health secretary’s radical reforms of the NHS  – which involve moving the cash tills to the other end of the counter in a bankrupt store while leaving the underlying business model, which is broken and beyond repair, largely untouched. GP’s are the ones who will have to explain to customers that the product they ordered three months earlier is no longer in stock and that, if they really still want to be treated, they can join the back of the queue and try their luck in another three months.

The healthcare market will eventually go the way of the book trade, with next generation healthcare providers becoming the new Amazons and the NHS the new Borders. GPs, stuck in the middle, run the risk of meeting the same fate as high street booksellers.

GP practices that are on the ball will already be looking at new business models in preparation for the day when the NHS implodes. No doubt some will be looking at social media as a way to connect with ‘customers’ rather than patients and ‘marketing’ healthcare rather than merely providing an accident repair service. To be fair to the NHS it is trying to move in this direction and its website is, belatedly, starting to provide preventative healthcare information. Unfortunately these efforts look a bit like the vegetarian option on a MacDonald’s menu and really their heart does not seem in it (I know, another unfortunate choice of words). Even so, it does show that even the NHS realises that the open loop control system that suppresses the public’s perception of the risks, both financial and physical, associated with lifestyle choices is inherently unstable.

The widespread belief amongst healthcare providers is that the impact of Health 2.0 on their business models will be gradual – giving the provider plenty of time to adapt. In 1993 a large newspaper publisher asked me to describe to them the potential impact of digital technology on their regional titles. The easiest way to do this was to set up a prototype online edition of one of their publications. The title even included an element of social media – a video conferencing application that enabled school children in England to talk to their peers in Germany – funded as part of an EU project. The publisher was unsure how they could derive revenue from an online newspaper so continued investing in print technology. The logic was that traditional newspapers would continue to produce cash for another twenty years – albeit the actual amount declining steadily.  It was difficult to argue with this as two decades ago most change in the commercial world was gradual and linear. However in the online age the exponential expansion (and sometimes contraction) of revenue has become the norm and the newspaper publisher’s cash cow began to run dry after ten, rather than twenty, years. Change in the healthcare market is likely to be just as dramatic – especially as many providers are already running on empty.

An obvious target market for a GP practice’s Health 2.0 service would be the Sixties generation. They signed up to the ‘Hope I Die Before I Get Old’ outlook on life and are now desperately looking for a get out clause – the obvious one being to delay getting old for as long as possible. Selling health and well-being to this demographic should be relatively easy. Possible platforms for these services are social networking tools such as Facebook, which has scaled rapidly and has the potential to become ubiquitous – it also has experience in hosting the type of database that could be used to store personal health data. Skype is also a contender with its low cost video conferencing technology.

As in the past, where the Sixties generation goes the rest of society will quickly follow and it should not be too long before ‘health and well-being’ are being sold to the younger generation. At some point in this progress towards next generation health investors will come to regard services set up by GPs as an opportunity on a par with the one Goldman Sachs identified in Facebook. Perhaps healthcare providers should take note of two other lines that U2 song:-

‘Who’s to say where the wind will take you.

Who’s to say what it is will break you.’

Peter Kruger, has worked in the healthcare IT industry for ten years. Prior to this he founded the medical imaging company, Digithurst. He is author of the report. “Alpha Moms Become Alpha Daughters.”  and is currently developing a healthcare and social support service called Alpha Daughters.