The use of the term ‘innovation’ is getting pretty worked up lately. In fact, almost every healthcare entity whether health plan, health system, IDN or even ‘mature ACO’ (morphed from an IPA or risk bearing PHO “chassis” or “carcass” as the case may be) seem to have anointed a ‘CIO’ as in ‘chief innovation officer’to steward the critical transformation from volume-to-value during a yet to be determined period of conflicting if not schizophrenic incentives coupled with its legacy cultural inertia.
In fact some institutions via branded ‘Centers for Innovation or Transformation‘ have made substantial investments in people and infrastructure (“bricks, sticks and platforms”) as well as the promise of the essential ‘firewall inoculation’ and separation from the ‘mother-house’ to catalyze the required re-engineering during a likely period of cannibalization of traditional revenue streams.
So the ancient Chinese curse (paraphrased below) most likely applies here:
..we live in ‘interesting times’ with both ‘danger and opportunity’ before us.
For those tasked with this challenge and fortunate enough to participate in conferences (Health 2.0, Exponential Medicine, Health Datapalooza, TEDMED to name a few of the trophy organizers) at the disruptive and transformational tip of the spear, the nature of the challenge including opportunities to meet and leverage connections of like minded and focus colleagues is a distinct strategic advantage.Continue reading…
Early this week Greg Masters and Pat Salber chatted with me for a fun convo about EMRs, NOLA, HIMSS, and alot more. It’s part of their overall series for the HIBCtv (Health Innovation Broadcast Network Consortium). And be warned they are giving me keys to the car for 90 minutes at HIMSS next Weds! You should be able to click on the player above to hear. If not click to this.
This is the dumbest idea I’ve heard since “I’m going to invest all my money in Facebook’s IPO and get rich!”
Here are six reasons why:
1) You’re too late. Health insurance was an attractive and profitable business in the 00s, but after passage of the Accountable Care Act it’s been commoditized.
First, the health plan business model of the past decade is dead. That model was — “Avoid and shed risk” — or more simply, avoid insuring people who are already sick (preexisting conditions) and get rid of people who become sick (rescissions). Under the ACA, health insurers must take all comers and they can rescind policies only for fraud or intentional misrepresentation.
Second, the ACA institutes medical loss ratio restrictions on health insurers. Depending the the type of plan, insurers now must spend at least 80-85% of premium dollars on paying medical claims; if they spend less, they must return these “excess profits” as rebates to customers. As a result, health insurance has become a highly regulated quasi public utility.
This is why you see health plan CEOs like Mark Bertolini of Aetna declaring “Health insurers face extinction”. The old health insurance model is on a burning platform, and health plans are reformulating themselves as companies involved in health IT, analytics, data mining, etc.
2) You have bigger fish to fry. Focus on developing accountable care capabilities. The AHA estimated that hospitals will need to spend $11-25 million to develop an ACO. Get going. Continue reading…