Tag: Health care Disruption

What the Walmart Exit from Primary Care Means

May 27, 2024

By JEFF GOLDSMITH

There has been a lot of commentary on the largest “disrupter” candidate in healthcare, retail giant Walmart, throwing in the towel on their primary care clinic and virtual health businesses. As someone who has watched “retail health” for close to forty years, Walmart’s decision did not surprise me. This is disciplined company that has chosen its niches in healthcare carefully. And the fact that they could not make primary care work with their customer base makes all the sense in the world.

I am a Walmart shopper. I visit my local Walmart at least once a week, and buy all my commodity items there, where they are cheaper than anywhere else in town. I also buy my drugs at Walmart, and got all my immunizations (including four COVID shots) from their pharmacy. I love my local Walmart- linoleum, fluorescent lighting and all.

The shoppers in Walmart that I see every week are not “poor”. They are a cross section of the community I live in. If I am accused of a crime, they are the “jury of my peers” that I will see in court. What I see in Walmart: signs of serious family financial stress, a product of a near twenty percent increase in the cost of everything since the pandemic began. They are in Walmart for the same reason I am: they hate wasting money and their shopping dollar goes further in Walmart than anywhere else in the community. I will wager that every single uninsured person in the US, perhaps more than 32 million after the post-COVID Medicaid purge, is a Walmart shopper!

Walmart never articulated exactly the strategy behind its clinics. Primary care was never going to be profitable as a stand alone product, but rather was going to be a loss leader to something else: more prescriptions for its pharmacy, (like CVS?), more pull-through from products required by diagnoses, longer store visits. Or, as some suggested, Walmart’s clinics could have been a potential entry point into a yet-to-be-acquired Medicare Advantage plan (Humana or CIGNA were both in play), or a collaboration with MA giant, United Healthcare. Whatever the benefits expected, early losses far exceeded forecasts.

Walmart clearly underestimated the revenue cycle overhead associated with accepting Medicaid or Medicare, despite retaining OptumInsight to help with their revenue cycle issues. Walmart also likely overestimated both volumes and the cash yield on what they intended to be $40 primary care visits. Many health plans unthinkingly apply a copayment to primary care visits, an increasingly potent demand destroyer in this inflationary age. That copay or the full $40 for the abovementioned uninsured folks was going to have to compete for increasingly scarce paycheck dollars with everything in that cart. In that competition, medical care is probably going to end up being deferred, until it becomes unavoidable. And when it is unavoidable, they will go to the “unavoidable” healthcare place, their local hospital ED.

Getting the Future of Health Care Wrong

May 22, 2024

By KIM BELLARD

Sure, there’s lots of A.I. hype to talk about (e.g., the AI regulation proposed by Chuck Schumer, or the latest updates from Microsoft, Google, and OpenAI) but a recent column by Wall Street Journal tech writer Christopher Mims – What I Got Wrong in a Decade of Predicting the Future of Tech — reminded me how easily we get overexcited by such things.

I did my own mea culpa about my predictions for healthcare a couple of years ago, but since Mr. Mims is both smarter and a better writer than I am, I’ll use his structure and some of his words to try to apply them to healthcare.

Mr. Mims offers five key learnings:

Disruption is overrated
Human factors are everything
We’re all susceptible to this one kind of tech B.S.
Tech bubbles are useful even when they’re wasteful
We’ve got more power than we think

Let’s take each of these in turn and see how they relate not just to tech but also to healthcare.

Disruption is overrated

“It’s not that disruption never happens,” Mr. Mims clarifies. “It just doesn’t happen nearly as often as we’ve been led to believe.” Well, no kidding. I’ve been in healthcare for longer than I care to admit, and I’ve lost count of all the “disruptions” we were promised.

The fact of the matter is that healthcare is a huge part of the economy. Trillions of dollars are at stake, not to mention millions of jobs and hundreds of billions of profits. Healthcare is too big to fail, and possibly too big to disrupt in any meaningful way.

If some super genius came along and offered us a simple solution that would radically improve our health but slash more than half of that spending and most of those jobs, I honestly am not sure we’d take the offer. Healthcare likes its disruption in manageable gulps, and disruptors often have their eye more on their share of those trillions than in reducing them.

For better or worse, change in healthcare usually comes in small increments.

Human factors are everything

“But what’s most often holding back mass adoption of a technology is our humanity,” Mr. Mims points out. “The challenge of getting people to change their ways is the reason that adoption of new tech is always much slower than it would be if we were all coldly rational utilitarians bent solely on maximizing our productivity or pleasure.”

Boy, this hits the healthcare head on the nail. If we all simply ate better, exercised more, slept better, and spent less time on our screens, our health and our healthcare system would be very different. It’s not rocket science, but it is proven science.

But we don’t. We like our short-cuts, we don’t like personal inconvenience, and why skip the Krispy Kreme when we can just take Wegovy? Figure out how to motivate people to take more charge of their health: that’d be disruption.

We’re all susceptible to this one kind of tech B.S.

Mr. Mims believes: “Tech is, to put it bluntly, full of people lying to themselves,” although he is careful to add: “It’s usually not malicious.” That’s true in healthcare as well. I’ve known many healthcare innovators, and almost without exception they are true believers in what they are proposing. The good ones get others to buy into their vision. The great ones actually make some changes, albeit rarely quite as profoundly as hoped.

But just because someone believes something strongly and articulates very well doesn’t mean it’s true. I’d like to see significant changes as much as anyone, and more than most, and I know I’m too often guilty of looking for what Mr. Mims calls “the winning lottery ticket” when it comes to healthcare innovation, even though I know the lottery is a sucker’s bet.

To paraphrase Ronald Reagan (!), hope but verify.

Tech bubbles are useful even when they’re wasteful

Healthcare has its bubbles as well, many but not all of them tech related. How many health start-ups over the last twenty years can you name that did not survive, much less make a mark on the healthcare system? How many billions of investments do they represent?

But, as Mr. Mims recounts Bill Gates once saying, “most startups were “silly” and would go bankrupt, but that the handful of ideas—he specifically said ideas, and not companies—that persist would later prove to be “really important.”’

The trick, in healthcare as in tech, is separating the proverbial wheat from the chaff, both in terms of what ideas deserve to persist and in which people/organizations can actually make them work. There are good new ideas out there, some of which could be really important.

We’ve got more power than we think

Many of us feel helpless when encountering the healthcare system. It’s too big, too complicated, too impersonal, and too full of specialized knowledge for us to have the kind of agency we might like.

Mr. Mims advice, when it comes to tech is: “Collectively, we have agency over how new tech is developed, released, and used, and we’d be foolish not to use it.” The same is true with healthcare. We can be the patient patients our healthcare system has come to expect, or we can be the assertive ones that it will have to deal with.

I think about people like Dave deBronkart or the late Casey Quinlan when it comes to demanding our own data. I think about Andrea Downing and The Light Collective when it comes to privacy rights. I think about all the biohackers who are not waiting for the healthcare system to catch up on how to apply the latest tech to their health. And I think about all those patient advocates – too numerous to name – who are insisting on respect from the healthcare system and a meaningful role in managing their health.

Yes, we’ve got way more power than we think. Use it.

————

Mr. Mims is humble in admitting that he fell for some people, ideas, gadgets, and services that perhaps he shouldn’t. The key thing he does, though, to use his words, is “paying attention to what’s just over the horizon.” We should all be trying to do that and doing our best to prepare for it.

My horizon is what a 22^nd healthcare system could, will and should look like. I’m not willing to settle for what our early 21^st century one does. I expect I’ll continue to get a lot wrong but I’m still going to try.

The Opportunity in Disruption, Part 2: The Shape of Today’s System

Sep 16, 2019

By JOE FLOWER

The system is unstable. We are already seeing the precursor waves of massive and multiple disturbances to come. Disruption at key leverage points, new entrants, shifting public awareness and serious political competition cast omens and signs of a highly changed future.

So what’s the frequency? What are the smart bets for a strategic chief financial officer at a payer or provider facing such a bumpy ride? They are radically different from today’s dominant consensus strategies. In this five-part series, Joe Flower lays out the argument, the nature of the instability, and the best-bet strategies.

Healthcare CFOs must look at the environment in which their system lives: Since 2007 the actual costs for the average middle-class family for many of the basics of life have decreased in real terms, while their actual costs for healthcare have risen 25%, or even more counting co-pays, deductibles, and out-of-pocket expenses. This long, continuing rise in the costs along with the continuing and increasing unreliability of the healthcare system (“Will it actually be there for me when I need it? Will it bankrupt me?”) create unyielding disruption.

Instability: Omens

I am no fortune teller, but here are some things we can see right now that give us a sense of what’s coming.

Political shift: Public opinion has shifted. When polled about actual policies, healthcare has been cited repeatedly as the top concern of voters across the country. Voters’ top concerns are cost, the risk to patient protections in the ACA, and threats to “reform” Medicare by weakening it. The popularity of “single payer” proposals is a direct result of the cost and uncertainty of healthcare, a simple cry to “Do something!” Under this pressure we are more likely to see drastic solutions proposed and passed at the federal and state level or embodied in regulatory changes and lawsuits against industry practices.
Degradation of American life: With the opioid epidemic, the rise in suicides, the actual regression in life expectancy, and the increasing income and wealth divide, people increasingly feel that the healthcare industry is just not helping. They feel it is in fact part of the problem. The feeling that there is no one there to help us adds to the desperation of many parts of American society and heightens the political cost of the healthcare issue.
Public awareness: Healthcare is intensely personal, visceral. It’s crazy-making. Surprise bills, balance bills, other bills slipped through loopholes in the fine print or even in unwritten industry practices—what the industry considers standard operating procedure, the customers view as shocking, aggressive, and financially crushing.
The rebellion of the buyers: The percentage of buyers—such as employers, unions, and pension plans—telling various polls that healthcare costs represent a major problem for their business has more than doubled in the last five years and is now a majority. Buyers are pushing for choices to control costs and manage quality. They are beginning in greater numbers to demand reference pricing tied to Medicare rates, direct access to competitive bundled prices, and price transparency through centers of excellence, high performance networks and accountable care organizations. Some 65% of employers plan on implementing direct primary care in onsite or near-site clinics by 2020. Buyers are increasingly willing to take their beneficiaries elsewhere if your business can’t meet their demands.

The Opportunity in Disruption, Part 1

Sep 12, 2019• 3

By JOE FLOWER

“It’s a buckdancer’s choice, my friend. Better take my advice. You know all the rules by now, and the fire from the ice.”
— Robert Hunter, “Uncle John’s Band”

Chief Financial Officer: tough gig. Seriously. Whether for a payer or a healthcare provider, the CFO’s job is the exact point where the smiling faces on the billboards meet the double entry, the financing, the payer mix, the debt structure. And it all has to work out in the black. It has to do that sustainably, not only this year but next year and five years from now. Best guess? It’s going to get a lot tougher, with shifting revenue streams, market boundaries, new technologies, growing consumer expectations and uncertain politics.

Raise your hand if you can tell me the significance of these names: Univac, Control Data, Burroughs, Digital, Honeywell, IBM, NCR.

These companies dominated the computer world in 1980. As of 1990, all but IBM were gone, bankrupt, subsumed into some other company, or just out of the computer business. The one that survived, IBM, is the one that said, “Maybe we should at least get a toehold in this new personal computer game, even though it is risky for our main revenue streams.” All the others went “poof.”

A number of factors—radical new technologies with vast potential, ramifying customer frustration, shifting user base—are coming together to put healthcare today at exactly the place the computing world was in 1980.

4 Signs that Disruption is Accelerating in Health Care Delivery

Oct 5, 2018• 6

By REBECCA FOGG

Hardly a day goes by that I don’t read the term “Disruptive Innovation” cited in relation to health care delivery. This might seem like a good thing, given that our expensive, wasteful, and in some cases frightfully ineffective traditional delivery model is in dire need of transformation. However, the term is frequently misunderstood to refer to any innovation representing a radical departure from an industry’s prior best offerings. In fact, it actually has a very specific definition.

Disruptive Innovation is the phenomenon by which an innovation transforms an existing market or sector by introducing simplicity, convenience, accessibility, and affordability where complication and high cost have become the status quo—eventually completely redefining the industry. It has played out in markets from home entertainment to teeth whitening, and it could make health care delivery more effective by making providers’ care processes, as well as individuals’ own self-care regimes easier and less costly. This, in turn, would reduce the need for both more, and more expensive, interventions over time.

Unfortunately, disruption has been slow to emerge in the health care sector. It’s been thwarted by the broader health care industry’s unique structure, which tends to prioritize the needs of commercial insurers and large employers (who pay the most for consumer care) over those of health care consumers themselves. It also stacks the deck against disruptive entrepreneurs, since established providers effectively control professional licensing requirements, and (along with insurers) access to patients & key delivery partners.