The Health Care Blog – Page 1015 – Everything you always wanted to know about the Health Care system. But were afraid to ask.

Above the Fold

HEALTH PLANS: Time to cut a deal?

Mar 11, 2008• 26

By Matthew Holt

There’s carnage amongst health insurer stocks on Wall Street this morning. For a long while I’ve been saying that the health insurer party was too good to last and in the past year things have certainly cooled down. Hanging over the industry has been an inability to extend itself further into the commercial market (commercial enrollment has been flat over the course of the boom—and now we’re going into a recession) and of course the lingering concern that payments for Medicare enrollment will be cut at some point.

Last night Wellpoint had at least the first shoe drop when it announced that a combination of higher medical costs and lower than expected enrollment would mean that it was going to miss its profit numbers. The stock is off more than 25% and most of the rest of the sector is well off too. Now this wasn’t a huge cut in the numbers—the reduction in forecast profits is under 10%. But Wall Street as you know hates the concept that earnings will diminish, and Wall Street doesn’t understand health care anyway.

Wall Street likes earnings machines that continually increase profits. To be such an earnings machine that you need to be able to sell an increasing number of widgets to the same people, or widgets to new people, or raise the price of the widgets you’re selling to the same people. Health plans can’t really do the first. They have done the second only because of massive subsidies in the Medicare market since 2004 and they look like they’re running out of steam in doing the third—although it’s been a darn good run! (Medical loss ratios are higher on on a base of greater overall revenue than they were 5 & 10 years ago, but that can’t go on for ever and that appears to be where the problem this morning lies).

And of course the political pressure on all the ways health plans make money continues to grow. Those games in the individual market are being found out, the games with opaque pricing are being investigated as consumer fraud, and although they’ve staved off Medicare private payment cuts for now, that issue isn’t going away.

So perhaps it’s time for health plans to consider their potential future as a regulated industry—one that will be forced to compete on issues that actually matter for the good of the health care system and the nation. And perhaps it’s time to prepare to really cut a deal on that, rather than propose a fake plan that takes but doesn’t give.

Now, there’s no way that under such an approach insurers will be allowed to make the kind of profits they’ve seen over the last five years, and of course Wall Street will freak out. But then again, perhaps there’s no time like the present to tell Wall Street the really bad news.

Health 2.0: The Long Tail of Healthcare

Mar 10, 2008• 3

By Scott Shreeve

Long Tail: New business phenomenon in which low distribution and storage cost enable significant profits to be realized by selling small volumes of niche items instead of large numbers of popular items.

The potential for online retailers to make more money than their bricks and mortar counterparts because there is virtually unlimited “shelf space” to offer products.

Chris Anderson of Wired magazine editorial fame, coined the term and described the phenomenon in a 2004 article called The Long Tail. For the unfamiliar, the Long Tail is best described as the ongoing niche interest in something once the large pulse of public interest has died off. Essentially, so the theory goes, when distribution and storage costs of a business are very low, they can realize significant profit by selling small volumes of hard to find items to many customers instead of selling large volumes of a few popular items. Given the length, or the area of the curve under the “tail”, it turns out there is actually a greater opportunity for profits pursuing this niche strategy if the right distribution and cost elements exists.

The Long Tail Explained. As demonstrated by the above example, while Walmart sells the bulk of popular music at their stores, the distribution and storage costs elements of online retailers like Rhapsody are such that they can actually mine a very large, underserved niche market that proves to be just as, if not more, profitable.

In my closing remarks yesterday on the final reactor panel at the Health 2.0 conference (totally off the cuff by the way as I was unaware I was going to have an opportunity to make a statement), I had mentioned this concept. However, given my uncharacteristic lack of preparation and desire to offer a coherent closing statement. I have including the following:

Monday Freedom Watch

Mar 10, 2008• 3

By Eric Novack

From Canada:

“Liberty – hostage to medicare”

“The Ontario Superior Court on Thursday rejected a Sikh man’s claim to a
religious-freedom exemption from the province’s law on mandatory
motorcycle helmets. Supporters of safety as the holiest of political
principles upheld the ruling as a triumph of reason; Sikh organizations
denounced it as an act of naked discrimination against their faith. Few
stepped forward to defend the idea that an adult in a free society
should be able to wear what he wants and take the risks he wants where
only his own body is concerned…”

Read the whole thing… and comment here…

As we consider health care reform—shouldn’t we protect freedom first?

Or: do we prefer this? Or, this?

Perhaps we’ll just end up with this.

HEALTH PLANS: Three Inconvenient Truths: The Future of Health Plans in a Connected World

Mar 7, 2008• 25

By Matthew Holt

In the same vein as Wyden’s speech to AHIP yesterday, this is the talk I gave to the Western Regional Conference (a group of Blues plans) on October 14, 2007.

Hello my name is Matthew Holt and I’m here to tell you the truth. Now I know that you are a bunch of senior executives at health insurance companies, so you may not be very used to that….

I also understand that the person I’m replacing as a speaker here is Governor Arnold Schwarzenegger, who starred in some famous movies involving the end of the world and invasions by aliens, predators and terminators–something which might seem metaphorical to you after you’ve heard my talk.

I’m here today to tell you three potentially inconvenient truths.

First, you’ve done very, very well for the past several years. But the chances that you will be able to keep running your businesses in the same manner in a decade or so are very low. In fact if you keep running your businesses the same way the chances are good that you won’t be in business. That may not matter to those of you close to retirement, but it probably does matter to everybody else.

HEALTH PLANS: Ron Wyden on Health plans

Mar 7, 2008• 3

By Matthew Holt

Just for Friday, no Health 2.0 stuff. Instead two speeches, one by Oregon Senator Ron Wyden (D) last week to AHIP. The other from me to the Western Blues meeting late last year. This is Wyden’s

In less than a year, America will watch a new president be sworn into office, and exactly one year from now that new president will be on day 44 of his/her first 100 days – their so-called “honeymoon” with the public. I don’t think that I have to tell you, that for the cause of health care reform, those 100 day will be very important. I believe, however, that the success of health care reform hinges to a great extent on how your profession responds to the efforts of a new president and a new Congress.

If your profession decides – as it did in 1993 and 1994 – to go out and spend millions of dollars fighting to preserve the status quo, you may delay reform for awhile but you will increase the likelihood of a government run health system with no role for the private sector.

So, this morning, I’m going to make the case for your taking a different approach. I’m going to make the case why a fundamentally different private health insurance market would be good not only for the American people but also for the many responsible persons who work in the private health insurance industry. Many of whom are in this room today.

I don’t have to remind you what the public opinion is of the private health insurance industry. It’s not just “Sicko,” Denzel Washington movies and Los Angeles Times investigative reports. Lots of presidential candidates can tell you that the easiest way to win applause is to “go negative” on private health insurance.

HEALTH 2.0/CONSUMERS: Susannah Fox on e-Patients and Health 2.0

Mar 6, 2008• 1

Two fantastic video clips from a fantastic researcher. (Susannah runs the health research program at the Pew Internet and American Life program.

Susannah’s (brief) keynote including the seven word meme that dominated the day!

Her interview afterwards:

TECH: Scott & me on Google and Microsoft

Mar 6, 2008• 1

Scott Shreeve is blogging up a storm these days. Where he finds the time I don’t know. Today he has an excellent piece called Getting Giga Over Google (Again) which compares the Silicon Valley giant’s strategy with that of its northern competitor. Yesterday I put one up on the Health 2.0 Blog on the same topic but from a different angle. Both well worth a read. I absolutely welcome the market entrants

However, Scott says “enough” with the privacy debate. But somehow I can’t quite get there yet. Every single journalist who ever writes about this leads and ends with privacy—and appears to have no other lens through which to view this issue.

I really have something to get off my chest about that. So stay tuned.

HEALTH 2.0: Indu Subaiya’s take

Mar 5, 2008

Thanks to Michael for his article and thanks to everyone for participating in such a fantastic day and a half. We’re just getting the first round up of coverage (here’s the San Diego Union-Tribune’s piece which was on the Front Page! (The O’Reilly conference down the street was only in the business section!!). And here’s my Health 2.0 Co-Founder Indu Subaiya telling icyou about the conference:

The rest of the many icyou videos are here. Many thanks to Nina and the gang from icyou! (We’ll be posting the "star wars" video they made for parent company Benefitfocus soon too!)

Health 2.0 – An Uncompleted Van Gogh

Mar 4, 2008• 12

By Michael Millenson

Imagine today’s presentations at Health 2.0: User-Generated Healthcare, as looking the way a painting by Vincent Van Gogh might look if he had not yet stepped back from the canvas.

In our painting, there is genius at work — each splotch of paint, each dab of color makes a statement, much as each Health 2.0 company presents its vision and its product. But somehow, despite all the individual needles, the haystacks are lost. Where is the vision that helps us see the health care system as a whole in a new light? Is it just too early in the process – with a little more pointillism, the point of it all will become clear — or is the problem that we are waiting for Van Gogh?

Health 2.0 companies, it seems, are addressing specific and limited problems – albeit quite important ones — with gusto. Putting it all together and transforming health care is nobody’s business plan.

Over the past 24 hours, Matthew and Indu put on an intense and fascinating meeting. Since they could not simultaneously “do” and write about the “doing,” they have asked Your Correspondent to do the latter. After nearly 10 hours of content bombardment, I can tell you there are some gung-ho entrepreneurs ready to drag consumerism into health care. Empowerment! Flexibility! Personalization! Wellness! Choice! Value! I and the rest of the under-65 (mostly well under 65), upper-middle-class (and not a few lower upper class) crowd are ready to throw our Power Bars into the air and cheer aerobically.

But wait: will these models work when “consumers” become “sick people,” and these sick people – old, with poor reading skills, not that well-educated, a little bit cowed by the men in the white coat — need not health care but “medical treatment”? It’s a question that nags throughout the day. This is a crowd that wants to both do well and do good, gosh darn it. We are a movement we are told – but, really, with Matthew and Indu mandating 8-minute bio breaks for a crowd of 300, is anyone having a movement? – but we are also a dog-and-pony stage set for new business concepts. Elevator pitches and elevated sentiments happily co-existing.