June 30, 2011
a. Larry Page
b. the Wicked Witch of the North
c. a broken U.S. health system
d. an ignorant public
According to the Technology Review it was C and D. As the magazine reported yesterday, “Google’s free online service lets people upload, store, analyze, and share their health information. But there are hundreds of different health-care institutions in the U.S. that use different systems to record and store data, and many doctors don’t use electronic records at all, making the task of retrieving and updating data extremely difficult for the average person…”
The article quotes Isaac Kohane, a CIO at Childrens Hospital of Boston explaining that it will be at least five years before data flows smoothly enough to make something like Google Health worthwhile. “Google is unwilling, for perfectly good business reasons, to engage in block-by-block market solutions to health-care institutions one by one. And expecting patients to do data entry is not a scalable and workable solution.”
It certainly is true that today’s healthcare IT marketing efforts need to be on a “block-by-block” basis. Google is just the latest in a long line of large companies (Sprint) and entrepreneurs (Jim Clarke, Steve Case) who saw the trillion dollar healthcare market and thought they could make a fortune by introducing a cool product and outsmarting all the luckless plodders who ran the hundreds of existing healthcare IT companies.
Closing anecdote: about six years ago, I was consulting for a large PR agency and we were summoned to a meeting with a marketing team from a Fortune 500 company that was, yes, going to jump into healthcare with a revolutionary product.
About 30 minutes into the meeting, one of the corporate guys wrote on white board, “Focus on key customers: get list of all medical groups with 5,000+ physicians.”
I knew right then this project was doomed. There’s only medical group in the country with anything close to that many physicians, Kaiser (and good luck making money on a contract with them).
That’s how these Fortune 500 companies think. They know better than idealistic, stick-in-the-mud hospital CIOs and physicians. With their “innovative approach” and a clever marketing campaign they can gain instant market share. Besides, a hospital operating room photo will look good on the cover of the annual report.
June 19, 2011
TechCrunch reported last week on a new “seed accelerator” or mini-VC fund called Rock Health. According to the website,
“Rock Health has designed a program, not unlike Y Combinator… that accepts applications from startups during a month-long period… The panel than selects 10 startups to enter into a five-month program that includes a $20K grant and office space in San Francisco.”
The program’s initial batch of ten has been selected and TechCrunch gave previews of eight of the “cool health startups.”
–CellScope, which builds systems for at-home disease diagnosis using smart phone cameras connected to a web platform.
–Pipette allows doctors to monitor and educate patients throughout the course of their care using smart phones and tablets, helping to improve recovery and outcomes,
–HealthinReach will create the first transparent marketplace for healthcare. Patients who pay out-of-pocket medical costs can learn about doctors and dentists based on experience, reputation and procedure prices, and schedule in confidence at pre-negotiated group discount rates.
TechCrunch also notes that Venture funding in the Web grew by over $1 billion from the first quarter of 2010. However, health and medical related investment was on the low-end, receiving only 3 percent of venture funding over the last year.
All of the companies listed sound interesting, however, their odds are very, very long. The healthcare marketplace is large, but very risk-averse and has been the graveyard of many savvy investors including Scott Case (AOL) and Jim Clarke (Netscape).
June 14, 2011
It’s good news, bad news for the meaningful use program.
Good news: on May 19 CMS announced it had awarded $75 million in Medicare MU awards to eligible providers. The maximum award per physician is $18,000, but you have to have beaucoup Medicare patients to get the full award. Assuming the average EP gets $15,000, that works out to 5,000 physicians.
And that May 19 announcement covered just the first two weeks of the program, so presumably several thousand more have signed up since.
Bad news: the American Hospital Association said today it does not want to go to the Stage 2 requirements (now set for 2012) until 75% of eligible hospitals and EPs have qualified.
Whoa! Considering there are potentially 300-500,000 physicians who can be EPs, we are a long way from reaching 75%.
There are two huge barriers. First, many solo practitioners believe they cannot afford an EHR system costing $20,000 or more to install and another $1,000 per month to maintain. Second, once the physician installs the certified EHR system, he has to adjust his workflow to reach the levels needed for meaningful use.
Fortunately, there are a number of affordable, low-cost easy to use EHR systems on the market.
June 6, 2011
The McKinsey Quarterly has issued a new study with some stunning numbers. The consulting firm interviewed 1,300 employers and found that 30 percent said they will definitely or probably stop offering health insurance for their workers after 2014 when the reform measures fully take effect. Among employers with a high awareness of the reform law, this proportion increases to more than 50 percent.
Although this projection may sound very logical to those with knowledge of employers and benefits management, the number is much higher than previous forecasts. For example, the Congressional Budget Office has estimated that only about 7 percent of employees currently covered by employer-sponsored insurance (ESI) will have to switch to subsidized-exchange policies in 2014.
I spend nine years at CIGNA Healthcare and met many benefit managers. The McKinsey numbers sound very reasonable to me. Despite some protestations by large employers, most medium and smaller employers have been looking to ditch this responsibility for a long time. In addition to being very expensive, health benefit management can lead to friction with workers, who may be disappointed with coverage decisions.
Note that with the exception of Hawaii, no state currently requires employers to provide health insurance. Instead, it has been viewed as a moral or competitive obligation. As the McKinsey report notes,
“Health care reform fundamentally alters the social contract inherent in employer-sponsored medical benefits and how employees value health insurance as a form of compensation. The new law guarantees the right to health insurance regardless of an individual’s medical status.
“ In doing so, it minimizes the moral obligation employers may feel to cover the sickest employees, who would otherwise be denied coverage in today’s individual health insurance market. “
The report adds that the current reform law “preserves the corporate tax advantages associated with offering health benefits—except for high-premium ‘Cadillac’ insurance plans.”
Given the current demands to reduce the government deficit, it is probable the corporate tax deduction for health insurance will be eliminated at some point in the future. That would really trigger a rush to drop benefits.