The Healthcare Innovation Challenge Looks to Transform

I have expressed the opinion in numerous posts on this blog that true innovation in health care will not come from big providers, big health plans, and certainly not from big government. But, maybe, just maybe, it will come from a group of medical students. At least we will have the chance to find out when the judges decides who will win the 2009 Healthcare Innovation Challenge.

The Healthcare Innovation Challenge is being operated by Idea Crossings and the Arizona State University College of Nursing and Healthcare Innovation. Innovation, entrepreneurship, and collaboration will come together in a forum designed to transform the quality, efficiency, safety, and effectiveness of healthcare.

Here’s the idea. Cross-disciplinary teams of three to five graduate students will choose one of three question categories, write a three page concept plan, and submit the plan to the judging panel. Six teams will go to the final round where they will present their ideas at a one-day Healthcare Innovation Conference. This year, $8,000 in cash will be awarded to the most innovative teams for developing a groundbreaking business model, product, service or strategy for healthcare.

For more information check out the website at:

Health Innovation Take: This is an exciting initiative and I can’t wait to see the ideas that come out of this competition.

Tale of Two Trade Groups.

Last week ended with an interesting exchange between the trade groups that represent the nation’s health insurance plans over the route to take for solving the country’s health care issues.

First, America’s Health Insurance Plans (AHIP), and the Blue Cross and Blue Shield Association, said Thursday that they would accept a requirement that they offer coverage to applicants with serious health problems if the government would set up a risk-adjustment mechanism for insurers and require all individuals to own health coverage.

These statements were quickly countered by The Council for Affordable Health Insurance (CAHI), an Alexandria, VA-based groups that promotes free-market approaches to improving the U.S. health care system. CAHI said it disagrees with other insurance groups’ willingness to accept more government involvement in the health care system.

With health care reform aimed at creating some form of universal coverage set to come barreling out of Congress in January, both trade organizations are positioning themselves for the battles to come.

On the one hand the AHIP membership is sending the signal that they are prepared to accept all comers, but only if the government does its part and mandates that everyone have coverage and that there is some mechanism for dealing with the real train wrecks that will come looking for coverage.

On the other hand CAHI points out that this plan opens the door to more government regulation including defining what would count as qualified health coverage. This, they say, will lead to interest groups seeking to force qualified plans to cover their many different products and services and could end up creating barriers to, or a ban on, features such as health savings accounts or health reimbursement arrangements.

CAHI says the government could do more to expand access to coverage by providing subsidies for individuals who cannot afford coverage and supporting risk pool insurance programs designed for individuals with health problems.

Health Innovation Take: AHIP should be commended for taking the first step toward working with lawmakers to come up with a health care system that would achieve universal coverage while it preserves the current multi-payer system. However, where is the plan to manage utilization and to lower costs? As CAHI rightly points out, a mandate will definitely involve government in making the rules about coverage. Look no further than Massachusetts if you need proof. Innovation can not be legislated or regulated. True reform will come from allowing employers and health plans to work together within the framework of the marketplace to develop programs that address the utilization and cost issues that are prompting many employers to drop their coverage in the first place.

You Can’t make it any More Simple

Sometimes you see an idea delivered with so much clarity and succinctness that it makes you stop and wonder why no one has said it before and then repeated it over and over until it sinks in. Such an idea confronted me this morning as a read a post on the Tax Update Blog with the intriguing title: Now that Health Savings Accounts are growing in popularity, will they be snuffed?

The article quotes an advisor to President-elect Obama as saying that “medical benefits that shift costs to employees” would not be consistent with the upcoming President’s position on health care.

But here comes the really good part of the post; a retort that is so simple and clear that it cuts right to the heart of the issue:

Hey, Mr. “advisor to the President-elect”: employees already bear 100% of the costs of medical benefits. Benefits aren’t paid using the cash that grows on a magical benefits tree that grows in the H.R. department. When hiring an employee, an employer looks at the total cost of the employee package – wages and benefits. If you want to put more benefits in the package, you have to take out wages to make room for them. More benefits = less wages. If you have to make a profit to keep going – a constraint unfamiliar to many in the public sector – there is no third way.

It just doesn’t get any more simple than that.

The Winds of Health Care Change

I just touched down from a trip to Orlando to attend the Employers Council for Flexible Compensation’s post election session called The Winds of Change. It was a meeting designed to unpack the results of the national election results and to try to get a sense of what it all means for the future health care in general and tax-preferred benefits plans (FSA, HRA, and HSA) in particular.

The keynote speaker was Grace-Marie Turner, president of the Galen Institute, a public policy organization founded in 1995 to promote informed debate over free-market ideas for health reform.

Ms. Turner recapped some of the health care reform proposals that have been flying around Washington since the Democratic victories earlier this month. Ideas like:

  • Community rating
  • Subsidies for low income people
  • State Children’s Health Insurance Program (SCHIP) reform and mandated insurance for children
  • An insurance exchange
  • Pay or play mandates

All of these are anathema to anyone who has advocated for free-market reforms to attack the two-headed headed monster (access and cost) that health care has become in this country. Turner pointed out the real culprit to be poor lifestyle choices by citing a study that found that behavior contributed to 40% of the country’s early deaths versus 10% that were attributed to a lack of health care. Another key statistic she cited was a survey showing that 80% of Americans think that the current system is good to excellent.

So, if 40% of our health problems are caused by our bad behaviors and 80% of us think that the current system is ok, should we look to through out the whole system in favor of something that will probably not work as well and will certainly cost more?

Instead of making fundamental changes to the current system, Turner suggested making incremental changes to the existing employer-based system. Changes like:

  • Creating fairness in the current tax subsidies for the self-employed
  • Guaranteeing access to health coverage to hoses with pre-existing conditions
  • Finding new ways for people to group together to buy more affordable coverage such as churches and civic organizations.

Health Innovation Take: Health care reform should be a priority and it is inextricably connected to fixing the economy, so let’s hope Washington takes Turner’s sensible approach of keeping the best of what we have and making incremental improvements to the system that will effectively address the issues of access and cost. Downsizes, Revamps Strategy

Back on February 5, 2008, I posted an article in this space with the headline: Understands Healthcare Consumerism and Transparency. I was very excited about the new website and how its creators – consumer-directed health care advocates formerly with Definity Health – wanted to do for health care what Travelocity did for airline tickets.

The concept was simple. Here it is as described in an article in the

Ankle pain? Click on the matching body part and two options pop up. For $199, doctors at Sports and Orthopaedic Specialists will check out your ankle, review your medical history and recommend treatment. TRIA Orthopaedic Center lists a similar package for $213 – and a reminder that they are the team doctors for the Vikings and Timberwolves. What did patients think? Read user reviews. Will your health plan pay? Tap in your details and find out.

In February, I wrote how I thought that was consumerism and transparency delivered in a way that a layperson can understand and at a price point where it makes sense for an individual to spend some time shopping around. I pointed out that not too many people ever tried booking their own flights on the green screens of the old Saber System. Nor did they shop for the best fares when there was a travel agent (insert insurance carrier) sitting between them and the information. I also pointed out that this was an example of how innovation in health care is not going to be driven by the big carriers and the big health care providers. (Should I have added big government?) It will come from small entrepreneurial groups like the team that created Carol.

So, it was with some regret that I read today that Carol has cut 25 jobs, or a quarter of its workforce, and is revamping their strategy. The Star Tribune reported that, despite aggressive advertising, the Bloomington, MN-based Carol has struggled to attract users to its year-old website, and that medical provider never got comfortable with the idea of posting their services online for comparison shopping.

The newspaper reported that Carol’s two consumer websites — in the Twin Cities and Seattle — will remain up. But the company will now focus on consulting and software services aimed at hospitals, clinics and physicians. It will help providers repackage services in ways patients can understand, rather than in the current system organized around insurance payments. It may also rent the Carol software platform for hospital and clinic groups to include on their own websites — backing off from the original goal of allowing users to compare directly among providers.

It is a shame that such a well conceived and well financed ($30 million in seed money) was not successful in getting us to think differently about how we purchase healthcare services. But as Carol’s chief executive, Tony Miller told the Star Tribune, “We are taking a step back.” He said that Carol will now concentrate on “how do you engage at an earlier level and how do you do something that isn’t threatening.”

Sometimes we forget that we need to crawl before we walk. To expect that providers would suddenly get how to package and price their services for retail and that patients would readily become consumers might, in retrospect, have been kind of a stretch. The good news is that the management of Carol realized their mistake before the money ran out and have been able to make a course correction. The vision is still clear, but now it is with the realization that everyone involved in this value chain needs some time to get themselves up the learning curve.

Army Care Centers Demonstrate Failure of Single Payer Health Care

Should there be any doubt as to the outcome of a government-run single payer health care system in the US, one need look no further than a story by Lolita C. Baldor that appeared in the Seattle Post-Intelligencer on Monday. The headline read: ‘Everybody Wants In’: Too Many Soldiers for Army’s Care Centers. The story line goes this way: In a rush to correct reports of substandard care for wounded soldiers, the Army flung open the doors of new specialized treatment centers so wide that up to half the soldiers currently enrolled do not have injuries serious enough to justify being there.

According to interviews and data provided to Associated Press, the number of patients admitted to the 36 Warrior Transition Units and nine other community-based units jumped from about 5,000 in June 2007, when they began, to a peak of nearly 12,500 in June 2008. The AP learned that just 12 percent of the soldiers in the units had battlefield injuries while thousands of others had minor problems that did not require the complex new network of case managers, nurses and doctors, according to Brig. Gen. Gary Cheek, the director of the Army’s warrior care office.

According to the report, Army leaders are now putting in place stricter screening procedures to stem the flood of patients overwhelming the units — a move that eventually will target some for closure.

Health Plan Innovation Take: The experience that the Army has had as a single payer system is indicative of what would occur on a larger scale if the government were in charge of providing health care. There would no doubt be cycles of rationing and substandard care that would lead to protests that would lead to a free-for-all attitude and incredible costs, and then the cycle will repeat. There has to be a better way.

You can find the article here: