Dell Healthcare hired imagine.GO to design and launch a CRM solution for health insurance companies.
Dell Healthcare is one of the largest Healthcare Technology Services providers in the world. They provide the people, processes, and technology to help health plans and large health care providers create the healthcare of the future.
The goal of this project was to define the ideal approach for implementing Salesforce.com as a CRM solution for health insurance companies. We used our 15+ years of implementation experience to not just design and build a technical solution, but also define the best way to implement it for Dell and its health care clients. Our work included how to set client expectations, how to make key design decisions, the best way to set up user roles, and our expert recommendations for customizations to the core Salesforce system.
Our final product produced solutions for health insurance lead management, sales, onboarding, service, and even care management. A high-level view of a few of the features in the solution are shown in the images below.
imagine.GO provides Salesforce CRM implementation services for healthcare companies using our proprietary delivery methodology (Decision Driven CRM Design). We also develop our own Healthcare Applications, currently available on the AppExchange.
Read this blog to learn how retail medicine, a once disruptive healthcare business model, is now in acceleration mode with new variations (pivots) of the model still coming to market.
The team at imagine.GO are experts in the field of retail health. Since 2005, we have helped bring to market over 200 retail health facilities and stores for companies like RediClinic, Smartcare, The Little Clinic, HMSA, Affinity Health Plan, United Healthcare, and others. We have helped our clients develop their retail strategy, design and launch their retail channels, and build retail staffing models.
Big and Getting Bigger
According to the Urgent Care Association of America, the number of walk-in “retail” clinics across the country is now over 9,400. That is a 20 percent increase since 2009. Why is that? We believe one of the reasons is the Affordable Care Act. There are now over 10 million newly insured consumers seeking health care services through primary care channels that are already over capacity. So now the demand is being orchestrated through these retail medicine outlets. So what is the distinction between these retail medicine channels?
Retail Clinics are Nurse Practioner staffed walk-in health facilities located in retail stores, supermarkets, and pharmacies. They treat lower scope ailments and minor illnesses, as well as provide preventative health care services.
Urgent Care Facilities staff Physicians and Nurse Practitioners. They are walk-in health facilities that are usually free standing to treat health problems that require immediate attention but are not life-threatening. Some examples include setting broken limbs, adding and removing stitches, and even giving x-rays.
Walk-in doctor’s offices are Physician staffed walk-in health facilities that do not require visitors to be existing patients. They provide simple medical care in a hurry and treat problems such as mild asthma or minor allergic reactions.
An example of the services that each channel provides is shown in the table below.
Alternatives to ER Care
The current market trend in retail medicine puts a focus on growth in the urgent care space. According to the research firm Pitchbook, more than $3 billion in private equity and venture capital has been invested in new urgent care clinics since 2010. Many analysts believe this has to do with the new metallic plans that offer cheaper monthly premiums in exchange for higher deductibles. Consumers that choose this option are looking for the lowest monthly price and will monitor their costs by self-selecting urgent-care clinics. It is amazing to see the impact of patient choice coupled with market incentives. When the consumer can make their decision, on their own “dime”, they are voting with their pocketbook and choosing the less expensive option.
This trend probably does not bode well for the hospitals that own the ERs – but it does lower the aggregate costs of care, which is something we all need to strive to achieve. And, more importantly, it does so without compromising the quality. Studies show that retail and urgent care facilities offer better quality for their limited scope of services. It stands to reason if you specialize in a procedure, and perform it many times a day then you become very skilled at it. You also manage to offer that quality service at the lowest price.
Additional to cost considerations, patients usually obtain faster medical care at retail settings than they do at either the ER of their primary care doctor. I relate to this inconvenience. Last year I had to wait six months to book my physical at my physician – and I have been with him for five years.
One interesting consideration is that retail medicine facilities stress to their patients the importance of following up with their primary doctor after a visit. I am unaware of any studies that show if these follow-ups are happening – but I doubt it. The same reason that has consumers choosing the lower-priced, faster-serviced option is probably the same one that prevents them from “paying twice” and duplicating effort.
A Smart Venture for Health Plans
Starting in late 2014, GuideWell, a Florida-based heath insurance company with 1/3rd of the market, created a joint venture with Jacksonville-based urgent care center operator Crucial Care. The goal was to develop a chain of GuideWell Emergency Doctors urgent care facilities. One that just launched is a flagship $22 million facility in Winter Park, Florida, located in a retail center with a Trader Joe’s. The 7,500-square-foot building has 15-20 exam rooms and the ability to handle major medical issues — such as heart attacks, strokes, and internal injuries. It also takes care of minor issues like respiratory illnesses, ear and eye infections and sports injuries.
The team at imagine.GO applauds Crucial Care and GuideWell for this innovative effort. It is a good move following on the heels of Optum, a UnitedHealth Group company, which has opened Optum Clinic Urgent Care facilities nationwide.
The economics of this business model is smart. A health plan could save millions by offering their newly acquired Exchange members a place to exercise choice in care at a lower cost facility. For example, it costs about $94 to treat a sore throat at an urgent care center compared with the same treatment at the ER costs five times that amount. This difference saves the plan money and the consumer – a win-win. Because of this fact, we assume (and hope) that the GuideWell Emergency Doctors locations are central to areas of high market penetration for the health plan.
This level of investment seems to be on par with the health insurer’s running model of building premium retail health facilities. Correspondingly, many of the GuideWell Retail Centers are around 5000 square feet and are located in premium outdoor malls as freestanding structures. GuideWell was one of the pioneers in the retail insurance space. They now have a whopping 18 of retail storefronts. Understand, these retail settings are quite expensive. Pretty “high-cotton” as my father would say.
Given the cost of this endeavor, the health plan GuideWell must see a strong return on investment in the urgent care model. For full disclosure, I was the Chief Innovation Officer at GuideWell at the time of the retail store model’s inception, having just come off of helping launch a few hundred convenient care clinics for various companies like RediClinic, SmartCare, and The Little Clinic. I was also the founder and first President of GuideWell, so I have a great affection for this company. However, at the time, I advocated for smaller health insurance stores, and even seasonal pop-up stores, because the economics did not support the larger, permanent settings. Here again, we assume (and hope) the numbers are beneficial to our friends at GuideWell. The 2015 individual enrollment should be out soon, so we plan to see if the store expansion and size have worked to their advantage.
However, adding large format flagship stores is contrary to the current trend of building more moderately sized and often semi-permanent insurance stores. We should know, imagine.GO has helped design and build many of them for companies like large blue plan of Tennessee, HMSA, United Healthcare, Affinity Health Plan, and others. We believe in the retail health model and will be writing much more on the trends and innovations in this space very soon.
One other thing we cannot get our heads around is why the GuideWell Emergency Doctors urgent care centers did not take the blue name like their retail insurance store counterpart. The name GuideWell, while a good one, does not have the market awareness like “blue” We assume it must be a restriction of the parent blue brand (in fact they told us we cannot mention the brand in any way or form in this post). In any case, it seems to us like a missed opportunity. Building brand equity takes time and costs a lot of money.
Furthermore, the GuideWell name does not help the health insurance plan acquire business from its competitors in markets where an affiliated urgent care center exists. Consider the affinity consumers could have when they have a health insurer they like and a care facility they like, and they are integrated. It seems to work for Kaiser Permanente, the highest rated health insurer in the country. The health plan and care provider are once again the highest ranked for customer satisfaction in California according to the J.D. Power 2014 U.S. Member Health Plan Study. This is the seventh consecutive year they have received this honor. We at imagine.GO hate to second-guess, but on this one, we simply disagree with the naming decision.
Further Innovation in the Model
So how else is the retail medicine model changing? In a recent interview by Matthew Holt for The Healthcare Blog, Wal-Mart discussed their business model pivot in this space to a new Walmart-owned and controlled “Wal-Mart Care Clinic”.
Traditionally, Wal-Mart hosted what they called the “Clinic at Wal-Mart”. This business model involved Walmart leasing space in the front of their Wal-Mart Supercenters to a clinic operator, in many cases with a health system as part of the venture. With RediClinic, I was involved in the first ever retail clinics built in a Wal-Mart. Since that time, they have had many partners in locations across the country.
Because Wal-Mart owns the clinics now, they control the price and scope of the services they offer. The price is $4 for employees and dependents on the company’s health plan. For customers, the price is $40. The scope of services includes the standard fair for retail clinics, plus basic chronic condition management services, such as treating patients with uncomplicated diabetes, high blood pressure, and similar conditions. They also offer full point-of-care labs. To build and manage these clinics Wal-Mart partners with QuadMed.
Here is a helpful video that explains this new model:
“We believe there’s a significant opportunity to serve the chronic patient and that we have a lot of the offerings that they would need to be successful in managing that chronic condition together with our pharmacy and the over-counter offerings available in the Walmart store.” Ben Wanamaker, Senior Manager of Strategy and Operations at Walmart’
We at imagine.GO speculate the main reason for building these new clinics is due to the high cost of healthcare for their employees. First, in states that opted out of Medicaid expansion, Wal-Mart workers may not be able to get subsidies for their health exchange plans. Under the Affordable Care Act, subsidies start for those making over $15,900 a year. This fact means their workers will have to pay more out-of-pocket, which they cannot afford.
In a board memo leaked to the press, it was revealed that Wal-Mart workers “are getting sicker than the national population, particularly in obesity-related diseases”. These ailments include diabetes and coronary artery disease. The memo also stated that Wal-Mart workers tended to overuse emergency rooms and underuse prescriptions and doctor visits. To put this in perspective, Wal-Mart spends $1.5 billion a year on health insurance. Wal-Mart also announced its health costs were expected to increase by $500 million in 2014 due to its workers signing up for its health-insurance benefits at a higher rate than expected.
Each of these two interesting pivots on the retail medicine model represents a sensible shift to a now-proven disruption.
The first is from Wal-Mart. They now own health care clinics and can “roll back prices” like they do with everything else. The second is with GuideWell Emergency Doctors. They are looking to steer health plan members to lower health care costs and create savings for the overall health plan.
So whether born out of customer demand or internal cost pressure, both business model pivots look like smart market opportunities. However, the team at imagine.GO feels the GuideWell Emergency Doctors model misses out on the opportunity to drive demand for the health plan due to its naming decision. But either way, we applaud both innovative efforts and look forward to seeing them each succeed in:
1. Improving consumer experience yielding an informed decision maker aligned to their risk and reward;
2. Increasing access to necessary care through an engaged delivery system; and
3. Reducing the aggregate cost of care, with a market-driven, balanced incentive and reward model.
2013 was certainly a great year for imagine.GO. We wanted to look back in less than two minutes and point out some of the highlights.
The Thought Life
In 2013, we were busy creating something entirely new. We launched modelH – a new way of thinking about healthcare business models. It creates value across the healthcare ecosystem and maps out a better way to build businesses.We were fortunate to have over 200 thought leaders contribute their thoughts.
And finally, we did a lot of blogging on innovation in healthcare, with a particular focus on building better healthcare business models. We were honored with an award for my efforts – which was very gratifying. It is good to know there are others passionate about fixing healthcare.
The Spoken Life
2013 was also a great year to spread the word. We launched on some new social media platforms and was able to meet some new friends.
For example, one day we were followed by LeBron James – I have no idea why and I certainly do not believe that LBJ handles his own Twitter follows himself – but still – pretty cool right!
On a serious note, throughout 2013 I spoke often on topics like business model design and how to build a startup company. It is a privilege more than a job for me to speak about what I love. I am grateful for the chance to share my thoughts and have real conversions with serious people about the convergence of healthcare and the consumer.
The Work Life
2013 was a great year for imagine.GO. In short, we helped some great companies become even better.
We collaborated with large insurance companies to “go retail”. I built some new physical storefronts as well as some virtual ones. And we promoted the customer experience into healthcare and the customer’s perspective into product design.
We also launched a new company of my own – Let’s Do X, or simply LDX. LDX is a software-as-a-service (SaaS) platform and app designed to help healthcare providers and their patients coordinate efficiently in real-time through our proprietary mobile communications model. More on this idea soon.
The Volunteer Life
And finally, 2013 was a great year for helping others. We mentored several startups and helped launch a few new ideas at various startup accelerators, such as Startup Weekend. It is a privilege to teach and encourage burgeoning entrepreneurs.
The Good Life
This was a lot to accomplish, and it was only possible through the support of my co-workers and customers. We look forward to even more excitement in 2014. Thank you for making 2013 memorable.
modelH is a business model canvas designed specifically for healthcare. It was designed to help business innovators generate and evaluate healthcare business models that can create positive consumer experiences, improve care delivery, along with aligning to control costs. Evaluation of each building block in a business model promotes consideration of the model’s strengths and weaknesses. Likewise, the structured layout of the canvas encourages thoughtful reflection regarding how the individual building blocks fit together. The 17 building blocks in modelH deal with 4 key business functions: the customer, your product, your operations, and your finances. As a strategic management tool, modelH can be used to design, describe, challenge, invent, and pivot your healthcare business model.
Introduction to the Cord Blood Industry
In this BLOG and 10-minute video, we look at the cord blood retrieval and storage industry through the lens of the modelH business model canvas.
Umbilical cord blood (or simply cord blood) is blood that remains in the placenta and the attached umbilical cord after childbirth. Cord blood contains stem cells that can be used to treat a variety of disorders. It is often viewed as a noncontroversial source of stem cells, which are currently being used to treat a wide variety of illnesses, immune deficiencies, and genetic disorders.
Generally speaking, there are two types of cord blood banks. Private cord blood banks store cord blood to be used exclusively by either the baby or a family member. This option ensures that cord blood is available to the child and/or the child’s family in the event of a future medical need.
Cord blood, donated to a public bank, is available to anyone who may need it. It can be used to treat any compatible patient, and may also be used for medical research. Most of the business model components covered here (for illustrative purposes) apply to both private and public cord blood banking.
The Cord Blood Business Model Canvas
modelH Business Model Building Block Explanation
Buyers are the customers a business sells to & may also be the User. In our business model illustration, there are three Buyers: 1) the families that exclusively preserve their child’s cord blood, 2) the care providers who want to use the stem cells in the cord blood to treat patients, and 3) the researchers who want access to cord blood for research purposes.
Users are the customers that a business model serves. In this business model, the Users include the 1) families who need the cord blood for treatment of a family member, 2) the individual patient requiring the treatment, and 3) researchers who want the cord blood for research purposes. In this example there is also great overlap of the buyers and Users, but not entirely.
Intermediaries affect how a Value Proposition is seen and paid for by the Buyer(s). The Intermediaries in this business model example are 1) the donors who agree to give their child’s cord blood and 2) those physicians treating disorders with stem cells from the cord blood.
Jobs-to-be-Done (JTBD) are high-level goals the customer is trying to accomplish. Jobs-to-be-Done are typically stated in the words of the customer. As an example the two JTBDs for a “family” User are:1) “I want to preserve my child’s cord blood in case they have a disease that can be treated from the stems cells within it” and 2) “I need to access my child’s cord blood to treat a disease for me and/or them that can be helped by the stems cells within it.”
Value Propositions are products & services offered to customers in order to solve their JTBD. In this business model, an example value proposition for the “family” User involves the Cord Blood Bank collecting and storing the cord blood so that it is accessible to treat diseases and disorders for that person or their family when needed.
Key Behaviors are the activities required of the User to complete their JTBD. For the “family” User using a private blood bank they include signing up ahead of the child’s birth and paying for the initial collection and ongoing storage of the cord blood.
Key Influencers affect the User’s understanding & ability to complete their JTBD. In this business model example, the FDA, which publishes cord blood banking information for consumers, hospitals and Birthing Centers is a good example.
Channels are the ways a company brings its Value Proposition to market. In our business model, Channels include: 1) an owned direct sales force that sells directly to pediatric offices, 2) an owned direct call centers that supports customer inquiries, and 3) an owned digital presence to create supporting materials online to influence the purchase decision of the buyer. Another Channel is an un-owned digital presence used to influence independent sources to post supporting materials online that also help influence the purchase decision of the Buyer.
Customer Relationships are connections a company creates with their Buyers & Users. In this business model, there are two main Customer Relationships that must be maintained. The first is personal assistance directly with they Buyer in order to provide them answers for questions about blood cord banking. The second is account maintenance for keeping channel partners informed about changes in the product, the pricing, and/or the diseases/disorders it cures.
Experience includes how Buyers and Users perceive a business model’s Channels and Customer Relationships. In this business model example, the Blood Cord Company will have to help Buyers to overcome any price sensitivity associated with the high costs of private blood banking. The Blood Cord Company will also need the ability to project strong financial and clinical assurance so the Buyer is willing to deposit their cord blood with a particular blood bank.
Key Activities are the most important tasks required to create the Value Proposition. Some examples of Key Activities in this business model include 1) educating buyers about the value proposition, 2) obtaining informed consent from the buyers, and 3) collecting the cord blood and cord tissue. There are many others.
Key Resources are the internal actors required to deliver the Value Proposition. In this model, the Key Resources include: sales staff, call center staff, medical directors, cord blood retrieval experts, cord blood storage facilities and blood tracking/matching systems.
Key Partners are the external actors required to deliver the Value Proposition. For this example the Key Partners include 1) the OBGYN Offices and Hospitals that they sell through, 2) the pediatric nurses and midwives that help explain blood cord banking and donation to customers, and 3) the vendors of the equipment and enabling technologies for the collection, testing, tracking, maintenance, matching and distribution of cord blood.
Costs are the most important financial drivers of a business model. In this business model, the main Costs are derived from blood collection, blood processing, blood storage, blood distribution, and company overhead costs.
Revenue is the way a company makes money from its customers. In this business model, some Revenue examples for private blood banks include a 1) one time fee from the initial cord blood acquisition, 2) a reoccurring fee for storage, and 3) a fee for accessing and shipping the cord blood on behalf of a depositor.
Informatics is the data and analytics needed to deliver and measure the Value Proposition. For our business model example, Informatics includes 1) the genetic typing (information) of the cord blood, 2) the quality control information for the viability of stored cord blood, and 3) information on the specific customers and donors.
And finally, Externalities are the external forces and regulations imposed upon a business model. An example of an Externality in this business model is compliance requirements imposed by the FDA on all blood cord storage facilities.
You can download the modelH canvas for this case study here.
You can also see the live Abzimo business model canvas for this case study here:
Any healthcare company that builds products or talks with customers ought to have an “Innovation Center”. The idea is to create a physical facility that is part consumer lab, part living laboratory, and part workplace- aimed at designing and delivering the healthcare models of the future. It will be an environment where all organizational and community stakeholders can experience your company’s view of the future of healthcare and be inspired to help create it. An Innovation Center can incorporate the brand promise within a physical setting. An Innovation Center shows true commitment to practice innovation in healthcare. It is time for all healthcare companies embrace the future the way the Mayo Clinic has done for years.
To get started on what I am about to talk about, watch this virtual walk-through of the Mayo Clinic Center for Innovation.
What is an Innovation Center and Why Would You Need One?
The main objectives for an Innovation Center are:
Lets discus them in some detail.
Job # 1 of an Innovation Center should be to create (and improve upon) intentional experiences for your customers. You cannot have a good experience without good design. The Customer lab can serve as the place to visualize and practice Design Thinking. Wikipedia defines Design Thinking as “a style of thinking [designed with] the ability to combine empathy for the context of a problem, creativity in the generation of insights and solutions, and rationality to analyze and fit solutions to the context. “
An Innovation Center lets you teach the process and the methods of Design Thinking. These are the tools and techniques that great designers use to generate ideas and solve problems. Your aim should be to create an employee base trained in the arts of creative problem-solving.
Job # 2 of an Innovation Center should be to create faster paths to market for new products and models. One such method to do this is referred to as rapid prototyping and uses the discipline of Minimum Viable Product (MVP). MVP enables designers to validate assumptions about their “product” in two important aspects: its value and the demand for it.
By definition, MVP is the version of a product that gets built through one cycle of a build, measure, and learn loop – as fast as possible. Once the MVP is confirmed (keep in mind it may take a few iterations), other lean methodologies can be employed to build upon it. An Innovation Center allows this rapid prototyping to occur outside the traction of the legacy product and technology build systems at your company. MVP delivered through an Innovation Center enables product developers, system designers, and business analysts to determine whether people want what they are building – in a manner that gauges acceptance and demand – yet preserves capital and time for your company.
Job # 3 of an Innovation Center should be to create a physical place designed to facilitate adult learning and team collaboration. As discussed in the book Where Good Ideas Come From: The Natural History of Innovation, big ideas are a series of smaller ideas coming together to form something that is meaningful to the market. The Innovation Center should be a co-laboratory that brings multi-disciplinary thinkers together on a common problem. Think of it as a modern version of a Library, except you are allowed to talk, experiment, and interact on topics of importance to your customers and your company.
You cannot ask people to collaborate on work if there has been no historical support for collaboration at your company – they simply just do not know how. They remember when they were kids but were programmed out of that model through a progression of educational settings and work scenarios where individual work product was the mode of operation. Asking people to change their work models without giving a realistic means to do so is merely rhetoric. An Innovation Center is designed to force interaction between co-workers. When combined with modern adult learning techniques like teaching collaboration, an Innovation Center can be the breakthrough that your company needs to re-educate its employees on how to work together.
Job # 4 of an Innovation Center should be to create a place to simulate customer interactions. Simulation is another great tool for adult education. While classroom learning and computer-based training still have their (small) place in the arsenal of training tools, nothing substitutes simulating a real life scenario to embed the training into the mind, and actions, of the trainee.
If your current training facilities do not invoke/inspire interest and a spirit of learning about how the customer feels in response to your customer-facing interactions – consider extending the facilities into an Innovation Center. Use the space as a simulation center to teach how to deliver the best results to a member and video it to review in private.
Job # 5 of an Innovation Center should be to create a place to have customers provide feedback on your company’s products and services. Part of the MVP concept mentioned above requires feedback. Healthcare is not like software – it is harder to have Beta users and not create tenuous or even dangerous situations. Proper validation through customer feedback is essential to great product design.
An Innovation Center as a customer lab allows this to happen with the control and confines of your company and reduces the need to pay outside parties to accomplish this oft-repeated task. To be a great consumer company, your company should foster its ability to do firsthand consumer research.
Job # 6 of an Innovation Center should be to your workplace of the future. Unless your company offers workspace like Google (and there are many of these, especially in Austin!) – consider using your space to transform your company’s cube farm into a dynamic workplace. Even if you are doing the best work on Earth, if you are sitting in a cube farm only lit by artificial overhead lighting, chances are you are miserable. Employers are obligated to make great environments for all people to work in, not just the executives. But convincing leaders about what this space should look like is hard to do.
An Innovation Center is supposed to look different – so make it your staging ground for your transforming workplace. Build it with the most modern yet simple furniture. Give it the technology bells and whistles that are fun to use and make people happier when using them. Keep it open and well lit. Provide couches and comfortable chairs to think in. Make it like everybody’s favorite thinking place – Starbuck’s. This will greatly enhance the employee experience and value proposition – and as a result, create a more productive workforce.
Job #7 of an Innovation Center should be to create a fluid understanding of what the future of healthcare might look like. According to Microsoft, their “Microsoft Innovation Centers (MICs ) are state of the art technology facilities for collaboration on innovative research, technology or software solutions, involving a combination of government, academic and industry participants.” Apparently there are now more than 100 Microsoft Innovation Centers worldwide. IBM has several IBM Innovation Centers as well. The concept used at Microsoft’s Innovation Center is “Behind this door lies the future – not a vision of what we want, but a vision of what will be.” Your company should adopt this philosophy as well.
Telling is greatly improved by showing. Teaching a man to fish is how the old adage goes – try putting the pole in his hand near the water, and you are off to the races. Showing removes the need for employees to try and interpret what your leaders are envisioning. Instead, it evokes people to quickly debate on what they see or come up with ideas on how best to implement them. This should be a focus for your company.
Justifying the Cost
In Summary, an Innovation Center can be easily justified as both a capital expenditure and a resource development tool. To compete in a consumer economy, a company needs the capacity to think, react, and dream at the speed of the customer. The natural functioning of business units is contrary to this need. A customer lab opens up the ability for consumer thinking for the whole company, without jeopardizing the current operations.
So the question is not, how can an insurance plan justify an innovation center on an ongoing basis? – but how can they not if they want to become great consumer healthcare companies?
But a word of caution on this idea – companies and the people that work for them change – what is needed today will be old hat tomorrow. If you are going to build your own innovation center – don’t pour it in concrete. Meaning, save room for new ideas and build it modularly so sections that are no longer relevant can be removed.
I had two unrelated experiences in the last 2 weeks around return on investment in healthcare. One was a question from a social media follower on how I approach ROI, and another was reading a BLOG entitled “ROI in Health IT is More Than Just the Pricetag.” I disagreed with the BLOG’s premise as I feel that Healthcare IT projects are some of the most costly and poorly executed across all industries. I decided to write up a short post on this subject.
Can healthcare have a return on investment?
The cost of healthcare should be a primary concern for all of us. Healthcare Reform, while providing access to more consumers, does not address the underlying problems of escalating costs. And costs are most certainly rising. In the 2008 Robert Wood Johnson Foundation publication entitled High and Rising Health Care Costs: Demystifying U.S. Health Care Spending, you can clearly see that unless the model changes, and cost controls are implemented, the healthcare system as we know it today will implode.
I responded to the BLOG author that cost matters more than anything else. If we do not reign in cost, we will bankrupt the system given its current trajectory. In my experience, many – if not most healthcare models do not produce a viable patient health outcome compared to their cost.
Likewise, we are often misguided to make statements like technology will solve our problems. Healthcare companies produce loads of unused and unusable technology. It is now the time to invest in creating an experience that produces known outcomes – and whatever technology is required to create those experiences, and then go forward. But to lead with the constant battle cry of “technology will save” us, whatever the cost might be, takes the care out of healthcare.
Healthcare Does Have an ROI Equation
I like to think ROI is quite definable for healthcare. ROI is the production of value as compared to its economic cost. Value is very definable in healthcare. “Value” is the patient health outcome achieved per healthcare dollar spent.
So more value is achieved when you get:
Improved patient engagement,
Improved patient experience and patient outcome, and
Reduced aggregate cost of care.
How Do I Create ROI for Clients?
I have based my work in this area on Clayton Christensen (Jobs-to-be-done), Tim Brown (Customer Experience), Eric Reis (Minimum Viable Product), Alex Osterwalder (Business Model Innovation), Peter Senge (Co-creating Shared Vision), and Harvard Business Review (Decision Design).
I combine these premises with deep and varied healthcare experiences to deliver collaborative business modeling, decision driven organization design, and agile communication techniques to ensure that your great ideas have momentum, and meet the market ready to accelerate profitable growth for your company.
My operating premise related to creating ROI for clients is two-fold:
Information about what markets, products and/or services NOT to pursue is valuable. And as such, the minimum cost in time and resources spent on obtaining that information is vital.
Business Models cannot keep up with the rate of change brought on, and accelerated by consumer empowerment. As such companies must invest in R&D, innovation, or what ever you want to call it and in customer experience.
Within these guidelines, the search for new business models is in-and- of-itself valuable and often a good return on investment. Care must be take though, to lessen the cost and time commitment in finding and proving out new models – this is what I call The Drawing Room.
So I encourage and teach companies to validate ideas and advance them to the market in the fastest and most cost-efficient manner possible. I advocate for the “NO” in innovation – so many, perhaps most, ideas are appropriately killed or sidelined. Using the tools and techniques in “The Drawing Room,” I show you how to do it quickly and painlessly.
Once a good idea passes certain stage gates, it needs a real business plan to match its prototyped business model. Calculating the staging of expected return on investment in a collaborative fashion, and communicating it to all stakeholders is the second part of the equation. I have built many businesses and business lines for companies – so there is a lot of art and science I have discovered in getting everyone on the bus and then communicating pre-decided progress against goals in an effective way.
I decided to tackle the subject of innovation in healthcare financing, or how Innovative health plans are looking to disrupt their payment models. One reason I am focused on this subject is that healthcare reform while providing access to more consumers, does not address the underlying problem of year-after-year of escalating costs. Take Massachusetts for example, where all citizens can receive healthcare coverage – yet medical spend has continued to increase more than 7% year over year.
Innovative health plans are looking to disrupt their payment models.
To help control costs, payers and providers are increasingly agreeing to share risks by entering into innovative payment contract arrangements called Accountable Care Organizations, or ACOs. This concept is an important first step, and will produce a “first cut” of reduced healthcare costs as the incentives to practice only necessary medicine will be much stronger for all parties involved. However, to sustain the cost savings and produce a profitable and efficient healthcare system, payers and providers must invest in the enabling capabilities and experience framework that is necessary for parties to take a risk position and produce a “wins” for all stakeholders. The intent of ACOs is to move away from the traditional pay-for-service model to one that better aligns care with the holistic needs of the patient all within a more affordable cost structure.
“a healthcare organization characterized by a payment and care delivery model that seeks to tie provider reimbursements to quality metrics and reductions in the total cost of care for an assigned population of patients. A group of coordinated health care providers forms an ACO, which then provides care to a group of patients. The ACO may use a range of payment models (capitation, fee-for-service with asymmetric or symmetric shared savings, etc.). The ACO is accountable to the patients and the third-party payer for the quality, appropriateness, and efficiency of the health care provided. “
“an organization of health care providers that agrees to be accountable for the quality, cost, and overall care of Medicare beneficiaries who are enrolled in the traditional fee-for-service program who are assigned to it.”
By either definition, it boils down to Insurers and Providers agreeing on how to share risk and the cost that is associated with that risk. Make no mistake; this has to be as much about cost savings as it is about care. The math insists on it, and I am fine with that. Continuing the trend in the current healthcare cost model, which shows no signs of stopping, coupled with many requirements mandated by the Affordable Care Act, in all likelihood would bankrupt the system.
For example, based on the Affordable Care Act, an ACO must agree to manage all of the healthcare needs for a minimum of 5,000 Medicare beneficiaries for at least three years. If we apply the current model to this new payment structure, I advocate that participants cannot break-even, let alone produce a profit. To ensure that ACOs work, the entire healthcare system needs to commit to a new model.
This approach includes helping Providers create a better model of care that is defined by more than just cost, yet allows them to be in agreement with how they are compensated and how they practice medicine. It also must result in more patient access to care inside and outside of the actual doctor’s office. And finally, Plans and Providers must work together to create meaningful patient experiences that result in behavior change or all of this is for naught. All parties involved in an ACO must be aligned and coordinated in their incentives and transparent in their distribution of risk.
A framework for sustainable ACO enablement
But risk-sharing contracts in and of themselves are not enough. After that begins the hard part. For ACOs to last, unlike managed care in the 90’s, they will need a sustainable framework to achieve cost, quality, and patient experience. ACOs will only succeed if participating healthcare providers have the people, process, and technology they require to collaborate on care amongst themselves, and with patients.
My position can be summed up as follows:
ACOs are necessary for a sustainable healthcare system
ACOs start with good risk-sharing
ACOs require investment in enabling capabilities for:
Data collection and analysis (data analytics)
Practice workflow management (care delivery)
Patient engagement (consumption)
What is the role of informatics in ACOs?
At the heart of effective risk, control is an intense investment in informatics. Imagine a hedge fund with the same level of risk tools and insight as what payers and providers have now. ACOs need enhanced information systems to track patients, coupled with economists and physicians that can make sense of the data and use it to determine how to deliver more effective care. I will cover this in more detail in a future BLOG.
What does improved care delivery mean?
Improved care delivery is not just the view of the Health Plan in regards to “necessary medicine”. It also means the provider believes they are practicing better medicine, and most importantly the patient confirms it. This approach requires a patient-centered approach to care management that focuses on quality, cost & the patient experience. Plans might consider helping finance provider practices in regards to providing improved capabilities for delivery of care. I will cover this in more detail in a future BLOG.
Can you create a winning care consumption experience?
Think of this as patient relationship management. This statement means creating engagement models that use carrots and sticks to get members to comply with evidence-based protocols, and enrich ties with their provider. It means creating an experience that ensures the patient is ready to receive care and leaves the provider committed to a plan of action that is manageable and traceable. I will cover this in more detail in a future BLOG.
Who is Leading the ACO Effort?
Hospitals and ACOs
ACOs are primarily about care, so most of the efforts are being driven from the hospital side. But Insurance Plans realize they must also get into the game or be left to live with its outcomes – whether they are advantageous to the Plan or not.
Here is a well produced 5-minute video on the Arizona Connected Care, an ACO based in Tucson, Arizona that is comprised of for-profit and non-profit practices, a hospital system, and a government qualified health care facility. The video, while somewhat of a commercial for Optum, highlights how several disparate provider practices have come together to create a better care model that incorporates informatics, experience, and risk sharing.
The Arizona Connected Care program was awarded participation in the Medicare Shared Savings Program by CMS, which rewards ACOs that lower the rate of growth in health care costs for Medicare beneficiaries while meeting performance standards on quality of care.
Insurers, Hospitals, and ACOs
Hospital systems are not the only ones putting together ACOs. According to The Commonwealth Fund, the majority (56.3%) of hospitals participating or planning to participate in an ACO said they were actively pursuing ACO contracts with commercial payers, including self-insured employers.
In the opinion piece “The End of Health Insurance Companies”, Ezekial Emanuel argues that Insurers will be disintermediated from the healthcare system. Some people believe that he is on the right track. The smarter insurers see this possible outcome as well and are doing something about it – mainly in trying to partner with regional care providers and create ACOs of their own.
Here are some examples of Plans and their ACOs.
WellPoint acquired clinic operator CareMore for $800 million last summer to make the transition into the ACO business.
HMSA, the largest blue plan in Hawaii, launched a new PCP pay for performance program that is supported by a member engagement portal known as Cozeva.
UnitedHealthcare, part of UnitedHealth Group, owns Optum who has invested heavily in developing the informatics services needed to enable ACOs.
Aetna announced a partnership with Banner Health Network to provide technology that will support a health information exchange within an ACO.
Another source at Geisinger Health System relayed that this well-respected health system is exploring their ACO enablement model, which is focused on data analytics and interpretation and clinical redesign, to sell as a co-branded product or consultative practice.
GuideWell launched 4 ACOs in 2012, starting with an oncology partnership in Miami between its parent company, Baptist Health South Florida, and Advanced Medical Specialties (AMS).
In California, a plan under the blue umbrella is experimenting with a new health plan, called Blue Groove that offers members a personalized, coordinated and collaborative approach to healthcare coverage.
Do ACOs Mean Less Money for Providers?
It is still early in the “reform era”, and like all innovations, ACOs are receiving some mixed press. According to J. Thomas Rosch, the Federal Trade Commissioner, Accountable Care Organizations will likely lead to “higher costs and lower quality health care”. Avik Roy reports that Rosch notes that the Centers for Medicare and Medicaid Services (CMS) have been running an ACO pilot (Physician Group Practice Demonstration) for several years and that the “even after five years of the project, a majority of the participating practice groups did not achieve any cost savings.”
Statements like this have generated concern for many doctors and hospitals that are looking at ACOs as a way for insurers to reduce their risk at the expense, and subsequent revenue loss, of the providers. Does this mean that ACOs will lower the profits for providers? Not necessarily.
According to the Health Research and Educational Trust, Hospitals will certainly see a change in revenue mix. Looking at the potential for a 10.7% drop in fee-for-service revenue looks disconcerting at first glance. But keep in mind, this is not a matching drop in profit. It costs money to apply fee-for-services, which are also reduced from the equation as those unnecessary services are removed. But take a look at the plus shared savings – this is where ACOs can conceptually shine. By practicing better medicine, and less of it, hospitals can reduce their operating expenses and actually improve their bottom line at the same time.
ACOs do not have to be HMO 2.0. Capitation has already been tried before – but without the informatics, care delivery changes, and experience improvements that I advocate are necessary to make an ACO work. This time around can be very different, and we are only at the beginning of this journey.
Understanding of the Consumer’s Need of Your Product
This is obviously of the utmost importance. If you cannot clearly and simply identify your consumer, you do not have a product. I speak in great depth about this in other BLOG posts so I will not go into detail on it here. But I will refer you to the following blog posts for reference:
At Last Year’s Startup Weekend I focused on how start-ups need to consider the larger market ecosystem surrounding their product. At the time, I was the Chief Innovation Officer for GuideWell and we were making plans to build our own start-up accelerator. We also had an active pipeline of ideas that we were watching the market for with the intent that we would make an informed build, buy, or ally decision on how to proceed.
During the discussion at Startup Weekend, I attempted to elevate the attendees thinking about their product so that they considered how it fit inside the prioritized needs of the existing marketplace. This is especially true in the healthcare space, where market entry is difficult and reliance on the existing infrastructure is of utmost importance. I asked them to consider if the product had viability to a large insurer like the one I worked for, and if so, would the best path forward be as a vendor or to outright sell it. I cautioned them that being a product vendor of a multi-billion dollar, highly-regulated company is high on the impossible side for a start-up, and could ultimately bankrupt them trying to get up to compliance with a long list of requirements and regulations. While this can be viewed as very unfortunate, it is nonetheless true.
Instead, I planted a seed for them to consider approaching large companies with the intent to sell their product and its IP in its current state. This form of exit strategy, I believe, will become more viable over the next several years. It allows the entrepreneur to acquire cash and most probably a retained contract to further develop it for the legacy company. Of course, that too comes with its’ own set of difficulties.
Understanding Your Competitors Position Against Your Product
I wanted to make some additional points on the need to have a greater understanding of the market and your product’s place in it. Today we will look at what we can learn from our competition. Here again, I advocate that if you cannot clearly and simply identify your competitors, you do not have a product. Even product category inventors like Ford and Apple have competitors.
Henry Ford, the inventor of the automobile, was once quoted as saying “If I had asked people what they wanted, they would have said faster horses.” While this may contradict the points I make around properly identifying your minimum viable product, at least it points to the fact that there is always some form of competition. I add to that the notion that you can learn a great deal from them.
My absolute favorite writing on this subject is from the blog of Marc Hedlund, the founder and CEO of the failed start-up Wesabe. His cautionary tale is entitled “Why Wesabe Lost to Mint .” Both Wesabe and Mint were/are online financial tools that puts the users’ bank accounts into one place, sets a budget, tracks their goals, etc. In 2009, Mint was acquired by Intuit (the makers of Quicken) for $170 million – not bad. Even with a year head start, users, press, and revenue – Wesabe lost to Mint and closed its doors forever. Why?
In his post, Hedlund bravely looks at the mistakes he made that led to being beat by Mint. In essence, he boils it down to Mint’s superior efforts in creating a simpler and more automated tool for consumers. Wesabe’s product features went deeper but required more user input and manipulation. Mint’s product features started at a much higher level but gave the appearance to the user of full automation. Hence, Mint was easier to use – so more people used it. By the way, since 2007 Mint has added all of those “deeper” features, and so much more. The lesson here is (in my opinion), it is better to win today with less, and add more tomorrow. This is the heart of the minimum viable concept model.
Hedlund and the team at Wesabe were mistaken in their interpretation of what their consumer’s minimum viable product actually was. They learned it by watching their competitor, but they learned it too late. Today’s start-ups must be nimble enough to quickly recognize market needs and pivot to ensure they always serve the customer best.
So I ask all you entrepreneurs out there, particularly in the healthcare space, to take heed of my words and think extensively not only about who are your customers, but who your competitors are and what you can learn from them. You can see the deck I presented with here.
I invite you to attend a webinar I will present this week on The Implications of Retail Health and The Future of Health Insurance on Tuesday, January 8, 2013, from 2:00 PM – 3:15 PM ET.
Retail health— from convenient care clinics in drugstores to the emerging insurance exchanges mandated by healthcare reform—has the potential to reshape the provider and payer markets. Health plans are taking a position by investing in technology, assisting members with price and quality transparency, and developing innovative care networks that broaden member access.
This webinar, in brief, is about how consumer-directed healthcare empowers “shoppers” by providing them with information about price and treatment options so that they can pursue cost-saving opportunities. As a result, a growing number of managed care organizations are adding retail health stores and clinics within their networks. Consumers want convenience in their health care options, which is right in line with retail channels.
What You Will Learn
This webinar will outline how you can best position your organization for success via retail health.
We will explore the origins and evolution of retail healthcare with an eye toward emerging trends that will impact your business.
I hope to show you how retail health coupled with consumerism can impact member behaviors—improving quality and cost.
We will also look at the impact of retail clinics on member access, costs, and quality.
Finally, we will examine how plans might formulate a retail health strategy to encompass market-based initiatives coupled with reform-driven mandates.
2013 was a big year for me. I resigned as Chief Innovation Officer of a major insurance plan at the end of 2012 to pursue what I consider to be the culmination of things I have been working on for well over a decade. I call this Health Model Innovation. My technical definition for it is to develop profitable and sustainable business models by creating and realigning the activity systems that improve member experience, boost provider performance, and enable payer cost control. Simply put, my goal is drive start-up businesses and new product lines that create disruptive change in the healthcare space.
This alone will be a big challenge for me in 2013. But I also need to save some time focusing on my personal health. That’s why in 2013 I am publicly challenging myself to exercise regularly and validating my journey through verifiable data. That means I’m recording the exercise that I do so that I have the data about my progress. Based on Wired magazine’s Thomas Goetz and his work on the “quantified self”, I will be using several tools to reach health goals and track my progress.
So you all know, I am fully aware that no one besides myself and my wife and child care about this endeavor – but my hope is that my fear of public shaming for not sticking to my guns pushes past my desire to take a nap or procrastinate. Moreover, I want this to be a sustained effort. I am a big believer in the power of habit, so I am trying to re-establish a good habit of daily exercise through the combination of incentives and dis-incentives – and a little bit of fun along the way.
Getting the Data
To get the data I want, I need to start with a pedometer. Better yet, an accelerometer. You might be asking, “Kevin, what is the difference between an accelerometer and a pedometer?” Well, from a mechanical standpoint, accelerometers measure vertical acceleration, while pedometers are much simpler and only respond to vertical acceleration. Another difference is around $100 price point.
So, my accelerometer of choice is the Nike+ FuelBand. Keep in mind, I tested most of the major brands: the FitBit Classic, the BodyMedia FIT LINK, and the Striiv Smart Pedometer. First, I wanted something that was simple. Second, I wanted something that was unobtrusive. Third, I wanted something I would remember to carry with me at all times. For these reasons I settled on the Nike+ FuelBand – however, I am not sure the Nike+ FuelBand is as accurate as the FitBit, as it seems to count movement that I do not consider exercise – like typing up a new BLOG.
In any case, this is what I will be wearing to collect data on my exercise whether I’m doing P90X, running or sweating it out at boot camp in the morning.
Another means to acquire data is using my Xbox Kinect. By now if you are unaware of what these nifty little devices do, you really must get out more. The Xbox Kinect is a motion sensing “camera” that inputs data into the Microsoft Xbox 360 video game console. At its launch in 2010, it set the Guinness World Record for being the “fastest selling consumer electronics device” with 8 million units sold in its first 60 days.
Along with the device though you need a game. I bought the new Nike+ Kinect Training. This game “creates a personalized, dynamic workout program based on your body, performance, fitness goals, schedule, and level of commitment.” You can check it out here. So far I like it.
I was an athlete in college, and I am far from that now. I sustained a pretty severe back injury and my flexibility is something I am constantly fighting with. Moreover, I am pretty busy with work and being a father and husband. Finally, I can get bored doing the same thing too long.
So knowing all this – I have opted for a mix of the workouts provided in P90X (although not all of them), the Nike+ Kinect Training Game, riding my bike 1X per week, running 2X per week, and trying to do Yoga 2-3X per week.
For me, staying motivated is a mix of incentives and dis-incentives. The dis-incentive part is my public commitment to track and publish the data of my workouts and write about my progress on occasion. Fortunately, my Nike FuelBand publishes the data “auto-magically” for me, as does the Kinect game. I also need to mark things in the – old fashion way – and send a tweet now and again. So if you do not see a tweet now and again about my workouts – send me a not-so-gentle reminder. Finally, I am using some wellness apps to help me set goals, record progress, and win prizes.
RunKeeper is a mobile app and website that helps keep track of running, walking, biking activities. Since running and riding my mountain bike are part of my regimen, I might as well track them and compare them against my friends. I also gave myself a goal inside of Run Keeper – to run in a 5K race by Feb 23, 2013. I think I may need to push that out a month or so.
There are several useful and cool features that RunKeeper provides. First, I can look for a local 5K to run in. I wanted to select the GATE River Run on March 9th (yes, I know that is past the 23rd) and then I remembered I will be at SXSW in Austin, TX at that time. I will need to keep looking for something that fits my goals and my schedule.
The second useful feature is a training plan. I signed up for the Beginner 5K plan that Mike Deibler M.S., C.S.C.S put together. Sweet!
Finally, I downloaded the iTunes App and uploaded it to my iPhone and iPod Touch that I will carry with me when I run.
I also joined Everymove. This is part of the incentive portion of my program. My reasoning is if I am going to exercise anyway, I might as well get some rewards for it. I looked at several of these reward programs – CoolLeaf, ShapeUp, Trim Challenge, and a few more. The idea behind these companies is connecting health and wellness related vendors with consumers in a manner that drives access to discounts through activity. In some cases, they get employer and insurance companies to sponsor and even subsidize “points” that their employees and members earn for healthy behavior. It works well with airlines and hotels, why not health?
Finally and just for fun, I am going to try out the Nike Fuel Missions. Nike has once again taken things to the next level by integrating their activity tracking products with a game that is powered by the user’s activity. This is something much bigger than Microsoft Kinect. Take a look.
So as I get ready to embark on this journey, I ask that you all feel free to keep me honest and motivated. Here is to a healthy and happy new year for all of us.