Obesity demands new health business models

Summary:Employers who expect to keep people on for many years can save big by tackling this problem. What they need is a business model that can capture the savings, and share them equitably with the patient.

Obesity represents 10% of our nation's annual health care bill.

New research from George Washington University (GWU) estimates its cost at $8,365 for women, $6,518 for men, per year, for anyone with a Body Mass Index (BMI) over 30.

(The picture is from a CBS News report last year on an anti-obesity conference.)

That includes the cost of premature death. The sex differential is because fat women face more workplace discrimination than fat men, said health policy professor Christine Ferguson.

Yet insurers won't cover the cost of most treatments.

Sounds like an open-and-shut case, right? Treating obesity as a disease will save money in the long run. It's a no-brainer.

Well, before you march off to your state insurance commissioner, let's follow the money.

GWU's own Weight Management Program sells a variety of expensive weight loss treatments, including counseling, meal replacement, even surgery. Following GWU's recommendation will make GWU money.

Then there's the corporate sponsor of the GWU study. Allergan is in the business of gastric banding, a surgical technique in which your stomach is literally made smaller. Cover obesity and Allergan makes big money.

CNN didn't mention this in its blog coverage. Neither did the New York Daily News. Or even the Christian Broadcasting Network.

The sponsorship does not discredit the study altogether, but it at least deserves a mention, and a scientific follow-up. (After all, it's in the press release.)

There's a second point to be made, which goes to the heart of health reform.

Insurers do not cover obesity procedures today for a very good reason. They cost money. If your business model is based on buying procedures, this makes sense. Why buy something today that is only going to save money tomorrow?

As with so much else in the U.S. health system the result is penny wise and pound foolish. If you only count the direct costs of obesity, taking out the lost life span, it's still $4,879 for each fat lady and $2,646 for each fat man. Each year.

You can pay that this year and next year and next year, or you can deliver a solution that pays the same price this year and avoid next year's cost altogether.

Again, it makes logical sense, but health care contracts only run one year. Even if you could reliably lose 50 pounds for just $2,500, present business models make that a push for insurers.

The problem, then, is one of business models. Here we have a long-term good being priced on a short-term basis. It's like buying a house with a one-year note.

Employers who expect to keep people on for many years can save big by tackling this problem. What they need is a business model that can capture the savings, and share them equitably with the patient.

What everyone calls the "health care problem" could be, for those who can create viable business models out of long-term savings, a great business opportunity.

This post was originally published on Smartplanet.com

Topics: Innovation


Dana Blankenhorn has been a business journalist since 1978, and has covered technology since 1982. He launched the Interactive Age Daily, the first daily coverage of the Internet to launch with a magazine, in September 1994.

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