Big business opportunities in health reform

If entrepreneurs are willing to do what they all claim they always wish to do, which is to see problems as an opportunity, there is a lot of money to be made in health reform.
Written by Dana Blankenhorn, Inactive

Health professionals have long sought transformation in their industry. The health reform law sets standards for that transformation.

Having followed health care IT at ZDNet Healthcare for over three years now, and having followed the health reform debate, I have a few thoughts on that. Since I'm traveling to the Open World Forum for ZDNet Open Source and won't be at my desk this week, I decided now would be a good time to talk about them.

First, to set the scene. Speaking on a conference call with bloggers recently, Nancy-Ann DeParle with the White House Office of Health Reform said there is "an inherent tension" between the insurance industry and health reform. (Picture from Wikipedia.)

That's true, if by industry you mean the industry as it exists today.

Change is hard. It's natural for any incumbent business to resist it. At this writing it's still possible the status-quo will prevail, that the law passed early this year will be repealed, in whole or in part, or that necessary provisions will be de-funded, leading to a bigger mess than we have now.

This doesn't have to happen if entrepreneurs are willing to do what they all claim they always wish to do, which is to see problems as an opportunity. If they had more certainty health reform would continue, more might be doing so.

Today's health insurance industry is selling neither real insurance nor health. Instead it sells contracts which give access to health procedures under certain conditions and prices set by the policy.

This is built into the industry's history. It began as a corporate "perk," something employers used to attract the best employees. In the mid-20th century there was little the medical industry could do for people who were really sick. Costs were relatively modest.

This has changed. Now there is a lot medicine can do to keep us alive. Life spans have increased dramatically. So have costs. It's now possible to make unlimited withdrawals from the common pool, whether that's a private plan or the public purse. The situation is untenable.

While America was seeing access to care as a perk, people in other countries were already seeing the limits of the common pool. In the wake of World War II their pools were smaller. So a variety of systems were developed to, in effect, control access to health services. Some were entirely public, others partly private.

However they were organized, each recognized the concept of limits, and created a process for defining those limits to assure every citizen gained access and to hold down the cost spiral.

As a result America's health care system, like its political system, is unique in the developed world. Access has become an economic good, there is no limit on costs. Most experts agreed the status quo was untenable.

Betsy McCaughey, a fierce opponent of reform, probably put the tension best in a Bloomberg article I quoted often during the debate:

The health-care industry is the largest employer in the U.S. It produces almost 17 percent of the nation’s gross domestic product. Yet the bill treats health care the way European governments do: as a cost problem instead of a growth industry.

She was right. Any health reform worthy of the name has to define limits on access to a common pool of funds. The bill which passed failed to accomplish that within the private market. But it created a ton of opportunities for companies to try and do so.

Bending the cost curve is all about these limits, and over the next four days I want to discuss them, based on my experience covering the industry for ZDNet Healthcare. I will be discussing four different business models, which already exist in the marketplace, which the health reform act encourages:

  • Real Health Insurance
  • Concierge Medicine
  • Predictive Health
  • Wellness Coaching

There are many other business opportunities out there, and I hope some of you might use this discussion thread to bring up some of them.

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