Notes from Nashville: Zoom In and Innovate, Zoom Out and Connect the Dots

| Global Business

At the invitation of former US Senate Majority Leader Bill Frist, I lectured in April at a senior manager development program for executives on the fast track to becoming future CEOs of large healthcare organizations. The topic for my two-hour session was, “Disruptive Innovation and Consumer-Centric Healthcare.”

The Frist family is founder of America’s largest hospital system, HCA, and Sen. Bill Frist’s vision is to help Nashville, Tennessee become the most innovative and important center for healthcare services. There are already 250 healthcare service companies in Nashville that in some way touch about 25% of the US hospitalized patient population.

Here are a few ideas that Sen. Frist and I discussed with a small group of CEOs over dinner, following my lecture:

  • Universal healthcare coverage of every American is a noble goal that we both admire.  But what the politicians created with The Affordable Care Act is so compromised with special interest deals that it is not a sustainable solution without radical adjustments.
  • Since the end of  WWII,  America has had an employer-based health insurance system where benefits pass through to insured employees, tax free. Now politicians have created a parallel universe of an entitlement-based system that adds 30 million additional lives without solving how these additional patients will be served and paid for by our existing health system.
  • The derivative effect is, employers are rapidly moving to a self-insured employer alternative in order to control the rapidly inflating costs of healthcare insurance. The trend with these self-insured programs is towards high deductibles, meaning that most of the 100 million insured employees in the next five years will have to pay the first $5,000 out-of-pocket expenses themselves, every year, before their co-pays kick in.
  • The implications for disruptive consumer innovation are huge, as now consumers will be highly incented to look around for lower-priced health service alternatives that will include walk-in urgent care clinics and telehealth virtual visits with accredited doctors.

By 2020, predictions are that our US healthcare spend will exceed $4 trillion. By that time, it’s estimated that a majority of US employees will be covered by higher deductible plans, most likely with a reduced list of insured conditions.

If these observations turn out to be correct, then I predict a new era of consumer healthcare and wellness services will be on an accelerated path to becoming some of America’s biggest consumer service brands. My partners and I are building one such telehealth company, called MDLIVE.

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