Fixing Health Care: Rockefeller Style

April 03, 2015

Health care in America is a perfect example of the Pareto principle, because 80% of our gargantuan expenditures on health care are due to only 20% of us who are very sick, elderly, disabled and vulnerable in many other ways. If we genuinely wished to reduce health care expenditures, common sense dictates that we would leave the 80% alone and zero in on those 20%, trying to care for them better than we currently do, and hopefully as their health improves, we would see a spectacular bang for our buck, not to mention the moral gratification of having helped our neighbor, because there but for the grace of God go we all. 

I have a better idea. Following the tried and true philosophy of John D. Rockefeller, why not turn the health care disaster into an opportunity to create the magnificent Standard Oil of our times? The 20% of people, who burn through 80% of our $3 trillion of health care money, are known as high-utilizers, frequent-flyers, hot-spotters, train-wrecks, million-dollar-babies, and all sorts of other terms indicative of receiving highly complex medical treatments, many times with minimal odds of getting better. Although, there is practically no way for us to partake in this messy frequent-flyer market, what if we could shrink its size and simultaneously expand the much nicer healthy market?

What if we could blow the Pareto principle to smithereens and reduce medical spending on the sick from 80% to say 50%? That would free almost $1 trillion dollars per year, just waiting to be disruptively innovated into our accounts receivable, by selling something to the 80% that need little to no professional medical care. Keep in mind that the nation is only expecting to slow the growth of health care expenditures, or to “bend the curve”, not to actually reduce the amount of money it spends on health care. The $3 trillion will be there year after year for us to enjoy. We just need to come up with a smarter allocation of resources.

Unfortunately, it looks like other innovative folks are having the same epiphany, so we will have to share the bounty and engage in some serious team work. The two pronged approach consists of prying the money out of the clenched fists of doctors who provide medical services to the 20%, and of using a few non-practicing physicians to legitimize increased reallocation of expenses to the 80%. In other words, we move from a sick care system to a health system, while delegating the care portion to involuntary labor performed by the sick 20% who have the most skin in the game. I think old John D. would be proud.

The first order of business is to obtain support from the government because although we are not a socialist country, the government controls and regulates most of our $3 trillion play money. Check. The second step is to put those high spenders on a budget without seeming heartless or criminal. The best way to do that is to budget indirectly. Instead of going to each sick person and telling them that we will not spend more than say, $100,000 on you this year, we make their doctor an offer she can’t refuse. Here is $100, 000 dollars for this particular frequent-flyer. If it ends up costing more, it comes out of your paycheck. If it ends up costing less, you get a cool sticker.

Doctors went to medical school, not business school, so we may get that deer in the headlights look when we make our offer, which is where our opportunity begins to emerge. We are business people and we know how to budget and allocate resources, so we can share with you methodologies that worked for the banks, for Toyota, for Starbucks, for the Cheesecake Factory and myriad other successful businesses. And we can share technology tools to make you successful, doctor. Of course, this is America, and we need to be successful too, so there is a fee for this cache of wisdom and intelligent software. Not to worry though, we’ll show you how to factor it into your allotted $100,000 and spread it over your entire client population. It’s not like it’s coming out of your pocket, you know.

Team work means that we have to keep hospital systems happy too. Many of them are heavily invested in all sorts of construction projects and machinery. If we cap the spending on the most lucrative 20%, hospitals will fight us tooth and nail, and unlike little doctors, these guys are no deer in our headlights, so we need to think outside the box. To get the best hospitals to join our winning team, we promise to obliterate the competition and funnel all customers to a handful of centers of excellence, while at the same time we allow them to raise unit prices per service. The net result for each team player is that revenues go up slightly, while profits go up significantly, as volume of expensive services drops like a rock. And in return for our innovative counseling and enabling tools, we take a piece of that action as well.

Finally, we take stock of our capabilities to identify stuff we can sell for approximately $1 trillion per year to please the 80% who are basically healthy. We know how to do social media, mobile apps, targeted marketing, data processing, telecommunications and retail. Our go to market plan is crystallizing before our eyes. Social health, mobile health, health surveillance, health data, telehealth, Apple Health, CVS Health, Google Health, basically we just slap health before or after our existing line of products. Not a word about sickness because the 80% want to be healthy, and we are selling health. If we get lucky, even the 20% may be persuaded to see the value of curative hope in a cell phone.

For the sake of completeness our plan should explore the largely historical bumps in the road, such as the Food and Drug Administration (FDA) and its antiquated insistence on regulating medical things. That was fine and dandy for the sick market, but in the innovative health market, everybody is already healthy so efficacy and safety are misplaced notions for wellness vaporware. To solidify our clinical standing, we should come up with some clinically sounding products as well, and impress upon the healthy 80% that every self-respecting billionaire is already using these health enhancing things on a regular basis, whether it’s Tim Cook who can’t live without his new watch, or Mark Cuban who can’t go more than three months without self-inflicted bloodwork (or a little free publicity on Twitter).

This does sound like taking candy from a baby, because it is. Traditional health care did not behave much like a market, but health is a classic consumer market and we are the champs when it comes to selling cheap stuff to consumers, or selling consumers to manufacturers of cheap stuff. The now discretionary $1 trillion is just the beginning, you see. The half trillion or so, previously spent on the healthy 80% is also up for grabs, because we don’t need doctors to sell that stuff. And once we get our foot in the door, we can chip away at the remaining $1.5 trillion wasted on the sick as well. To whet your appetite, here’s a billion dollar idea to leverage community resources: nudge the chronically unemployed to provide free care to the chronically ill, in the comfort of their artificially intelligent homes.

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