Uncertain Health in an Insecure World – 97

“Whatever… Wherever”

In 1956, the United States legally changed its official motto from “E pluribus unum” to “In God We Trust.”

Sixty years hence, as the 2016 U.S. Presidential Election results roll in, we will learn whether the “wherever” misogynist Donald Trump or the lyin’ “whatever” Hillary Clinton will become the leader of The Free World. Regardless of the outcome, the future of American Healthcare is at best uncertain and at worst unsustainable.

No subject has been studied so deeply, yet so stubbornly defiant of a solution.

Why is that?

Healthcare, prescription drugs, elder care and child care sectors are all characterized by rapidly rising prices and limited technological innovation.

Venture capitalist and Netscape founder Marc Andreessen (above) recently opined (Oct. 5, 2016 www.vox.com>new-money>2016/10) about a “technology bust” in the healthcare and life sciences sectors, which have historically demonstrated inflexibility to change. He cited market inelasticity for innovations that would increase productivity or reduce costs. According to Andreessen, these sectors suffer from “dysfunctional behaviors that lead to rapid increases in prices… monopolies, oligopolies, cartels, government-run markets, price fixing.” He added, when “government injects more subsidies into those inelastic markets… (they) cause prices to go up further.”

He’s totally right!

There are no other markets like healthcare and Pharma. 

 

Andreessen believes that Theranos’ 2016 collapse occurred as a result of a “beta release as production” business strategy that may only work in Silicon Valley. But the blood-testing start-up failed fast, never impressing either Wall Street or the U.S. Centers for Medicare & Medicaid Services (CMS). Theranos CEO Elizabeth Holmes (below) has laid off 340 workers, and the company plans to close all of its clinical labs. Now Theranos is being sued by one of its original hedge fund investors, Partner Fund Management (PFM).

The private equity bubble that created highly valued unicorns like Uber, Airbnb, Snapchat and Theranos has not produced typical initial public offerings (IPO’s). Instead, it has spurred big money late round investing by hedge funds (like PFM) and institutional investors (like Fidelity). Typically, the pre-IPO / pre-acquisition VC vetting process is much more robust, and is better suited to the nature of these increasingly rare exits.

As politics inevitably creep in, the U.S. healthcare sector is irreparably harmed.

According to Harvard Business School (HBS) Baker Foundation Professor Leonard Schesinger, after the “fall and fix” of Obamacare’s  Healthcare.gov website, the situation has gone from bad to worse (www.hbswk.hbs.edu Cold Call Podcast Oct. 20, 2016). Variable state-by-state interpretations of the Affordable Care Act (ACA) have been bungled because the creation of state insurance exchanges requires complex managerial tasks.

As gleefully pointed out by the Trump campaign, the opting out of many insurance carriers and the depleted numbers of ‘healthy’ enrollees has ballooned Obamacare health insurance premiums for those trying to comply with ACA mandates (above). Many young people faced with >US$500 per month premium bills are just opting out, instead taking the much lower Internal Revenue Service penalty charge on their federal taxes.

HBS case studies describe the adverse outcomes associated with the multiplayer accountability gaps of Obamacare and the failure to adopt open innovation at NASA (‘Houston we Have a Problem’, May 5, 2014, www.hbs.edu). Both have suffered from the same quasi-governmental “Who’s on first?” confusion. The private sector players see the blood in the water, swooping in with standard management tools or hyperbolic IT solutions, while securing nicely leveraged financial positions.

Increasingly, Fintech approaches may be a key to overdue solutions for healthcare malaise.

The average ATM transaction is $60. The average hospital transaction is $1,600. The Smart Card Alliance reports that 140 million smart cards have now been issued by hospitals around the world to identify patients, instead of using paper-based demographic and personal information validation.

Governments have repeatedly tried to foster innovation to hold down healthcare prices, without taking any market risk. They recognize that the price problem is largely due to insufficient technology adoption. But despite penalties and incentives, the healthcare system holds out and holds on. Such slavish orthopraxy is resulting in continuing delays in the adoption of ‘meaningful use’ of the electronic health record (EHR) required by the Obamacare law.

The U.S. healthcare industrial complex increasingly controls the data. This dis-intermediates doctors from patients.

Widespread unhappiness with EHR technology has created unlikely bedfellows – consumer and health IT advocates – to push for more personal health record keeping. The 3^rd phase of Obamacare policy meaningful use requires that EHR vendors certify that they use open application programming interfaces (API’s) for exchanging EHR’s. In response, Epic, Cerner and Allscripts announced that their API’s would employ the Fast Health Interoperability Resources (FHIR) standard and be open. Ideally, these changes will allow greater user access to their PHI.

According to health guru Eric Topol (tri-cording Stephen Colbert, below), access to our personal health information (PHI) will become a human rights issue in coming years.

Now that would indeed be disruptive innovation!!

Of interest, Dr. Topol’s Scripps Translational Science Institute recently received a $20M federal Precision Medicine Initiative grant, and also signed a partnership agreement with Apple. POLITICO reports (http://www.politico.com/story/2016/10/apple-expansion-health-care-229111 ) that Apple is moving into healthcare, including FDA-regulated sensors, clinical decision support, and EHR’s. Apple-philes hope that the company will make patients the guardians of their own health data. When patients can download their PHI onto iPhones via a platform of API’s, the smartphone could emerge as the middleman in healthcare.

The reason that Healthcare is economic kryptonite to the globe’s greatest superpower is simple.

In its uniquely manifest destiny mindset, America has rejected the complete overhaul of its public-private quasi-market healthcare system because it’s simply too big to concede failure.

Whether in politics or business, changing a president or CEO is not transformation.

Deeply entrenched dysfunctions of bureaucracy and management will survive the peaceful transfer of power that follows the U.S. Presidential Election on January 20, 2017.

Brexit and this damn election have damaged Trust.

So, by God, we in the Square suggest resurrecting, “Out of many, one…”