Biotech & Health

Supreme Court Decision On Obamacare Has Little Relevance To Healthcare Disrupters

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Supreme Court

Editor’s note: This guest post was written by Dave Chase, the CEO of Avado.com, a patient portal & relationship management company that was a TechCrunch Disrupt finalist. Previously he was a management consultant for Accenture’s healthcare practice and founder of Microsoft’s Health platform business. He’s part of the White House Roundtable on Patient Access. You can follow him on Twitter @chasedave.

When I’m not writing for TechCrunch, my “day job” is working with healthcare providers the disruptive innovators who are reinventing healthcare and slaying the healthcare cost beast as a byproduct. In some cases, these are entrepreneurs. In most other cases, they are pioneers within existing healthcare providers fighting to make changes within otherwise slow-moving organizations.

Despite this being the month that the Supreme Court is supposed to rule on the Obamacare’s constitutionality, it is striking how the SCOTUS ruling rarely that comes up in discussions with healthcare providers. [Note: Some readers questioned the use of the term “Obamacare” – please see comment/link below on its preferred use by backers and opponents of the federal legislation.] A HealthLeaders Media piece by Philip Betbeze described how “Disruptive Healthcare Innovations Trump SCOTUS Worries“  when he asked senior executives about their viewpoint regarding upcoming the Supreme Court decision.

But when you ask one question, you might get an interesting answer about something else entirely. That’s the way my sources for this off-the-record conversation surprised me. They agreed they are much more concerned about disruptive innovation than what nine people in black robes are going to say at an indeterminate date sometime this month. The roundtables, set up for me by the good folks at Premier Inc., which is holding its annual “Breakthroughs” conference here in Nashville this week, revealed that these leaders fear less what the government may do in response to whatever decision the Court makes, and more what nontraditional competitors may do to their resource and capital-heavy healthcare delivery systems.

They are rightfully concerned. The array of disruptive innovation activity underway or in the works is encouraging. Much of this is taking place in what I call “DIY Health Reform” at the behest of commercial plans and employers. Even the items that were key parts of the Obamacare such as Accountable Care Organizations (ACO) are surpassed by private sector efforts. For example, more than 70% of the newly formed ACOs are driven solely by private sector efforts as opposed to government funded. The following are just a few examples of disruptive innovation in the DIY Health Reform movement:

  • Venture-backed Iora Health has bent the proverbial healthcare cost curve working with some of the most challenging patients (i.e., costly) for casinos and other organizations as highlighted in  DIY Health Reform from Massachusetts to Alaska. Working with employers or unions, they do the opposite of skimming the cream by identifying those that are highest cost and inviting them into a special program.
  • DaVita (DVA) just announced a $4.4 Billion acquisition that is going to blow a hole in a facet of health insurance. The ripple effects of this big move are large within physician groups — a cohort that is particularly well positioned to offer fee-for-value (as opposed to strict fee-for-service) models that employers, unions, the government and individuals are pushing for.
  • An array of startup organizations best described as “concierge medicine for the masses” backed by some of the most successful entrepreneurs of the last 15 years such as Jeff Bezos, Michael Dell and Rich Barton offer a service that is reducing healthcare costs 40% or more. They have proposed how their service could also be used to balance state budgets. See The Marcus Welby/Steve Jobs Solution to the Medicaid-driven State & County Budget Crisis for more.

[Disclosure: Some of the companies described in the linked articles are customers of my patient relationship management software company, Avado, which is why I have a view into their business results.]

When an entire health system shifts from a reactive to a proactive model as has been the case with the highly successful examples cited above, the backbone of that system is primary care, not hospitals.  For example, Denmark went from 157 to just 21 hospitals as detailed in “Primary Care Spring” unleashed by IBM. It’s a more geographically concentrated country so the reduction won’t be as dramatic in the U.S., however it’s not inconceivable that we might have half the number of hospitals a decade from now.

As Philip Betbeze stated, “In their day-to-day-lives, it [the SCOTUS decision] largely won’t affect the 180-degree shift they’re making in reimbursement philosophy. For most systems, those changes are taking place largely at the behest of commercial plans and local employers.” The fee-for-value train has left the station. Woe is the health system that hasn’t made aggressive moves to reinvent themselves.

Unfortunately, some view “reinventing” themselves as simply automating the broken processes that have created the mess we are in today. The established health system leaders are rightfully concerned as the disruptive innovators aren’t shackled by old processes. Rather, they are building from the ground up that recognize value, not activity, as the core focus. While the federal reform was a catalyst, the DIY health reform movement has enough momentum regardless of the outcome from the 9 black robed folks in DC.

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