For Profit Healthcare Requires Healthcare Co’s Benefit First, Consumers Second
Posted by Z on September 1st, 2007 -
This morning while reading through some healthcare news I saw a CNN summary of the most recent Diamond health/wealth paper. One thing that stuck out to me while reading the summary was that the best way for this to work is for it to be “mutually beneficial” (between the consumer and healthcare co’s). There’s a lot of marketing spin from the payers around Wellness (type) Programs and the messages around these and other programs and benefits for consumers come out smelling like roses. However, consumers should never forget that for the most part healthcare is a for profit industry and it will/should be run as such. That is, improving health will be placed after improving profit in terms of importance unless improved health means additional revenue for the healthcare companies as well.
This is similar to a computer server company saying they are “Green” focused when in reality they have always been trying to reduce power and heat so they can reduce footprint and AC costs in data centers, thus improving the sales of the product – it is just now that they actually are making it more of a point to the consumer and starting to leverage that intrinsic goodness around their original design goals. This is a nice segue into why some consider a National Healthcare system better – i.e. clearer motives (debatable for sure). How do you think the business model works if we move to a single payer and/or more regulated industry post 2008 elections?
May 25th, 2008 at 10:45pm
Sorry for taking so long to answer your question - I just realized I didn’t get to it. Anyhow, I believe that improving the US healthcare system will require both allowing natural market forces to work as they do today, but it will also require government involvement to mandate certain aspects of the healthcare system/process. A good example is the HIPAA requirement for electronic claims (yes, there are exceptions) and the recent NPI ruling/law. Both aren’t uber invasive and still allow the market to be “free” for the most part.
September 30th, 2007 at 10:19am
Energy efficiency has always been a hard sell to companies — ask my brother, an engineer who analyzes energy usage and recommends means for reducing consumption and therefore lowering cost. Typically the ROI for these initiatives are undesirable and therefore never followed-through on. How would shareholders react to an up-front hit on earnings today for something which wont realize positive ROI for years to come — especially when executive leadership may not last as long as the ROI takes to realize?
The interesting thing today is that ROI is not necessarily the only thing which interests companies — Look at the strategic initiatives of many companies today and at the top of that list: ‘Customer intimacy’. They want the consumers to get in bed with them, and ‘green’ is just that. ‘You love the earth? _WE_ love the earth too!’ The difficulty is: how do you measure the benefit aspect of ‘green’ on a business case? What is the business value of that intimacy?
September 12th, 2007 at 3:45pm
No, I am not saying other countries should run their healthcare systems for profit. My point is, I don’t think some Americans (many perhaps) understand that healthcare companies are run like any other for profit business - i.e. a public for profit insurer’s main focus is to make money and that, if necessary, will be placed above their customers’ well being. Insurers may argue they are trying to both (make profit for shareholders AND superb care for their customers well-being), which may be true (and I think the insurers have plenty of good-hearted people), but if it comes down to it, the need for profit is placed above a customer’s health. The market forces dictate that - i.e. people will sell shares of an insurer that isn’t making money.
As far as the server comment, always was too harsh of a word to use. I should have wrote: This is similar to a computer server company saying they are “Green” focused when in reality they are really trying to reduce power and heat so that there are less failures due to heat, less need for large AC/cooling systems in data centers, etc. (customer demand). It’s not that the customers are demanding “green servers” per se.
September 10th, 2007 at 7:54pm
You write that “health care is a for profit industry [...] and should be run as such”. Many other industrialized countries run health care as a government service, are you saying that they should switch to for-profit as well, or do you think it works fine for them but wouldn’t work well in the US?
Regarding green servers, having spent a lot of time in data centers and felt the searing blast of the servers living therein, I am a little skeptical of your claim that manufacturers have always been trying to reduce power
I think for a lot of customers it comes down to economics. If power becomes more expensive, servers that use less power become more desirable. And most companies will follow the desires of their customers in making products…