An Impending Hanging: Will Health 2.0 Be Compromised By The Economic Downturn?

Nothing focuses the mind like an impending hanging.

Samuel Johnson

I’ve been preparing for tomorrow’s 3rd Health 2.0 conference in San
Francisco, where I’ll join my pals Matthew, Indu Subaiya, Jane
Sarasohn-Kahn and Michael Millenson amid a Who’s-Who cast of health
industry luminaries. I spent part of Monday reviewing the attendee and
sponsor lists, impressive indeed, testament to how seriously this topic
is being taken throughout health care.

The meeting is sold out at 950 participants. Its worth remembering
that, before the first Health 2.0 conference 13 months ago, Matthew,
who with Indu took enormous professional and personal financial risk to
pull this off, worriedly told me he’d be surprised if 75 people showed
up. There were almost 500, many of them with genuine influence.

That meeting was spark to kindling, but its a bonfire now, with all
kinds of conference imitators trying to cash in by hawking Health 2.0,
Medicine 2.0, Hospitals 2.0. That may be fair enough, given everyone’s
right to play on the term Web 2.0.
But the real power rests in the knowledge of who’s doing what, whether
each effort in question matters, and the principles that underlie the
dynamics of this powerfully transformational sector.

These are critical question and, in the face of an economic firestorm, they couldn’t be more germane. Consider an article in yesterday’s Financial Times
that recounted the woes of Silicon Valley firms hunkering down with the
rest of us in the recession, hinting that this was a pin aimed at the
bubble of the current wave of Web 2.0 ventures.

By contrast, the Times Online’s Jonathan Weber takes us through a more grounded and optimistic argument in Fear and Opportunity in Silicon Valley.
He sees the current circumstance as inevitable, a “healthy corrective”
that will winnow the weaker players and give the stronger ones – the ones
that bring genuine value – more breathing room. I agree.

As David Kibbe pointed out recently,
the signs are everywhere that the health care
bubble is being strained to bursting. (I mean “bubble” in
this context as inflationary growth explainable not by
conventional market forces, but by irrational forces, like misaligned
incentives (e.g., FFS reimbursement), the market’s structural flaws
(e.g., pricing/performance opacity) or external influences (e.g.,
support/subsidy of goods/services achieved by lobbying, rather than
value demonstrated in the market). We’ll explore
this issue in another post soon.  For now, suffice it to say that if
you look at  elective consumer purchases of office
visits, drugs and surgeries; the
diminished ability of employers to access credit lines to buy new
coverage; shrinking health benefit structures and coverage purchases;
rising hospital bad debt and uncompensated care loads; skyrocketing
hospital bond interest rates; changes in health system net revenues
related to investment income; and other measures of how the health care
economy is ticking along, things aren’t look very promising in health
care right now.

Not so with Health 2.0, which might be described as leveraging two
big ideas. One is that consumers and professionals can collaborate –
exchanging information within and across communities – over the Web.
Independently of what happens in the economy, the Web isn’t going away.
And we’ve learned over the last few years that the Web offers by far
the most flexible and efficient mode of communication developed so far.
Short of national catastrophe, its unlikely we’re going back to
postcards.

The other big idea is that the Web can facilitate the efficient aggregation and reformulation of knowledge and data
to create new information that is not only descriptive, but
prescriptive, evaluating complex situational configurations and
recommending next steps based on current best knowledge and
experiential data. Health care is fundamentally an information-based
discipline, and the Web catapults us way beyond individual expertise to
the organically evolving wisdom of mass collaboration.

Health 2.0’s value lies in its ability to empower everyone connected
to the Web with nearly every activity that relates to health care
information. Patients can quickly learn about their conditions, meet
others with the same issues and become more involved in managing their
own care. Clinicians can tie into instantly accessible knowledge and
decision-support, and also check their quality and financial dynamics
against those of colleagues. Purchasers of all types – consumers
searching for a 16 slice CT, clinicians considering which treatment
approaches consistently deliver the best outcomes, health systems
benchmarking their own performance, health plans trying to rank
benefits by their value, or employers trying to assess which health
plans actually fulfil their promises of managing the care process –
will shortly have access to unprecedented transparency and decision
support.

In an industry as out of balance as health care, where we know that
one-third to one-half of all care and cost is waste, Health 2.0’s
spectacular opportunity is to become the engine for rationalizing the
process. The industry is characterized by two kinds of companies. First
are enormous firms – Google and Microsoft are the obvious ones – who
understand that they can create value and win by identifying the waste.
The others are organizations, mostly startups, at the margins of health
care, who hope to win by bringing transformational elements to the
table.

The losers in all this will mostly be traditional health care firms
that have come to expect that the waste is legitimate, and
organizations whose value propositions are only marginal. These
companies could be savaged if Health 2.0, combined with
performance-based reimbursement, promotes higher levels of
appropriateness in care delivery.

In this sense, Health 2.0 is a true game-changer, redefining how
winning will be accomplished. We’ll see many big established healh care
firms at tomorrow’s meeting, not just because they want to monitor the
techniques that could ultimately be used to compromise their current
business practices, but because they’re trying to figure out how to
incorporate these new processes to advantage.

In a downturned economy, the winners will be those that sell risk
and cost reductions, or that bring enhanced quality for the same
dollars. This economic downturn will hurt or kill some organizations.

But in general it will focus health care, favoring approaches that
drive enhanced value across the vastness of its constituenies. That is
precisely what Health 2.0 is focused on.

Brian Klepper is a health care analyst and commentator, and a Principal in the newly formed Health 2.0 Advisors.

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