Self-Insured Companies: Low-Hanging Fruit for Consumer-Driven Telehealth?

Monday, November 26, 2007  | Malcolm Burwell


Are the companies who self-insure for healthcare a better place to start proving new consumer-driven healthcare models than mainstream health payers?

I am one among the entrepreneurs who have been motivated to start telehealth businesses since the implementation of consumer-driven health legislation in 2003.  I have noticed a trend among such entrepreneurs:  we are choosing to direct our efforts at the Fortune 500 self-insured companies (see, for instance, VieLife, Tangerine Wellness, Nutrio).  This is in contrast to "doing the obvious thing" and trying to work directly with mainstream payers and providers. 

Certainly the inertia of mainstream health is daunting.  Big payers require big telehealth solutions with fully-proven financial benefits before taking an interest in something new.  Revolution Health aside, it is very hard to find investors willing to take the long-term gamble to do such proving.  Mainstream VCs say that telehealth success has been just-around-the-corner since the 1960s.

By working for self-insured companies and their benefits suppliers, we are able to deal directly with commercial entities who understand cost/payback/benefits and most-importantly, what "consumer-directed" means (from their own businesses).   They are also used to sharing risks on new business processes.   Furthermore, by choosing specific companies to pilot with (eg. healthcare companies, food companies, fitness companies) we can profitably target the early adopter segments without having to solve the problems of the full patient population demographic.

Shouldn't we be systematizing this important "back door" into developing profitable new telehealth business models?

 

Member Comments


I generally agree with your diagnosis, Malcolm – but specifically what are you prescribing? Who should do what to “systematize” this?

Mary Anne North

President
Polaris Management, Inc.

 

Posted by: Mary Anne North
1/8/2008

 

While I wholeheartedly agree that the self insured employer is an important target and the idea of cutting out us stodgy, slow moving providers has seductive appeal, I believe it is at best as short term solution. This is in essence what happened 10 or so years ago in the insurance industry when employers asked for chronic condition management, providers were disinterested and payers started contracting with disease management vendors. The results have not been impressive. I've recently been 'on the road' talking to health plans, employers and some DM vendors and all agree that tight integration with the provider would be ideal. And with the advent of pay for performance and other payment reform efforts providers are beginning to get interest. The leading edge of this is provider organizations such as the VHA, Kaiser, Geisinger, Christus Health and of course Partners. All have emerging programs that combine aspects of connected health, disease management and payment reform.

If your solution is one based on achieving improved wellness or improved fitness, of course that can be implemented without payers or providers. And HR benefits professionals are buying these solutions now. One gets a sense, however, that wellness is a second choice to managing chronic illness and that employers have somewhat given up on chronic illness management. In the back of their minds they all carry that haunting statistic that 5% of their employees account for 50% of their spend and that most of that is for chronic illness.

I think that squarely points to the need to integrate with providers under the banner of payment reform in order to achieve the tripartite goal of improved quality, improved access and reduction in the trend of growth of health care spending. I believe this IS 'right around the corner' and have seen evidence that investors are starting to put their money behind start ups that will achieve this result; one that is critical to the future of the United States as a competitor in the world economy.

Joseph Kvedar

Director
Center for Connected Health

Joseph C. Kvedar, M.D., is the Founder and Director of the Center for Connected Health, applying communications technology and online resources to increase access and improve the delivery of quality medical services and patient care. Dr. Kvedar is also a board-certified dermatologist and Vice-Chair of Dermatology at Harvard Medical School. In his role with the Center for Connected Health, Dr. Kvedar launched the first physician-to-physician online consultation service in an academic setting. He is also leading important research into novel approaches for connected health in a variety of medical specialties, including post-operative care in the home, wound care, and remote monitoring of patients with chronic diseases. Dr. Kvedar is a past President and member of the governing Board of the American Telemedicine Association (ATA). Dr. Kvedar is also Chair of the American Academy of Dermatology (AAD) Task Force on Telemedicine. Dr. Kvedar is internationally recognized for his leadership and vision in the field of connected health and the application of communications technologies to improve healthcare to patients. Dr. Kvedar is co-editor of a new book, Home Telehealth, which was published in May 2006. He is a frequent lecturer and has authored over 60 publications on telemedicine and connected health. In 2003, Dr. Kvedar was honored by the New England Business and Technology Association for his extraordinary leadership in the field.

 

Posted by: Joseph Kvedar
1/12/2008

 

Joseph, as ever, you give an excellent view. Very much at the cutting-edge of providers' thinking.

As an entrepreneur with investors keen to see a monetizable effect on a 3-5 year horizon, I remain daunted by the glacial pace of change typical in the mainstream professional healthcare system. This is particularly true in my chosen area of obesity management, where the underlying chronic condition is curable, unlike the other top-5 chronic diseases.

The "corporate shunt" around the mainstream professional healthcare system is motivated by proving a commercial benefit: it remains attractive to me and to investors.

I agree wholeheartedly with your views on the uncertain cost benefits being delivered by mainstream disease management offerings (see the 12/07 Rand Corporation study at http://www.rand.org/health/feature/2007/071210_mattke.html). However, even though DM is not a universally-applicable solution, the pull from corporate America for it has provided a sandbox for finding where there can be beneficial changes (eg. lowering CHF hospitalizations and outpatient service/prescription drug use in depression).

I embrace a corporate drive to take control of preventative care, if only to get some much-needed funded exploration of new approaches. Such exploration is, thank goodness, appropriately attractive to venture investors. This gives us a route to move forward from the necessarily conservative plans of mainstream healthcare provision.

We need to be relentlessly creating a "culture of health" in the population, and not relying exclusively on an extension of a "culture of treating sickenss." We should be engaging corporate self-interest, and not just waiting for mainstream healthcare to eventually get around to it (which, as you say, they will definitely do).

In answer to the question posed by Mary Anne North earlier in this thread, I continue to search for a way to systematize using corporate self-interest to generate approaches and companies that address cost control in the treatment of chronic diseases. Although groups of HR leaders exist, I find them often paralyzed in the present when presented with new approaches This is not least because of the career dangers associated with unintended consequences from new approaches applied to their employee populations.

I see the most enlightened companies (think J&J, EMC, IBM, Motorola) being driven to exploring profit-maximizing new preventative health approaches. That drive is generally coming from the C-suite.

Motivating the formation of an elite group of C-suite interested corporate leaders, might be one step towards sytematization of the corporate power available here. Of course, such a group may already exist without my knowledge; if so, I would value a reader telling me about it.

Malcolm Burwell

Founder
Vivigor Health (in early-stage stealth mode)

 

Posted by: Malcolm Burwell
1/23/2008

 

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