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Health Orgs Dooming Their "Innovation" To Failure - Forbes

Posted on by Brandon Klein

Direct Primary Care (DPC) organizations such as Iora Health, Qliance, DaVita’s Paladina Health are an “ACO” in all but name. This new delivery model is demonstrating the most impressive Triple Aim objectives [See Health Insurance's Bunker Buster for more] Onsite clinics are one of the hottest sectors in healthcare. Employers are bypassing traditional healthcare systems as they perceive they can get service and outcomes superior to traditional options. [See DIY Health Reform: Employers Solving Healthcare Crisis One Onsite Clinic At A Time for more.] Like newspaper executives who dismissed craigslist, Monster, Cars.com and countless other upstarts who eventually ate their lunch, I hear health system leaders assure themselves (with no data to back it up) that those organizations are skimming the cream. They make comments such as “oh, those organizations just get the tech sophisticates or “easy” patients unlike my organization.” In fact, it’s often the opposite. For example, the unions and employers partnering with Iora Health target their most expensive, polychronic individuals to get into Iora’s program. Note: If you’d like a copy of the seminal whitepaper on Direct Primary Care, contact me via LinkedIn so I can send you a copy. Walmart is the most visible example of creating a national market for surgeries where it once was only a local market. No matter how small a market you are in as a surgery center, local hospitals are now competing with Mayo and Cleveland Clinic for non-emergent surgeries. For Walmart employees with health benefits, they just made an offer that is almost impossible to refuse. Lowes, Pepsico and others are doing the same. Benefits consultants state that they are getting strong interest to replicate their models. It’s just a matter of time before it’s normal for a bundled, transparent price for surgical procedures. Other categories where most health systems aren’t cognizant of their lunch progressively getting eaten include onsite clinics, direct-to-consumer lab testing/monitoring, Medicare Advantage programs, retail clinics broadening scope, near-site clinics, etc.  These businesses have seen multi-billion dollar exits in the past year along with 10′s of millions of VC investment. In most cases, there is a similar opportunity to what newspapers had — i.e., they could invest, buy or build these businesses. One of the common threads to these organizations is most tout reducing unnecessary hospitalizations, ER visits, surgeries, specialist visits, etc. The old refrain from incumbent media companies was they didn’t want to replace analog dollars with digital dimes. Their problem was that it  was going to happen with or without them (and it did). The smart newspaper execs said “it’s time to start stacking dimes.” Healthcare CEOs need to prepare their boards/orgs for this dynamic. Precious few are. The others run the risk of having the final chapter of their otherwise-extraordinary careers be written as they failed to reinvent their organizations before it was too late.