Innovation, healthcare industry and a problem

This started as a pricing question that a friend needed an answer for…

How do you keep the enormous financial muscle moving healthcare innovation, when institutions and individuals are seeing less real growth in care? And when many are already awakening to how much they are really paying for these new pills through their taxes, embedded in healthcare governments budgets around the world…

But, lets come back to the pricing question

Using Telco pricing as an guide, this Healthcare company was looking to take advantage of its enormous range of medical devices and related products to come up with some sort of a bundle or Cap plan. In Telco the journey went from itemised pricing (per minute, SMS, kilobyte data) to a bundle/cap pricing that tried to reduce the absurdity of ever higher increasing costs to customers, and the disincentive to try any innovations coming from the telecoms new product pipe. The result in Telco: a feeling of having liberated the public, and provided a sense of control of their expenditure, while having some permission of introducing new products… in the short term

Fast forward a little bit, and you have Telcos coming back to its old model as it was too tempting to be greedy, and the liberation was only a feeling, not a true commitment. Then what happened later you can almost guess. Its best customers were paying the largest bills, and quickly fleeing them, leaving their revenue model without the key ingredient to balance a majority of unprofitable customers.

So now Healthcare wants to do the same with hospitals, and offer them a base bundle that will allow for a higher penetration of its products, while keeping a few out of the deal, so they can charge those at a higher price as excess of their hospitals cap? Great idea healthcare CFO’s, but is it really sustainable?

What about a model that not only make the companies boards happy, but also applies healthcare costs to hospitals more evenly across the chain? Hospitals are the last resource, and usually in care they are the most expensive way to treating patients. However, a clinic or local GP practice is able to prevent some of these costs, and even your grocery store could do as well, if we just ate better (you are what you eat, so your health) but that’s a separate post. I refuse to believe that Healthcare companies are not aware that focusing on maximising their revenues will eventually lead to stagnation and governments that won’t be able to pay the bill anymore…and that’s really us

So, a model that reduces the hospital bill, increases the focus on preventive care, and introduce innovation in lifestyle itself, making it more healthy, should be the master plan for Healthcare companies….But, we know is not yet, and that is probably why they are a master target for digital disruption!

Not only because is somewhat corrupt, and many are not aiming at improving general well being anymore (although they think they still are), ultimately because Medical practitioners, and hospitals no longer have a monopoly on health information. I’m pretty sure there is an army of entrepreneurs, already waiting for their turn, better equipped to manage the social influence arena, and ready to unleash the power of information aggregation to scare or bring the giants down.

To my friend, I probably didn’t answer the question on pricing, but I sure gave him something to think in how to be better than their industry peers, and regain the trust from a community that is slowly raising to get back control of its care.



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