Healthcare is one of the most rewarding spaces for innovators to focus. After all, what is more rewarding than saving lives and curing disease? Demand for healthcare innovation is high, as nearly all of us all want to live longer healthier, happier lives. Healthcare is also heavily funded with vast amounts of money coming from both NGO’s and via pharmaceutical companies eager to find lucrative new drugs, and arguable, in some cases, lucrative new diseases. This potent mixture of demand, financial resources, and concentrated expertise should combine to make healthcare one of the most fertile areas for innovation on the planet.
So l why is healthcare so terribly sick in the US today? Turn on any media stream, and it is hard to avoid deeply emotional, often vitriolic arguments around different visions for healthcare. So in this blog, I’ll explore how taking an innovation rather than politically based approach might brake the current log jam, and provide a foundation for moving this gnarly problem forward in some degree of unison. Can an approach based more around a loose design thinking framework, where we focus more on carefully defining the underlying problems and then targeting solutions against them, be more productive than the deeply entrenched partisan positions that we currently face? There is no question that these problems are inherently hard, but in a space which attracts so much funding and thinking, maybe, just maybe, a different lens could help us find common ground and move forward.
Is This a Good Idea? Like many people, because of the current, hyper polarized political climate, I’ve been reluctant to engage in this debate. Frankly, I see this as a problem space that has become almost entirely blame focused rather than solution focused, and I don’t really want to be unfriended by connections on either side of the political spectrum, or blacklisted by clients in the medical field, simply for looking for solutions. But I’ve also always been passionately interested in healthcare. I started my career in pharmaceutical manufacturing. My mother was a children’s nurse, and reveled in the service aspect of her calling. I’ve been fortunate to learn from the brilliant Dan Ariely a lot about how Behavioral Economics can help nudge people towards better wellness behaviors. And I’ve learnt a great deal from Gerd Gigerenzer, Director at the Max Planck Institute for Human
Development about how greater statistical literacy can help both physicians and patients make better health decisions. And for me, as with many, many others, healthcare is deeply personal. Both my wife and mother are cancer survivors, and my father died from brain cancer. And there is certainly more to come. Death and taxes may well be the only certainties in life, but increased exposure to the costs and complexities of healthcare is a pretty good bet for all of us as we get older. And all too often it reaches crisis point as our cognitive function starts to drop below a level where we can effectively manage it!
This is also Immediate for Me Right Now! This article was directly triggered by my own healthcare experience this week. I ended up in the emergency room with a back problem. The pain was excruciating, but if past experience is anything to go by, nowhere near as painful as the bills and insane billing complexity I’ll face in the coming weeks after I am physically recovered. Saddest of all was the blithe, even cynical acceptance by my caregivers of how bad the financial and logistical cost of healthcare has become. My mother never thought of her calling in this way. But both medical and administrative staff joked with me that I may have been medically treated, but before I left the hospital they were going to completely ‘shaft’ me with the bill (their words, not mine), and financial paperwork. They were actually very nice and caring, and just trying to cheer me up by adding some humor to my situation(sic), but I couldn’t help thinking as I was wheeled out of the hospital that they also told a fundamental truth, and that while my back would get better quickly, the lingering pain of crossing the healthcare system almost certainly wouldn’t.
I’m an innovator, not a politician, so the obvious thought was what could we do if we looked at this through an innovation rather than political lens? An essential start point for any innovation is to acknowledge that we have a problem, and that is something that scientists and innovators are generally more comfortable with than politicians.
Solving the Wrong Problem: The first question I’d ask is are we solving the right problem? One of the most common mistakes we make in any innovation is solving the wrong ones – could this be part of the healthcare problem today? To illustrate this, there is quite a well know urban legend associated with NASA and the space pen. The story goes that NASA were having problems developing a pen that would work in space. It is gravity that causes ink to flow from a pen onto a page, and for all practical purposes, gravity is all but absent on a space mission.
To address this, NASA, at great expense, developed a space pen that contains a tiny internal pump that acts as a proxy for gravity. The lesson of the urban legend was that while NASA were narrowly focused on improving existing ‘pen technology’, the Russians solved the problem by stepping back, and bypassing “pen innovation” altogether by simply using a pencil. The reality was more complex, and if you want to read the full story, it is told here http://www.snopes.com/business/genius/spacepen.asp
However, this simplified parable does illustrate how all too often, we spend a lot of time and money creating brilliant answers to a problem that all but disappears if we step back and take a broader view. In this, albeit hypothetical case, NASA simply didn’t step back far enough, and focused on modifying the existing ‘norm’ – pen technology, rather than approaching this as a ‘how to write without gravity’ problem. This may be a somewhat fake example, but there are plenty of real ones. For example, Marshall & Warren’s Nobel prize for the discovery that peptic ulcer disease was primarily caused by Helicobacter pylori, and so treatable by antibiotics rather than surgery, was a classic example of stepping back, and finding a completely new problem-solution combination. The replacement of code with a desktop interface, Canons ‘so advanced it’s simple’ mantra, or just the use of solar power to deliver power to remote villages in developing economies, or to power external security lights without the need to build power grid infrastructure are all great examples. Most seem obvious in hindsight, and often fit the ‘why didn’t I think of that’ model that defines many elegant but brilliant innovations.
Cognitive Biases: Why do we so often fail to step back, and at least initially miss simple innovative solutions to problems? At the heart of this is a very human cognitive bias. We tend to look at problems through the eyes of our own expertise. A surgeon has a natural bias to see surgical solutions whereas a chiropractor will typical look first at manipulation. While following one’s own expertise may be in part self-serving, it is also an honest bias. A designer will naturally look at design based solutions, while an engineer will jump to engineering solution because it’s comfortable, leverages our skills, and because on an individual basis, it’s where we are most likely to come up with innovative answers. So it’s not surprising that politicians focus on political solutions to the healthcare issue.
How does this apply to Healthcare? I’d argue that every proposal to solve the healthcare problem currently on the table is absolutely attempting to solve the wrong problem. They are all focused on who pays, rather than on reducing how much we all pay. This ignores that the disproportionately high cost of healthcare in the US is the key log jam. At the end of the day, hardly anybody is arguing against making basic healthcare available to everyone at a cost that we, as a society can afford. There may be considerable debate over what defines basic healthcare, and who should pay what share, but the friction ultimately stems from cost that is effectively unaffordable, and growing.
Long Time Coming: This is where people will start hitting the ‘unfriend’ button, but this is a problem that has been growing for a long time, and was a fundamental issue prior to either the implementation of ACA (Obamacare) or the current rounds of proposals doing the rounds in the legislature. The ACA certainly brought cost issues to the fore, because it attempted to extend coverage to previously underserved groups. No matter how well intentioned, without a viable , fundamentally sustainable long-term strategy to pay for this, it accelerated an already looming crisis. But the existing proposals currently on the table for ACA reform appear to be no better. They again fail to solve the core issue, an instead exploring ways to solve the core problem, and bring total costs down, they simply shift the same fundamentally unaffordable cost burden around a little, maybe reducing the scope of coverage a little in the process. Both are missing the point that a good innovation bases approach would ferret out. We don’t need innovation around how we distribute cost, but in how we solve the elephant in the room, and bring total costs down.
Why? Because it’s going to be a lot easier to find agreement if everybody ends up paying less, and the argument centers on who will get the biggest reduction in healthcare costs, rather than who shoulders the biggest burden: Of course, this is easier said than done, but there are compelling reasons to believe that we should be able to do this, and so completely change the debate.
Healthcare in the US is Far More Expensive Than Anywhere Else in the World: This is a pretty good reason to believe overall cost reduction should be possible. In 2010, the average US person spent over $8,000 on healthcare, compared to around $3,000-$4,000 in the UK, Japan, Australia, France and most of Europe.
Why is US Healthcare so Expensive? This is the multi billion dollar question, as if we can find out the cause of this disparity, then we have a fighting chance of innovating our way out of it. Great innovation starts with great problem definition, and is facilitated by deep understanding of our system.
Do we Use Healthcare More?: This is not the problem, in fact Americans spend slightly less time with medical professionals than people in most other developed nations.
Do we get Better Care? There may be some truth in this, but we typically pay 2-3 times as much for identical prescriptions and medical procedures in comparison to other developed economies. For example, in 2014, the average cost of Humira for a US patient was ~$2,600. In the UK the cost of the identical drug and dose was $1,300, and in Switzerland, $800.
Avastin was $4,000 in the US, but only $500 in the UK. In the same year, the average cost of an MRI was $1100 in the US, $788 in the UK, and $215 in Australia. A day in hospital was $5,000 in the US and ~$750 in Australia. A ‘normal birth costs $10,000 in the US, $5,000 in Australia, and $2,000 in Spain. The cost of a C section is about 1.5X, but the ratios are about the same. Removing an appendix cost about $16,000 in the US, but under $4,000 in Australia. There is clearly a lot of variation in costs, but the one consistent pattern is that the US always pays far more than any other developed nation for identical treatments and procedures.
Do We Live Longer? No! Average life expectancy in the US sits near the middle of the distribution for developed economies, on a par with Cuba, but well below countries that pay far less per capita for health care such as Japan, Switzerland, Australia, France, South Korea, New Zealand and the UK. Clearly, this is complicated by diet and lifestyle, but the fact remains that in the US, we are not getting even remotely good value for the premium we spend on healthcare.
Is Our Healthcare more Advanced? Maybe in some cases, but see above, not where it really matters. We have shorter life expectancies than many advanced countries. We may have better access to stand up MRI’s, and more choices to treat restless leg syndrome, chronic dry eye , or very rare (and often profitable) diseases. Not to belittle any condition, but big picture, if we are not living longer, any unique advances we have are not targeted where they really matter most – serious illness and life expectancy that effect large numbers of people.
There is a great moral case for developing economies paying a higher share of healthcare innovation, and so the US has a moral obligation to help lead innovation that benefits developing economies. But why should US healthcare consumers subsidize medical advances for other developed economies such as the UK, France, Australia, China, or Russia?
Doctors salaries? Doctors in the US are on average paid well. Depending upon how we measure it, not as much, or very similar to the Netherlands and Australia, but significantly more than doctors in the UK, Canada, and France. But before I get unfriended by all of my physician friends, I should point out that this is somewhat offset by the high cost and debt associated with a US medical education, the cost of liability insurance, and often a larger share of expenses associated with running a practice. Doctors in the US eventually enjoy a good standard of living, but they are not the primary source of the difference we see in healthcare costs in comparison to other countries. And I personally want my surgeon to be financially comfortable. When his knife cuts through my skin, I want him focused on me, and not how he’s going to pay her mortgage.
Do Higher Costs Provide a Healthcare System that is simpler and easier to Navigate? No, No , No!!!. As anyone who has had even minor surgery knows. We have to navigate multiple charges, copays and deductables from primary care doctors, specialists, anesthetists, phlebotomists, labs, hospitals, and others. In most countries, this complexity is handled internally by medical establishments, with a stressed, hopefully recovering patient receiving a single bill. In the US most of the complexity is pushed onto the hapless patient, often obscuring the true total cost of a treatment, and adding enormous stress to people who are often in no state to deal with it.
Do we waste more Money in the US? Yes!!! And I Believe this is our biggest opportunity for innovation. If cost is the problem, where can we cut it without hurting the key functionality of the system?
Pharmaceutical Advertising: The US pharmaceutical industry spends over $6 billion on direct-to-consumer advertising every year, and this number is rising rapidly year on year. This is a significant amount of money that could be passed back to the consumer, and is compounded because it encourages patients to demand expensive, branded alternatives over cheaper generics, potentially creating a chain reaction of increased costs. Only the US and New Zealand allow direct to consumer advertising, which is largely opposed by physicians. This sounds like an interesting place to innovate policy, especially in the face of pharmaceutical prices that are rising far faster than underlying inflation.
Unnecessary Procedures. Estimates vary, but perhaps as much $250 billion is wasted annually on excessive testing and treatment, sometimes labeled as procedural medicine. This not only increases costs, but can also harm patients, generating mistakes and injuries that may cause up to 30,000 deaths each year. False positives, and treatment of injuries also add to the cost of healthcare by generating a snowball of increasing cost and further procedures. As an example, in his book Better Doctors, Better Patients, Better Decisions, Prof Gigerenzer estimates that about ten million women have undergone unnecessary Pap tests. These are women who no longer possess a cervix having undergone a complete hysterectomy.
Similarly, the typical C-Section rate around the world is about 19%, but is about 33% in the US, with some States posting even higher numbers. A cesarean birth costs about 50% more than a ‘normal’ birth. To be fair, this is likely not entirely cost driven, and probably reflects an increased trend in defensive medicine. But this at least represents an opportunity for cost innovation, as doctor’s decisions should be based on the balance of benefit and risk to the patient, not an institutional fear of litigation. And there are many others examples of potentially over prescribed tests and medications, from PSA tests, to the over prescription of antibiotics. These are not a waste of money, but can create cost snowballs, with false positives generating additional stress and tests, or by contributing to the alarming increase in antibiotic resistant super bacteria.
Focus on procedural medicine versus preventative medicine: Many insurance companies pay lip service to preventative medicine, but in practice, could do so much better. As a personal example, I am due a routine colonoscopy. It’s not exactly something I look forward to anyway, but what makes it worse is that I also have to look forward to a very high probability that it will cost me a fortune. Nominally, as a preventative procedure, this is free, but if my surgeon finds anything wrong, or takes a single sample for testing, the procedure gets recategorized, and while I go into the procedure a ‘free man’, I come out of the anaesthetic with a nice, big invoice. This is simply lip service to preventative medicine, and I think morally reprehensible.
Fragmented Infrastructure and Communication. I’ve personally experienced having to pay for repeat tests and analysis on many occasions, simply because doctors and hospitals cannot share information. For example, I have a CD with my spinal X-Rays and MRI’s, but my general physician cannot read it because the software one hospital uses is not compatible with the software his group uses. Innovation that would allow different hospital groups to simply share information would not only reduce both patient and insurance cost, but also the risk to patients having to undergo multiple redundant procedures, which in the case of X-Rays present significant cumulative health risks as of themselves.
Hard Decisions. The older we get, the more we spend on healthcare per year, and as a country, we are living longer. While the data is somewhat inconsistent, it is also pretty clear that a significant proportion of our lifetime healthcare costs are incurred in our final years of life. This is hardly surprising, as we tend to get sick before we die. But it is an open question around how much of this cost lines the pockets of the healthcare industry, and how much delivers quality life extension for the patient, as opposed to additional months suffering on a death bed. Could innovation around how we talk about death actually improve patients final years and months by sparing them painful chemo and surgery that expensively extends length but not quality of life, while also redirecting funds towards making basic healthcare affordable to a greater proportion of the community?
These are very tough questions, and are one of many reasons I think physicians deserve comfortable salaries. But in a world of constrained resources, they are questions that as an innovator, we should at least pose, and at least engage patients in making more holistic, less purely clinical decisions.
What can we Learn Via Analogy: Virtually every other country in the developed world negotiates aggressively with the providers to set rates that are much lower than in the US. In Canada and the UK, prices are set by the government as part of a single payer system. In others, they’re set by providers and insurers reaching an agreement, but with government oversight. An obvious innovation opportunity is for the US to adopt a similar unified system. Or better still, as many pharmaceutical and medical providers are global in nature, why not adopt a global price structure that spreads the cost of health innovation fairly across the developed world?
Unlike most consumer goods, medical products are a category where customers are rarely in a position to say “no thank you”. Choosing to have open heart surgery is not like buying a vacuum cleaner. Consumer healthcare decisions are often at best time constrained, ort worse made for them by providers when they are in no state to make decisions at all. If ever there was a case for innovation in the form of government price and profit intervention to better protect consumers, surely healthcare is it?
In summary, Healthcare desperately needs innovation of its systems, processes, communication structure and innovation portfolio and cost allocation. Healthcare is about helping people live longer, more fulfilling lives, and as innovators, we may have a skill set that could help find and diminish the core problem I believe that we are facing – spiraling costs. While a final execution strategy may ultimately have political biases, billness is not partisan, and the way we approach the core issue should not be either. Our start point should not be driven by a Presidents legacy, the unity of any political party, or a philosophical preference for marketplaces or single payer systems. It also shouldn’t be about squeezing every last cent of profit out of patients who are in no position to make choices.
As an innovator it hurts to say this, but on a personal note, I also believe that our goal should not be blind technical advancement. Much as individual, targeted medicine is a good thing, focusing on very high cost, individually customized treatments is at best questionable when we cannot afford basic medicine for everyone. After we solve the core problem, and make basic care affordable, the choices around who pays what, what type of healthcare system we want, and where we focus research will still be a challenge. It will also likely have nuanced, rather than simple solutions. But if we can break the log jam of cost, that part of the equation may just get a little easier to solve, or at least have a civilized discussion about.
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A twenty-five year Procter & Gamble veteran, Pete Foley has spent the last 8+ years applying insights from psychology and behavioral science to innovation, product design, and brand communication. He spent 17 years as a serial innovator, creating novel products, perfume delivery systems, cleaning technologies, devices and many other consumer-centric innovations, resulting in well over 100 granted or published patents. Follow him @foley_pete