Bing! It's Round 6 for Goodman and Ali. Goodman pounces out of his corner. He's bobbing and weaving. Ali is looking a little groggy after the pounding he's taken for first five rounds.
Oops. Sorry. I was having a Walter Mitty moment.
Today's topic is entrepreneurship and everyone needs to get into a creative state of mind.
In a recent Wall Street Journal editorial, Harvard Business School professor Regina Herzlinger asks, "Why are there no entrepreneurs in health care?" Alert readers of this column already know some of the answers.
In our fee-for-service payment system, doctors are slaves to the way they are paid. It doesn't matter whether the payor is public or private. It also doesn't matter whether we are in the United States or in Canada. Doctors have no freedom to repackage and reprice their services. More precisely, regardless of how they repackage, they cannot reprice. So almost any innovation that raises quality or lowers the patient's costs means less – not more – net income for the physician.
Fortunately, there are exceptions to this generalization. There are isolated markets here and there that are bustling and teeming with entrepreneurial activity. These islands of health care innovation are easy to spot. They are the places where the third-party payers are not.
Take TelaDoc, a company that has discovered something for medicine that lawyers, accountants, architects, engineers and other professionals discovered almost a century ago: the telephone.
TelaDoc is headed toward its one millionth customer. If that doesn't immediately knock your socks off, stop and consider: Almost one million people have stepped outside the traditional health insurance system and paid with their own money for a few simple services that our institutionalized, bureaucratic, archaic, third-party payment system cannot deliver. In addition to telephone consultations, TelaDoc patients have portable electronic medical records. Also, their prescriptions can be ordered electronically, taking advantage of software that reduces medical errors.
Another entrepreneurial venture — walk-in clinics in pharmacies, supermarkets and shopping malls — has recently discovered for medicine something nonmedical professionals have known about for several decades: the computer. Nurse practitioners not only enter patient data electronically, they follow computerized protocols in making decisions, and they can order prescriptions electronically as well. A MinuteClinic survey of 58,000 sore throat cases found that the nurses conformed to evidence-based treatment guidelines 99.15 percent of the time. By contrast, the RAND Corporation found that system wide, doctors deliver appropriate care only 55 percent of the time.
Here again, thousands of people are stepping outside the traditional payment system to pay with their own money for services they cannot get otherwise. Prices are posted and are about one-half what primary care physicians charge. There is usually very little waiting, and some clinics hand out beepers so patients can shop and browse while they wait. RediClinic CEO, Web Golinkin, writes in The Wall Street Journal that there are already 400 clinics and thousands more will open in the next few years unless the defenders of the status quo get state legislatures to stop them.
I know some will object that I am ignoring all the entrepreneurship over the past two decades loosely associated with the term "managed care." Granted, there has been a lot of that type of activity. But it's all on the wrong side of the market.
Big market changes are not driven by entrepreneurial buyers. They are driven by entrepreneurial producers and sellers. More on that in a subsequent alert.
For the Herzlinger Wall Street Journal op ed, see
For the Golinkin Wall Street Journal op ed, see