What’s going on with the great wave of “Consumerism” that was supposed to sweep through healthcare?


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What’s going on with the great wave of “Consumerism” that was supposed to sweep through healthcare?  Consumer-driven health plans? Online health activism? Online purchasing?  Physician and hospital rating systems at the touch of a mouse? Entire health records on a credit card?
 
Managing chronic disease through the promise of technology, instead of the intervention of a nurse?  Timely, real-time treatment information that is 100% aligned with diagnoses? And…  And… And…
 

Five years after the Medicare legislation that was supposed to represent the Dawn of a New Age of Consumerism is Healthcare, how are things going?  
 
Are “Consumers” buying?  Are they healthier?  Are they less costly to treat?
 
Oh, yeah, and have investors made any money in their investments?
 
So far, we think the answer is NO, NOT YET.  But, we must keep trying.
 

Consider the latest headlines:  
July 9, 2008:  “Problems Found With Consumer-Directed Health Plans”
July 10, 2008:  “CDHPs Motivate Patients To Avoid Care, Discontinue Drugs”
June 5, 2008:  “Wellness Programs Common Despite Lack Of Savings”
January 2, 2008:  “CDHPs Will Need To Step Up Outreach Efforts”
September 14, 2007:  “A Long Road For Retail Care”
August 30, 2007:  “Consumer Medical Finance Grows… Slowly”
Despite recent hic-up’s in the evolution of “CDHP 1.0”, the power of the Consumer movement in healthcare is unmistakable.  In fact, the number of large companies offering a consumer-directed health plan has nearly doubled over the last two years, according to research published earlier this year by Watson Wyatt and the National Business Group on Health.
About one-half of large U.S. employers offer the plans, up from 33 percent in 2006. Fifteen percent of employees at organizations that offer consumer-directed health plans are currently enrolled in such plans, up from 8 percent in 2006.
THE BOTTOM LINE:  Consumerism in healthcare is the right thing.  However, it’s a journey, not a destination.  It will take time for systems and infrastructure to be built in order to support the needs of the system and the expectations of the participants.  The most important promise of CDHP is that it aligns the interests of all participants in the care pathway.  For that reason, CDHP can be the catalyst that brings the same type of productivity improvements to the global healthcare industry as have been seen in other industries during the past 20 years.
And this is the reason that investors will make money in CDHP.  Because it is the cornerstone of forthcoming healthcare reform.  Because enabling technology now exists.  Because the regulatory forces are gaining momentum.  Because there is an inordinate amount of “pain” in the market – which is the best leading indicator of structural change in a market.  Because productivity-driven initiatives in growth industries have always made better investments than growth initiatives alone.  Because – in the final analysis – ‘We ain’t in Kansas anymore, and we can’t go back! 
 
We understand very clearly that there will be strong headwinds, and that certain constituencies in the healthcare system would rather see the return of suppositories to treat head-aches than to give the keys of the healthcare system to the “Consumer”. 
 
But it’s a lot like the argument for energy independence that we see splattered all over CNN and the New York Times every day.  Just as the oil companies are not so concerned that we have to pay $5.00 for gas despite the fact that we are completely depleting the U.S. economy while mortgaging our children’s future, “Clean Tech” is a red-hot investment theme.  Yet, I would venture to say that most investors in Clean Tech have NO IDEA HOW THEY ARE GOING TO MAKE THEIR MONEY.  Instead, what they will say is, “It’s important to our long term economic and social interests to have broader, more efficient form of energy available to us.  But we are patient in our understanding that we are building a whole new industry, and that large sums of capital will have to be deployed over prolonged periods...
 
We’d say the same thing about CDHP.