Transparency

Default to truth

Why do we default to truth when someone is lying? Most people default to truth until their doubt and the facts tell them otherwise. 

My default belief has been set using the 80/20 rule. 80% of people tell the truth and do the right thing. Based on Talking with Strangers by Malcolm Gladwell, it’s a reasonable starting point.

However, I was in a meeting with healthcare executives when the physician founder challenged my belief. He believed only 20% of people do the right thing and that most will act in their own self interest. 

Work vs. Life

So which is it? It’s something that I’ve been rumbling with since that meeting. Let me start this discussion by sharing some additional input from colleagues that will help you understand why.

The Director of Health and Safety for a large employer organization believes 60% of physicians fudge the facts to turn medical claims into worker’s comp claims to get higher reimbursement [aka: payment].

A Finance Executive in private equity shared that he believes everyone seeking financing from them is lying. The only way they get to the truth is doing careful due diligence even if the company has been audited. They don’t put much faith in auditors either.

What I learned is that context matters. These people don’t believe everyone is lying all the time but in a professional context [and more specifically when money is involved] their default level of trust is lower. Whether it’s experience that has raised their level of doubt or use of data, they have learned to verify the facts rather than trust what people say.

Life

In the broader context of life, we don’t always have data readily available to tell us whether or not someone is lying or telling the truth. 

No one is good at spotting a liar. Looking someone in the eyes, reading their body language or talking to them doesn’t make you a good judge of truth. In fact, these attempts to discern truth blur whatever facts are available and consequently, rarely result in the right answer.

We have to believe people are generally good even if they tell a lie or two. Society wouldn’t function if we didn’t.

However, when we have doubt, we need to look to the data and trust the facts so that our feelings and biases don’t blur our judgement.

As with any Malcom Gladwell book, Talking with Strangers is brimming with great stories – and yes facts. 

#metoo

Talking with Strangers includes several stories about rape and why it’s hard for people to discern the facts in legal cases. The stories clarify the laws in each case, highlight the added issues if someone is intoxicated and discusses what constitutes consent.

Post #metoo everyone should have a clear understanding of these cases to help guide their behavior and to judge the facts. It’s worth your time to read the book.

Change is in the air

How will Amazon and Walmart change healthcare?

With Amazon and Walmart entering the healthcare provider business, it is safe to assume the industry is in for some big changes.

For now Amazon Care will be beta tested with 50,000+ employees living in the Seattle area but you can only imagine that it will be soon available to Haven employees and then Prime members.

Healthcare entrepreneurs and legacy providers have so many questions and likely fears about what’s to come. Your guess is as good as mine.

However, you might get some insights by thinking through some of the questions that will likely surface during the beta test. 

Questions such as:

1/ Is the medical information being shared sufficient to facilitate the continuum of care?

2/ What other types of services do employees need?

3/ What is the best way to deliver those services?

4/ Who is the best provider of those services?

5/ What medical needs are predictable?

6/ Are employees open to health and wellness product recommendations?

7/ What other medical products should be offered on Amazon to enable self-care?

8/ When do employees schedule in-person appointments?

9/ What are the most highly sought after appointments?

10/ Do we have enough contracted providers available to meet demand and service expectations?

Now think about what they do well, what they will likely buy and what they will likely need to complete the marketplace.

Amazon vs. Walmart:

As you likely know, Amazon and Walmart serve different customers and do so in a different way. Amazon operates a marketplace with the same type of product offered at different prices whereas Walmart strives to offer the lowest priced product to their customer. 

Start by thinking about what Amazon offers all consumers:

1/ Consumers see the full marketplace of products relevant to their search.

2/ Results are displayed by most relevant.

3/ Filters can be used to narrow the options.

4/ Recommendations and reviews provide verified consumer feedback.

5/ Consumers can filter for products included in Prime.

Now think about how that translates to healthcare.

1/ Heathcare Consumers would see all licensed providers: contracted or not.

2/ Healthcare Consumers would be able to search and use filters to narrow their search.

3/ Healthcare Consumers would be able to read service details, reviews and recommendations.

4/ Healthcare Consumers could filter for providers included in [……..]


In what?

Amazon could administer other networks [Medicare and Commercial Networks] and/or develop a Prime healthcare network that resolves the confidentiality issues of existing networks.

Pricing + Contracting

With Amazon, it’s not necessarily a race to the bottom for healthcare providers. Prime rates are not always the cheapest but free shipping and the ease of dealing with Amazon customer service makes membership and the added cost worth every penny.

Healthcare providers should be thinking about who they serve and how to differentiate their serves in the marketplace.

Review your data to help answer questions:

1/ Why do patients choose you? Simply asking if they use Amazon or shop at Walmart might give you some good insights too.

2/ What do they say about the experience? Collect feedback about care and service separately.

3/ Do you have unpaid patient balances? Your patients may be underinsured or dissatisfied with your service or maybe your business practices need refining. 

Commercial payers understand that it is not a one size fits all marketplace. If the patient population you serve puts a higher value on your care and services, they do too.

Leading with Purpose

Some of the richest people in the world made their fortunes by making products and services cheaper.

Jeff Bezos, Founder of Amazon, is the richest man in American. As you likely know, a lot of products on Amazon cost less than the same or similar products at local retailers. Plus you can acquire everything almost as quickly from the comfort of your home. The Walton family members [Walmart] are also in the top 20 of wealthiest.

Running a profitable business takes a lot of work to refine systems and processes but it is possible to do so and to make money. That’s the lesson that the industry should be taking from Amazon and Walmart.

What I hear from entrepreneurs especially those new to the industry is a passion to take on the cost of healthcare challenge. They are taking their inspiration from Amazon and Walmart and thinking about how they can make things cheaper and better for healthcare consumers. 

Healthcare entrepreneurs are thinking about value and leading with purpose.

How matters

How matters more than most leaders thought.

Corporate America is changing. Business leaders are realizing that they need to think beyond the bottom line.

Some investors are pushing back but what they might not realize yet is companies can do even better when they consider the social and environmental impact in their policies and business practices.

Haven

Haven Healthcare is the new healthcare company formed by Chase, Amazon and Berkshire Hathaway that is led by Atul Gwande MD. Dr. Gwande has been sharing his experiences, thoughts and insights about the cost and quality of healthcare in his books and articles for more than a decade. 

Since formation, the company has been working to understand the needs of their patient population so that they can “create new solutions and work to change systems, technologies, contracts, policy, and whatever else is in the way of better health care.”

The “whatever else” in this case likely refers to the way American Corporations have focused solely on the bottom line. It should come as no surprise to any of us that Jamie Dimon, CEO of Chase is one of the leaders championing this change. 

He is likely getting some good data and management insights to support his position. Hopefully we’ll learn more about that when the Forbes article is published next month. Until then, you might want to check out this book.

Dying for a Paycheck

We’re likely going to hear about some of the work published by Stanford Professor, Jeffrey Pfeffer.

In Dying for a Paycheck, he shares countless stories and stats about the management practices that “literally sicken and sometimes kill employees” and that also negatively impact productivity and the bottom line. Wellness programs can’t compensate for the fundamental issues that exists in many workplaces and unfortunately, are not bending the healthcare cost curve as expected.

Researchers in Denmark are reportedly using prescription drug data to draw correlations between prescription drug use and the effects of entrepreneurship, organizational change, compensation and more.

My guess is that Haven is using their medical data to investigate the policies and business practices of the operating companies and drawing similar types of insights. It could be game changing for Americans and the healthcare industry.

Times change, we need to change as well. 
~ Nelson Mendela

Changing how

A lot of this might seem like common sense, but without data it is harder to convince people change is necessary.

I was an online learning provider during the dot com boom/bust days. We helped clients enhance their operations while providing a path for a brighter future for their employees. How you ask?

Our training solution provided the much needed training to those responsible for the revenue cycle and financial management of healthcare organizations. Most had never received formal training on the systems or best practices which from a financial perspective is a recipe for disaster.

Staffing decisions are emotional but became so much easier with data about the time spent on course work, modules completed and assessment results – all stats we needed to report as a CPE provider.  

We enrolled everyone in their required training modules and gave them time on the job to complete the course work. Some just didn’t complete all of their modules and not surprisingly, they underperformed in those areas of their job. It was a clear indication that they had no interest in the work.

Rather than terminating their employment, it was my opportunity to start a conversation about the right career path for them. There are really only three career options: 

1/ Develop functional depth

2/ Transition to a cross functional role

3/ Retrain for something entirely new

Even though the organization had less than 100 people, we were able to offer all of these options within the organization and financially, we had some of the best years. 

Investments in fundamentals and people pay off in companies of all sizes.

Training investments help people perform better on the job and prepare for a brighter future. Many of the people who successful completed our courses have already transitioned into new jobs. They didn’t have to experience the stress of having their job eliminated as some are experiencing now.

Industry leaders need to be making these types of fundamental investments to be profitable and accountable to all constituents going forward. Those leading in a strong viking and victim culture such as in law, finance and tech might find it harder to make the mental shift but it is time for change.

Regulation vs. Ethics

Can the healthcare industry self regulate?

I had a discussion recently with a CEO to fortune 1000 companies about the need for proper regulation. At the start of the conversation, he asked what I meant by regulation. So to ensure that we’re all on the same page for this discussion, let’s start with the definition of regulation.

Definition: A regulation is a rule or directive made and maintained by an authority.

Regulations are tricky to get right because they need to be protective but not restrictive – and somehow, they need to be efficiently and effectively enforced to work well. It takes a lot of work to strike the right balance. That may be why some politicians and business leaders would like to do away with all regulation and let the markets self regulate. 

AdvaMed


The AdvaMed Association for medical technology is taking on a self regulation initiative for 2020. They are developing a new code of ethics that is values based to better engage everyone in and involved with the organization in compliance. To do so, they have been reportedly working with all of their stakeholders including teaching hospitals, hospitals, clinicians, device and diagnostic companies to develop the new code.

At this point, they have identified six [6] key values for the new code of ethics:

1/ Innovation
2/ Education
3/ Integrity
4/ Respect
5/ Responsibility
6/ Transparency

It’s not clear yet how they plan to operationalize the values. What we know is that member companies will need to have policies and programs in place signed by the CEO demonstrating compliance in order to be awarded the AdvaMed seal of approval.

There is a carrot for member company participation. The seal will help business partners and customers identify organizations who are in compliance. That may also give companies selling solutions an edge in competitive bid opportunities.

There is no stick for non-compliance. AdvaMed will not initiate investigations or bring any action for non-compliance. 

The question that remains unanswered is whether ethics can protect consumers from corporate wrong doing and greed better than regulations?

However, the industry should welcome the attempt to self regulate even if it’s an added regulatory measure. With all the advances in medicine that are raising new ethical questions and concerns for the healthcare industry, ethics need to be ingrained in the culture for companies to earn the trust of partners, customers and patients around the world.

Relativity applies to physics not ethics.
~ Albert Einstein

Startup Comp

What is the value of your time and risk tolerance?

A member of the Female Founders Network shared her story of working for a successful startup that recently became a public company. She was an early employee but was never offered shares or options and questioned whether or not it was fair.

With the amount of pay inequity in the market, it would be easy to chalk it up to another example of gender inequality. Without knowing the numbers, I have to generously assume it has more to do with risk and reward.

Startups are high risk. It’s easy to look back at a successful startup and wish you were paid in equity. But how would you feel forgoing cash and benefits for a stock vesting plan if the company failed after 4 years? My guess is that the experience gained would not feel like adequate reward for most. That’s the risk – reward relationship of startup.

My advice to the Female Founder Network and you is to know the value of your time and your risk tolerance. Everyone deserves to be fully compensated for the value of their time. The method of compensation needs to reflects your risk tolerance. Methods include:

1/ cash + benefits
2/ stock + options
3/ blended

Time is one of your most precious resources that can only be valued by you. The method of compensation should be negotiated.

From a leadership perspective, we need to think about the person not just the position when offering stock and options. Doing so will help address pay inequity.

Startup Comp

What is the value of your time and risk tolerance?

A member of the Female Founders Network shared her story of working for a successful startup that recently became a public company. She was an early employee but was never offered shares or options and questioned whether or not it was fair.

With the amount of pay inequity in the market, it would be easy to chalk it up to another example of gender inequality. Without knowing the numbers, I have to generously assume it has more to do with risk and reward.

Startups are high risk. It’s easy to look back at a successful startup and wish you were paid in equity. But how would you feel forgoing cash and benefits for a stock vesting plan if the company failed after 4 years? My guess is that the experience gained would not feel like adequate reward for most. That’s the risk – reward relationship of startup.

My advice to the Female Founder Network and you is to know the value of your time and your risk tolerance. Everyone deserves to be fully compensated for the value of their time. The method should reflect your risk tolerance.

Compensation Methods:

1/ cash + benefits 

2/ stock + options 

3/ blended 

Time is one of your most precious resources that can only be valued by you. The method should be negotiated.

Operating in the Grey

Morally wrong but not illegal. That’s the fine line that many companies walk.

There is a really good documentary called the Drug Short that uses the story of Valeant to explain the problem with drug pricing in the US.

Valeant operated more like a hedge fund than a pharmaceutical company. The model was pretty simple:

1/ Buy companies that have a drug with a monopoly.

2/ Strip out the R+D so that the typical 18% spent on R+D goes to the bottom line.

3/ Raise prices on existing drugs.

The problem is that many of the drugs were life sustaining drugs for people in middle America who couldn’t afford to pay for them. 

So the company took extraordinary measures to bilk insurance companies into paying for the prescriptions. To keep patients quiet about the issue, they provided just enough financial support to them through their advocacy efforts.

Hillary Clinton started tweeting and talking about the issue during her campaign. Investors and board members could have looked into it and taken action, but they didn’t. They were reportedly paid large sums to look the other way. 

The returns on biotech companies now are largely due to price increases. The companies can’t afford to lower their prices and profits.  So nothing has changed.

Experience vs. Service

The Hudson Bay Company [HBC] is a really good case study for modernizing healthcare. Why?

The retail customer is becoming the healthcare consumer. In an era where the retail customer is becoming more knowledgable and empowered with choice, HBC is struggling and stores will likely close.

After attempting one transaction with HBC, I told a healthcare colleague that the company is in for a rude awakening as Amazon expands operations throughout Canada. 

1/ Lack of Customer Focus: They’ve tried to be things that they are not [ie. competing in the luxury market] and failed. They clearly don’t have a strong grasp of their customer and what their customer expects of them.

2/ Product over Experience: HBC is still focused on what to sell rather than curating the experience for their customer. Companies thriving in the modern era of retail are doing so by focusing on the entire customer experience rather than simply curating product. 

3/ Ease of doing business: Retail consumers expect the payment system to work for all their transactions whether online or in person. The more friction there is with the purchase process the more likely the customer will go elsewhere.

Healthcare service companies are also in for a rude awakening if they don’t get these three things right.

Trust

Transparency is the key to consumer engagement in healthcare. Why? In one word – trust. 

Yesterday I participated in a film being made by a US physician who’s trying to wrap his brain around the patient – physician relationship. The film is being presented at a US Public Health event later this year. I’ll be sure to share the link.

Trust is one of the themes that has come up in several interviews that he’s had with both patients [aka: healthcare consumers] and professionals. Reportedly, no one knows who to trust when it comes to healthcare.

Trust has been eroded in both Canada and the US but for slightly different reasons. 

In Canada, the lack of choice and ability to actively participate in treatment decisions is eroding patient trust. Canadian physicians have no financial incentive to invest the extra time needed to educate their patients. 

In the US, the lack of pricing information and network participation is eroding patient trust. American physicians need to educate and almost sell their patient on their plan but patient trust has been undermined with various out-of-network and billing strategies.

When I ask people if the 80/20 rule [80% right thing done] applies in healthcare – most don’t agree. The responses are pretty dismal.

Trust is clearly a problem. Transparency will help to re-establish trust.

Political Risk

Lower cost is one element of the triple aim. How does your company’s values address the cost of healthcare?

Cost is a big issue for the 2020 election. Some of the government findings about healthcare pricing and billing practices are clearly an issue that could blow back on companies that aren’t proactively addressing cost.

What are patients being promised about the cost of their care? Is your company promising the lowest cost, a market rate or a high cost for a premium service? There is no one right answer but patients need to know what your company is promising. Why?

Stakeholders have the ability to influence government action now more than ever thanks to social media. Social pressure from stakeholders including patients, employees and employers will force the government to regulate the reported problem. We’re seeing it now with proposed regulation for pricing and billing practices.

Leaders of companies should be thinking about:

1. Risk profile as it relates to cost.

2. Prioritizing cost as a risk and integrating it into their values + strategies.

3. Mitigating existing risk.

Companies that don’t will expose themselves to unnecessary political and reputation risk by not making a clear statement about cost.