What if you found out that your company is spending over twice as much as your competitors on a key element of your business, but the excess spending provides no differentiation, market-share gains or price premiums for your company? You’d likely appoint a team to unearth root causes of this wasteful spending. Welcome to the US Health Care system. We spend 16% of our Gross Domestic Product (GDP) on healthcare – seven percentage points of our GDP more than the average of all OECD nations and 5 percentage points more than the second highest spender in the OECD, France. (The 34 member countries in the OECD span the globe and include many of the world’s most advanced countries.) Yet we have nothing to show for our excess spending in terms of population health, as cited in Forbes. Today’s situation will only worsen absent…
Business model innovation starts with challenging hidden assumptions
Impressionist artists were excluded from top official exhibitions because their “fuzzy paintings” did not fit the mold (i.e., set of assumptions) of what constituted great art of its time. So Monet, Van Gogh and others formed their own association, held their own exhibits, and attracted an art dealer who needed to differentiate himself from established art sellers. And that’s how modern art was born. Do these century-old reinvention patterns feel familiar? Treating an assumption as a fact can be very dangerous, as dealers of classical art discovered. Great leaders are willing to unearth hidden assumptions and challenge their validity. Consider the watch industry, at the edge of creative destruction with the explosion of digital communication devices telling time. If you’re like me, a millennial generation parent, you may know that look of disbelief when you ask your child if she’d like a watch…
Disrupt the US health insurance business model
Let Washington fight a tug-of-war over how much or how little of the recently passed federal health care legislation gets enacted. I’d like to step away from the politics and talk about the business model for the health insurance industry, why it needs disrupted and how to accomplish just that. With US health care costs far exceeding that of the rest of the world and health status outcomes mediocre at best, our health care system is ripe for disruption. The insurance industry business model is one lever for accomplishing this. I’m sharing my thoughts here hoping to get your feedback on what’s right and wrong with my thinking. (Note: I am a political independent, seeking pragmatic solutions, whichever political party provides them.) Health insurer profitability is driven by a number of factors: Accurately assessing and pricing risks of insuring a pool of people…