Unbiased Estimate

This post came about from a conversation I had with Alex Binkley, a former rowing teammate and founder of FundingCommunity. You can find his version here. It is the latest in a series where i compare my experiences in entrepreneurship and rowing.

The ability to stay calm and think strategically when under intense pressure and in unfavorable conditions is essential to winning boat races. Rowing is a full-body endurance sport that pushes you to the limit. It is not uncommon for rowers to vomit, collapse or black-out during competition, and it goes without saying that successful rowers pour every ounce of energy they have into a race.

But often the difference between winning and losing comes down to which competitor is able to stay relaxed and think strategically at the height of the pressure and pain brought on by racing conditions. Because as much as rowing requires good genes and superb physiology as prerequisites to success, an oarsman’s technique makes all the difference in the world. To give some perspective, a scrawny, untrained rower with a high level of skill could easily defeat a giant fitness maniac who lacks the technical acumen to apply his power effectively to make his boat move forward.

Indeed rowers spend countless hours in training, not merely getting fit, but perfecting their technique to have the most efficient stroke possible. But to row well in practice, at sub-maximal effort and under favorable conditions, is not enough. The best rowers are able to maintain their form - to stay relaxed and think strategically - when on the brink of collapse, toe-to-toe with their fiercest competitor in the worst weather conditions imaginable. That is what it takes to win. Those who are able to hold on to the skills ingrained in training when it is most difficult to do so have a distinct advantage.

A gust of head-wind arises. Who will handle it better? Lactic acid levels reach the point where where the legs burn intensely with pain. Who will continue to apply pressure evenly throughout the stroke? Another boat makes a big surge and pulls ahead. Who will avoid the distraction and stay focused on making their boat go as fast as possible?

It’s much the same, I am finding, with entrepreneurship. Having a high degree of talent and being incredibly hard working is in most cases a prerequisite. Having a good strategy is crucial. But the ability to maintain focus and clarity, to stay relaxed and think strategically under the “racing conditions” of building a business has to be a critical factor to be successful.

I started ‘Unbiased Estimate’ about a year ago, as a forum for sharing my thoughts on a quickly evolving health(care) technology landscape. Several months later I co-founded Wellframe, resulting in a prolonged hiatus from blogging. The last nine months have been among the most challenging and rewarding of my life. I’ve had the honor of working toward addressing problems about which I am passionate with co-founders that inspire me on a daily basis. I’ve received invaluable support from family, friends, mentors and fellow entrepreneurs every step of the way. And I continue to be learn more and faster than I can ever recall.

Though I remain at the very beginning of what I hope will be a long adventure, I for whatever reason feel released to once again share by thoughts and learnings publicly. I hope this sentiment will stick, and that my musing will be useful to someone.

A friend made a comment the other day that “building a startup business is more of a marathon than a sprint”. As a former competitive rower I find myself drawing on sport analogies to describe many aspects of life, and I quickly countered his assertion with one I thought more fitting.

I spent a couple years rowing (and studying) at the University of Oxford in the UK. Unlike most collegiate or international rowing races, which are 2,000 meters (~6 minutes), the Oxford v Cambridge boat race (otherwise known as ‘The Boat Race’) is 4 miles long (~17 minutes).

So, you might naturally think, a longer race means you bring down the intensity, pace yourself, and make sure to finish strong. But The Boat Race takes place on the Thames in London, a tidal river with an obscure ‘stream’ that carries whatever object is optimally placed in it swiftly toward the finish line. The trick is that the best part of the stream is not quite wide enough for 2 boats side by side, so if one boat is ever able to break “open water” on the other boat and move in front, they may confidently capture the best part of the stream and leave the other boat in their wake. Game over.

This makes for a unique racing strategy scenario. The Boat Race is a war of attrition. Despite being much longer than most rowing races, it is no less intense from the start. The best crews go out of the gate as hard as possible, and then just keep on going….keep grinding the other crew down as hard as possible until they break open water, move in front, and take the win. Sometimes this happens after 1 mile, other times it comes right down to the finish, no boat able to break the other. Success requires a sprinter’s intensity combined with a marathoner’s endurance, and the ability to keep an eye on the long-term strategy while pouring every ounce of energy you have into winning each and every stroke.

I am not advocating for 120 hour weeks, nor am I precluding the role of another sport analogy, periodization (progressively cycling periods of stress and rest), but I do think that The Boat Race captures something important about the psychology of entrepreneurship, particularly as it relates to intensity over time. And the ‘competition’ to which I am referring is not so much competitive companies (although I think it could be) but rather the inertia and entropy that seedling ventures must overcome to escape from obscurity and create value in the world.

We recently examined how the proliferation of strategies to better manage health risk and contain healthcare costs are driving demand for tech solutions that: 

• help individuals to better manage their health and get more value for their healthcare dollar, and
• help institutions such as health plans, employers and providers to better engage their members, employees and patients to be more engaged in their health and care.

• Consumer: Microsoft Healthvault, Motherknows, Zweena Health
• Institution: Dossia, Kaiser My Health Manager, Aetna PHR, Avado, countless provider sponsored patient portals

• Consumer: Healthcare Bluebook, Angie’s List, Hospital Compare
• Institution: Castlight, Thomson Reuters, Wellpoint Treatment Cost Advisor

• Consumer: Simplee, Cake Health
• Institution: Increasingly part of health plans’ portals

• Consumer: ZocDoc
• Institution: Thousands of online provider appointment scheduling systems

• Consumer: RememberItNow, Vitality Glowcaps, Medminder
• Institution: Health Prize, Proteus Biomedical

• Consumer: RealAge, 23andme, 100Plus
• Institution: BioSignia, Staywell, Mayo Clinic Health Assessment, Navigenix

• Consumer: RunKeeper + Earndit + Bonobos
• Institution: Virgin HealthMiles and numerous home-grown workforce wellness programs

1. Their interests (financial or otherwise) must genuinely be aligned
2. They must provide products that members would be motivated to use, if not pay for, on their own

It can be downright depressing when you consider just how entrenched unhealthful lifestyle behaviors (like physical inactivity and poor diet) have become in American culture, so it is encouraging to recount instances that demonstrate that indeed social norms can and do change dramatically over time, sometimes for the better, and that peer pressure can be just as effective at fostering positive behaviors as negative behaviors. I’ve recently been reminded of three notable examples:

Smoking breaks at the workplace - Decades ago in the US smoking was broadly considered to be socially acceptable, and many individuals would feel peer pressure to join colleagues for smoking breaks on the job. Smoking breaks were a time to socialize and unwind, and an excuse to take a break from work. Unfortunately this is still the case in many vocations (and around 20% of American adults still smoke). However, there are a good number of workplaces where it is now socially unacceptable to smoke, where peer pressure works in the opposite direction, and where (a) smoker is left out in the cold, alone, feeling isolated from peers.

Exercising at the Pentagon - A friend recently recounted his experience as an intern at the Pentagon. He told me that for the first time in his life he started going to an (onsite) fitness center, and when I asked him why his response surprised me. He said that everybody he worked with, despite being incredibly busy, brought a gym bag to work and at some point during each day they would disappear to fit in a workout. He said he felt “judged” for not doing so himself, so he began to follow suit, and ended up getting fitter than he had ever been over the course of his internship. I have to assume that this norm has not always been present at the Pentagon, and is not ubiquitous across divisions, but rather was something that evolved among the group of people with whom my friend was working.

Beat the Peak - A recent Atlantic article highlighted how in Tucson, the social acceptability of maintaining a green lawn (which in the desert requires a lot of water, a limited resource) has, over time, become taboo. This was not always the case, but thanks in part to a decades old initiative called ‘Beat the Peak’ the social norm has evolved such that Tucsonians now frown upon green lawns, and residents feel peer pressure to ‘pass on grass’ - as their perceived misdeeds are evident to all their neighbors. There are some good quotes throughout this article about the social psychology underpinning the city’s efforts, and how city officials have borrowed heavily from marketing techniques used to influence consumer behavior. (Disclosure: I have never been to Tucson, and cannot attest to whether this article overstated the phenomenon)

These are obviously just a few instances where social norms evolve over time among groups of people to eventually exert peer pressure toward a positive or healthful behavior, and there are undoubtedly many more to speak of.

Just as, in terms of individual behavior change, the aim to get to the place where the individual is intrinsically motivated to pursue a healthful behavior that has also become routine, when thinking about social behavior change, the aim to get to the place where a healthful behavior becomes both the social norm as well as the default pathway.

These changes do not happen overnight, nor do they happen by accident. Depending on the behavior, misinformation and bias may need to be overcome, policies and even physical environments may need to change, and ‘early adopters’ may need to create visibility around a new way of doing things. However it is instructive to note that they can indeed change, and to learn from past successes to inform ongoing efforts to change social norms.

It’s that time of year again when millions of American employees go through the annual benefit enrollment process. As highlighted in a recent WSJ article, employees will once again be asked to contribute a greater share toward their health benefits in 2012.

Why? The cost of healthcare (and thus health insurance) keeps going up, and employers, faced with year over year healthcare cost increases that far outpace the rate of inflation, have been - and continue to - shift costs to their employees. There are a lot of ways to do so (e.g., increased premiums, co-pays and co-insurance) but high-deductible health plans are emerging as a primary method of shifting cost, risk and responsibility to employees. Today an estimated 17% of US employees are enrolled in high deductible plans, and this number is rising quickly.

For many of those unaccustomed to managing financial risk related to health, this trend is likely to be perceived with strong negative valence.

Though perhaps painful in the short run, I believe that shifting healthcare costs to employees (and patients in general) is a positive trend for several reasons.

First, rising healthcare costs have been responsible for stagnant wage growth, attenuated job growth, a mix of higher taxes and public debt (mostly the latter), and higher prices on domestic goods. All of these cause financial harm to employees. Up until now employers have, on the surface, absorbed healthcare cost inflation, and they have clearly suffered for doing so in terms of global competitiveness. But the brunt of the pain has not been directed at corporate profits, but rather employee salaries. Employees have been getting screwed by high healthcare costs for decades, mostly without realizing it. Now at least they are starting to wake up to reality, starting to demand change. I think that’s a good thing. OWS take notice.

So what if costs are too high (thanks Captain Obvious!) - how does giving employees a high deductible help?

The way I see it, though there are two general strategies that could purportedly contain healthcare spending, there is only one that could, in reality, be successfully implemented in the US.

The first strategy would involve implementing a single-payer healthcare system wherein the prices and scope of services available are determined by government panels, and cost targets are met by rationing care when necessary. As a strong proponent of public health promotion I find this approach to be very attractive in so far as a single healthcare payer has a strong financial incentive to invest in long-term population health (mmmm, nanny state!) . However, this approach has so far fallen outside of the historic American social contract, rather achieving acceptance in smaller, more homogenous nations or those with a distinct social-political climate (where, though costs are lower than in the US, cost containment is still a struggle) . Moreover, it is my belief that the US federal government, due to strong influences from industry and other special interests, would be incapable of granting decision making bodies sufficient authority to make the hard (life and death), objective (utilitarian) decisions necessary to effectively control costs. If you disagree, that’s great, and I’d love to hear from you.

The second strategy relies less on the question of who pays for healthcare, but rather on the question of how they pay for it, and flows from the axiom that health insurance (as well as employee health benefits) in the US have over the last several decades become completely irrational. Insurance is a financial instrument reserved to cover the costs of incidences that are “random, infrequent and catastrophic”. Paying for routine care with health insurance is incredibly inefficient, and has often been compared to paying for an oil change and tire rotation with auto-insurance. Nonsensical right?

Thus a critical component to achieving a more rational, high-value healthcare system is the advancement of consumerism. For some time insured patients have been almost completely obscured to the true costs of their care, and have had little access to information about the comparative quality and value of providers and services. As result, patients have not been treated like consumers, and have wielded little power to demand high value care. Many individuals now responsible for the first several thousand dollars of their care, are, either out of necessity or principle, starting to ask the hard questions about the value of their care. Few stakeholders are ready with answers, but that is changing (more on that in my next post).  

For those of you who might argue that, because healthcare is a special and necessary commodity that does not follow traditional laws of supply and demand, it cannot be viewed through a standard economic lens, I concede that in a good number of instances (such as a medical emergency) it is not reasonable to ask a patient to make a value conscious decision (and I am in no way saying consumerism is a silver bullet, it is one component of a multi-tiered payment system that is optimized around value). However I counter that in many other cases (like routine care) it would be advantageous to do so. Moreover, I would remind you that healthcare in the US is a $2.7T (T stands for “trillion”) industry that threatens to cripple the most powerful nation on the planet with debt. I don’t think we can afford to treat it as a sacred cow. I’d also add that consumerism does not mean that care cannot be subsidized for those who cannot afford it, but again the manner in which the money is allocated would change.

The most well-articulated portrayal of moral hazard in our current system, and subsequent argument for the ‘radical’ consumerization of healthcare that I have read was written by David Goldhill and appeared in the Atlantic in 2009 - I would highly recommend reading it.

In short, as patients begin to pay the bills for more and more of their (non catastrophic) care, they will demand value for their hard-earned money, forcing the healthcare system to re-orient itself to provide consumer-friendly, convenient, cost-conscious care.

A recent study by RAND showed that employees on high-deductible health plans incur substantially lower costs than those in traditional insurance models, but the same study also observed that these same individuals forgo both unnecessary as well as preventive care. That last bit is a real problem. If individuals on high-deductible plans skimp on high-value, preventive care, that is likely to be bad for both their long terms health, as well as their long-term healthcare costs.

That’s where a concept called Value Based Benefit Design, which came out of UMich almost ten years ago, comes into play. Think of this as an attempt to further rationalize health spending by removing financial barriers to patients getting high value care. Wellness visits, vaccinations, screenings, high value medications, etc - all ‘free’ to the member - or financially incentivized. Financial incentives for participation in health promotion programs and meeting health behavior and biometric cutoffs is a natural extension of this model that is being applied by more and more employers and health plans. The recent health bill (PPACA) drew heavily from the value-based benefit design, making free preventive care a mandatory component of all authorized health plans, and increasing the the financial carrots and sticks that employers are allowed to offer to employees to encourage wellness engagement.

As result of the advancement of consumerism in healthcare, as well as the layering of value-based benefit design elements, we are seeing patients - now increasingly becoming consumers in a market ill equipped to treat them as such - clamoring for tools and solutions to help them be more discerning consumers, more engaged health citizens - which historically have not been in demand, and are therefore only now becoming available.

At the same time, as stakeholders that are responsible for managing risk with regard to healthcare cost inflation (health plans, self-insured employers, and now perhaps providers (e.g., ACOs)) attempt to pay for (or provide) higher value care, we’re beginning to see them clamor for tools to help them do so…as well as solutions to help them engage their members/patients/employees to be more proactive participants in their health and care.

These tools and solutions, nested in the context of everything described above, are a main focus of this blog. In the next couple posts we’ll begin to dive into this newly created demand from patients, payers and providers, as well as the solutions emerging to meet it.

Atul Gwande has famously described a major problem of modern medicine: too often medical professionals fail to consistently implement known best practices. He has used the not-infrequent failure of doctors to wash their own hands as a prime example, however concedes that this is a widespread problem, as evidenced by myriad inconsistencies in care delivery that cause substantial, avoidable suffering and death.

Gwande describes a growing gulf between what is known to be best practice in medicine and the reality of what medical professionals do on a daily basis.

I see a parallel, but even more dramatic gulf between what is known about the lifestyle behaviors that are necessary to promote health, and the typical modern/American lifestyle.

Over the last half-century we have witnessed an explosion of scientific knowledge - from the fields of medicine, physiology, biochemistry and particularly epidemiology - such that we now have far better grasp than ever regarding the kinds of lifestyle behaviors that lead to favorable health outcomes, and the kind that cause premature disease and death. For example, we now have a dramatically better understanding of the effects of tobacco use, physical activity, diet/nutrition, sleep and other health-related behaviors. Enough so that if everybody did what we already know to be good for them, we could prevent over 90% of type II diabetes, 80% of heart disease and 40% of cancer. Achieving these results would arguably be the most important health breakthrough in the history if the world.

So as scientists have forged ahead with new discoveries and established a clear paradigm for optimal health behaviors, in doing so they have created a giant gulf between knowledge and practice.

Why does this gulf persist?

First, it’s inevitable that there will be a time lag between new discoveries and the broad deployment of corresponding interventions and other changes that require the gradual attainment of new awareness and mobilization to action across large populations.

Second, the behaviors in which these (relatively) new discoveries demand changes are much more deeply embedded (and widely held) in our environment, our lifestyle and our culture than any standard in medical treatment could ever be. The more complex and deeply rooted the norm the harder it is to change. For far too many years advertisers trumpeted the ‘cool’ of smoking, transportation systems evolved to preclude the need to move, agricultural policies promoted the procurement of refined carbohydrates…these and many other factors have had a dramatic impact on our modern lives, and are not easily reversed. Mindshare has been hard enough, let alone behavior change.

Third, there is no field or profession that is explicitly tasked with bringing about these changes. Or if there is, it is inconceivable that any one individual, group or even sector can move the needle across large populations on such deeply embedded behavioral norms.

So who is responsible? And who can bridge the gulf?

The only answer that will suffice is everybody.

To change the way large populations eat, move, sleep, and essentially live will require meaningful contributions from all corners of society. Governments must redact policies that are detrimental to public health, and replace them with those that promote healthful behaviors. Academics must investigate not only the relationship between behaviors and health outcomes, but  how to most efficiently close the gulf between knowledge and practice. Healthcare purchasers must transcend complacency in managing risk, and proactively mitigate risk. Schools must engage their students, companies their employees and communities their members. The private sector, technologists and entrepreneurs must create innovative (and monetizable) technologies, strategies and solutions with which to enable people to improve their health behaviors. And every single individual must take responsibility for their own health behaviors while influencing those around them as they are able. Because if the gulf persists, we all lose.

In public health as in medicine, there is an enormous latent opportunity that derives from consistently executing what we already know to be right. Scientists will continue to make new discoveries about which behaviors lead to optimal health - but while they do it’s up to everyone else to do their part in closing the gap between what we know and what we do. The reward could not be overstated.