Urgent care clinics have taken off in the past decade — and it shows that health care businesses acting like Amazon will gain an edge
- Going to the doctor isn't a very good experience.
- To survive, health care businesses need to start thinking about the customer.
- It's more important than any policy decision Washington makes.
- Urgent care centers are an example of applying the Amazon model to health care.
Why is it that when I walk into a restaurant or store where I'm spending $15, I'm often treated better than when I go to a doctor's office where I'll easily spend $150?
We've all been there. Sick and suffering, you wait hours for the doctor's office to have an opening, and you limp into their lobby. A grump at the front desk pushes a clipboard at you, and you spend 15 minutes filling out a paper form with the same information you've provided twelve times before. There is a long wait, and you need to postpone an important call with your office.
It is that experience, to which we've become all-too accustomed, that will be the life or death of many healthcare businesses in the next ten years - much more so than any policy decision made out of Washington.
As more cost is borne by consumers, and healthcare demand and expense rapidly expands, healthcare models will need to change.
Just look at the way urgent care centers have taken off in the past decade.
Urgent care doesn't offer care that's unique to what any doctor or emergency room provided in the past. They've had success on the basis of easy parking and extended hours. Any healthcare business that is acting like Amazon, by taking the service to the customer, will gain an edge.
This 'consumerization of healthcare' is just one of the private sector dynamics to watch.
We have an aging population, a diabetes wave building on the horizon and genomics breakthroughs that can utterly shuffle the deck for how healthcare is delivered.
Insurance policy will have some sway on profits. But ultimately, any business that is wholly dependent on being paid by insurers based on numbers of patients and billable services is already on the wrong side of the trend.
What type of companies will succeed?
Beyond catering to the consumer, there are other earmarks of successful healthcare companies in this new healthcare order.
For instance, investors should be on the lookout for anyone who has a shot at curing a disease. In our current healthcare system, we're great at managing symptoms and conditions. We need a moonshot breakthrough, just to show that it can be done. Companies and researchers with any chance at developing cures for cancer, Alzheimer's or ALS are worth funding.
Next, we aren't addressing the healthcare system's major cost drivers — chronic illnesses and injuries, the brain injuries, strokes, cardiac issues, diabetes, the knee and hip replacements. Instead, we focus on acute injuries and sicknesses -- colds, flu, broken legs. This emphasis is unwise.
Any company that can create systemic change to prevent and manage chronic illness through technology or new therapeutic models will win. Companies that use technology to allow chronically ill patients to better manage their condition or enable them have a more fulfilling life will be successful.
Take a stroke survivor, for example. Instead of that person being in an institution, imagine a care model where he or she could be at home and cared for less expensively. We need to reduce hospitalizations, emergency room visits, and custodial care.
Third, care coordination remains highly fragmented among multiple stakeholders whose interests aren't always aligned. People want more and better care. Insurers want to grow revenue and pay out less . Providers and the government need to reduce costs. How can such competing interests deliver value? Honestly, I'm not sure it can be done. But we've got to do better.
Finally, Americans increasingly believe, as most of the rest of the world already does, that healthcare should not be denied for financial reasons. That raises questions about who pays for what costs and what kind of care and services are considered universally accessible and affordable. Solving for that is a major actuarial and societal challenge, and anyone who can determine how to cover these bases will have a good story to tell.
I'd be willing to bet that some smart entrepreneurs have answers to many of these big problems. And that means the healthcare industry is about to get much healthier in the next ten years. Let's hope we all do, too.
Mike Geldart is a partner at Excellere Partners, a private equity firm in Denver, CO, specializing in healthcare with investment experience in urgent care, pain management, anesthesiology, radiology, specialty pharmacy, pharma services and manufacturing, and life sciences.