Will Tampa Be Healthcare's Inflection Point

Jim Clifton, the Chairman of Gallup, made a strong case that we’re in World War III in his book The Coming Jobs War. Just as the previous wars impacted which countries would lead the world in prosperity, the “war” we are in will dictate which communities get the lion’s share of the jobs (and thus prosperity). Some leaders in Tampa hope to stake their claim to be the place where healthcare gets reinvented. As a byproduct, they will be one of the winners in creating jobs.

While most cities are passively leaving the “war” up to the healthcare systems in their community, some leaders in Tampa have the foresight to recognize a different approach is needed. The old model of economic development for communities is to put a marketing veneer on their community and throw some tax breaks at corporations to entice them to relocate. The new model includes a recognition that all the tax breaks in the world are dwarfed by differences in healthcare value from one community to another.

After payroll, the largest cost for most industries is healthcare benefit costs. Just as manufacturers shift production to low cost manufacturing centers, industries will be attracted to high value healthcare centers. For instance, IBM is making decisions on where to locate new technology centers based on the healthcare value equation. These decisions represent 1000′s of jobs for communities such as Tampa vying for those growth opportunities.

Thanks to Dr. Paul Grundy who is IBM's Director of Healthcare Transformation for the slides he shared in this article.

Meanwhile, cost-cutting isn’t limited to the government. After all, it is employers who foot most of the healthcare tab and are starting to flex their muscle. For example, IBM has shifted from thinking about healthcare as an employee benefit to a large cost driver that will impact their profitability. IBM recently made a decision as to where to locate 4,000 new hires based on their analysis of where they received the best value from their healthcare expenditure. Consequently, they determined that Dubuque, Iowa was the best location to expand their employment. With wide cost differentials, some argue that CFOs and CEOs are failing in their fiduciary responsibility to not shift to models that are proven to save money while maintaining or improving health outcomes and patient satisfaction. This is a scary prospect for communities that are high cost locations for healthcare.

This may shift how communities think about economic development. It turns out that having a high value healthcare system is likely to be of greater benefit than a tax break. Conversely, communities with expensive healthcare have what amounts to a healthcare “tax” that will push businesses away or, at a minimum, impair their bottomline.

Capitalizing on Disruptive Innovation

Tampa’s official unveiling happened at the MediFuture2023 event with a keynote by the father of disruptive innovation — Clay Christensen. The Innovator’s Prescription is his take on how disruptive innovation will impact healthcare that was written about in Healthcare’s Age of Agility Will Shuffle Market Leadership. My role was to follow Clay and lay out a more detailed prescription. The rest of this article outlines some of the concepts I shared and concluded with a call to action.

The core of the call to action was to create a new market space by harnessing the health benefits spend of the local business community — ideally over $1 billion. As an entrepreneur myself, I shared how it would be irresistible to entrepreneurs (and established players reinventing themselves) to have a ready greenfield market. While this includes tech startups such as mine, arguably it’s even more important to entice the sorts of organizations highlighted in this article on organizations who have rethought the care delivery process from the ground up.

As outlined in Healthcare’s Trillion Dollar Disruption, a trillion dollars of annual revenue will move from one set of players to another in the coming 10 years. Tampa leaders decided this opportunity is too important to leave up to just the healthcare players in their community. Impressively, their economic development organization has assembled all the major business organizations and employers along with key healthcare providers to harness the opportunity.

As was laid out in Healthcare’s Trillion Dollar Disruption and Mr. President: The Deficit Problem was Solved Last Week but for the Preservatives, the great news is best stated in a William Gibson quote — “the future is here, it’s just unevenly distributed.” If Tampa simply cherry-picked the the proven models scattered around the country and applied them all in Tampa, problem solved. They would be a generation ahead of other communities.

Tampa’s Obstacles: Preservatives and Ostriches

“History does not repeat itself, but it does rhyme.” – Mark Twain

What’s keeping the aforementioned from happening? Our present healthcare model depends on people being sick to profit. Let’s face it, there are 2.8 trillion reason why established players don’t want to change. Unfortunately, the “preservatives” (i.e., those trying to protect status quo/revenue) referenced in the two articles I linked to above don’t like revolutionary models. I haven’t met any of the healthcare leaders in Tampa so I’m hopeful they don’t fall into the “preservative” category. In other words, my comments are not directed at Tampa healthcare leaders. Rather, they are based on observations from spending time with many healthcare leaders throughout the country. Unfortunately, some of the dirtiest competitive tactics I've seen in any market have been employed by non-profit health systems.

Despite the fact that many health systems are non-profits, they have reflexively viewed top-line revenue growth as their objective. This may be due to the fact that non-profit boards are typically made up of business leaders where revenue growth is (appropriately) the goal. Forward-looking non-profits, instead, focus on long-term economic sustainability. Though these non-profit healthcare organizations are mission-driven, they frequently overlook the fact that 50% of bankruptcies in the U.S. are driven by healthcare costs that they have a direct hand in. With all of the changes in healthcare, it's just a matter of time before enlightened boards fundamentally rethink whether their health system should fulfill its mission in a different manner.

The most alarming observation is the remarkable, near-verbatim comments coming out of healthcare leaders mouths that echo what I heard out of newspaper executives mouths in the late 90′s. As I outlined earlier, healthcare providers are making newspaper industry mistakes. The most notable parallel is myopia regarding their competitive set. In the late 90′s, newspaper companies (another local oligopoly) were primarily worried about other newspaper companies as competitive threats. In reality, other newspapers were the least of their worries. Instead it was a litany of competitors who chipped away at their primacy in delivering information to consumers. The following are a few examples:

• National news, sports scores, entertainment and stock information went to the likes of MSNBC, Yahoo News/Finance, ESPN, and countless others.
• Classifieds went to craigslist, Monster.com, Cars.com, Realtor.com, Zillow, eBay, etc.
• Twitter, Facebook, Google, Groupon, Foursquare etc. have been taking additional chunks away from what newspapers used to own

The shame of it is that newspaper companies had opportunities to develop many of the segments above including owning stakes in some of these organizations. At best, they had half-hearted efforts frequently shackled by the mothership or starved of resources while their new competitors played to win with investment capital from VCs. Ultimately, their efforts at "innovation" were doomed to fail.

An example of an ostrich-like statement was from a for-profit healthcare executive who felt they could bide their time until the healthcare market fully shifted. At that point, he felt they would move faster than their non-profit competition. That might work if their competitive set was in stasis but that is far from the case. Under their nose, a shadow healthcare system is emerging that is largely discounted by healthcare systems — a sad, but predictable, response as Christensen outlines in his books on disruptive innovation.

The examples below are a “shadow” healthcare system that is rapidly developing. As with newspapers, it’s not a frontal assault but a slow chipping away of chunks of what has been delivered by traditional healthcare providers. While health systems dawdle, their lunch is being eaten by an array of new entrants reminiscent of what happened to newspapers.

• Onsite workplace clinics: Frustrated at how much time it takes for employees to get in for a 10 minute appointment, onsite clinic providers are seeing their businesses grow 100% year over year. See DIY Health Reform: Employers Solving Healthcare Crisis One Onsite Clinic At A Time.
• Direct Primary Care providers: Another innovative new model that is two parts Marcus Welby and one part Steve Jobs is poised to explode as venture firms and health plans are investing in organizations such as Iora Health and Qliance while DaVita is making a major bet with their Paladina Health division.
• Retail clinics such as Minute Clinic and ZoomCare are filling an unmet need and are rapidly growing. They have grown to over 10 million visits in under a decade by filling an unmet need. Organizations such as CVS, Walgreen’s, Target and Walmart are also getting their pharmacists out from behind their counter to more actively get involved in medication management that is so vital to managing chronic conditions.
• Domestic medical tourism: Walmart joined Lowes and Pepsico in creating a national market for surgical procedures. Now every hospital in the country is effectively in competition with the Mayo Clinic, Cleveland Clinic, Virginia Mason and other top facilities who provide fixed fee procedures with outstanding outcomes. Add to this the movement to transparent pricing on surgeries and it chips away at some of the most lucrative, non-emergent procedures a hospital delivers. See DIY Health Reform Reduces Surgery Costs 50-90% for more
• Medicare Advantage programs: WellPoint bought CareMore for $800 million and DaVita bought Healthcare Partners for $4.4 billion as they have clarity on the future of healthcare. As you can read, CareMore and Healthcare Partners have had remarkable results — much of it at the expense of slow-moving hospitals.

I have seen this “movie” before and the ending isn’t pretty, yet it’s entirely avoidable with decisive action. The final chapter written by many newspaper executives was a disaster. Newspaper executives oversaw the demise of one of the major institutions of their cities and are a pale shadow of their former self. Health system executives run the risk of repeating this story if they continue to sit back and play defense.

Avoiding Pitfalls on Path to Leadership

“You can’t sink the other end of the boat without sinking your own” – Unknown

The head of University of South Florida’s Medical School and the economic development leader of Tampa penned an op-ed about MediFuture outlining the opportunity. They discussed how Tampa has the components necessary to capitalize on the opportunity.

The keys to that transformation are embedded in our community in the form of entrepreneurs, existing life science companies, research facilities and universities: University of South Florida Health (and its multitude of initiatives), Moffitt Cancer Center, the Center for Advanced Medical Learning and Simulation (CAMLS), M2Gen, Draper Laboratory, SRI International and All Children’s Hospital-Johns Hopkins Medicine. They are just the beginning of the list.

I would add that by virtue of being in Florida, they have a large senior population that represents the bulk of healthcare spending and opportunity for improvement.

Last weekend, on a sun-sparkled Seattle day, I watched my alma mater (15-time national champion University of Washington and subject of a great book, The Boys in the Boat) sweep all the races of the Opening Day Regatta crew races — the most watched crew races in the U.S. Why did they win? They weren’t working any harder than other other crews. Rather, they had 8 rowers working in unison literally leaving the other schools in their wake.

The crew metaphor is instructive for Tampa and other communities. Most communities have healthcare “crews” that work incredibly hard but they rarely “row” in unison. In fact, most of the crews don’t even have the equivalent of a coxswain providing leadership. The following are common pitfalls that doom communities to under-performance:

• Parochial health systems: It’s common for healthcare organizations to only focus on their own marketshare rather than collaborating for the betterment of the community. As health system CEOs come and go, it’s imperative that health system boards typically made up of local business leaders interact periodically with other health system board members to find common cause. They would also benefit from outside perspective — not just nearby business leaders who haven’t seen a high function system.
• Reinventing the wheel: As mentioned above, innovative healthcare delivery models that dramatically outperform existing models already exist. All too often, healthcare leaders think their market is so unique they can’t get ideas from outside.
• Innovation is shackled: In the Xboxification of Healthcare, I stressed the importance of innovation tapping the mothership’s resources without being shackled by the current way of doing business. If not shackled, the other sin is not properly resourcing innovation. Most innovation budgets at health systems are pitifully small and shackled.
• Pre-Copernican view: Many health systems tend to think their gleaming buildings and technology are the center of the healthcare universe. Rather, consumers (aka “patients”) should be the center of the healthcare universe. Unfortunately, “patient-centric” has become a meaningless platitude at many provider organizations. See The Hot Spotters Sequel: Population Health Heroes for comments by Dr. Douglas Eby for the contrast between patient-centric platitudes and consumer-centricity.

Prescription for Change

If this was easy, someone would have already done it. Tampa’s leaders asked me to follow Clay Christensen’s presentation with a prescription for how they take action so they seize the opportunity. The following are some of the areas to start:

• Consumer-centric design of new healthcare models. In contrast to the pre-Copernican view outlined above, The 7 Habits of Highly Patient Centric Providers can be applied at a community level. For example, I have yet to meet the person who wants several different places to get at different information silos from their various providers. This only increases with further silos being added via biometric devices and mobile apps. Just as Quicken and Mint bring together information from various financial organizations, there is the same opportunity to have a unified view for patients that spans several providers, biometric devices, labs, pharmacy and more. This helps to avoid duplication of effort and potentially harmful procedures when providers lack a complete picture of a person. [Disclosure: My company has developed a Collaborative Health Record designed to give a longitudinal view of one's health history -- not just what happened at one provider.] This is a great litmus test of which organizations will constructively engage versus taking the silo’ed, uncoordinated approach of old. The healthcare organizations unwilling to participate in such a simple, consumer-centric approach will impair Tampa’s ability to thrive. I’d advise Tampa’s leaders to be as inclusive as possible but don’t get stymied by those resistant to collaboration – move on without them.
• Create a collaborative clinic focused on population health. Healthcare will fundamentally change requiring a host of new skills that will challenge every facet of the healthcare system. Why not create a jointly funded clinic in the Old City Hall that has permanent staff perfecting these new models and rotating staff that has fellowships where they can learn the skills and bring them back to their home facilities? If necessary, a proven outside organization such as CareMore or Iora Health could collaborate to bring population health skills to Tampa if they don’t already exist. Presumably, there are many prospective patients that would be eager to go to a consumer-centric provider that contrasts with a more typical healthcare experience. This clinic would be a nice complement to the existing Center for Advanced Medical Learning and Simulation (CAMLS) facility that is needed for complex conditions.
• Entrepreneurial space co-located with the clinic. Entrepreneur-friendly co-work spaces are nothing new. What Tampa could offer is space that is appropriately woven into the fabric of the clinic without being obtrusive. Pioneers in new care models such as the aforementioned CareMore and Iora Health had to homegrow their software. For obvious reasons, legacy software is optimized for the old models. There can be a nice symbiosis of getting technology for the models Tampa adopts and innovates around while providing startups a proving ground and invaluable market feedback. Historically, change in healthcare comes over years. With a lean startup philosophy, there can be a dozen product iterations in the time of the old product cycles allowing Tampa to leap ahead of other geographies.
• Market Tampa as open for business. To the extent Tampa walks the talk and gets the word out, a virtuous cycle can get spawned. If Tampa reduces time to scale up for both new care models and technologies, more companies will want to establish headquarters or outposts. This is similar to why technology companies flocked to Singapore when they were the first city-state to have broadband to virtually every home or when South Korea was way ahead in mobile phone adoption. Being “open for business” means that Tampa businesses and healthcare leaders will be pre-disposed to support (as customers/partners) new and emerging companies. Historically, healthcare has been so risk averse, they have bought 20 year old technology as the “safe” solution even when it has costed an order of magnitude more and is built for the past. While the temptation could be to setup yet another healthcare incubator, I’d suggest that it is higher value to take those dollars and put them towards product pilots and the like. If equity participation is the goal, there are ways to structure purchase deals to include warrant coverage. Tampa could partner with the StartUp Health academy that is fostering the development of an armada of hundreds of new companies that they call “transformers” and are more mature than the companies in a typical accelerator. [Disclosure: My company, Avado, is part of the StartUp Health Academy.]

Tampa’s economic development director, Rick Homans, has discussed creating the Paris Air Show of healthcare. It could go beyond that to create an Aspen Institute like model that brings people in year-round to see how healthcare is being reinvented. It’s clear the opportunity exists. The only question is who will seize the opportunity.

Competition Will be Stiff
While the most broad-based initiative I’ve seen, Tampa isn’t the only place that wants to be at the epicenter of healthcare’s reinvention. The following are examples of what other communities are doing:

• Like Tampa, New York has business leaders who are driving change. The Partnership Fund for New York City is funded by the 100 largest corporations based in New York and is a double bottomline investment fund.
• Dubuque, Iowa is already one of the high value healthcare centers and has attracted IBM and others to setup technology centers in their community. They have programs such as “Live Healthy Iowa” that includes challenges to change habits.
• Seattle is where Direct Primary Care was invented. One of the legends of biotech, Lee Hood, began progressing in his vision of the future of medicine: first focusing on predictive and preventive (2P) Medicine, then predictive, preventive and personalized (3P) Medicine and finally predictive, preventive, personalized and participatory which led to the current concept of P4 Medicine. Hood states that P4 Medicine is the convergence of systems medicine, big data and patient (consumer) driven healthcare and social networks. Further, Seattle is also the home to the University of Washington which has been the top medical school for primary care for a long time. Primary care is the foundation of all of the most successful programs highlighted in this program. Seattle is also a hub for healthIT with over $2B of healthIT revenue going to Seattle area companies.
• Rochester, NY has healthcare costs that are 30% lower than national average and 21% lower Medicare costs. Kodak’s demise was the spark of a collaboration of 7 major employers, academia, community, city, state and non-profits came together on what they could do to improve healthcare since they felt it could impact economy. By making their community healthier it could attract employers. They took a broad view of health including a focus on healthy eating.
• Esther Dyson has catalyzed a competition called the Way to Wellville that warrants attention.

Are you aware of other locales doing unique things to make improve the health of their community? Please add any examples/links in the comments box below.

This article was originally published in Forbes May 2013 shortly after the inaugural MediFuture. MediFuture took place September 16-18, 2014. It was an invitation-only event gathering, perhaps, the most CEOs and senior executives in healthcare representing all major facets of healthcare (providers, payors, purchasers, consumers, life sciences and various technology companies).