Health care is a hot political topic – but most of the attention focuses on how Americans will get their health care costs covered. While this is important, a much bigger issue often flies under the radar. The question that most people don't ask should be ‘Is our health care system really designed to improve your health?'



What's the Business Model in Health Care?

Let's look at a typical business model (Yes, health care is a business). Companies are in business to make a profit in exchange for products or services that improve people's lives. Whether it's a lawn mower company making it easier for you to care for your yard or an airline company getting you where you need to go. The basic premise is the same. They help you in exchange for payment. If they don't provide a quality product or service they quickly run out of people to sell to.

There are only three ways that a business can increase it's profits. 1. Get more customers or clients. 2. Increase how many times existing customers or clients buy products or services. 3. Increase the profit margin on each transaction. That's it. All business growth fits into one of those 3 areas.

Now let's look at those in the context of the health care business. Presumably, health care is supposed to improve your health, which makes you less likely to need health care in the future. So how do health care businesses grow?

Health care companies cannot really use strategy #1. In order to get more customers there would have to be more sick people in need of health care services. That would mean that companies could not promote prevention because that would reduce the number of sick people.

They can't really use strategy #2. In order to increase the number of times sick people need to buy there products or services they would have to keep from truly getting better.

They can't really use strategy #3 either. In order to increase their profit margin on existing products or services they would have to charge the insurance companies more, who would have to pass those costs onto the consumer, who are already over-stressed with regard to medical costs.

So how do health care companies grow without using the strategies of business growth? Surely, they don't deliberately shun prevention strategies, keep people from fully recovering, or over-charge for their services?

Who really supports the Health Care Industry?

A couple of recent articles in the New England Journal of Medicine had some interesting perspectives on the relationship between the government, health care providers and pharmaceutical companies.

The first report detailed a survey of over 3,000 doctors that explored their relationship with drug companies. The study found that 94% of doctors have some relationship with drug suppliers. About 4 out of 5 physicians admitted receiving free food for themselves and their office and free drug samples to try out on patients. Drug companies paid for business trips for more than 1 out of 3 doctors and about 1 out of 4 in the study were actually on drug company payrolls for consulting, lecturing or enrolling patients into clinical trials.

Now getting some free coffee and bagels might not be that big of a deal. Most people would not feel incredibly loyalty to a company for that favor. Besides, getting some free samples might actually save the patient money (assuming they needed the drugs in the first place). But getting business trips covered and receiving paychecks for ‘services'. . . that's a different level of conflict. This does not automatically translate to unethical behavior. Some physicians may truly stick to their morals, but how many will not?

The second study from the New England Journal evaluated the relationship of the Food and Drug Administration with the pharmaceutical industry. Back in the early 90's the FDA was completely supported by congress – but the agency wasn't big enough to do their job. So the 1st Bush administration encouraged relationships with the private sector, which translated to support from the pharmaceutical industry.

Today more the 50% of the FDA's budget comes from drug companies. This means that FDA doctors, who evaluate new drugs, are paid by the very companies that produce the drugs they are evaluating. Is there a possible conflict of interest there?

In 1992 the $126 million FDA budget came solely from congress. In the first year of drug company support industry kicked in about $8 million or about 6% of the total budget for that year. By 2004 drug companies were paying $232 million, greater than 50% of the total budget. The upside is that some useful drugs, like AIDS and cancer medications, are able to get through the bureaucracy faster and get out to the public. The down-side is that so are drugs like Vioxx, blamed for the death or disability of hundreds of thousands of people.

Current legislation is under review to change these laws. But don't assume that the change will be for the better.

Is there a better Way?

The question really becomes, ‘How do health care companies grow and help people improve their lives at the same time?' The answer is very simple. Focus more on prevention strategies.

The US government estimates we could save over $71 billion and prevent 14% of all premature deaths through lifestyle strategies. Focus on these strategies is a truly sustainable business model.

Living a prevention lifestyle is a life-long process, and therefore means repeat customers. It's like taking a shower. You don't take one shower and expect to be clean for the rest of your life.

This is where nutrition companies, exercise gyms and health education companies focus their efforts. They are truly helping people improve their lives and are growing a successful business. This is the true ‘Health Care' industry. What most people think of as health care is really the ‘Sickness Industry'. One has healthy people as customers, the other caters to sick people.

This is a business model that is good for individuals and good for the economy. But the only way this will take hold is when people start to vote with their dollars. Vote for health food instead of junk food, vote for treadmills instead of big-screen TVs, vote for tennis shoes instead of gas to drive 1 mile to the store. This is the only way that we will really secure a future of life-long health for our kids and our grandkids