Archive for April, 2005

60 Minutes

Wednesday, April 6th, 2005

You don’t want to be on 60 Minutes. Bottom line, unless you are the hot new celebrity, technology, or world leader, generally speaking being on 60 Minutes is a pretty good signal that you are in trouble as an institution, industry, or individual. In the 1990s, managed care was the prime target. I used to joke back then if it wasn’t for managed care, 60 Minutes would be called 30 Minutes. Now it is the drug companies taking the heat, whether because of excess profits or concerns over safety of drugs like Vioxx and Celebrex. Being exposed on 60 Minutes is the epitome of demonization.

But demonization is a complex process, in the words of my colleague Humphrey Taylor, Chairman of the Harris Poll, “the media is a mirror, a magnifying glass and a prism: it reflects, amplifies and distorts public opinion”. The Harris Poll has documented the plummeting fortunes of many industries that become demons in the eyes of the media and the public, particularly in health care. But demonization really matters, as I pointed out in my book “Healthcare in the New Millennium: Vision, Values, and Leadership”, because it has a profound effect on both public policy and private strategy. In the 1990s, the managed care industry faced the threat of regulation and a potential enactment of a Patient’s Bill of Rights, in the public policy arena. Similarly, the public’s reaction to restrictions on choice of specialists and second-guessing of medical decisions by managed care “bureaucrats” led directly to the open network, consumer-directed, world we now enjoy where we can have any healthcare we want, as long as we pay for it out of pocket. I’m beginning to miss the bad old days of managed care.

It is quite possible we will live to regret the current demonization of pharmaceuticals, (brought about by their own pricing, safety performance, and marketing track records), if we end up whacking the industry through price controls. The industry’s na├»ve defense to date: “pay me or I will stop developing new medicines” has worn-thin and has developed an almost Tony Soprano like tone with the media and the public. Obviously, we could regulate the industry to be like a utility, as some like Marcia Angell have argued, and we would still have drug companies doing research. But just how innovative is your local electric utility? My neighborhood still has poles and wires put up shortly after the Ohlone Indians and the Mexican ranchers left Menlo Park.

Better for the pharmaceutical industry to heal itself, lower its prices, change its business model to be better, faster, cheaper, and safer not more expensive and worse. We need innovation and we should be willing to pay for it, but it has to be real improvement, not just statistically significant but not very important steps forward.

Oh, before the hospitals and doctors out there start gloating, let me suggest that you all are next. One of the reasons industries get demonized is that when consumers have to pay more they get very, very cranky. In the new world of consumer payment and retail care, how will we feel about our doctors and hospitals when we are writing big checks with our own money? Doctors are still trusted and revered so they have a lot of falling to do if the patients and the public turn on them. For hospitals, the demonization has already started. Class action lawsuits about price gouging of uninsured patients are just the beginning of greater public scrutiny and political pressure on the economics of well to do, non-profit hospitals. Medical errors, fraud and abuse and patient safety concerns, have made 60 Minutes already. All of this negative attention may lead to public policy aimed at whacking hospital reimbursement or redefining tax-exempt status, if the hospital sector does not try to manage the emerging public mood.

What do you do about it?

First, prepare to be demonized when you make consumers pay more. You have to articulate value to the customer, before during, and after the service is being performed and you have to be very smooth, efficient, warm, and fuzzy on the collections process. Does this sound like your collections process? Healthcare organizations of all types are absolutely horrible at bill presentment and payment systems. We have Explanation of Benefits (EOBs) but they don’t explain anything. Maybe the Consumer Directed Healthcare pioneers can actually teach us how to do this stuff properly.

Second, you have to build, constantly reinforce, and continuously measure reputation and trust. I have said it before in this column, hospitals that lose the trust of their local community are toast.

Finally, think about your behavior before you act, whether it is a big strategic decision or a small step in a business process, and ask the question: How will this look on 60 Minutes?

Ian Morrison is an author, consultant and futurist based in Menlo Park, California.