The Boomer parents of Millennials may have complained about their kids leaving messes around the house, however Boomers are leaving an exponentially bigger mess for their kids. Millennials will see their future stolen if the healthcare cost beast that Boomers have largely ignored isn't slayed.
Healthcare’s hyperinflation-driving fortress has been impenetrable to forces trying to disrupt it over the last couple decades. Whether through regulatory capture to protect the status quo or self-inflicted mistakes (e.g., HMO “gatekeeper” and denial of care debacle), healthcare has been remarkably resilient to forces that have driven change in virtually every other sector.
At long last, the gig is up and the fix is in (the good kind of “fix”). It’s coming from the edges and is largely unnoticed by incumbents who haven’t delivered any productivity gains in over 20 years (unless you measure productivity by getting out bigger bills).
I’m optimistic that we’ll look back at this point in time as pivotal thanks to the biggest generation in history – the millennials. They will drive the fix to the blunders made by Boomers (their parents) that have made healthcare the greatest and most immediate threat to America (e.g., devastated household incomes, retirement nest eggs, and education budgets).
Millennials are the biggest share of workforce
The bad news for incumbent health organizations is that there is a near perfect mismatch between what millennials value and how health systems and plans have been designed . A key challenge that has blinded incumbents is that even exponentially growing trends are easy to miss early on when they look small compared to the existing revenue streams. Health systems should learn from another regional oligopoly/monopoly business — newspapers. Health system executives are making the identical mistakes that newspapers made in the late 90s and early 2000s as the oldest millennials came of age. While the incumbent regional oligopoly worried about threats from similar sized organizations, it was once Lilliputian-sized eBay, craigslist, Monster.com, Facebook, Google and countless others that tied down the Gulliveresque incumbents. Traditional media was amongst the first industries punished by the millennials for not changing with the times despite it being telegraphed very clearly. Millennials won’t be satisfied just upending media .
Once upon a time, health systems were looked at as the center of the healthcare universe. Some incumbent health organizations still maintain that pre-Copernican view while forward-looking leaders recognize that as an artifact of the past. Without a doubt, health system CEOs have one of the most challenging jobs in America. Unfortunately, most grew up in an industry seemingly impervious to positive change and have become complacent or distracted (again, remarkably similar to newspaper CEOs). Fortunately, there are visionary leaders such as Geisinger’s Dr. David Feinberg who clearly sees how the future will unfold when he states “my job ultimately is to close every one of our hospitals” in a recent Wall Street Journal article.
While the problems of healthcare extend beyond the hospitals that Feinberg wants to close, the fact is that is where the biggest chunk of healthcare spending goes. A systemic fix won’t happen until the central driving force of healthcare shifts from filling hospital beds to fulfilling what is ostensibly the mission of health systems – optimizing the health of their communities. As long as the business objectives remain misaligned with the stated mission of virtually every health system, healthcare will persist as the single greatest threat to America.
While we spend well over 80% of health-related spending on the sick care system, it only drives 20% of health outcomes. The impact of that disconnect is being felt already.
Source: The Future of Healthcare Today, Cascadia Capital
Millennials to the rescue
Millennials have driven society-wide change in many areas. Millennials ignored newspapers both as a source of news but also as the de facto place to buy/sell items. Undermining the bread and butter of newspaper business model (classified ads) made the newspapers a demonstrably worse product since classifieds drove roughly half of newspaper profits. The profits previously supported reporting that has gone by the wayside over the last 10 years. Cutting delivery on some days has further accelerated their decline. Of course, millennials’ technology adoption drove the early success of smartphones, social media and services such as Uber that are now pervasive across all generations.
The parallel to newspaper classified within health systems are profit centers such as cardiac catheterization labs. The so-called “cath labs” are nicknamed “cash labs” as they are also centers of over-use. Spinal and orthopedic procedures are also well known to be greatly overdone as highlighted in Consumer Reports‘ program. High quality Transparent Medical Networks are in alignment with millennial values of transparency and fairness and have solved healthcare's most vexing problem -- pricing failure. In the process, they avoid overtreatment and chip away at hospital profit centers. Aggressive physician leaders are quite happy to see the pendulum swing back in their direction.
“Let food by thy medicine” – Hippocrates
On the health front, millennials are the least healthy cohort of 20- and 30-somethings in the last 100 years thanks to what their Boomer parents fed them -- what Michael Pollan calls "food-like substances". This is causing millennials to engage more broadly in the healthcare system much earlier than previous generations. Millennials have personally felt the consequences of bad health choices. It’s payback of sorts when you see millennials punishing Big Food and Soda with dramatically lower earnings. The Christian Science Monitor did a broader analysis of how widespread the millennial impact is on the food industry.
Financial services is another example of where millennials are steering away from incumbents. While it may seem easy for incumbents to ignore “annoying” millennials, they are a canary in a coal mine as this TechCrunch article states:
I want a bank where absolutely everything can happen through my phone, and if I need help, I can ask a banker about something instantly through the click of a button. I want a concentrated set of services designed just for me, and not a menu with more than fifty options for services that aren’t even relevant for me.
Yes, millennials are annoying customers, but here is the irony: everyone wants these features . Consumers want to be able to manage their finances from their phones and tablets while limiting their visits to bank branches and bank tellers. Plus, everyone hates bank fees, particularly their complexity and lack of transparency.
The difference today is that millennials are willing to shop elsewhere, because we are simply not going to accept that these are the only products on the market. We are willing to try new startups and their innovations, since they speak our consumer language while the traditional banks do not.
KQED’s Chrissy Farr analyzed the impact millennials are already having in healthcare including how they are avoiding the ill-designed norms in dealing with healthcare providers to select doctors aligned with their preferences.
Almost all of the millennials I spoke with said they had high expectations for their primary care and were willing to “doctor shop” until they felt satisfied. Most saw value in same-day appointments, online scheduling and access to their medical record, as well as the option to text or email the doctor between visits.
A 2012 survey from Harris Poll, a market research firm, found a disparity between the desire for online health services and the availability of those services. Among those surveyed, 52 percent of baby boomers said they were “very satisfied” with their healthcare experience, compared to 48 percent of Gen Xers and just 35 percent of millennials.
The vast majority of people who use ZocDoc are under the age of 40. Many patients who use ZocDoc hold a similar view as Ali Boldish. Three out of four returning patients will choose the same doctor, company spokeswoman Amy Juaristi said, adding that many of the doctors who have signed up to ZocDoc offer texts and email communication as well as weekend and evening appointments to appeal to busy young professionals.
Millennials: The Ben Franklin Generation
“An ounce of prevention is worth a pound of cure.” – Ben Franklin
Adam Hanft is a well-known brand strategist who wrote “The Stunning Evolution of Millennials: They’ve Become the Ben Franklin Generation,” referring to the financial industry but could have also been speaking about healthcare:
Their faith in technology is understandable. Algorithms don’t act in their own self-interest. Algorithms weren’t responsible for dreaming up sub-prime loans and nearly bringing down the financial system . Millennials didn’t trust authority and conventional sources of wisdom before the melt-down. Imagine now. Wealthpoint argues that Millennials: “…have been nickel-and-dimed through a wide variety of services, and they value simple, transparent, low-cost services.
I love that a generation identified with the eroticism of immediacy is choosing slow and steady as an investment theme. It makes them, truly, the Ben Franklin generation, in even more ways than just how they relate to money; they value craft, authenticity, strong values. Ironically, they are far more prudent and sensible than their predecessors.
They don’t want to beat the system; the success of Wealthfront and others says that the Ben Franklins want a fair system they can be part of, and that can benefit everyone in it.
The giants of financial service haven’t seen the telluric shifts that travel, media, entertainment and home thermostats have. They will. Depending on who you are, the Ben Franklin generation is composed of 80 million Benedict Arnolds.
Renowned cardiologist Bernard Lown invented the defibrillator but also was a voice for restraint that was largely ignored by his fellow cardiologists while in practice. The motto of the Lown Institute could be Ben Franklin’s quote, “Nothing is more fatal to health than an over care of it.” The tactics cardiologists used to cow previous generations to undergo inappropriate care that Dr. Lown described won’t be readily accepted by Ben Franklin-esque millennials. Appalling stories such as the 52-year-old woman having to have her heart replaced after straining a muscle in her chest due to a new workout go viral thanks to millennials. Unfortunately, this kind of overtreatment having hugely negative consequences isn’t isolated.
Just as algorithms didn’t create the sub-prime crisis, the huge overtreatment crisis that the Lown Institute, Consumer Reports and others are highlighting wasn’t created by algorithms. Thus, Vinod Khosla speaks in the voice of a millennial when he states his belief that 80% of what a doctor does today is going to be replaced by algorithms -- regardless of whether you agree with that statement, it's the mindset of the millennial generation. Algorithms such as Google’s further the predisposition to trust an algorithm when they seem to undermine Google’s near-term revenue. For 100 years, the old adage of the ad industry was “I know we waste half of your ads dollars. The problem is we don’t know which half.” Google and others put the end to that.
I believe, like the investors behind Collective Health and Oscar, that a similar percentage of what traditional health plans do could be replaced much sooner than what Khosla speculates will augment or replace doctors. People like their doctors, but there is no love lost for health plans as they have the worst Net Promoter Scores of any industry. Incumbents: Beware the algorithm.
Millennials won’t accept miserable benefits
Current health plans are so bad, some millennials would rather clean their toilet than understand their health plan. As I’ve said before,most employers are pouring more than enough money to fully fund a great health plan and a comfortable retirement . The reality of this is hitting millennials parents as most Boomers are finding their health benefits costing more and delivering less while they have woefully underfunded retirement accounts. Millennials won’t accept this appalling benefits status quo particularly when it’s not hard to find a model Health Rosetta benefits plan that some employers are using to get a far better value proposition. [Disclosure: I was a catalyst of the non-commercial open source Health Rosetta project to define the reference model for smart benefits purchasing.]
Here’s how one millennial (Birke Baehr) put it when people comment that some healthy food is more expensive than junk food:“You can pay your farmer, or you can pay your doctor” .
I chose Rosen Hotels and MassMutual as two of the seven most game-changing organizations as they recognize that health is about more than access to clinical care. After all, clinical care only accounts for 20% of health outcomes.
By partnering with Maxwell Health, MassMutual recognizes that financial health is integral to overall health. Of course, there is enlightened self-interest since trillions have been “stolen” from retirement accounts by the healthcare system that could be managed by the likes of a MassMutual. Rosen also recognizes that addressing the full spectrum of health not only means addressing access to clinical care but also underwriting their employees and employees’ children’s college education. Harris Rosen goes a step further by reallocating money that most companies are squandering on healthcare to fund education in their local community. This has resulted in graduation rates growing from 45% to nearly 100%, not to mention a 67% reduction in crime due , in part, to the after school programs he has supported.
The good news for employers is that an enlightened approach can benefit their business. This echoes environmental issues where Walmart has shown how reinventing their approach is saving them billions. Likewise, companies ranging from a small manufacturer like Enovation Controls to a medium sized hotelier (Rosen) to Michelin are benefiting both their employees and bottom-line through a reinvented approach.
Sadly, too many employers and unions are making the same mistake as teacher unions by being on the wrong side of the negotiating table. Collectively, the teacher unions and school boards are sticking fingers in the dike yet if they popped their heads above the dike, they would realize that a healthcare tsunami is headed their way. The massive wave of millennials dominating the workforce is a perfect excuse for reinvention particularly when there is a way to build a Cadillac tax shelter.
In the next quarter, millennials will be the biggest portion of the workforce. In 10 years, millennials will be 75% of the workforce. At companies such as Ernst & Young, millennials are already 60% of their workforce. The time has come for benefits consultants to fulfill their promise and guide their clients to develop a new benefits program optimized for millennials . As they have before, millennials can drive a benefits approach built for this millennium unlike the under-performing benefits strategy optimized for the last millennium.
This article was also published on Forbes
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