Healthcare Retail

The insurance and pharmaceutical industries also came to realize that there was profit to be made in creating products that provided quick-fix solutions and treatments for common problems that aren’t necessarily medical problems. Conventional medicine in our culture has always been more focused on cure rather than prevention: what if “cures” were invented for conditions that weren’t necessarily medical in nature.

Viagra, for example, is a prescription drug used to treat a condition that often occurs naturally in older men, erectile dysfunction. The payroll taxes not paid by the employers of the men filling these prescriptions are compensated for with public tax dollars. In scenarios such as this, only the fellows holding the prescriptions and the company that makes the drug are coming out ahead; the rest of us are contributing tax dollars to fix a problem that may be wholly natural.

After World War II the federal government decided to get in the healthcare business by proxy: new regulations allowed employers to list employee healthcare costs as untaxed pay, allowing companies to lower their payroll taxes. Suddenly there was a way to compensate employees essentially off the books, and seeking benefits in addition to salary was a new employee priority because benefits also weren’t taxed as personal income.

The healthcare industry that evolved from this revelatory decision no longer survived by selling insurance one policy at a time; they sold to entire companies, and for the first time corporate America had a vested interest in employee health, even if it wasn’t for the most noble reason. Initially everyone profited from the business arrangement.

But the nature of employment changed over the subsequent decades. Working one’s entire adult life for the same company became the exception, not the norm, leaving both insurers and their client companies with very little incentive to promote long-term health or wellness. Employees leaving after several years of employment wouldn’t tax the healthcare policy with late-in-life medical problems; those would be someone else’s problem, most likely the government’s.

We will conclude this discussion in my next blog entry.

Consumers know which stores carry electronics, which to visit for home and garden supplies, and which ones carry clothing. And each of these established retail markets has its sub-markets: do you want high-end electronics, or something less expensive? Do you wear clothes off the rack, or do you want tailoring?

Without much forethought American consumers can easily decide which retail operation is likely to have some version of the item they want for a price they’re willing to pay.

Retail healthcare is far less organized, both as an industry and in the minds of consumers. It’s an enormous market, but one that’s comprised of tens of thousands of retailers with varying degrees of product reliability, and with few guides for consumers seeking the best available products.

Just consider some of the products and services that didn’t exist or were in their infancy just two decades ago: cosmetic plastic surgery, Lasik and other corrective eye surgery, cosmetic dermatology, genetic engineering for fetus gender selection and fertility, cosmetic and reconstructive dentistry, fitness clubs and fitness equipment, pharmaceuticals for hair replacement and impotence, hormone replacement, health food restaurants, weight loss products, and healthy alternatives in traditional restaurants.

Who would’ve believed twenty years ago that McDonalds and other convenience restaurants would be serving salads and yogurt alongside the burgers and fries? Even traditionally unhealthy eateries are realizing that they’re missing out on a significant segment of the consumer market if they don’t offer healthy food alongside the comfort or “junk” food.

Along with this partial conversion to healthier eating by established restaurant chains, retail health food and restaurants that specialize in offering healthy food are booming.

Wellness products and treatments are constantly emerging on the market, not compensated by traditional insurance carriers but sought by the public anyway. In “The Wellness Revolution,” Paul Zane Pilzer describes taking glucosamine, available over-the-counter in any pharmacy as a treatment for osteoarthristis, while debating whether to have surgery on an injured knee, a procedure which had been suggested by a number of surgeons.

When he visited a surgeon one year after treating himself, the surgeon asked who had operated on Pilzer’s knee. When told that his patient had treated himself with glucosamine, the surgeon asked Pilzer not to publicize the success of the self-treatment, lest it cut into his surgical business. Not only that, Pilzer was astonished to learn that the surgeon hadn’t even heard of glucosamine.

Ford’s biggest expense in making autos isn’t steel. It’s healthcare, and healthcare costs are affecting our ability to compete locally and globally; American companies frequently lose ground to foreign competitors which haven’t been hobbled by the overhead of exorbitant insurance premiums.

It wasn’t always this way. It wasn’t until the late 19th century, little more than a century ago, that “accident insurance” first was available. The original accident insurance operated much like today’s disability insurance, and was intended to provide some form of support for workers who were injured at specific jobs, particularly rail and steamboat workers.

The notion of insuring something like “health” or “wellness” had been suggested centuries earlier but had been deemed impractical by insurance companies, most of which were in the business of insuring tangible assets. The first accident insurance was first offered in the United States by the Franklin Health Assurance Company of Massachusetts.

Before the development of medical insurance, patients were expected to pay healthcare costs out of pocket. The insurance was available to citizens willing to pay for their policies; industry wasn’t particularly interested in keeping workers healthy. (Before the creation of unions and the intervention of President Teddy Roosevelt’s administration, some companies weren’t particularly interested in keeping their employees alive.)

It wasn’t until the middle of the 20th century that traditional disability insurance evolved into modern health insurance programs. Hospital and medical expense policies were introduced during the first half of the 20th century, and during the 1920s some hospitals began offering services to individuals on a pre-paid basis, which led to the creation of Blue Cross organizations.

(Life insurance, incidentally, was originally known as “death insurance” until insurance companies realized that marketing the product required giving it a less oppressive name.)

Our current reimbursement-based system will fail: that’s not a prediction, but a certainty. The question is when, and what can be done alternately to make healthcare profitable while maintaining its core mission of serving the needs of the community.

Healthcare costs increase the cost of everything manufactured and every service provided in this country, which creates financial pressure first on the company, then on the consumer, and ultimately leads to outsourcing of jobs and importing of products manufactured for less overseas.

Retail healthcare via the Internet has no comparable element in traditional healthcare: there are web-based medical sites, but no physicians are prescribing medications or performing surgeries over the Internet.

Retail sales on the Internet are cash and carry (using credit or debit cards, of course) and healthcare products are no different.

Medicine that’s primarily concerned with treating illness rather than preventing it is losing its sway with the informed consumer, and they’re willing to take their business elsewhere, even to experimental or un-reimbursed remedies if the remedy will achieve what conventional sick-care can not.

Another area of rising cost in sick-care that’s preventable is late-stage expenses. Statistically, 80% of the medical costs we’ll incur in our entire life will occur in the last five years of life. This isn’t to suggest that the elderly be placed on ice floes and waved goodbye, but there are many expenses in late-stage illnesses that are of dubious value medically, and which add minimal time at maximum cost.

There are also preventative measures to prevent much of the lethal heart disease, diabetes and lung cancer that debilitates much of the elderly population. The viability of late-stage treatments must be assessed, but equally importantly, a great deal of late stage illness could be extinguished with proactive wellness care throughout life.

Meanwhile, Medicare has reduced compensation to hospitals for certain procedures and treatments; hospitals are still obligated to treat Medicare patients, but now at additional uncompensated expense, another indicator of where the reimbursement system is headed.

Help doesn’t appear to be on the way, either from the government or from profit-driven industries like pharmaceuticals and insurers. For physicians and hospitals, not treating isn’t an option and not receiving Medicare patients isn’t an option. The only option, other than to allow the dysfunctional healthcare industry to drag providers under, is to actively keep people healthier, and supplement traditional healthcare with a retail element.

Promoting wellness isn’t only a community benefit, but also an economic benefit to the institutions that implement care. Mission-based healthcare, seeking to serve the community at large, seems incompatible with economic security, but that’s not the case if adjustments are made that enable the hospital/clinic/physician to add a retail element to the business model.

Hospitals already engender trust and provide health and wellness services and products. All they need to capture a corner of an existing market that already generates billions of dollars each year is engage the consumer where the need is: providing products and services that promote wellness.

Clearly, the cost of treating sickness rather than addressing wellness in the United States has not been as profitable for American businesses and the populace as a whole as it has been for the companies that treat sickness.

Too often the prevention of illness and disease has been ignored as a partial treatment for the cost of rising health insurance, but both medical institutions, which are pledged to maintaining community wellness, and the federal government, which is pledged to protecting the populace (even if it’s protecting people from themselves) need to be proactive in promoting wellness and healthy lifestyles.

Chronic illnesses and diseases bred by poor health maintenance and treated by the healthcare industry primarily in the no-turning-back illness stage of the problem are economically debilitating. (Pharmaceutical sales in 2007, meanwhile, were a robust $643 billion worldwide.)

Wellness isn’t just what consumers seek: it’s what the public needs to demand from healthcare purveyors, insurers and pharmaceutical companies. A logical federal action would be promoting wellness rather than allowing profit-driven industries to set the standards for appropriate care.