Friday, June 10, 2011

Healthcare Reform – the Purpose Innovation© Way.....

With our Purpose Innovation idea, that is being posted, within the Management Innovation Exchange MIX site, seem to be getting some good visibility, some of our readers, informally suggested that we expound upon our earlier hypothesis – “Purpose Innovation, being a systemic approach, has a great opportunity to revolutionize health care reform”. Before we get into the nuances of our solution – in our humble opinion, there exist three foundational issues, in the way health care reform, in its current form, has been scoped –

  • First and foremost, the health care reform problem space has not been framed up correctly. In other words, it has been wrongly framed, predominantly as a choice between public vs. private option (as pointed out by Prof. Clayton Christensen), as opposed to, being framed up as a choice between distributed, integrated or virtually integrated solution options.

  • With the fact it has been framed incorrectly in the first place, it has also been approached with a “problem solving mindset of finding an immediate answer to fix the symptoms”, as opposed to being approached as a “systemic mindset of finding a long ranging solution, fixing its root causes”. In other words, it all comes down to “problem solving mindset of fixing the symptoms vs. solution providing mindset of fixing the root causes”.

  • Finally, the health care reform has also been solved with a mindset of fixing the symptoms, with a 5-10 year planning mindset, as opposed to being solved with a series of experimentation based chunks of solutions, fixing the root causes, constituting 5-10 year road maps with an experimentation mindset. In other words, it all comes down to “symptoms fixing mode, with a vanilla planning mindset vs. “root causes fixing mode, with an experimentation based planning mindset”.

Systemic root causes of the Health Care reform

With that said, we propose a systemic approach, where we step back and re frame the health care reform, as an “opportunity for solution with an experimentation based chunks of solutions, fixing the root causes, leading up to the 5-10 year road map. As part of that attempt, we have also identified the top three systemic causes for the health care challenge (especially within the US context), before arriving at the solution part.

  • Lack of a compelling mechanism motivating consumers to reduce their health risk profile, so that insurers can accept them readily without charging a high premium.

  • Existence of Conflict of Interest (or lack of motivation) between providers and insurers - e.g. providers trying to extend hospitalization services whereas insurers trying to reduce the coverage of the services, thus resulting in a tension.

  • Motivation of the providers to exploit the loop holes (e.g. performing mundane health care services as part of an in-patient care instead of out-patient care etc), resulting in malpractices and hence higher cost.

If we had to further summarize these three causes - it all comes down to the “lack of a compelling motivation (or incentives) on the part of providers, insurers and consumers” to come together and find a systemic solution, fixing the root causes. In other words, the primary root cause for the health care reform is - the lack of a compelling motivation among the three parties (providers, insurers and consumers) to form a joint alliance, so that collaboratively, they can create a win: win value proposition for all the parties involved.

Potential Solution Options

With that said, the sustainable long term question that needs to be solved within the health care reform context (especially when we add those 32 million uninsured people) is – which solution option? – distributed, integrated or virtually integrated solution options.

As part of this right framing, we have also identified the key pros and cons of these three solutions options, and let the "pros and cons", themselves decide the right solution option.

  1. Under the distributed model (by and large the current model in US and most developed countries), hospitals are motivated to keep patients for longer - whereas the insurers are motivated to minimize reimbursement; thus creating conflict of interests – which means, any process improvement solution done on one end (provider side or insurer side) is not sustainable as it lacks a systemic view. In some cases, process optimizations, done in one side of the health care value chain, to save money or improve performance, invariably might have a detrimental impact on another side of the value chain, because the system lacks an end-to-end systemic perspective. The classic example, is privately managed private hospital providers, like hotels are motivated to fill their beds (or increase their room occupancy) whereas independent insurers are motivated to minimize reimbursement charges; thus creating the conflict of interest.

  2. Under the Integrated model, (as proposed by Prof. Christensen), providers and insurers will come under one roof (perhaps as one firm) and so, provider’s action to reduce costs will also help the insurer side, as the conflict of interest, no longer exists as they are all part of the same organization. Increased room occupancy, a primary motivation for increasing the revenue in the distributed model, may not be a revenue opportunity under this model, and hence, conflict of interest, is greatly reduced, resulting in a better solution. On the flip side - while it provides a superior strategic/systemic solution, it might also introduce some structural challenges, in terms of making the health care value chain much more complex and bigger, potentially leading up to a monopolistic market model, as opposed to the free market driving the long term solution. In other words, a superior strategic solution, without a solid free market structure, sometimes, may not get the support from the business world!

  3. As a middle ground solution, we propose the Purpose Innovation enabled virtual model, wherein, providers, insurers and consumers alike, are motivated to come together under a virtual roof, that is bounded together by a powerful “Purpose score based, virtual PurposeCare© platform”, that inherently motivates the parties to reduce the cost (with incentives to reduce their conflict of interest & malpractices), resulting in a “collaborative health care value chain” providing win: win value proposition for all, as promoted by our larger Purpose Innovation Idea. In other words - stronger their purpose causal chain (e.g. H&W consumers with a history of consuming/applying H&W P&S’s, leading a healthy lifestyle in body-soul-spirit dimensions), higher will be their purpose scores (and lesser their risk profile), and hence, resulting in increased number of uninsured being accepted by the insurers with lower premiums, facilitating a quick treatment turnaround time(as healthy consumers, in general, respond to treatments faster, with less expensive medicines & do-it-yourself and commoditized/shop floor type procedures), thus increasing the profit margins of all parties involved. It is also important to highlight yet another point here - that the spiritual dimension of "body-soul-spirit" has been consciously incorporated into the purpose causal chain, as health & wellness, in our opinion, also has a spiritual component, as history has proven again and again, that spiritual minded people (regardless of their religious denomination background), lead a healthy life style and have a better resilient power to recover quickly from health issues. On the down side - although, this solution is a sound systemic solution like option #2, (yet does not have as much of structural challenges like option #2), it still needs, some revamp of the health care value chain, as it needs lot more collaboration mindset among all parties (without much of direct control) - potentially resulting in a model, where we might need regulators policing the governance and purpose scores.

By looking at the "pros and cons" of these three options - options #2 and #3, in our opinion, deserve some additional exploration. Having said that, by no means, we are suggesting that any of these options, will totally replace the current solution(s) in totality – rather, we suggest that our solution, among many of the other experimentation solution options, has a great potential to compliment the current solution options, that are being considered by the experts from Washington. In other words, our solution is an experimentation option – with a potential to become the stepping stone, for the long ranging solution(s) within the 5-10 year health care reform road map.


In closing, our hope is, that experts from Washington will pay a closer attention to our experimentation based, Purpose Innovation option - given the fact, our solution (including its foundational purpose platform), not necessarily, just solves the health care reform, but also, has a potential to become the solution for other purpose reforms – i.e. motivating corporations and consumers to embrace green brands, green energy and also thereby solving externality other corporate social responsibility issues, given the fact, our solution is built on a purpose platform, that is bound together by a powerful purpose score based, purpose causal value chain.


  1. Hello Charles Prabakar,

    This is a powerful, integrated and practical article. I love it wholeheartedly for it looks at the value of health affairs from a common ground. You are not disintegrating the health system; in contrast you accommodate all different perspectives under one roof or all in the same boat. Win together or lose together is the message all stakeholders get. All parties get the same message with very remote misunderstanding or misinterpretation. I really fail to find the words to express my appreciation of this article. It is the most relevant and practical article that you have written. It clarifies your system and shows its merit. I admire this work.

  2. Charles,
    Another thought provoking article…
    I’d like to point out something else. May not be directly correlated with your topic but, I just read another survey and felt like there is a vital connection. The survey by Simplyhealth (which provides health plans to companies) points out that a majority of employers don't correlate Health and well-being to Productivity. Employers could be missing a trick as employees value health and well-being at work above career progression opportunities. Not correlating benefits with productivity could mean that employers do not fully understand the impact they can have, and are missing a key opportunity to engage with staff. Employers are looking for alternatives as cost management bites but they are also ignoring the effects of connecting the dots between productivity and health benefits.


  3. Thanks Ali for highlighting one of the key features of our proposal - “Yes, it does not disintegrate the current system; however, it slowly disrupts the system in an in-side out manner – thus reducing the healthcare cost in the long run, yet without compromising the quality”. Again, as you have pointed out, our approach is a middle ground solution, providing a win: win value proposition for all parties – and so, our hope is that experts and other leading purpose practitioners, will pay a closer attention and embrace our idea soon. Regards, Charles

  4. Yes Surya, you bring up a great point of linking productivity to H&W - and so, it is yet another motivating reason for employers to embrace this idea as well – as increased purpose scores of their employees, not only increases their productivity, but also, it helps them to reduce their Group insurance expenditure, given the fact our PurposeCare platform enables employers to move their high purpose score employees, from employer-sponsored insurance (ESI) to our model, in a lower cost, thus increasing the take home pay of their employees as well – and so, it is a win: win value proposition for all parties as well. Also, as it turns out, yet another power of our idea comes from the creative ways of carving out the purpose causal chains – and rightfully so, the PurposeCare platform gives us the liberty to dynamically carve out the purpose causal chains, in multiple possible ways– including, but not limited to, productivity, volunteering, spirituality, family values, Green brands, Green energy (& of course all other possible purpose characteristics as well). Again, your point is well noted Surya. Regards, Charles