The Case for Healthcare
AOL founder Steve Case says he wants a revolution--in healthcare
Admire or revile him, you've got to admit that former AOL Chairman Steve Case has RBI, LOM, and FWC: Really Big Ideas, Lots of Money, and Friends With Clout. So when he says he's going to "revolutionize" American healthcare, it's smart to RWI: Regard With Interest. But given the strategic and accounting troubles that plagued his last years at America Online, the scattershot nature of his new company, and the sheer difficulty of his new goal, maybe that should be Remain Wary Indefinitely.
In a move reminiscent of financier Michael Milken's financial and entrepreneurial assault on prostate cancer, Case says he is pouring his cash and energy into making the nation's health system as easy to navigate and consumer friendly as AOL. Case announced last week that since forming his Revolution Health Group in July, he has spent about $100 million, mostly of his own money, buying all or part of seven private companies that provide healthcare and health information and manage health benefits for employers. And he's planning to spend hundreds of millions more scooping up other health-related ventures and building a new health information website, Revolutionhealth.com. Twenty percent of the money will come from private investors who, Case says, understand it may take more than 10 years to realize a return. But the profit, for now, is secondary. The real goal of all this money and energy, he says, is to "put consumers at the center by improving their choice, control, convenience, and care."
There is no doubting his sincerity. Case's drive comes from having watched his brother deal with doctors and insurers while dying of brain cancer. "It was a confusing maze," Case says.
There's also no doubt that America's health system needs reforming. Healthcare spending now totals $6,000 per person annually, almost double that spent a decade ago. Medical costs, which are expected to keep rising two or three times as fast as inflation, are helping push companies that provide generous insurance, such as General Motors, to the brink of insolvency. And more than 45 million Americans can afford no health insurance at all.
There's no doubt that Case's emphasis on consumers is smart. Twenty-six percent of large employers are expected to offer workers a version of the new "consumer directed" health plans next year. These usually set a high deductible and often include an employer-funded savings account to pay for routine and preventive care. Employers like these new plans not only because they control their share of costs but also because they are billed as a way to rein in rampant health inflation. The theory is that consumers who pay out of their own pockets or health savings accounts for doctors' appointments and MRI s make only the appointments they really need and shop around, forcing prices down. But patients often can't tell the difference between symptoms that demand a doctor's attention and those that don't. Physicians don't typically give patients the kind of price lists and quality-of-care statistics they need to comparison shop.
Unfortunately, many have tried what Case is aiming to do--and failed. From managed care to DrKoop.com to former President Clinton's health plan, the landscape is littered with the remnants of previous attempts to reform healthcare.
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