Health care is a $1.4 trillion industry. It's been estimated
to consume 15 percent of our gross domestic product. But it's
also an industry in flux. Consider hospitals, which are struggling
to improve their financial performance as they compete increasingly
with private clinics and urgent care centers that offer specialized
services at less cost. "That's revenue that won't go
to the hospitals anymore," says Jody Root, a partner and chair
of the health law department at Foley & Lardner, a law firm in
San Diego. "The traditional model of health-care delivery has
changed."
Today, health care is a Pandora's box of problems.
Well-trained health-care professionals are in short supply.
Providers and insurance companies are trying to meet a spring 2003
deadline for compliance with the Health Insurance Portability and
Accountability Act (HIPAA), which sets new federal privacy
standards for patient documents. Meanwhile, employers--stymied by
rising insurance premiums--are looking to shift more cost to
employees at the same time that consumers and doctors, tired of
managed care, are wanting more control over their health choices.
As a result, insurers are moving far away from the HMO model toward
defined contribution health plans that offer more choices. State
governors, driven by deficits, have asked the federal government
for $6 billion to cover expected Medicaid shortfalls, an amount
they're not likely to receive from politicians in Washington
who so far have been dragging their feet on the health-care issue.
The list goes on.
"There are a
lot of opportunities if you can solve a business problem through a
process change, outsourcing a service or creating a new
technology."
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The good news? Your business plan could emerge from all this
chaos. "There are a lot of opportunities if you're an
entrepreneur who can solve a business problem through a process
change, outsourcing a service or creating a new technology,"
says Lewis Redd, head of the health practice segment of management
consulting firm Cap Gemini Ernst & Young in Atlanta.
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Consumer choice will be the trend over the next few years, says
Victor Tabbush, faculty director of the Johnson & Johnson
Healthcare Executive Program at the University of California, Los
Angeles. Cost-conscious patients will be picking up more of the tab
in exchange for more control, and they'll start shopping around
for the best service at the best price. Is a PET scan better than
an MRI? Is it worth the extra cost out of my own pocket?
Patients will have to make these choices, and while their
primary doctors may offer sound advice, more and more of them will
go to independent sources for information, Tabbush says:
"Businesses that cater to the added need for patient
information, cost and effectiveness have a real future."
Your fledgling health company could end up in critical
condition, however, if you're not careful. Health care
isn't an industry you just jump into and hit the ground
running. It's highly regulated, start-up costs can be steep,
and long sales cycles can make it difficult to land new
clients.
To be successful, "you really have to do your
homework," says Richard B. Siegrist Jr., president, CEO and
co-founder of health-care software firm HealthShare Technology in
Acton, Massachusetts, and an adjunct faculty member at the Harvard
School of Public Health. "You need to get an understanding of
the language of health care and how health-care organizations
work." Here are the stories of three start-ups that did their
homework and are already pictures of health.
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