I'm a big fan of Michael Porter, but his latest piece, "The Big Idea: Creating Shared Value,"  left me a bit flat. The premise of the article is that our capitalist system is currently “under siege,” with the public blaming business for social, economic, and environmental problems. In order to legitimize business in the public’s eyes, Mr. Porter and his coauthor, Mark Kramer, propose that corporations shouldn't just focus on profits– they need to create "shared value," which they define as: "policies and operating practices that enhance the competitiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it operates. Shared value creation focuses on identifying and expanding the connections between societal and economic progress."

The authors go on to say that the idea of corporations creating "shared value" will start to blur the lines between for-profit and non-profit entities. And while I understand their point, I don’t think that this "shared value" concept is the big idea that is going to revitalize capitalism – for a few reasons…

#1. "Shared value" is already an innate concept in organizations where the management lives where they work. If you live in the community where your company operates, you are always concerned about advancing the economic and social conditions surrounding you. The problem arises when there is no connection to the community. Whether you’re dealing with absentee landlords of real estate or corporate entities, it's hard to care about what you never see and people you'll never meet.

#2. The issue of “shared value” isn't what is going to blur the lines between for-profit and non-profit organizations. That distinction is strictly an issue of repatriation of profits—do profits go to shareholders or are they reinvested?  There are many mercenary non-profit organizations that have as little "shared value" as their for-profit counterparts.

#3. We will never have "shared value" in publicly-traded companies. Executives of publicly-traded companies won't be in the positions long if they don't maximize quarterly earnings—a goal that can never be consistent with advancing "economic and social conditions in the communities in which it operates."

In theory, I am a huge supporter of the "shared value" concept that Mr. Porter and Mr. Kramer forward.  But in practice, I think we can all recognize that it will take more to "legitimize" business.

Like many of you, on Monday I saw the news that a federal district judge in Virginia ruled that the insurance mandate in the health care reform bill exceeds the authority granted to congress under the Commerce Clause of the Constitution. (It apparently is Constitutional to mandate that employers provide health insurance, but not individuals – a distinction I don't quite get.)

But that is not the purpose of this missive. To all of my colleagues who are applauding the death of the individual mandate, I would like to give a quick remedial course in health care financing. In order for our health system to eliminate preexisting condition clauses and exclusionary enrollment in health plans, the current mandate for individuals to buy health insurance is a necessity. It is financially impossible to have one without the other; if there were no mandate, everyone would simply wait until they were ill to get health insurance – something akin to allowing an individual to buy homeowners insurance the day after they have a fire.

So what is the answer?
 

#1. Fight the Virginia Court decision to the Supreme Court (likely), and restore the individual health insurance purchase mandate within health care reform.

#2. Accept the Virginia Court decision and allow the return of preexisting condition clauses and exclusionary enrollment in health plans. I think this is poor (and penny-wise, pound-foolish) policy choice. We have many Americans who forced into bankruptcy paying for treatment for devastating acute and chronic health conditions.

#3.  Accept the Virginia Court decision and have the federal government provide health insurance for all uninsured persons, which would keep the ban on preexisting condition exclusions in health plans.

For those of us trying to find the “middle ground” in health care reform, I'd like to point out that ruling that individual purchase mandates are unconstitutional is likely to spur an increase in federally-financed coverage.  I'm not sure this is the outcome that many of those organizations financing the anti-health care reform lawsuits will want.  But, as they say, be careful what you ask for. . .

I just read a great piece in Becker's Hospital Review, “10 Key Trends for Hospitals in 2011,” which focused on hospital subject matter experts’ predictions for the new year. Their observations are relevant not only if you’re in the acute care sector of the field, but also serve as useful guideposts for any organization in the health care field.  

The ‘top ten’ trends this group is expecting include:

1. Lower reimbursements
2. Recovery audit contractors (RACs) gather momentum
3. More uncompensated care
4. Political gridlock
5. Uncertain fate of healthcare reform
6. Anticipated ACO rules may open the floodgates
7. Greater focus on experimentation
8. States will further cut Medicaid spending
9. Healthcare IT payments start
10. More hospital consolidation likely

I think these will prove to be trends that all management teams will need to factor into their planning scenarios. So make sure that your team – and your plan – is ready for the new year.

I’ve written in the past about the need for specialist health care organizations (such as behavioral health organizations) to reposition themselves in an era of changing technology, science, and financing. There are many possible directions for repositioning – from primary care for individuals with chronic conditions; focused disease management programs for consumers with multiple chronic diseases and complex social support needs; and program to address unnecessary use of high-cost acute care interventions.

Now comes yet another study on the cost savings opportunities of prevention efforts in two areas – high blood pressure and diabetes. The study authors concluded that reducing the prevalence of diabetes and high blood pressure by five percent would save the nation about $9 billion a year in the short term. In addition, conditions related to those health problems would also be reduced, which would increase the savings to about $24.7 billion a year in the medium term.

The study was conducted using 2003-2005 data from the Medical Expenditure Panel Survey.   Study results were released on-line on November 18, and are scheduled to be published in the January print issue of the American Journal of Public Health.

This is data that can be the foundation for designing (and marketing) prevention programs.   For more on the evolving wellness and prevention market, check out these recent articles by our team:

• Market Opportunity in Prevention Programs: Reform Creates New Market Niche for Prevention (available to premium OPEN MINDS Circle members)
• New Science Changing The 'Perceived Value' of Prevention & Early Intervention  (available to all OPEN MINDS Circle members)
• Mental Illness & Addiction Prevention & Treatment Critical to U.S. Health Reform (available to premium OPEN MINDS Circle members)
• UnitedHealth Group Launches Diabetes Prevention & Control Alliance With Partners Walgreens & YMCA of the USA (available to premium OPEN MINDS Circle members)
• J&J to Grow New Wellness & Prevention Business as Part of Consumer Division (available to premium OPEN MINDS Circle members)