Summary: High profile business failures a decade ago in integrative clinics like American Whole Health and Wellspace sent word to venture capital that complementary, alternative and integrative health care were zones to avoid. Yet a series of recent studies of cost outcomes from a wide variety of integrative practices point to the significant financial value in these fields. The gold is latent, in the form of cost savings. The findings suggest that the integrative practice community needs to get off the defensive about its economic merits. It’s time to demand focused government investment in the public good, through a flurry of additional pilot projects that can help drive private and public investment in cost-saving models.
The failures a decade ago of venture capital-backed
integrative clinic initiatives like the $75-million American Whole Health boondoggle and the ultimate debacle that was Wellspace left a
pall on the business of complementary, alternative and integrative health care.
enduring message: Investment in these practices and practitioners will never please a venture capitalist’s portfolio. More likely they’ll break the bank.
|The judgment from early investment:
Beware. There’s no big
You’ll be lucky to get out alive.
The similarly devastating experience of high profile hospital and
health system integrative medicine clinics did not help. The demise of bold initiatives like the 10,000 square foot Arizona Center for
Health and Medicine, where a Zen garden entrance to groovy curved hallways was shuttered and converted into a telemarketer’s call center, only drove the
point home. Not only could investment not turn a buck. Integrative clinics in the not-for-profit environment appeared only able to survive with continuing infusions of philanthropic dollars.
The echo: Investor, beware. There’s no big
money to be made here. You’ll be lucky to get out alive.
Not surprisingly, entrepreneurial interest virtually died out over the subsequent 10 years, despite a continuous uptake of
such therapies and practices by the public.
But a recent review of studies reported during the last year relative to financial outcomes from integrative health
care interventions suggests that the subject deserves re-examination. Notice the pattern.
- Well-coordinated inpatient integrative care by
holistic nurses, licensed acupuncturists and massage therapists at Abbott
Northwestern Hospital was estimated to diminish hospital costs $2000 per
Blue Cross Blue Shield of Tennessee found that
patients with low back pain who directly access chiropractors cost 20%-40% less.
A study out of the Netherlands found that patients
of general practitioners who used a limited set of CAM treatments were healthier and cost the system 7% less.
Costs for insureds with significant disease
burdens in Washington State who used licensed complementary and alternative
medicine practitioners was $1420 less than those who didn’t use them.
Employees of Canada Post with elevated
cardiovascular risk who used naturopathic doctors saved their employers an
estimated $1021 less per year.
An integrative wellness program at Duke saved an
estimated $2200 per employee.
Two of these studies were in health systems. Two were
insurers. Two were employers. In each case, the researchers found savings. Significant savings.
Now imagine a system organized around and incorporating all these models for in-patient and out-patient treatment. These studies suggest that there is truly big money in
integrative health care. Only the big money is not in the usual kind of production. The big money is in producing savings compared to usual care.
Profit models from integrative
care is not through the usual kind of
production. The big money is in
producing savings compared to
One would think that a system facing medical bankruptcy might catch a hint. Or that investor curiosity would stimulate a little ingenuity. What pilot projects and business models will capture investor interest?
Here’s the rub. The financial rewards in the nation’s $2.6 trillion of annual healthcare spending go to pharmaceutical, testing and medical device manufacturers, specialist physicians and
the health system executives charged with managing this commerce. Tens of millions of small and large investors in mutual funds have a piece of this industry. Investors are trained to patterns that support the continued growth.
Now here is integrative health care, promising to take money out of these pockets. The assault would appear to be on all fronts. Via the outpatient integrative care, present incomes are attacked by personalized wellness, integrative
medical practices, chiropractic treatment of low back pain, licensed complementary healthcare providers of all types for multiple conditions, and naturopathic
care for lowering risk. Inside hospital walls, acupuncturists, massage therapists and holistic
nursing join to dam up usual flows of capital.
Duke chancellor emeritus Ralph Snyderman, MD, who reported the savings from personalized wellness noted above, addressed this point obliquely in his opinion piece in the Journal of the American Medical Association:
“Ironically, because reimbursement compensates
in-hospital patient care at a higher level than outpatient services,
the health system realized a financial disadvantage, and the program
proved economically unsustainable.”
A more harsh spin on Snyderman’s words is that those making money off the current system haven’t much incentive to do things differently.
Harsher yet: To charge leaders of this way of doing business to ardently engage significant initiatives to examine best use of integrative practices and practitioners is roughly equivalent to inviting them to take a long stroll off a short plank while shooting their best buddies in the process.
Or to put Hosni Mubarek in charge of developing democracy in Egypt.
No wonder the business models are tough. Yet these recent reports provide guidance. The new healthcare entrepreneur will explore strategies that partner with those who pay for the care rather than those benefiting from current expenditures. The big money in new business models may be in sharing in the savings.
The integrative practice community
needs to get off the defensive and both
positively assert and assume responsibility
Meantime, the integrative practice community needs to get off the defensive. It must take a lesson from these studies and both positively assert, and assume responsibility for, promoting this economic value. That will mean organizing researchers, institutions and self-actualizing creativity toward developing and promoting cost-focused pilot projects. One emerging venue is the “real world” Strategic Objective #3 of the 2011-02015 strategic plan of the NIH National Center for Complementary and Alternative Medicine (NCCAM).
This cluster of recent studies suggests that there is indeed big money in integrative health care. It is latent, as unreleased savings. The failure of the private sector to step up and invest is all the more reason to demand that the government, as agent of the common good, fill the void.
for inclusion in a future Your Comments Forum.