If you have a herniated disc in Santa Barbara, Calif., you are six times more likely to have it treated surgically than you are if you live in the Bronx. If you are a diabetic in Royal Oak, Mich., you are 40 percent more likely to get appropriate lipid testing than a diabetic in some parts of Pennsylvania.
Those are the kind of statistics that George Bennett, chairman and chief executive officer of Health Dialog Services, refers to as “treatment pattern variation research,” and they are the bread and butter of a company that made millions by simply looking for patterns in what we already know about health care.
Bennett, MSIA 1970, Ph.D. 1971, is a self-described “serial entrepreneur” who founded Symmetrix, Inc., Braxton Associates, and co-founded Bain & Company, Inc., before co-founding Health Dialog in 1997. His goal was simple: to help address rising costs, poor quality and variations in health care, a task he terms “filling the void.”
Built in collaboration with the not-for-profit Foundation for Informed Medical Decision Making, the company provides analytics that drive “actionable and measurable solutions” for patients, including people in health plans, provider groups, government programs, and people who work for large employers.
Bennett is also active in the nation’s health care reform initiatives. Although he is a registered Republican, he says he has been working closely with the Obama administration to help form its policy.
Two years after it was founded, Health Dialog reported $3 million in revenues. By 2008, that number had grown to more than $300 million, and the numbers continue to climb, even in a weakened economy. In 2008, the company was sold for $775 million to Bupa, a U.K.-based global provider of healthcare services.
“As entrepreneurial stories go, it worked just the way it should, and the profits came in just when they should,” Bennett told an audience of MBA students as part of the Tepper School’s W.L. Mellon Speaker Series. “It was emotionally satisfying to be able to help that many people, and it was very satisfying for the investors.”
The opportunity grew out of what Bennett calls “the seven-minute doctor visit.” As health care costs skyrocketed, payers cut what they would reimburse doctors, particularly primary care physicians. To maintain their income, doctors began to see more patients. After two or three cycles of reduced payments and increased patient volume, doctors were seeing so many patients that appointments were abbreviated.
That spells trouble for chronic conditions such as asthma or diabetes, which require an ongoing relationship with the health care provider. And paradoxically, the system becomes costlier, because people become sick and have to be hospitalized.
“A dollar into good longitudinal care pulls $2.50 to $3 out,” says Bennett. “The people like it, because they’re healthier; the people who are the payers like it, and in cases where the government is the payer, the government likes it.”
Healthcare Dialog succeeds in part by analyzing treatment pattern variations, says Bennett.
“In the U.S., treatment practices vary dramatically from community to community,” he explains. Research shows that if variations can be eliminated, costs go down and quality goes up.
Some variation happens because patients don’t do what their doctor recommends, or the doctor doesn’t know what the most recent effective care is. Other variations can be attributed to something as simple as the number of available doctors in an area.
For example, spending on Medicare enrollees is 2 ½ times greater in Miami than in Minneapolis, according to Bennett, because Florida has more specialists, creating “velocity of usage,” meaning patients return to the specialist more frequently. But the age at time of death in the two regions is equal, suggesting that all that extra care is not improving outcomes.
Through predictive modeling and other analysis, Healthcare Dialog can also target its outreach efforts to educate people according to very specific demographics. One service offers computer-generated calls to patients — an idea that Bennett admits he almost dismissed out of hand because he personally didn’t think he’d use it.
When put to the test, the service proved to be very popular in a sample population, and wound up becoming a very effective form of outreach.
“Be really careful before your own reaction to something drives a lot of investment, or lack thereof,” says Bennett. “This looks like a simple business … but it has a broad and deep infrastructure that relies on the kind of skills that come out of Tepper.”