Here are a few more eye-popping statistics about the US healthcare system:
- Private payers (primarily private health insurance and payments by individuals for co-pays, deductibles, and services not covered by insurance) funded more than half of national health expenditures in 2003, or $913.2 billion.
- Private sector spending growth was 8.6 percent. Private health insurance premium growth was 9.3 percent. Out-of-pocket spending for health services grew 7.6 percent in 2003. In other words, those who do have health insurance are paying a lot more each year and with incomes falling for most Americans, this means that they are either borrowing more to maintain their lifestyle or cutting back.
- Spending growth for prescription drugs grew 10.7 percent, lower than the previous year. Among factors contributing to this spending slowdown were: a reduction in the growth of number of prescriptions dispensed, the conversion of a popular allergy drug to over-the-counter status, several drugs losing their patent protection, and the expanded use of tiered co-payment plans.
I have always highlighted that serving the uninsured Americans is a great business opportunity and a business does not have to use dishonest means to win. As a management consultant, this is one of those business opportunities that gets me excited and so should any other shrewd entrepreneur. In fact, I believe that it is entirely possible to create a parallel health care system for the uninsured Americans so that they have access to basic healthcare. Indeed, these people are ready to take on more risk than a provider will typically take for an insured person.
But what have we seen? Many Americans are either avoiding visits to the doctor altogether or waiting till they need emergency treatment. Others are traveling overseas for treatment and India is already an attractive destination for such patients.
I had expected more from the drug industry but all they have come up with is a discount card called the Together Rx Access Card, which for reasons that I have not understood, is not being advertised at all. I wonder if this is just a PR initiative with no real intention to provide prescription drugs to more Americans.
What does it mean for you?
- Providing healthcare to uninsured Americans is an attractive business opportunity. If we use the even 10% of the amount that an insured American is currently spending, this market is approximately $25 billion. This is a highly fragmented market and that is why segmentation is key. Pick your niche and develop an offering that meets their requirements.
- Technology and lower cost of communication allow a business to locate its infrastructure offshore. As indicated above, patients may even have to travel offshore for complex surgery.
Recommended next steps
- Research the needs of uninsured Americans (I am including uninsured immigrants/ permanent residents as well) and assess their profitability to pay. I have not seen readily available data so you will have to pull data from a few websites to compile your basic numbers.
- Conduct focus groups and targeted market research to validate your initial findings and to develop an offering.
- Put together the package that meets their basic requirements and also appeals to them on the affordability factor.
- Use offshore/outsource model generously - I cannot imagine any other way to make this business a success.