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INTRODUCTION

TWO ENTIRELY DIFFERENT mind-sets are at work in the world of U.S. health care. The public and private sectors, which roughly split the nation’s nearly $3 trillion medical bill, see different challenges. Government leaders think reform means more access for more people through better insurance, subsidies, and expanded tax revenues; private companies see out-of-control costs as the main issue and improved workforce health as a major solution. The health care law that was signed into law in 2010 and has begun taking effect (with the full effect hitting companies in 2015) is all about access and insurance reform, but it leaves largely unaddressed the pivotal issue of costs, which have been spiraling upward for decades. The costs have about doubled every eight years.

In my first book, The Company That Solved Health Care, I described what my mid-size manufacturing company, Wisconsin-based Serigraph Inc., did to loosen the cost noose that kept tightening around our neck. Since then, I have had the rewarding experience of traveling the country to interact with hundreds, even thousands, of business people who were also grappling with that huge issue. I got more than I gave. It was a learning journey.

Growing up in the newspaper and manufacturing businesses, with a grandfather in each, I always had one foot in journalism and the other in commerce. Curiosity and questioning are the requisites for a news reporter, and benchmarking on best practices at other companies is an invaluable tool for running a company. Both skills helped as I engaged in a cross-country dialogue with smart people who are passionate about finding a cure for the chaos in health care economics.

As I spoke with businesspeople across the country, it became clear that I am far from the only one who sees that the business side of health care is badly broken. I imparted what we had learned at Serigraph, as we improved workforce health sharply and kept our costs about 40 percent below the national average. But the more interactions I had, the more I realized something profound was taking shape across the land. Collectively, these innovators were hammering out a new business model for the delivery of care.

I, with help from a seasoned business reporter, interviewed many of these change agents, these disrupters, and their insights are spread throughout the book.

The payer revolt has been growing from the ground up, just the opposite of what happened in 2010 when President Obama and Congress imposed insurance reform from the top down. ObamaCare, love it or hate it, was fashioned cerebrally by wonks and pols from inside the Beltway and inside the health care industry. It was anything but empirical, as its troubled launch demonstrated.

ObamaCare, love it or hate it, was fashioned cerebrally by wonks and pols from inside the Beltway and inside the health care industry. It was anything but empirical, as its troubled launch demonstrated.

What I was touching and seeing across America is the “real reform” that has been going on in the private sector at the grassroots level. The innovators have been dealing with the elephant in the room—the bloated cost structure of the industry. They also have been dealing with the health of employees, because you can’t manage health costs without managing health. Duh! That basic truth became perfectly obvious in my many conversations.

It should come as no surprise that most of the innovators I encountered were in the private sector. Government payers move very slowly, except to devise new revenue schemes to cover the soaring medical costs. Conversely, innovation is at the heart of survival and competitiveness in the private economy. And corporate executives move fast once they engage a strategic issue and understand that it has to be solved. We in business are a community of problem solvers. We thrive on innovation. And we’re motivated to innovate in health care, since we’re directly footing roughly half of the bill in this country.

Business leaders can push their reforms with the knowledge that we possess lots of leverage. As Jeff Thompson, CEO of Gundersen Health System in Wisconsin, put it: “All of the margin in health care comes from private payers.”

Further, innovators in the private sector are more pragmatic than wonky. They are empirical. They get an idea for improvement, try it, keep it if it works, and dump it if it doesn’t. When their proven initiatives and pilots are stitched together, they add up to a new model. It is a mosaic. In contrast, ObamaCare avoids, for the most part, the over-riding issue of costs. So no one really knows if ObamaCare is going to work without busting the bank. And it may not even resolve the access issue. We’ll know in five to ten years.

We private payers, on the other hand, know beyond a doubt that the emerging business model in the private sector works, because it is being rolled out successfully in thousands of results-oriented companies.

The emerging business model in the private sector works . . . it is being rolled out successfully in thousands of results-oriented companies.

Corporate purchasers also understand basic business concepts, like the rock-hard fact that they and their employees are the customers.

Medical providers, who often think they are at the center of their universe, have a hard time with the concept of customer. I often have to explain to them that the customer is the one who writes the check.

Corporate purchasers see the world through supply chains, with the payer at the top and the doctors, hospitals, clinics, and insurers as vendors down the chain. With that mentality, proper relationships start falling into place.

In my learning expeditions, I encountered a mountain of frustration, even anger, at the existing system for delivering care. Most of the ire is on the economic side of the equation, though there is plenty of room for improvement on the medical side.

The American people are fully aware that unchecked health costs—almost twice per capita of anywhere else in the world—are crowding out advances in education, research and development, wage increases, public safety, environmental improvement, even defense. They see the hits to their personal finances. Health costs have become the leading cause of personal bankruptcy in the country. The citizenry wants it fixed.

Fortunately, there is a grassroots revolution surging across the country, company by company, and it offers hope and change. In that light, this is an optimistic book.

The rate of inflation in health care premiums has dropped from double-digit increases a decade ago to mid-single digits. The wonks are puzzled by that unprecedented drop. How did it happen? Look no further than the Grassroots Revolution led by private payers. They are demanding change, and they are making it happen.

This book lays out the initiatives that many companies have launched and the platforms they have built for a restructured health system.

Unlike the current system that revolves around specialist doctors, hospitals, and insurers, the new model centers on the employee, the consumer. The new delivery model listens first to the voice of the customer. It is patient-centric.

That’s the heart of what I learned from the innovators at the ramparts of real health care reform, and it’s at the heart of this solutions-oriented management book.