Healthcare co-ops as co-creation

There have been so few new ideas on either the Democratic or Republican side of the political debate since the advent of the Obama administration that we should welcome the arrival of the healthcare co-op idea recently floated by the Senate Finance Committee.

Of course, the idea has already been ridiculed by politicians on both sides of the aisle, because it is neither a true public option nor a fully private-sector enterprise. But let’s remember that being mocked on both sides is often the beginning of bipartisanship. So far, co-ops have been viewed as a sort of union where consumers would come together in a nonprofit structure, negotiate with doctors and healthcare providers, and compete against traditional private-sector insurers. I can’t get too excited about this concept because it does little to reduce overall cost, which is the real issue here. Eliminating some of the costs associated with the high salaries of private-sector management and the remuneration of third-party investors is not that big a deal. Also it’s hard to see the self-replicating nature of the enterprise that would allow the co-op to rapidly reach a scale where it can compete against private insurers.

But if doctors were allowed to become part of the co-op, then the game would become interesting, because both sides would have a vested interest in lowering costs and could engage in the co-creation of unique solutions to get there. Imagine you’re a middle-aged, overweight person belonging to such a co-op and you’re facing your general practitioner for your yearly physical. Further imagine that you both are members of the same local co-op. Your motivation to lose weight increases if you know your extra pounds not only create a health risk but also impact your premium. Because the doctor is a fellow co-op member, he is no longer a dispassionate dispatcher of “I don’t care if you listen to me” advice. The doctor is now more likely to put pressure on you to shape up, since he personally suffers the financial consequences of his patient’s bad habits. Both doctor and patient now have skin (or pounds) in the game. The royal “we” in “Now, how are we going to lose weight?” becomes a true “we.” And that’s harder to ignore. In this intertwining of the doctor’s and patient’s fate lies the true opportunity to reduce costs, and the chance for the co-op to effectively compete with health insurers.

It also becomes easier to see how co-ops with joint memberships of patients and doctors could scale up rapidly. There is an eBay quality to this marketplace of buyers (patients) and sellers (doctors) coming together to organize an efficient healthcare exchange. I’ll bet you could find quite a few doctors and patients in many communities willing to put up $5,000 of capital to get a local co-op going. Before you know it, you’d have a respectable amount of capital that would allow the co-op to set up shop, buy a few computers, and hire some people. If we truly want healthcare reform, let us put our money where our mouths are. The interests of doctors and patients are objectively aligned. A few successful, early communities could trigger a rapid proliferation of the concept at the national level. If doctors became excited about co-ops, they in turn could redefine their own relationship with their hospitals and bring them to the negotiation table with the co-ops.

This democratization of healthcare through co-ops would bring healthcare back to the people who care the most about it: patients and doctors. Let’s give them a chance to shape the concept.