health 20 introducing healthcare fico

Health 2.0: Introducing the Healthcare FICO Score

FICO Score (fik'o sk�r) n.

1. Financial instrument used to assess the risk of credit applicants

2. A risk-based score system used to determine the probability of a

borrowers risk of default

I have been talking quite a bit about the convergence of health and

wealth in recent months. I am continually reminded of how much

healthcare has to learn from the financial services industry. It is an

analogous industry with an incredible amount of information,

incredibly complex transactions, and significant privacy/security

issues of very personal information. The Medical Banking project,

which I have discussed before, is a very good start on introducing

financial best practices into healthcare. The "information liquidity"

(this was the buzzword of the day at the conference) achieved in the

financial services industry is one of the primary drivers of our

unprecedented 25 year run of prosperity according to Alan Greenspan.

Crossing over to healthcare, I have been mulling over a concept for

several months which I have termed "The Healthcare FICO Score". Given

that the closing reactor panel at the Health 2.0 Conference mentioned

it several times (thanks Esther and Jay!), I felt that it is time to

put my intellectual stake in the ground by defining the term first (a

Google search of the term as of 5 PM PST did not reveal any hits).

The FICO score is a financial instrument developed to assess a credit

applicants degree of risk when considering the extension of credit.

The concept of credit risk scoring was originally developed by the

Fair Issaac COrporation (FICO) and was the basis for a computerized

risk-based scoring system to determine the possibility that the

borrower may default on financial obligations to lenders. This scoring

system has since become the leading indicator of financial risk (or

worthiness as the case may be), and is used pervasively throughout the

financial services world. Everything from home loans, to credit card

applications, or other lending situations are based on your personal

score. The actual scoring is somewhat mysterious in that it is a mix

of your net worth, current income, current credit, past performance,

and probably several other metrics that are leading indicators of your

financial health. Three companies have been authorized to be the

definitive source of the FICO Score and literally hundreds of

companies (case in point - look at their banner ad!) have sprung up to

help people manage and improve their scores in order to obtain credit.

I believe the corollaries are obvious and have been hiding in plain

site for years. Health Insurance is currently a mathematical analysis

of actuary tables and past claims experience. To my insurance plan, I

am just like any other 38 year old white male. However, I am not your

average 38 year old male (thank you very much). I don't drink or

smoke, I don't do drugs, I am happily married for 16 years and have

four beautiful children. I enjoy being active, hiking, surfing, and

working out as I am able. I weigh 190 pounds, have less than 9% body

fat, cholesterol less than 150, and have enjoyed very good health. My

family history has remote cancers but all my immediate relatives have

lived very rich and rewarding lives into their late 80's. On the

negative, I keep impossible hours, travel way to much, don't get

enough sleep, and need to work out more consistently to actually get

back in shape.

So given all of this, what's my true heath insurance risk - My

HealthCare FICO Score? My insurance company has no idea. I get pooled

with every other obese, smoking, drinking, pimping, clubbing 38 year

old yokel. We can do better than this.

Think about how much better it would be if there was a HealthCare FICO

Scoring system in place and a health plan that actually rewarded and

incented me to take care of myself. In this scenario, I would be

seeking a long relationship with my health plan, independent of my

employer, because I might be switching jobs over time, moving, or a

host of other things that disrupt that relationship and my insurance.

Because of the longer time horizon, my health plan would really invest

in getting to know me because our relationship would actually matter.

I would take a health risk assessment, a basic laboratory panel,

perhaps some physical fitness test, and in the future apply genetic

forecasting as well. I would also have a health counselor work with me

to determine my real age, which would include reducing my life

stressors, improving my health, and applying all the best-practice,

evidence-based, preventive medicine practices we currently know. In

fact, there might an entire secondary industry built up around

"repairing" your HealthCare FICO Score through a boot camp approach to

improving your health. My Health Plan would be my advocate and I would

pay them money to keep my HealthCare FICO score as high as it can be.

In this scenario, the insurance or payment component might need to be

separated from the Health Plan to remove any perverse incentives.

Because my health plan is paid to keep my HealthCare FICO score

elevated, their incentives are aligned with mine. They, in turn, can

shop my HealthCare FICO score around to insurers who like my risk

profile and can continue to apply their mathematical formula's to my

scoring - albeit, my scoring now really means something, and Scott

Shreeve, MD the 38 year old white male has a much more transparent and

defined risk. I get rewarded for my good choices with preferred rates,

ongoing assistance to improve my health, and a long, health, and

hopefully happy sojourn on spaceship Earth.

I believe this is where it is all going. While many people talk about

the concept of a healthcare tipping point, I believe we can go faster

by looking at the "CrossOver" between industries to learn and apply

what is already known in other industries to the healthcare problem.

The Health 2.0 Conference really brought this home to me because it

was a gathering of the healthcare intelligentsia, and not the

entrenched healthcare illuminati who are incentivized toward

maintaining the status quo. I believe we can build from the

conference, by continuing to attract the attention of the bourgeoisie

(employers) and ultimately the proletariat (the rest of us) with the

ideas, technology, products, and services that will truly impact the

way that healthcare is delivered in the United States and beyond.