Managed Care Matters

I've been keeping my eye on Revolution Health since its founding earlier this year, and the item posted last week about Kaiser's work on electronic health records reminded me to check back on Revolution's progress. Why the focus on Revolution? There are other consumer-directed health plan firms out there, why them specifically?

First, they seem to have the cash. Steve Case's investment firm, Revolution, has a half billion dollars to invest. It's very important to understand that not all of this will go to Revolution Health; to date. Of note, Revolution has also invested in two "lifestyle resort firms", the car-sharing service FlexCar, and other firms in the "life in balance" space.

Second, they have the attention of the media and investment community.

Where is Revolution Health (RH) today? Revolution is framing their business as focusing on three areas; coverage, content, and care. They have acquired several web-based and other companies that have some level of expertise or experience in each of these areas. As noted here previously, none of them is even close to dominant in their specific space. Notably, there are no components that are specifically health care management, managed care, or provider network management firms or have significant capabilities or experience in these areas.

The company appears to be in the process of merging its acquisitions, building the marketing image and message, and possibly looking for new acquisitions.

The only member of Revolution Health's operating committee with extensive experience in the health insurance/managed care business is Bryce Williams, who worked at eHealth, the parent company of eHealthInsurance as their head of marketing and business development.

Why the comparison to Kaiser? Kaiser is at the opposite end of the spectrum; a company (Kaiser Permanente is actually two entities; Kaiser owns the facilities and administrative end of things, while all the physicians belong to the Permanente Medical Group; technically KP is a large group practice HMO…) that started the HMO industry over five decades ago, dominates the market in many of its locations; and deeply understands the delivery of health care and the challenges inherent in serving a diverse member base.

Clearly RH and KP are two very different entities; one has essentially no significant background, experience, or expertise in the financing, delivery, assessment, administration or management of health care. The other does. One is targeted at a relatively small market segment, the other already serves millions of members. One's goal is to build a company with a high market capitalization, the other is to maintain and improve the health status of its members.

If one is interested in meaningful ways to address the nation's health care crisis, watching Kaiser is going to be more productive than tracking RH. I had hoped and continue to look for RH to do something meaningful, exciting, different, and potentially significant in health care.

I'm still waiting.