Small Business Needs a Big Shot of Disruption in the Health Care Marketplace

Entrepreneurs and their employees are benefiting from policies that have vastly improved the business climate. Regulatory improvements coupled with tax savings, solid consumer confidence and better sales are driving small business optimism to very high, if not historical, levels. This fertile environment means entrepreneurs have a very favorable outlook for the economy and their businesses.

According to the Spring 2018 Bank of America Business Advantage Small Business Owner Report, 60 percent of small businesses believe their revenues will increase in 2018, and the same percentage plan to grow their businesses over the next five years. That is great news for local communities, as growing businesses are key to innovation, job creation and economic vibrancy.

Entrepreneurs and small businesses are not without their challenges, however. Finding the employees they need to operate and scale their businesses, along with accessing capital for expansion projects, is hindering their ability to fully leverage new opportunities. And now a new uncertainty has been thrown into the mix — tariffs — with business owners trying to determine how their costs will be impacted (and for how long) and whether the trade feud will escalate.

An enduring uncertainty also continues to gnaw at their bottom line and annoy owners and employees alike: the high cost of health coverage. Costs continue to spike upward, and coverage choices have dwindled or simply do not exist. The bottom line is that owners, employees and the self-employed are getting squeezed by higher copays, deductibles and monthly premiums with nowhere to turn.

There is no doubt that health coverage, and how we receive and pay for health care, is one area in need of massive disruption. But pervasive regulation and mandates are barriers to innovation, which is unfortunate, as entrepreneurs and market dynamism are our best source for competition and finding solutions.

The good news is that regulatory changes now underway will start to chip away at these burdensome costs, and hopefully legislative action is not far behind. A final rule recently released by the Department of Labor on association health plans, and forthcoming rules on health reimbursement accounts and short-term limited duration insurance, will begin to bring choices back to the marketplace. The growth of direct primary care is providing consumers with an appealing and affordable choice, along with the strong relationship they desire with their physicians.

Well-known players in health care are also taking action to improve health outcomes, lower the cost of care and bring economies of scale directly to consumers. The CVS Health-Aetna merger, for example, makes practical sense as it brings together pharmacy resources and retail clinic services (MinuteClinic) with a health plan that will provide community-based, quality care.

This type of innovative, integrated health plan is the kind of business model that needs to be encouraged so that other models, and competition, can emerge. We can’t continue to have the kind of fractured and disconnected health care system we have today and expect to see cost savings; we need to challenge convention and look for new ways to deliver high-quality care.

There is little doubt that this merger will push other big players to compete differently and explore alliances and/or models that create a more effective, consumer-friendly and lower-cost system for consumers. This will be good news for entrepreneurs, small businesses and their employees who are losing access due to higher costs or lack immediate access to health care for basic health care needs.

Disruption is what Amazon, Berkshire Hathaway and JP Morgan Chase also have in mind for their new venture to cut health care costs and improve services for their combined (more than 1.1 million) employees. The January announcement has been recently followed by a CEO announcement, Dr. Atul Gawande, who said he will tackle waste and work to improve outcomes. If the venture is successful, the plan is to share those innovations freely with all businesses. Again, this is the kind of private sector action and risk-taking that our economy and health care system needs.

Health care players, both large and small, require the freedom to innovate and build new business models to improve access, affordability and patient outcomes.  Health care costs are weighing down the competitiveness and innovative capacity of many of our nation’s small businesses and the more that the private sector can do to innovate and experiment, the greater the likelihood for solutions and models that are more affordable and meet consumer needs.


Karen Kerrigan is president and CEO of the Small Business and Entrepreneurship Council.

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