In the January 21, 2012, issue of The Economist, the main focus of both the feature articles and the special report was on the resurgence of “state capitalism.” The magazine’s reporters described a world in which major companies in major markets were either owned directly by national governments, or subject to control or heavy influence, even if they were privately owned or had issued shares to the public.

The stories reminded me that, for the last 21 years of my Pitney Bowes career, I dealt continuously with the encroachment of state capitalism in the postal sector.  In the late 1980’s and throughout the 1990’s, we successfully fought a series of battles with the U.S. Postal Service to keep it from becoming another entity with all the powers and privileges of the federal government, but with none of the regulatory constraints associated with federal government agencies.  Several senior postal officials aspired to create a power base similar to many government-owned entities, such as the Tennessee Valley Authority (which Marvin Runyon, the Postmaster General from 1992 to 1998, had led) or the New York-New Jersey Port Authority.

Fortunately, we defeated efforts by the Postal Service to regulate the mailing industry and compete unfairly with it at the same time.  The Postal Service leadership teams succeeding Runyon and members of his senior team generally tried to operate within the boundaries set by Congress. We had a very collaborative, and mutually respectful, relationship with the Postal Service during most of my tenure as CEO.

The story was very different outside the United States.  While we had similarly respectful and collaborative relationships with the postal officials in the UK, Canada, Spain, Denmark, and Norway, we had a variety of challenges with postal authorities in many other countries.

We saw three distinct challenges:

• Some postal operators, which had appeared to become privatized, acted in very anti-competitive ways in their own nations, and also secured rights and privileges from their national governments that stacked the deck against partners and competitors.  The most extreme example was Germany, during the leadership of Deutsche Post by Klaus Zumwinkel, who resigned in early 2008 for reasons unrelated to his work-related performance.  Throughout Zumwinkel’s 18-year tenure as CEO, Deutsche Post acquired companies all over the world, including a disastrous acquisition of Airborne, a major package shipper, and the worldwide operations of DHL.

In Germany, where Deutsche Post realized most of its profits, postal rates were exceptionally high (well above $.60 per piece), service was not exceptional, but competition was ruthlessly suppressed.  At the end of 2007, a few weeks before Germany had committed to open its market to full competition from within the EU, Zumwinkel successfully prevailed on German legislators to pass a law that created a minimum wage for postal sector employees only, a wage pegged at Deutsche Post’s minimum pay grade.  The immediate result was to destroy its two largest mailing competitors, since neither could secure labor cost advantages over Deutsche Post.

In Italy, Poste Italiane took advantage of complex and onerous labor laws to fend off competition, since these laws made part-time and temporary workers prohibitively expensive.

• In many countries, postal operators expanded into businesses in which the marketplace was amply served by the private sector, but in which the postal operators would immediately have a competitive advantage, because of the implicit protection from national governments.  Australia, Belgium, Ireland, China and New Zealand all started retail banks.  Japan had always had a sizable postal banking system which paid almost no interest to depositors, but which became a huge source of loans to projects favored by politicians.  Prime Minister Koizumi staked his political career on an initiative to privatize the Japan Post, not because there was ferocious opposition to privatizing the mail or package business, but because the heavy governmental control of the flow of bank loans would be jeopardized. He barely avoided receiving a vote of no confidence because his initiative upset the way government favors had been delivered for generations.

Postal operators have played heavily in the money transfer business (competing with Western Union), in retail government services, in the sale of greeting cards and stationery, and in the sale of gift items often transmitted through the mail.  Postal operators like Australia, China, Finland, and Sweden moved seamlessly into mail services businesses. In countries with a strong tradition of state capitalism, these postal operators were able to operate freely in more businesses in which they competed unfairly with the private sector.

• The postal operators often carried mandates and missions inconsistent with a business focused on cost-effective customer service.  France and Canada were prime examples of this problem, as were Japan, Spain, and Portugal. In these countries, postal operators were saddled with explicit and implicit requirements that they keep a minimum number of people employed, even if the demands of the business would not justify such employment.  For Pitney Bowes, the government employment mandates made many of our productivity enhancement tools unusable by these postal operators.  They could not improve their productivity, even if they wanted to, because they were fulfilling social mandates.  Postal ratepayers paid more, in the form of a disguised tax, to create a welfare system for workers who probably could not have secured employment at comparable wage and salary rates.

I was able to experience the ugly underside of state capitalism for over two decades.  It made me realize that the United States should think long and hard about migrating down the path these other countries have followed.  It also is a cautionary tale for large multinational corporations that aspire to compete fairly in major markets in which one or more of the competitors are state-owned or state-controlled enterprises, or in which the state considers a particular industry strategically important.

Over the past few weeks, I have been to a major data center, attended a medical school advisory board meeting, met with several providers of both wearable and non-wearable biometric data collection systems, and looked at the increasingly sophisticated array of biometric kits available at the major pharmacies.  I have concluded that we have the potential to improve health, to improve the quality of health care, to reduce health care system costs, and to transform the role of nurses and doctors through technology.

Each of the experiences I have described above has shaped my thinking, but each has done so in a different way.

The data center visit

I visited a large data center, in which the operators are using state-of-the-art monitoring systems for electrical power, climate control, and the performance of its computer and server systems.  A company on whose board I sit, Eaton Corporation, is a leader in providing comprehensive power management solutions for data centers. What is remarkable about the large data centers is the degree to which these centers no longer need human beings to monitor many system components.  The central control hardware devices and software programs provide data on thousands of points within the system.  There are less than 10 employees for a huge data center.

What insight does this have for health care?  To the degree that we are designing a system that enables remote and comprehensive monitoring of the state of health of a patient population, we can do so with relatively few healthcare professionals.  Although we talk about a serious labor shortage, the labor shortage assumes an indefinite continuation of the face-to-face diagnosis and treatment systems we now have, as opposed to the remote monitoring systems toward which we are heading.

The term the data center people when describing a center monitored predominantly by sophisticated hardware and software technology is a “lights out” system.  We must evolve to a “lights out” healthcare system on the same model.

The medical school advisory board meeting

As we think about healthcare professionals being trained in modern medicine, it becomes clearer than ever that healthcare professionals not only need to learn traditional human biology and body chemistry, but to be steeped in the field of bioinformatics.  Bioinformatics is a relatively young field of knowledge and skill in which diagnoses and treatments are developed through both onsite and remote data collection and the computer-generated analyses that use the data.

There will never be a complete loss of human judgment by trained health care professionals, but their efforts can be focused on those cases in which human judgment can make the biggest difference.  Getting good data on biometric indicators, health and healthcare history, and the foods, beverages, prescription drugs, over-the-counter drugs, and other items ingested by an individual is critical to enabling the human judgment factor to work best.

Medical schools are beginning to understand the importance of bioinformatics, and to incorporate course material on this field.

The visits with biometric device producers and health plan administrators

The Dossia Health Manager now is able to aggregate not only the comprehensive clinical history on an individual, but biometric and daily activity data that enables the healthcare professional to get a much more complete picture of the individual’s state of health.

Even better, there is an increasing effort to integrate biometric data tracking and management into health plan designs.  Employers and health plans have been providing services and incentives to get individuals to participate in health risk assessments, but these have been one-time exercises, as opposed to a program of capturing and tracking health data all the time.

There was a 2010 Kaiser Permanente study which supported the view that someone who regularly tracks blood pressure is 50% or more likely to control blood pressure.  This is consistent with a broad principle, often articulated about business objectives, that what gets measured gets managed.  The ability to capture blood pressure data with wearable devices is better than ever, and should be stimulated with incentives and rewards.

Shopping at the local pharmacy

Perhaps the most interesting learning I have done over the past month has come from wandering through several pharmacies while I was shopping for a few items.  Near the pharmacy counter at every counter is an increasing variety of home health test kits which are getting close to laboratory accuracy.

One which particularly caught my eye was a kit costing about $30, marketed by Bayer, which enables a user to draw a drop of blood and get a quick reading on his or her Hemoglobin A1c level.  Hemoglobin A1c is a leading indicator of Type II diabetes.  In the past, someone like me, who monitors this biometric indicator as closely as possible because of a family history of Type II diabetes, a genetic predisposition to the disease, and a slightly elevated level of blood sugar, would have had to get a physician to write an order for a laboratory test.  I would have had to schedule an appointment to get blood drawn, and would have had to wait at least one day, and possibly longer, to get my A1C reading.

Today, I can buy my own kit, draw my own blood, and get a same-day reading of my A1C level.  While I would not rely on a home test kit for a definitive diagnosis, I can track general trend information and can do so far more frequently than would be the case if I relied on a physician’s order and on having to schedule an appointment at a lab.

The next step in the evolution of these biometric devices is to make them able to communicate automatically with either a smart phone or a laptop or desktop computer, so that the data can be communicated directly back to a personal health record controlled by the patient.  Once that happens, the productivity of healthcare professionals will increase dramatically.

Instead of having nurses reside at a physician’s office or visit each patient at home, the nurse can work from either a home-based desktop computer or a mobile laptop or I-Pad device to track the health status of a much larger patient population than ever before.  Physicians would write orders to that nurse relative to what biometric indicators are most relevant for a particular patient.

Final comment

The biggest obstacle to adoption of this “lights out” healthcare system is the resistance of those who have built strong capability and income from face-to-face diagnosis and treatment systems.  If I operate a large medical practice based on the assumption that I must see every patient I treat, it will be very difficult to put into place systems and processes that operate as if I am not there.  The biggest challenge in diminishing this resistance is not technological or educational; it is the fear of losing income, jobs, or status.

One of the biggest causes of higher health care costs is “supply-driven demand.”  As Niko Karvounis wrote in a 2008 blog in Healthbeat:

“High consumption of care is driven by the crowd of academic medical centers, specialists, and equipment needed to perform tests. The Bay State has one doctor for every 267 citizens — versus one doctor for every 425 people in the nation as a whole. Supply drives demand. “

Supply-driven demand happens for two reasons, often overlapping:

• Healthcare providers believe in a particular treatment or therapy, and try to maximize the number of people who access it.  This is often reduced to the saying that “If you have a hammer, every problem is a nail.”  Supply-driven demand occurs when people who should not be customers for a particular service become customers because the provider of that service force it beyond its natural market.
• Healthcare providers have excess capacity, and try to get that capacity in use.  This happens with expensive diagnostic imaging equipment, hospitals, and outpatient centers.  It is even arguable that physicians react to reduced usage of their services by patients who become healthier by increasing the frequency with which they see other patients.

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Our family was fortunate this past weekend in not experiencing any property damage or loss of power from Hurricane Irene.  700,000 other residents of Connecticut were not so lucky.  However, as I have thought about this disaster and others through which I lived during my lifetime, I have increasingly realized that much of the devastation of natural disasters is not “natural.”

Sometimes, the influence of bad human decision making on the scope of a disaster is obvious: Hurricane Katrina would not have been anything more than just another bad Gulf Coast hurricane, had the levees protecting big portions of New Orleans not failed to protect the city against water damage.  The levees were not built to protect against Category 4 or 5 hurricanes, so a disaster of the type that happened was inevitable and experts were not surprised when it happened.  Experts warned of this kind of problem, but were ignored year after year. Nevertheless, most of the time, we forget the degree to which we can anticipate disasters and minimize their impact.

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I have now been the President and CEO of Dossia for almost four months.  As I look at the personal health record landscape, I think that those who care about this space need to rethink some fundamental directional assumptions about health information technology.

We are “consumers,” not just “patients”

The term “patient,” as applied to health information, has two flaws: first, we need health-related information at all times, not just when we are in a doctor’s office.  Health management is a 24×7 activity, not an activity confined to our clinical encounters, which are a tiny fraction of everyone’s life.  Second, “patient” is a passive term.  We should be controlling the management of our health, not being a passive recipient of clinical care.

We need all clinical information, not just medical information.

Our health care system encounters are with doctors, hospitals, outpatient centers, pharmacies, labs, imaging centers, dentists, alternative medicine providers, nutritionists, fitness trainers, health counselors, and retail outlets at which we receive immunizations and screenings.  We need all information, not just what our preferred doctor, hospital, or insurance company wants us to see.

The “medical home” and “accountable care organization” concepts contained in the recent health reform legislation are somewhat flawed because they assume we will concentrate our health care in one system.  That will never happen because we will want choices, even if we stay in the same geography. However, a sizable part of our population will change residences, which will force changes in health care providers, employer plan sponsors, and insurance plans.  We need a comprehensive and portable health information system.

We need all health-related information, not just clinical information.

Much of what matters to our health relates to non-clinical activity: what we eat, how active we are, how much sleep we get, how much stress we feel, what vitamins, herbs, and over-the-counter drugs we take, what infections are exposed to us, our genetic make-up and expression, what environmental hazards present themselves to us, and what injuries and cumulative physical stresses we risk.  We need all of that information presented accurately, automatically and comprehensively into a health record, not just what we can remember when asked by a doctor.

We need help navigating through health care payment sources.

The days when most Americans could anticipate having all their health care costs covered by a health plan are long gone.  Today, we navigate payment through four sources: the health plan, a tax-deductible vehicle like a Flexible Spending Account, a Health Savings Account, or a Health Reimbursement Account, an employer or other incentive program, or self-payment.  We need help navigating through these different payment streams.

We need help making health care decisions.

Health care decision making is increasingly complex.  It is influenced by cost, quality of care, relative effectiveness of treatments, and what health plans and other payment sources will cover.  Consumers increasingly need more decision support, because choices are imperfect.

We need to recognize that health-related decisions are often made by someone other than the patient.

The health care system and policies related to it, such as privacy policies, assume that most health-related decisions are made by the patient.  However, we know that this is not the case for many parts of our population.  Parents make health decisions for children, but a parent also drives health decisions for a spouse, for elderly parents, and even for elderly in-laws. People living together outside of traditional marriages are also making health-related decisions for domestic partners. Additionally, more elderly people are giving others health care proxies to make decisions for them under certain circumstances.  Our health care system needs to recognize this reality and accommodate in access to health information.

We need to recognize that people need help with decisions relating to health management.

The personal, consumer-controlled health management system assumes that, for many medical decisions, the decisions are not simple and the choices are both imperfect and inherently based on incomplete information.  Health management tools have to be available to make the health record more valuable in bringing to bear on health care decisions.

Privacy preferences are not simple and they will change, based on changing life circumstances.

Many privacy advocates, who are highly suspicious of the security and privacy of any health information system, and who may have experienced or been made aware of bad health outcomes because of misuse of health information, assume that everyone wants health information kept private. The real world is more complex.

Some people freely share their health status on public web sites, and on semi-public sites like Facebook, knowing that the information is no longer secret as a result.  For some, they do not care who knows.  For others battling a debilitating disease, they want to share information to get the best possible sources of help.

Others are willing to share information based on their need to find out better sources of help on allergies, back pain, or injury rehabilitation, but do not wants others to know that they have heart disease, because of job-related concerns.  Anyone who expects to apply for a health insurance policy wants to keep health information secret to the degree that it affects their ability to get insurance or to get the lowest possible rates.

Privacy consent management has to allow patients or caregivers to express precisely patient preferences and to have those preferences honored.

Moreover, people who express a preference at one time may change that preference, based on changed life circumstances.  Someone who is newly diagnosed with a condition may have more desire for privacy, or, in the alternative, may want information communicated more broadly.

Any privacy system has to make it easy for individuals to change preference profiles.

Conclusion

The state-of-the-art personal health management system needs to take all these factors into account.  Too much of what passes for personal health record systems today are based on flawed assumptions about how health, health care, and health benefits actually work. Dossia strives to help people function in the world as it is, not as we believe it once was.

In the March 5-11 issue of The Economist, there was an article entitled “The Perils of Property.” The author made the point that buying a home is the biggest single financial bet most Americans will ever make.  As all too many Americans learned in the recent financial meltdown, buying a home can be a very risky bet.

Our government not only subsidizes home ownership through the home mortgage interest deduction, but it has created a variety of tools to enable lenders to make home mortgage loans to more people.  Lawmakers have always believed that broad-based home ownership is an inherent societal benefit, because they believe it creates a greater stake in the well being of the community.  Independent of whether owning a home is a good investment, American lawmakers want as many Americans as possible to own, rather than rent, their residences.

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President Obama has proposed billions of dollars for rebuilding America’s transportation infrastructure.  Many others, including the America 2050 project, have very thoughtful plans for more intelligent transportation networks that will enable America to be globally competitive.  As a person who has been a strong advocate for transforming our transportation infrastructure, I could not agree more with the goals of better use of our transportation infrastructure and more public transportation in place of single-occupant vehicles.  The one place in which I might take a different view from those who advocate building new transportation systems is that I believe we need to repair, maintain and getter better yield from what we have.

However, I also believe that we could reduce the stress on our transportation systems with three non-transportation initiatives, all of which are far less expensive to implement than building a lot of new transportation infrastructure.

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On Thursday, January 6, 2011, the Dossia Service Corporation announced that its Board of Directors had elected me as the new CEO.  I am thrilled for this opportunity, but it has also reminded me that I have a more hands-on responsibility to insure the security and privacy of the individuals and families who have entrusted us with their health information.

Fortunately, Dossia is not only in compliance with all applicable laws and regulations, but, having had to market our personal health record system through large employers, we have had to meet much more challenging security and privacy standards than our competitors, who market directly to consumers.  I am very familiar with exacting security and privacy standards from working inside a company that had to manage sensitive financial information for postal services and their customers because of our postage meter business.

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This past week, I was on vacation, first at Martha’s Vineyard and then in Mashpee on Cape Cod.  I have an I-Phone, which means that I have ATT cellular phone service, as was the case with my wife, my sister-in-law and brother-in-law, whom we visited on Martha’s Vineyard, and many of their other visitors.  Additionally, I rented a home that had all cordless phones.  The owners, whom we met Saturday morning, July 10, before leaving had Sprint cellular phones.

The telephone and Internet service were so bad for the eight days we were away that we were effectively cut off from communicating with others except for very brief periods when we could find a signal at a handful of locations.  Moreover, when there were power outages because of weather and horrific heat, we also were unable to use the landline phones in the rented house or the wired Internet service the owners had provided us.

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I am continually amazed by how experts who make excuses for why certain problems have remain unsolved overlook simpler and less expensive solutions to these problems.  For example, a whole population of advocates have pointed out that low-income people living in inner cities, particularly those lacking access to an automobile, are trapped in what are now called “food deserts,” that is, areas in which people lack access to affordable healthy food. Very often, the food deserts have abundant access to less-healthy junk foods, cigarettes, alcohol, and, of course, illegal drugs.

The usual solutions are to put supermarkets in the inner city, or to have farmers markets in the inner city or urban gardens in abandoned lots.  While all of these solutions are excellent long-term answers, all have problems or limitations.

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