As Tony Chen mentioned, there is certainly an inherent conflict between healthcare providers’ traditional dependence on reactive sickness care (RSC) and the growing interest in proactive health management (PHM). The purpose and goal of PHM is to reduce the incidence and prevalence of sickness, and thereby the costs of medical care to consumers, insurers, governments and employers. What is cost to all such payers is revenue to providers, who will necessarily suffer as a result.

There are two ways that providers can make up for the lost RSC revenue that the other stakeholders in the healthcare “system” want to achieve:

• create such strong preference among those who pay for RSC for providers who are helping solve this problem, rather than relying on it totally for their revenue, that PHM-focused RSC providers will gain a significantly greater market share of the RSC business that remains (which will, after all, decline fairly slowly thanks to the huge numbers of people already sick and unlikely to reform their health-related behaviors very soon), or
• create such a strong preference for PHM providers that deliver financial benefits of healthier employers, members and beneficiaries so well that payers and consumers alike will reward them well enough to make up for the loss of sickness care revenue – i.e. making PHM far more profitable because it is a cost saver for payers, instead of a cost driver, with payers willing to share these savings with providers who can profit by keeping their own costs low

Both possibilities are limited by the fallacy of composition – they will only work when and because a few providers in each market engage in PHM with high success. If all did, there would not be enough make-up revenue to enable all, or even a large majority, to survive. Given the huge and increasing capital costs of RSC, large numbers of traditional providers will go broke if they rely entirely on RSC revenue, while their peers are successful in either gaining much more market share through PHM, or much more profitable PHM revenue so they can survive on less RSC revenue quite well.

But is seems clear that all the stakeholders in the sickness care system, except for providers, want and are working to reduce the amount of money going at the current rate of insatiably increasing need. They are creating new ways to work together and align incentives across all who participate in PHM efforts to reduce the incidence and prevalence of sickness, and thereby reduce medical care, disability, workers compensation, absence and presenteeism expenses. Since PHM has already been shown to improve quality of products and customer service, increase market share and profits for employers, as well, it creates whole new piles of money to be shared among those whose interests are aligned.

This being the case, the future profitability and even viability of the sickness care system, at least at its current bloated size and rate of growth, figures to be in serious doubt, regardless of whether some providers “go over to the enemy” by investing in PHM. Those who demonstrate the ability to deliver PHM benefits particularly well will survive and prosper, while many RSC providers will fall by the wayside, regardless of whether traditional RSC providers switch to or add PHM capabilities to a significant degree. No RSC provider will drive a PHM provider out of business, but the reverse is not only possible but highly likely.