What does Sears' slow death teach us about health care in the US? – During the post-war period and all the way through close to the end of the 20th century, Sears was "the store". When consumers wanted to find clothing or other household apparel, you didn't have to think twice about where to go to find it all. And for those who didn't live in proximity of a store, there was the ubiquitous catalog in which you could find and order pretty much anything. If you ask a Millenial about the Sears catalog, they will look at you if you're someone from another galaxy, and rightly so. Technology has destroyed the need for "the store" and obliterated the catalog. Instead of shopping from one store, any consumer can go to the new virtual mall that is Amazon and shop from thousands of stores, comparing products, ratings, and prices. Sears still appeals to a portion of the population, one that likes the one-stop location and for whom the familiarity of the brand is comforting. Ultimately, it's hard to see how Sears will survive and its corporate HQ, in what was once the tallest building in the US, will likely be purchased by a company from the next generation of disruptive innovators, or simply torn down to make a park. It's likely that today's hospitals and hospital chains, ACOs and other 20th century "big box" constructs will suffer the same fate.
What this means to you – Technology has flattened the world and while health care has resisted that flattening, partially facilitated by EMR vendors who (and whose customers) are all too happy to lock their users into a proprietary architecture, and partially abetted by complacent stakeholders who benefit from all the inefficiencies, the outcome is inevitable. Ultimately, the combination of open source software, standard APIs, plummeting computing prices, and consumer activation, create the inexorable forces that will bend time and propel the industry into the rest of the 21st century. The fact today is that, if anything, the number of Americans enrolled in "Sears-like" health plans is 10% and has almost never cracked above 15%. If Americans have refused to enroll in the current HMOs, much like they now refuse to shop at Sears, what makes us believe they will enroll in the new HMOs…ACOs? A view of the distribution of average yearly costs across a population of commercially insured plan members shows why the Sears model would only make sense to a small percentage of the population, namely those that are in the right tail of the distribution and that have multiple complex conditions that require tightly coordinated care. For the rest, those that represent a significant percentage of yearly costs, they need focused specialty and primary care, but not necessarily the "all-in-one-stop-medical store". And for those who have total costs that are less than their annual deductible, they're already retail price shopping. How the forces will reshape the delivery system is still unclear, but very much like Sears is closing up one retail store after another now, the health care Sears-like stores of today – hospitals and health systems – will very likely be closing up shop then. So should we, like Sears' shareholders, hold on to and even double down on investments that are almost doomed to fail, or should we learn from that slow death and avoid the same fate?