An academic study gave birth to a hugely successful private venture devoted to improving healthcare decision-making. Now some of that capital is being turned back to make sure the scholarly research continues.
Chairman of the board of directors of Health Dialog, George Bennett, is leading a $5 million drive to endow a chair at Dartmouth College to honor the work of Prof. Emeritus John E. “Jack” Wennberg, founder and director emeritus of The Dartmouth Institute for Health Policy & Clinical Practice.
Wennberg’s research into the unintended variations in medical care around the country provided the spark for the founding of Health Dialog. Bennett, the company’s co-founder and former CEO, says he’s already put $1 million into the drive and hopes to announce its success at the 2013 Wennberg International Conference at Dartmouth in October. Among those working with him is Spencer Trask, the venture firm that helped fund the company’s launch.
“It ends up that Jack Wennberg’s work is among the most profound research work in the area of big data that has ever been conducted,” Bennett says. “He has documented the wide variances in treatment patterns around the country, and it has impacted policy at the highest levels. … His work has had more and more influence on more and more decision makers.”
Bennett expects the first occupant of the Wennberg chair to be Professor Elliott Fisher, current director of the Dartmouth Institute “and well qualified to carry on Jack’s work” in the relationships between treatment decisions and quality and, ultimately, the cost of care.
In the 1990s, investor and entrepreneur Bennett encountered Wennberg’s work showing that the very same medical condition often received significantly different care in two different locations – a big difference in price without necessarily a difference in outcomes.
“It’s a little bit like ‘Field of Dreams.’ If you build it they will come,” said Bennett, using an example he attributes to Wennberg. “In the healthcare arena, if you have three heart surgeons in a small community, there will be enough heart surgeries to keep the three busy. And if in that same community, you have five heart surgeons, by a strange set of circumstances there seem to be enough surgeries to fill up the schedules of five.
“He is not impugning the integrity of the people, he is just saying there is a tendency, if you have a lot of imaging capacity, you tend to get a lot of images, and if you have a lot of heart surgeons, you get a lot of heart surgeries,” Bennett said.
This has major implications for the U.S. healthcare spending, which reached $2.7 trillion in 2011–$8,680 per person or 17.9 percent of our gross domestic product, according to the government’s Centers for Medicare and Medicaid Services.
Wennberg’s work has become an important part of regulation under the soon-to-be-fully-implemented health reforms known as “Obamacare,” Bennett says, which aims to reduce healthcare costs. But long before that, it was clear that private initiative was needed to address the issues raised.
In the late 1980s, Wennberg and his colleague Albert G. Mulley Jr. formed a not-for-profit group, now called Informed Medical Decisions Foundation, to put Wennberg’s data and Mulley’s studies of shared decision-making to work together to help patients make better decisions. “They started making videos that showed the treatment options for breast cancer and prostate cancer and all sorts of surgeries. They then were going broke,” said Bennett. “I reviewed this material … and I struck a deal with Wennberg and Mulley saying I’ll take the commercial property and I’ll give the foundation a royalty.”
Spencer Trask was right there to underwrite his plan, which was founded as Health Dialog in 1997. “Spencer Trask was pivotal,” Bennett says. “There was a moment in time when we needed to raise about $10 million of capital. We were an early stage company that the venture community misunderstood as being labor-intensive. … “Everyone else kept telling me how hard it was going to be to raise the money and how expensive it was going to be,” Bennett said, “and (Spencer Trask Chairman) Kevin Kimberlin said, ‘I’ll raise it for X and I’ll do it in this number of weeks.”
Employed primarily by health insurers, Boston-based Health Dialog now provides its health decision-making aids and coaching to 17 million clients around the world.
“At Health Dialog, we empower people to make the health and healthcare decisions that are right for them. Our mission has not changed since our founding: Improve healthcare quality and reduce medical cost,” said Dr. Robert Mandel, who in January became CEO of Health Dialog.
“Dr. Wennberg showed that there is a significant variation in the delivery of medical care across providers and that much of this variation is unwarranted by medical evidence,” Mandel said. “This work provided the foundation for Shared Decision Making, Health Dialog’s approach to care that seeks to fully inform patients about the risk and benefits of available treatments, engage them in the decision-making process, and ultimately help make the best choice for their own individual health and health care.”
A study of 174,000 patients published in the February issue of the journal Health Affairs showed that providing Shared Decision Making-based health coaching for patients reduced their overall costs 5.3 percent. That included 12.5 percent fewer hospital admissions and 9.9 percent fewer “preference-sensitive” surgeries, including 20.9 percent fewer preference-sensitive heart surgeries.
In 2008, Health Dialog was acquired by Bupa, a London-based global health and care company, for more than $775 million. Bupa is a huge international nonprofit dedicated to improving health care and, Bennett says, Health Dialog couldn’t be in a better position to continue spreading its ideas now.
“We are proud to say that the work of Dr. Jack Wennberg and his groundbreaking research at Dartmouth continues to be put into practice every day across our company,” Mandel said.
And now the time is right to honor Wennberg with a Dartmouth chair named for him, Bennett says.
“We raised about $30 million (to start Health Dialog), and we turned back about $775 million,” Bennett said. “So (Kimberlin) and I have the opinion that there are people in that group (of investors) who would be honored to help Jack get a chair, because his intellectual property was the large part of what we used in order to build the firm.”
By JOEL BROWN, Photos by RENEE DeKONA