FICO Score (fĭk‘o skôr) n.
1. Financial instrument used to assess the risk of credit applicants
2. A risk-based score system used to determine the probability of a borrowers risk of default
I have been talking quite a bit about the convergence of health and wealth in recent months. I am continually reminded of how much healthcare has to learn from the financial services industry. It is an analogous industry with an incredible amount of information, incredibly complex transactions, and significant privacy/security issues of very personal information. The Medical Banking project, which I have discussed before, is a very good start on introducing financial best practices into healthcare. The “information liquidity” (this was the buzzword of the day at the conference) achieved in the financial services industry is one of the primary drivers of our unprecedented 25 year run of prosperity according to Alan Greenspan.
Crossing over to healthcare, I have been mulling over a concept for several months which I have termed “The Healthcare FICO Score”. Given that the closing reactor panel at the Health 2.0 Conference mentioned it several times (thanks Esther and Jay!), I felt that it is time to put my intellectual stake in the ground by defining the term first (a Google search of the term as of 5 PM PST did not reveal any hits).
The FICO score is a financial instrument developed to assess a credit applicants degree of risk when considering the extension of credit. The concept of credit risk scoring was originally developed by the Fair Issaac COrporation (FICO) and was the basis for a computerized risk-based scoring system to determine the possibility that the borrower may default on financial obligations to lenders. This scoring system has since become the leading indicator of financial risk (or worthiness as the case may be), and is used pervasively throughout the financial services world. Everything from home loans, to credit card applications, or other lending situations are based on your personal score. The actual scoring is somewhat mysterious in that it is a mix of your net worth, current income, current credit, past performance, and probably several other metrics that are leading indicators of your financial health. Three companies have been authorized to be the definitive source of the FICO Score and literally hundreds of companies (case in point – look at their banner ad!) have sprung up to help people manage and improve their scores in order to obtain credit.
I believe the corollaries are obvious and have been hiding in plain site for years. Health Insurance is currently a mathematical analysis of actuary tables and past claims experience. To my insurance plan, I am just like any other 38 year old white male. However, I am not your average 38 year old male (thank you very much). I don’t drink or smoke, I don’t do drugs, I am happily married for 16 years and have four beautiful children. I enjoy being active, hiking, surfing, and working out as I am able. I weigh 190 pounds, have less than 9% body fat, cholesterol less than 150, and have enjoyed very good health. My family history has remote cancers but all my immediate relatives have lived very rich and rewarding lives into their late 80’s. On the negative, I keep impossible hours, travel way to much, don’t get enough sleep, and need to work out more consistently to actually get back in shape.
So given all of this, what’s my true heath insurance risk – My HealthCare FICO Score? My insurance company has no idea. I get pooled with every other obese, smoking, drinking, pimping, clubbing 38 year old yokel. We can do better than this.
Think about how much better it would be if there was a HealthCare FICO Scoring system in place and a health plan that actually rewarded and incented me to take care of myself. In this scenario, I would be seeking a long relationship with my health plan, independent of my employer, because I might be switching jobs over time, moving, or a host of other things that disrupt that relationship and my insurance. Because of the longer time horizon, my health plan would really invest in getting to know me because our relationship would actually matter. I would take a health risk assessment, a basic laboratory panel, perhaps some physical fitness test, and in the future apply genetic forecasting as well. I would also have a health counselor work with me to determine my real age, which would include reducing my life stressors, improving my health, and applying all the best-practice, evidence-based, preventive medicine practices we currently know. In fact, there might an entire secondary industry built up around “repairing” your HealthCare FICO Score through a boot camp approach to improving your health. My Health Plan would be my advocate and I would pay them money to keep my HealthCare FICO score as high as it can be.
In this scenario, the insurance or payment component might need to be separated from the Health Plan to remove any perverse incentives. Because my health plan is paid to keep my HealthCare FICO score elevated, their incentives are aligned with mine. They, in turn, can shop my HealthCare FICO score around to insurers who like my risk profile and can continue to apply their mathematical formula’s to my scoring – albeit, my scoring now really means something, and Scott Shreeve, MD the 38 year old white male has a much more transparent and defined risk. I get rewarded for my good choices with preferred rates, ongoing assistance to improve my health, and a long, health, and hopefully happy sojourn on spaceship Earth.
I believe this is where it is all going. While many people talk about the concept of a healthcare tipping point, I believe we can go faster by looking at the “CrossOver” between industries to learn and apply what is already known in other industries to the healthcare problem. The Health 2.0 Conference really brought this home to me because it was a gathering of the healthcare intelligentsia, and not the entrenched healthcare illuminati who are incentivized toward maintaining the status quo. I believe we can build from the conference, by continuing to attract the attention of the bourgeoisie (employers) and ultimately the proletariat (the rest of us) with the ideas, technology, products, and services that will truly impact the way that healthcare is delivered in the United States and beyond.