Taki, I enjoyed learning about the CardioMEMS product and am encouraged by the clinical results, but I wonder: is $18,000 the right price? Your post brought me back to the pricing module from our Marketing class, and in particular, how we employed the pricing thermometer in “The Medicines” case, in which COGS was the minimum ‘temperature’ and estimated value was the maximum.
As you mentioned, $20,000 represents the cost of a follow-on hospitalization; so to justify the utilization of this device at its price point of $18,000, we would have to anticipate a re-hospitalization rate of 90%. I poked around and saw that ~50% of patients are rehospitalized within 6 months; so I wonder if there additional clinical benefits that CardioMEMS offers and/or additional costs it avoids. (http://circ.ahajournals.org/content/126/4/501)
Further, I wonder if CardioMEMS has a societal responsibility to deliver this lifesaving technology at a lower cost. This tension exists across the pharmaceutical and biotech spaces, and currently we see payers and providers absorbing the steep costs. With the rise of scandals like Epi-Pen (price increased to ~$600/pen) and Valeant’s Glumetza (price increased 9x in a one and a half months), the public is scrutinizing pricing in healthcare more than ever before… I would recommend that CardioMEMS, and others, be extra cautious of what’s at stake for pursuing high margins.
K. Caven, you offer an expert opinion on the benefits and drawbacks of Rent-the-Runway. Like a few of the commenters, I agree that RtR’s pricing strategy (albeit exclusive to the massives) is still reasonable enough to attract millions of users. This high willingness to pay makes me think there is room for competition in this space…
I wonder why we have yet to see a sharing model threaten Rent-the-Runway’s position. You called out how women have many dresses sitting in their own closet that are only worn once; maybe they should get in on this model of renting gowns in order to take a piece of the markup RtR is now monopolizing. This idea (let’s call it: “Share-the-Runway”) can provide a competitive online platform and hire individuals to perform the dry-cleaning and packaging functions (upon further research, logistics are the key barrier to entry right now). The benefit to this also eliminates the inventory risk that RtR faces if a dress is unpopular or suffers wear and tear.
Anton, thank you for highlighting the potential and challenges of healthcare data sharing. I would like to call out an additional point regarding adoption and one potential solution.
Protected Health Information (PHI) has become the newest target for hackers, making headlines following the Anthem data breach of 2015. Large healthcare systems that have invested millions to avoid this fate but still face day-to-day threats to the security of their data. As a result, opening up their PHI to thousands of users outside of their system is perceived as risky. There’s also an element of the waiting game… if Player B hasn’t put themselves out there, why should Player A?
Currently, government incentives programs are used to accelerate the adoption of health IT (such as, the “Meaningful Use Program” to accelerate electronic medical record adoption). These programs lay out standards for technology proficiency, set reimbursement schedules, and are often used to defray the costs of implementing the technology. I think a nation-wide (rather than state-wide) program will be needed to motivate health systems to take the leap into data sharing.
Anonymous, I really enjoyed reading about how 3Derm has the capability of better matching supply of dermatologists and demand for their services. I am equally optimistic about how telemedicine is playing a similar role in behavioral health. Behavioral health care shares some of the traits you described in dermatology (including, long wait times and inconsistent reimbursement) but also has the barrier of stigma that unfortunately dissuades some patients from seeking treatment. Telemedicine has the advantage of making behavioral health services more discrete, which may encourage more individuals in need to seek them out. As with dermatology, there are regulatory barriers that need to be overcome; but I am encouraged that telemedicine will eventually be a solution to improving quality and acess to behavioral health care while reducing costs.
Under Armour has gone all in on digital, but I wonder: will its innovation outpace its consumers?
As zaradi mentioned, Under Armour has the benefits of being a first mover in the fitness app space, which is a tremendous benefit for a habit-forming product; but I hypothesized that UA struggle to convert its loyal customers to more complex and expensive products (such as, the shoe) or to bring new customers in. To pursue this hypothesis, I visited the Under Armour website and found the “UA SpeedForm® Gemini 2.1 Record-Equipped” priced at $149.99 with 5 reviews averaging 4.8 stars. Reviews varied from: “Best feeling running shoes I’ve had in a while… Still figuring out the record function without the iPhone… I’m sure I will sort it out with a quick read.” to “Incredible Shoe. Perfect Fit. Great Comfort. Record-Equipped Inconsistent.”
I interpreted these reviews and others as stating that customers are loyal to Under Armour hardware and are standing by UA as it dives into software even if the customer benefit is not there yet.
Z, you bring to light an important and widespread tension: consumerism persisted by retailers is at odds with their actions to improve the environment. The information you provided on how quickly consumers dispose of clothing and how difficult it is for clothing to be recycled shocked me and should be a wake up call for the fashion community! Because retailers that deliver products at a low price point (like H&M) rely on volume to ensure profitability, they will not be an ally in this fight. It seems like we will have to look to other players in the fashion world to show that conscious consumption is indeed fashionable! In 2016, fashion addicts were captivated by the “capsule wardrobe” which favors a smaller selection of high-quality basics over a crowded closet of disjointed and lower-quality offerings. Will the capsule wardrobe be another fashion fad, or is it a popular way to educate shoppers about the choices they make?
It seems like PITT OHIO is modeling the way not only for its competitors in the trucking space but also for its customers who are seeking a more environmentally responsible transportation option. I am excited by the Carbon Calculator tool which enables information symmetry for both PITT and their customers. This tools seems like an effective way to influence customer behavior (equipping them to think more strategically about frequency of shipments and geographies) while also allowing PITT to be more efficient as well… Win-win! Tools that drive awareness of carbon consumption and allow the consumer and the business to solve problems together are an exciting frontier in our march towards sustainability. As businesses look upstream at how to harvest more sustainable practices in their supply chains, I recommend that a tool like this is key to sharing information and unlocking mutually beneficial solutions.
D, I appreciated how you raised that pressure from activists and expectations from consumers can be a motivator for organizations to join the sustainability movement. Cynically, I am disappointed that organizations are not adequately motivated by the impending depletion of our planet’s resources to start acting; but at the same time, I am grateful that this strong social pressure has been effective in mobilizing large corporations. I am left wondering – does it even matter why an organization started taking action? Or from another perspective, how can we strengthen this social pressure to drive the stragglers to join the movement?
Emily, I am impressed by Whirlpool’s 40+ years of dedication to the environment, but I agree there is always room for innovation! I wonder why Whirlpool has yet to convert its whole product suite to Energy Start status (especially because as Cara mentioned above, it should be win, win, win!) Is Whirlpool unwilling to sacrifice a lower-paying segment of the market in order to make that switch? Will Whirlpool reap enough benefits to justify this transition? When (if ever) should corporations make tradeoffs between sales and environmental responsibility?
Further, this article reminded me that the shift to using clothes dryers is relatively recent. Clothes dryers were first created in the 1940s but did not become widely accessible (due to cost) in US homes until the final quarter of the 21st century. It’s interesting to consider that effective ad campaigns and pricing by Whirlpool and its competitors helped drive this overutilization of resources. Now that we are all hooked on the convenience of dryers, it likely wouldn’t be worthwhile for environmental lobbyists attempt to to reverse our behaviors and revert to the seemingly archaic behavior of air-drying clothes. It reminded me of the inventor of Keurig K-Cups who regretted ever coming up with the idea…
Wincent, thank you for sharing Unilever’s path to sustainability and the steps the organization has taken from product design level to executive report-outs.
I enjoyed learning about how Unilever has designed products (such as detergent that requires less water and dry shampoo) to change consumer behaviors. I see these two approaches in two different lights – detergent reduces water consumption without requiring behavior change from the consumer, while dry shampoo requires a conscious behavior change by the consumer. The former makes me think of energy efficient light bulbs or more effective shower heads, but I am very curious about the opportunity to innovate products that drive behavior change. What behaviors do we have that we are willing to be disrupted for the sake of climate change? What other industries could leverage product design to drive consumer behaviors?
I question Polman’s choice to refrain from sharing quarterly profit statements… Although he intended it to send a signal across the business world that Unilever and its investors are thinking more sustainably, I think his decision to hide it actually reinforces the behavior that businesses should be afraid of short-term financial impacts. I believe Polman would have been more effective by coupling the organization’s quarterly profit statement with a statement on how these investments are tied to the initiatives Unilever is undertaking. This transparency could help model the way to other organizations and show that tackling climate change is in fact part of their strategy and performance.
SCWC, you’re right on by saying that Clif should not be tackling this problem alone. Clif has not only modeled the way for some of its competitors in the food industry but also teamed up with them. Last year, Clif joined forces with a dozen other food companies (from giants like General Mills and Unilver to smaller companies including Ben & Jerry’s) to pledge their commitment to climate change but to also call the global community to action. Clif Bar’s donations to third party research is also a good example of how Clif is already thinking beyond themselves.
In spite of this action, Clif Bar has more juice to squeeze out of its own operation. We have seen how Clif Bar has continued to find impact through innovation over the last decade, and I am excited to see what solutions they come up with next!