What Healthcare and the NFL Have in Common
The National Football League is among the greatest success stories of American enterprise. Founded in 1920 as the American Football League with 10 small town teams, it’s now a $12 billion juggernaut with 31 big town teams and the Green Bay Packers, the lone hold over from the originals.
Like healthcare, the NFL is big business. It broadcasts its contests on Sunday’s, Monday’s and Thursday’s attracting 16.5 million viewers weekly (Nielsen). More than 120 million tuned in to yesterday’s Super Bowl: half on Fox and others online. Advertisers shelled out up to $5,000,000 for each of the 72 spots. Ticket prices started at $1500 for the cheapest seats and averaged $5000 for the 70,807 who crammed into NRG Stadium. And the league’s 32 owners hope to grow the league’s revenues to $27 billion by 2027.
But the league has issues. Viewership and attendance is down and ticket prices to weekly contests are up. Fan loyalty is being compromised: teams in San Diego and St. Louis are leaving for greener pastures in a new $2.6 billion stadium in Los Angeles and the Oakland Raiders are relocating to Las Vegas where they will play in a new $750 million stadium funded by taxpayers. Off-the field stories about player misconduct and growing evidence of the link between football and brain trauma (chronic traumatic encephalopathy) have cast a shadow over the sport. Though firmly ahead of the NBA, MLB, NHL and NASCAR as America’s most popular professional sport, one in three parents thinks it unsuitable for their sons’ participation (Public Religion Research Institute) and 3 of 5 Millennials think the league is “sleazy” (ESPN Poll).
The healthcare industry faces challenges similar to the NFL’s:
Affordability: The average price of a single ticket to a regular season NFL contest is now $92 with a range from $61 for the Jacksonville Jaguars to $132 for the Chicago Bears. Add parking and concessions and the tab is out of reach for most. It caters to a dedicated core fan base: 16.5 million who watch telecasts, 33 million who spend $465/year to play Fantasy Football (Fantasy Sports) and millions who buy NFL licensed merchandise made by Nike. Not surprising, after last night’s game, Patriots’ hats ($35) and jerseys ($120) were prominent on NFLShop.com. The NFL has gained more than its proportionate share of the $67 billion U.S. entertainment market by looking to new markets and products. Healthcare competes for the same discretionary dollar: out of pocket spending. But unlike NFL purchases, healthcare’s out of pocket spending is driven by circumstances seen as unpredictable—injuries, illness, fatalities. And these costs have increased 129% to $2560 per household since 1996—faster than housing, transportation, food, clothing and entertainment. For lower and middle income households, especially, out of pocket spending for premiums, co-payments, deductibles and over the counter therapies are increasingly unaffordable, forcing cutbacks in their discretionary spending in other categories. Affordability is a critical issue to the NFL and in healthcare.
Growth: Growing the NFL to $27 billion by 2027 is needed to fund massive capital investments in complexes like NRG Stadium, player salaries that average $2 million annually and diversification of the league’s revenues beyond tickets, broadcast rights, merchandise and concessions. Healthcare faces a similar challenge: utilization is increasing, but costs for our technologies, therapies and facilities is increasing faster. Every major player in healthcare is looking for revenue growth that’s accretive to offset declining profits in traditional lines of business. That’s why hospitals are becoming insurers and retailers, insurers are becoming providers and drug companies are consolidating to maintain scale. Profitable growth is their aim: the winners will win with both scale and scope advantages. Like the NFL, expanding the range of services to accommodate increased demand and new methods for delivering services is central to strategies in healthcare organizations going forward.
Reputation: In recent years, the NFL has become better known for off-field misconduct by its players, attentiveness to diversity and domestic abuse and growing aversion to its violent bent. Notably, on NFL.com, the “health and safety” tab is prominent linking to the league’s 2016 Injury Report (compiled by Quintiles IMS) but clearly the league’s brand is tarnished. In healthcare, our reputation is likewise on trial, especially among Millennials. Corporate misconduct by some leaders and boards, our aversion to transparency and online tools that facilitate access, and price gauging “because we can” lend to growing distrust. U.S. Millennials—70 million strong -- have lived through a financial crisis, the 9-11 attack, skyrocketing academic debt and most recently Campaign 2016. Only 58% trust their physicians vs. 73% of older adults (Kantar Media) and majorities favor usage technologies and care approaches that enhance access, efficiency and transparency i.e. alternative health, retail clinics, online scheduling, telemedicine, group visits, probiotics et al. Across the board, healthcare’s brand is under scrutiny and its reputation for putting patients before profits is being challenged, especially among Millennials.
Last night’s game was entertaining. For die-hard Patriots fans, the franchise 5th Super Bowl win was poetic justice given the early season conflict over Deflate-gate and suspension of the team’s quarterback. For Atlanta fans, it marked the end of a successful season that came up short on the scoreboard but big in the players, coaches and owners bank accounts.
But beneath the pageantry of Super Bowl LI, half-time glitz of Lady Gaga and overtime win, there’s an organization, the NFL, that faces challenges similar to those we face in healthcare—how to be affordable, where to grow our organizations, and how to protect and enhance our reputations. The big difference is that the NFL oversees a sport; healthcare isn’t a game!