Healthcare the Day After Tomorrow: What Will it Take?
When it comes to healthcare, America is #1. Number one in obesity, and number one in spending on healthcare, that is. Our ranking when it comes to actual health outcomes, however, is far less impressive: Among the 34 nations that make up the Organization for Economic Cooperation and Development (OECD), the U.S. ranks 27th in terms of life expectancy at birth; 17th in mortality from cardiovascular disease; 25th for mortality from cancer. Running the numbers, one might argue that we’re spending ourselves to death.
But change is afoot. Joe Flower forecasts that in the not-so-distant future, healthcare will look vastly different than it does today; more deconstructed, more personal, more accessible, much less expensive, and much more effective. How do we get there from here?
Flower, a veteran healthcare analyst, futurist, industry influencer and author of Healthcare Beyond Reform: Doing it Right for Half the Cost and How to Get What We Pay For: A Handbook for Healthcare Revolutionaries, shared his positive vision of the future of American healthcare before a group of some of the leading providers and industry consultants in the region at Kraus-Anderson’s fifth annual Healthcare event on Nov. 5, 2015 at Midland Hills Country Club in Roseville, MN.
To chart a course for the future, first we need to understand how we got here, Flower pointed out. Healthcare spending in America began its rise to staggering heights in the 1980s, when the federal government adopted “Diagnosis Related Groups” (DRGs), designated reimbursement amounts for hospital treatments. Intended to cap costs, the DRG structure had just the opposite effect: Costs shot up, as countless new procedures and treatment methods were developed and implemented to make up for fixed unit costs by increasing volume. By 2012, U.S. healthcare spending reached 16.9% of GDP, almost 50% higher than the next highest expenditure among OECD countries.
Correspondingly, the fee for service structure has also resulted in a lot of waste. Most studies conclude that we waste about 1/3 of every healthcare dollar spent in unnecessary procedures, states Flower. That adds up to $900 billion a year— 50 percent greater than the U.S. military budget.
Turning this course around will require a paradigm change—starting with a redo of its current, broken business model of producing value for the provider, Flower stated.
The equation that got us here looks like this:
coded reimbursements x volume = value to the provider
Instead, Flower asserts, the industry needs to refocus its goals on producing value for the healthcare consumer.
The consumer-focused business model looks like this:
health outcomes that matter to the patient ÷ cost = value to the patient
Beyond the Affordable Care Act, multiple “levers of change” are guiding the industry toward this inevitable consumer-driven healthcare future. Flower touched on seven major trends:
• Shopping- the growth of retail care, medical tourism, direct pay primary care, cost+ groups are putting more control of costs in the hands of the consumer.
• Transparency- After years of opacity, actual costs of healthcare are becoming more available to consumers, along with information on what is involved and what medical teams are best equipped to treat various conditions.
• Results- Rather than focusing on what procedures have been done, the focus is shifting to the question, is the patient healthier? Payment structures focused on process performance, quality, and improvement will elevate the benefit part of the cost/benefit ratio.
• Prevention- The people who use wellness programs and HRA’s are rarely the ones who could benefit most from them. More employers exploring new ways to improve employee engagement, and disease management; while health organizations are moving away from Volume to Value, taking on risk for the health of entire populations, such as under per patient per month (PPPM) fees….making money by keeping patients healthy.
• Targeting- Half the cost of healthcare is generated by 5% of the population. Twenty percent is generated by 1%. Targeting this 1-5% population for preventive care and attention will reduce the incidence of the most expensive acute care.
• Tech- Virtual visits, remote monitoring and other new technologies hold tremendous promise in reducing healthcare costs and improving quality. To fully mine technology’s potential, hospitals will need to revamp or junk their largely dysfunctional healthcare IT systems, many of which were not designed to talk to each other.
• Trust- The #1 efficiency engine and greatest need/greatest opportunity in healthcare is to become a trusted partner with the consumer. “None of your other strategies will work if they don’t trust you,” Flower said.
Healthcare is in transition: shifting its gaze from its traditional model of providing value to the provider; to strategizing how to more effectively provide real value to the consumer. Every American has a part to play in moving us to a healthier practice of healthcare, Flower contends.
“It boils down to, who are you going to serve,” he says.View Comments