“In the long history of humankind (and animal kind, too) those who learned to collaborate and improvise most effectively have prevailed” Charles Darwin
As the legislative reform volcano rumbles and angrily spews magma into the Washington night, nervous industry stakeholders competing for survival on this unstable island of American healthcare are still betting that the seismic activity is merely a false eruption.
Survivor contestants are using every possible means to ensure they are not voted off the island. The stakeholders are a veritable who’s who of personalities – the powerful, the wealthy, the prima donnas, the tough love advocates, the national health zealots, the well-intended academics, the bellicose politicians, the under-employed, the overweight, and the disenfranchised. It remains to be seen whether Congress, market forces or the American people will be the ultimate judge of who stays and who goes.
If the contestants cannot change in the next five years, 2015 will find them staring at a terrifying wall of regulation and governmental intervention that will be more destructive than the changes from the 2010 proposed legislation.
The island has finite resources struggling to accommodate infinite demand. Do these players have the emotional intelligence to change or are they too addicted to their way of life to yield to the need for transformation. Time is running out. As we handicap the winners and losers in the 2015, here’s what each group needs to do to remain on the island:
Insurers – In the brave new world, insurers will have to cede higher profit margins realized in the individual and small group business resulting from a formation of purchasing pools and guarantee issue coverage. Insurers must transform from B2B businesses to B2C business solving for the compromises that have frustrated consumers for years. Insurers need to aggregate clinical data on quality and efficiency of doctors in partnership with government to create a credible, non-partisan consumer reports to help patients make more informed choices of providers. High performance networks must become the norm to ensure optimal value over an entire episode of care. Primary care reimbursement must increase over 30% for family practice providers as medical home and population health rewards based programs reimburse providers to keep patients well or stable when chronically ill. Insurers must become community stewards helping finance primary care into urban and rural ” hot zones “serving “at risk” populations in underserved communities.
Brokers/Consultants/Agents – Total transparency must mark the year 2015 as broker, agents and consultants remuneration is shared with all employers. Brokers and consultants must justify their role as an intermediary – less by marketing insurance and more by harnessing clinical, underwriting, administrative, compliance and population health management programs to advise small, medium and large employers on how to best manage and finance healthcare risk.
Hospitals – our most expensive delivery systems must yield to a new reality where chronic disease prevention spending exceeds spending on the inpatient treatment of chronic illness. Hospitals must accept value-based healthcare and accept risk through global case rates, helping actively manage the assembly line of care to patients being treated inpatient. Intensity of services must decline over the next four years as well as inpatient days. Survivor hospitals sober to the reality that big is not necessarily better. There is focus on better managing the delivery of services to Medicare and Medicaid patients and total transparency of costs of services and clinical outcomes.
Specialists – specialists must yield to a brave new world of reduced reimbursement, consolidation and the first decline in practice growth as medical graduates begin to select family practice. Remuneration must be more closely managed as medical home plans reassert control of care, pre-empting self-referrals and overtreatment more characteristic of the early 2000s.
Government – Federal and state agencies must demonstrate they can manage cost through clinical and medical management services, not just through serial underpayment. With improved oversight Medicare and Medicaid can claw back up to $100B a year in fraud. The additional funds coupled with higher payroll taxes for higher wage earners, global case rates for hospitals, disease management and fee cuts aimed at overtreatment for of life evidence based medicine will help finance subsidies for the expansion of Medicaid and broader coverage for the most vulnerable of the estimated 45M uninsured. Government must enforce Certificates of need are reinstituted and moderate the hospital arms race of medical device purchases and redundant care delivery.
Congress must consider a controversial decision to promulgate a single reimbursement between Medicare and private insurance which can eliminate cost shifting and create a more unified public/private focus on clinical outcomes, reduced variability of care and population health management. The projected net present value of the Medicare deficit can been pared by responsible oversight impacting US debt standing and strengthening the dollar. State and Federal government should focus on interest free medical school loans to students electing to practice primary care as part of an American Family Practice Reinvestment Act.
Consumers – Medicare recipients must accept medical home models as an access point to the healthcare system. Focus will be on personal responsibility and the waiver of cost barriers (e.g. Co-pays and deductibles) for services required to keep the chronically ill stable. Consumers must comply with expectations for regular care and maintenance. Patients must become increasingly comfortable with compliance calls from physicians urging them to stay follow up with tests, maintenance drugs and check ups. Patients must understand physicians will be rewarded for health maintenance and catastrophic cost risk mitigation. 80% of Americans in 2015 must access healthcare through a primary care provider and reduce ER visit for routine non-emergency treatment. Individuals must routinely check their biometric health indicators through work site based providers, kiosks, health clubs and provider offices to measure progress on key health management indicators.
Employers – Perhaps the most engaged stakeholders, employers must accept their reluctant role as the catalyst for market reforms. In striving for low single digit medical trends, employers must focus on population health improvement, compliance, value based plan designs, medical home, specialty services for key chronic illnesses such as diabetes, cardiovascular disease and orthopedic care. Partnering with CMS and private insurers, employers can take a front seat as the market force through the adoption of gate keeper, medical home models and high performance networks, to reduce, streamline and rebalance the secondary and tertiary care in America.
Pharmacy – Pharma and their intermediary partners, PBM’s must be required to disclose 100% of all rebates and to provide clarity around opaque pricing schemes. Decision support tools introduced through increased HIT and EMR useage has elevated physician awareness around contradictions and the inconsistent outcomes surrounding certain specialty drugs. Consolidation among pharmacy purchasers – state, federal, consortias and pharmacuetical benefit managers has eaten into industry margins. Improved consumer adherance to chronic illness medication as a result of broader medical home oversight, digital consumer compliance tools and incentives has driven higher use of generics and reduced trends. In this part of the island, only the large and strong survive.
Who Will Win? – As we watch Survivor 2015 unfold, we wonder whether the reality show of American Healthcare is a fair competition or rigged to the benefit of a few stakeholders.
In a free market economy, optimal balance is achieved differently in different segments of our economy. The fewer the players and the closer one inches toward oligopoly or monopoly, the more important effective regulation is to allow for innovation while limiting abuses and excessive profit taking that disproportionately benefits too few while disenfranchising too many. However, Survivor 2015 must require personal responsibilities. There are no victims – only those who choose to be too self interested or too quick to default into angry populism that deflects from the real issues.
On this island, everyone needs to change. However, it is unlikely that we can have only one winner. In this fight for the future, we all win or lose. Stay tuned.