Vision of a Fundamentally Different FutureBusiness
The following is an except from the book, From Healthcare at a Turning Point: A Roadmap for Change by Rita E. Numerof.
It’s the year 2024. It’s hard to believe that just a decade ago there was intense debate about healthcare in the United States. Today, we have more options than were ever available before. We spend less on healthcare delivery, and we seem to be generally healthier as a nation. Costs have come down dramatically in some sectors of the industry, and dynamic new businesses have sprung up to meet emerging needs. Traditional businesses have evolved with core components re-purposed. Financing mechanisms have changed, and while not perfect, there is better alignment between cost and quality. There Is better coordination of care, more personal accountability for health outcomes, more choice and competition, fewer restrictions, and generally less intervention and fewer procedures.
Of course, there have been some business “casualties” across the industry, as those organizations that held on to old models found themselves unable to adapt and therefore unable to compete in a new marketplace.
Medical tourism is up as the United States has once more become the global destination for elective procedures and continues to be the gold standard for complex care. Innovations here have been taken to other parts of the globe as researchers in the United States continue to work collaboratively with their global counterparts to find ways to improve health outcomes. New investments in research and development (R&D) have had big payoffs, as medical interventions have replaced surgery, and in some cases minimally invasive surgical procedures have replaced chronic medical treatment. Equally important, non-Western approaches to treatment have gained acceptance as the evidence for their efficacy is increasingly demonstrated.
Everyone in the United States has access to health insurance. Typically, it’s attached to the person, although there are still some sectors of the economy where employer-based healthcare is the preferred option. National access opened up competition. Local providers sprang up, sometimes coordinated with more traditional care delivery organizations, which together built comprehensive or “bundled” approaches to disease management, wellness, and prevention. Whereas fragmentation and inefficiency still characterized healthcare in 2012, coordination and cost effectiveness increasingly characterize the industry. Of course, there are still niche players who are quite successful in their market segments.
What’s so remarkable is the creativity brought to bear on what appeared in 2012 to t>e intractable problems that some argued could only be fixed by a single, government payer. Indeed, the creation of true market-based solutions, with very targeted policy (government) intervention, has enabled this magnitude of change in such a relatively short period of time.
Insurance payment reform enabled interstate access and reduced complicated rules and bureaucratic inefficiency. Member retention, once a major problem for the industry, due in part to an over-reliance on employer-based benefit coverage, has dramatically increased in recent years. Whereas average member retention was once pegged at 18-24 months, it continues to increase, with some carriers reporting averages of 6-8 years and a positive trend line. Portability Is characteristic of all insurance since most individuals hold their own policies, with myriad design options for consumers to choose from long-term care, full coverage including vitamins and over-the-counter (OTC) products, basic catastrophic coverage, and specialty options including 10- , 20- , and 30-year life support.
Pooling and tax incentives have leveled the playing field and made this a reality. Tine competition has lowered costs and increasingly put consumers in the driver’s seat. Employers, where they do provide coverage, have almost entirely moved to defined contribution approaches. Employers get to make the determination of what the contribution will be—not the insurance provider or the government. For insurers still in the business, the model has moved to a retail individual-dominated market.
On the delivery side, things are very different. Fundamental to change has been a shift in a basic assumption of the industry—that volume (or at least a certain type of volume based on payer and procedure) is good. In the world of the healthcare continuum—prevention, early diagnosis, intervention, and rehab—traditional hospitalization volume represents a cost, not revenue! Not wanting to repeat the mistakes of capitation in the 1980s, 2012 innovators committed to short- and longterm health outcomes.
This required enormous behavioral change on the part of physicians, social agencies, and consumers. It also required new approaches to metrics and the generation of evidence. Increasingly, healthcare delivery institutions are focused on optimal outcomes—the right treatments) in the right amount, administered in the right way, at the right time, at the right place, for the right patient. Hospitals are less frenetic for caregivers, and they tend to focus more on the things they do best—acute, complex intervention, often in specialty institutions. They are less likely to attempt to l>e “all things to all people.”
Nurses who frequently focused in 2012, on getting through the shift without hurting anyone, now focus on the bedside—on consumer and family education, on rehab, on care management, coordination, and health outcomes—and a smooth transition back into the home and community.
Hospital-acquired infection rates, while never reaching zero, have been dramatically reduced; medication errors also are down below 1%. No longer are hospitals generally recognized as unsafe.
Together with the elimination of redundant and unnecessary care, estimated at between 30% and 40% at some of the best hospitals even in 2012, these changes resulted in the savings that enabled innovation and universal coverage without adding cost.
The refusal of the Centers for Medicare and Medicaid Services (CMS) to pay for such error-based never events initially forced healthcare delivery institutions to dramatically change practice—or suffer the financial consequences. Similarly, 30-day readmission payment restrictions drove letter coordination within the hospital setting and facilitated discharge planning and coordination with community agencies and post-acute care settings. Discharge planning now starts pre-admission except in the case of emergent situations, and even there, it begins at the time of admission. Commercial insurers, not surprisingly, followed CMS’s lead.
On the physician front, frightening trends in primary care have been reversed. With balanced payment increasingly recognizing the enormous contribution and broad system expertise of primary care physicians and a decrease in compensation for narrow specialty care, more physicians have been going into primary care medicine as a specialty, thus reversing the disturbing trend in 2012. Where there were significant shortages projected years out for primary care physicians in 2012, now more than 20% have selected this specialty area in 2023. Contrary to what was anticipated, the small business model for independent physicians continues, nurse practitioners have opened offices, and integrated cross-specialty practice models have emerged to offer their customers comprehensive healthcare solutions accessible to local communities. Increasingly, consumers get care they need in their homes, at retail clinics, and sometimes at the office…when they need it.
In 2012 defensive medicine was frequently offered as a major contributor to the problem of overutilization. Essentially, physicians and hospitals felt as though they needed to leave no stone unturned in diagnosis and treatment to protect against potential legal liability. Some patients, unencumbered by the need to actually pay for the services, would likewise demand that no stone be left unturned, even when the downside risk outweighed the upside potential. Clinical judgment was painted as a prisoner of the legal system, and tort reform became the obstacle to rational resource utilization. Mow things have changed in just a few short years.
Today, increased transparency, reliance on evidence, change in payment mechanisms and the redefinition of the consumer’s role in health care decisions have dramatically changed the picture. Patients are more likely to collaborate with their physicians, especially primary care providers, and evidence is used to determine which tests need to be done and when.
In the midst of this change, some hospitals have repurposed bricks and mortar, turning low-occupancy beds into assisted living long-term care (LTC) and long-term acute care hospitals (LTACIIs). Still others have created temporary residences for families visiting sick relatives receiving needed treatment and rehabilitation.
New players, not in the traditional healthcare space, created dramatic disruption by taking advantage of the industry’s inability to see itself in a fundamentally different business model. Primary care began moving, ever so slowly, to walk-in clinics in retail settings in 2010 and 2011, picking up speed dramatically in 2012 and 2013. More and more people turned to convenience and began to trust nontraditional settings for blood pressure and other screenings, flu shots and other immunizations, and even nonurgent care.
Screenings have led to earlier diagnoses and referrals to specialists. Industry leaders including Walmart, Walgreens, and CVS shook up the industry. Capitalizing on location, they brought the health clinic into the retail space, tying in low-cost access to generic prescription medications and store brand over-the-counter products. Their enormous success also disrupted traditional pharmacy benefit managers (PBMs) who, in retrospect, have been a bridge between the old and new model of healthcare.
It’s truly a different world!