What words come to mind when you think of healthcare in America? If you said “expensive” or “complicated,” most Americans would agree. The United States continues to have the most expensive healthcare system in the world. Despite private and public efforts to bend the cost curve, U.S. healthcare spending increased to $4.1 trillion in 2020, or roughly 19.7% of the gross domestic profit (GDP).
We live in a country with a magnitude of access to care, yet half of Americans avoid medical care due to cost uncertainty. Healthcare spending has risen while utilization of healthcare services has stayed consistent. The rising cost of care comes without an improvement in the population’s health, and very little transparency to patients.
How do we solve for this problem? Do we cut pay for physicians, “big pharma” or hospitals? Do private insurance companies make too much money? Do we focus on care efficiency in public plans? Without blaming any one stakeholder over another, here are four ways we can bend the cost curve in healthcare:
Promote gender equality in leadership.
Studies have shown that women have a positive influence on the economic equation, having better financial outcomes, and are viewed as wiser and more compassionate by their employees when compared to male leaders. And yet, women account for only a third of executive teams and just 13% of chief executive officers in the healthcare industry.
In my own experience, 99% of the rooms I walk in have men at the board tables, while a majority of clinicians taking care of patients are women. My graduating class was 70% women and yet we hold fewer leadership roles. I have a blended management team that is equal parts men and women. It just worked out that way. I also hold happy hour socials for women leaders in the industry to connect and work together. I have mentored a handful of female up-and-comers to get used to working in board rooms and being confident with their decision-making.
Scratch the place of service (POS) from healthcare billing.
Healthcare is one of the only industries that ties payment to site of care. Traditionally, the same care provided in a hospital is reimbursed at a higher rate, sometimes 10x, than care delivered elsewhere. Higher payment for care delivered in hospitals drives care to inconvenient locations for patients, rather than shifting care to meet patients where they are.
Payment for services should be based on the quality of those services, not where they were delivered. Patients should be able to receive care anywhere and clinicians’ reimbursement should not be limited by location. Fortunately, we have seen a shift in healthcare delivery to patient homes led by Center for Medicare and Medicaid Services (CMS).
On November 25, 2020, CMS announced a comprehensive strategy to enhance hospital capacity during Covid-19 surges, believing that “treatment for more than 60 different acute conditions, such as asthma, congestive heart failure, pneumonia and chronic obstructive pulmonary disease (COPD) care, can be treated appropriately and safely in home settings with proper monitoring and treatment protocols.” Johns Hopkins research indicates there is up to a 30% cost saving in delivering care to patients’ homes when compared to traditional hospitalizations.
Require value-based contracts.
We should be pushing for value-based agreements as the standard of care, rather than a fee-for-service model. We need to address medical costs and the administration of those medical services to make everyone accountable. Providers, administrators, insurance and pharmaceutical companies should all bear the risk of overspending.
Universal payment “one price fits all” monopolizes the industry and doesn’t allow for physician engagement and incentives. We want our doctors to be paid based on providing the best care possible, so why not tie payment to that very idea? Better outcomes result in more money. Less efficient outcomes result in less money. This will drive innovation and reduce waste. If we’re going to be the most expensive healthcare system, we should at least have something to show for it.
Level the playing field for provider contracting.
I was in private practice when I first realized that the same insurance company pays providers significantly different rates for the same exact service and same exact patient. I was shocked to find out that my competitor, one town over, had a higher profit margin per patient encounter than I had been paid for the entire encounter with the same patient. When I tried to negotiate my rate, I was told I had no negotiation power being a single provider in private practice offering “services [physical therapy] that the hospital system also offered.”
I learned quickly that even though you went to school, passed your boards and became licensed to provide care, insurance companies could decide not to extend an in-network contract to you — simply because they “have enough therapists, or PCPs, or home health agencies in their network.” This forces private practices and startup companies to charge out-of-network rates for services. This is a compounding issue when it comes to innovation. Startup companies typically have the worst contracts with the best technology that patients avoid using.
If we level the playing field with contracts and contract rate in an open forum with public request for proposals (RFPs) and were transparent with patients as to cost of care, patients would be empowered and providers would be incentivized by the quality, not the volume, of care. This reduces costs and improves outcomes.
For payers, the payer price transparency rule would mean that shared savings with consumers would factor into medical loss ratios. Payers would have to publish their negotiated, in-network rates, out-of-network provider payments and the negotiated and historical rates for prescription drugs by pharmacy site.
Bending the cost curve in healthcare would open up opportunity to spend on technology and innovations to improve administrative workflows, data analytics for patient outcomes measures and a baseline for value-based contracting. This would improve our system, while reducing costs.