WELL STATES HEALTHCARE
The cost of healthcare continues to skyrocket. Current estimates say the average American spends $4000 a year on medical costs, but that number is expected to rise another 20% over the next four years.
We recently shared thoughts on some of the latest technological innovations to impact the medical care landscape, but innovation often comes at its own cost, as new technology can require heavy regulatory oversight and can take time to implement or adopt into practice.
The debate around healthcare costs is in no way an easy one, if it were it would have been solved a long time ago. There are, however, pathways opening up that show real promise in changing the status quo and have the potential to deliver measurable value to the patient.
Value-Based Care
The U.S. health system still largely operates as a pay-for-service model, but that is changing. Value-based healthcare is proving to be a potential model for how costs can be managed.
In value-based healthcare, providers are paid based on patient health outcomes rather than on the number of services they deliver. This helps incentivize not only health care professionals, but hospitals and insurance providers as well, to deliver the fastest and most effective care possible – with the goal to cure rather than simply treat.
That’s certainly a lofty ambition, and it should be noted that much of our healthcare services are dedicated to delivering quality care designed to heal the patient. Yet there are stumbling blocks throughout the process that can create bloated and unnecessary costs which can be eliminated by shifting the focus from quantity to quality.
By focusing on providing better patient care and improving overall health metrics for the wider population, healthcare costs inadvertently go down. Value-based care incentivizes providers to use evidence-based medicine, take advantage of technical advancements and tap into available data and analytics to assess care.
Improve the Network
It goes without saying that when patients receive coordinated, appropriate, and effective care they are more successful in healing or recovery. Yet there is significant improvement that can be made in the network of care provided.
When primary care providers are able to more readily work with specialists and share information and diagnostics it becomes easier to treat the core needs of the patient in a timely manner. More importantly, it allows the patient to become part of the team effort and have the necessary insight and advocacy to take charge of their own treatment process.
This isn’t an idea in the abstract, it’s been proven time and again that when the patient is actively engaged with a well-connected network of care, it results in faster recovery, fewer diagnostic tests, fewer referrals and improved outcomes
And no, this isn’t a new way of thinking. The Institute of Medicine published a report back in 2012 that listed “engaged, empowered patient” as one of seven characteristics of an effective and continuously improving health system. What is shifting and will impact this year however, is the technology access and the transparency required to create the most efficient network surrounding the patient.
Introduce Transparency
Speaking of transparency, it plays another critical role in reducing healthcare costs. For too long there has been little understanding or insight into why medical procedures cost what they do, and why one hospital or physician can charge such drastically different rates than the next.
Secretary of Health and Human Services, Alex Azar, spearheaded a four-point plan to address greater value in healthcare. One of those tenants is more transparent access to pricing of quality care options. As he pointed out, “You ought to have the right to know what a health care service will cost—and what it will really cost—before you get that service.” One of the short-term results of this plan is that all hospitals will have to release their billed rates publicly.
While this sounds like a smart first step in addressing healthcare costs, there are critics. It’s complex to try and determine what any one patient will need as medical care is highly personalized, and the many providers needed across the treatment process can cause costs to fluctuate wildly. What’s more, there isn’t yet solid proof that patients will use a cost-benefit analysis approach in choosing care, as it often seems higher priced care means better care.
Advocates insist these are simply initial stumbling blocks, and that by introducing transparency they are putting patient needs first. Education is an important component of pricing transparency, but over time its value will increase.
Transparency doesn’t just benefit the patient. Providers negotiate rates with insurance providers and government agencies, and those can vary widely and can seem quite arbitrary. Giving providers the necessary transparency into accepted costs can help them negotiate better reimbursement rates and not pass the loss on to their patient.
The government is spearheading this effort at the moment, but as it begins to take root this year the voice of the patient will begin to push for more insight and choice in what they spend for their care.
Like many Americans, we’re keeping a close eye on the changes taking place around healthcare costs and we’re excited to see some ways in which providers, insurers and regulators alike are addressing real patient concerns.