3 Things We Can Do to Break Old Habits in Healthcare in 2019

After reading all of the 2019 health care predictions I can’t help feeling we are perpetually stuck in 2010. Volume to Value, AI, patient engagement, patient centered technology, ACOs....

We continue to invest billions of dollars into unproven healthcare solutions with little results-- in January 2019 ALONE, this number was $2.61 Billion —and the majority of these funds are going into unproven, “nuovo-healthcare tech”. An article by Safavi et al., recently published last month in Health Affairs provides evidence that most of the new population health solutions that digital tech companies are focusing on are poorly evaluated for efficacy (or not at all).  And, those that were evaluated for efficacy were shown to make little to no difference in achieving what they set out to do -- reducing costs and unnecessary utilization.

 So, where does that leave us? As a system, investing huge sums into unfounded solutions, where the 1% capitalize on short-term gains, but leave the healthcare system even worse off because scarce resources are being wasted on ineffective solutions.

I have cultivated a short list of things I believe need to happen to break free of this cycle:

1.    Short-term gain Long-term pain

Divert public and private funds into evidence-based best practices, which have targeted and proven goals. However, this will mean taking evaluation and efficacy much more seriously—as a nation. One possible solution will be to require new companies who receive a certain threshold of private funding (note: this rarely happens effectively in the public realm either) to follow evaluation standards, and make results public. This will also require entrepreneurs and investors to consider impact and value add to the health system in addition to short-term profits, and to be held accountable for achieving outcomes outside of pure financial gain. This may be one step in the right direction in terms of putting these billions to better use.

2.    Finders Keepers

Those that have pioneered solutions need to be incentivized to share their expertise. There are organizations in the private sector that have figured out how to save and make money, a lot of money, while simultaneously increasing or at least maintaining quality—and they largely aren’t sharing. For-profit organizations (look at managed care) who have managed to benefit from the arbitrage opportunities in the market have no incentives to publicize their solutions to the healthcare industry at large, lest they lose their competitive advantage.

In a capitalist market, this is rational, however healthcare is desperate for these entities to step-up and educate. We must create market incentives that not only reward those that are doing well and have figured out how to survive by keeping costs low and quality high, but also for everyone to win at once. For example, if all providers consistently lowered costs, Medicare would lower payments and those that did it best would lose their edge—there is little to no incentive for healthcare organizations to publicize the tactics and strategies that are truly effective. This needs to change by re-aligning incentives, not just for those haven’t succeeded yet--which has been the case in forcing fee-for-service entities to switch to value purchasing-- but by encouraging those that already create value to share how they do so (maybe we are dangling the carrot in the wrong garden).

3.    The Invisible Hand

The title of the seminal publication by Uwe Reinhardt, the renowned economist, still reverberates through most healthcare debates today—“It’s the Prices, Stupid”. Without consideration of those basic economic tenets, nothing will change.

Today’s environment of consolidation and integration, whether vertical or horizontal , has just given certain corners of healthcare more power—often negotiating power to bring prices down. This does not mean that prices for the consumer actually go down-- instead the costs are shifted to the entity with less negotiating power. And, since everyone is beholden to their current profit margin whether by shareholders, expenses or otherwise, this ends up being a zero-sum game without any real bending of the cost-curve for the consumer or taxpayer. There have been countless debates over the efficacy of the “free-market” as it applies to healthcare and why or why not it will ultimately be able to introduce the right type of competition to bring down prices considering how unique healthcare delivery is.

My personal opinion is that it can work, but there needs to be the right type and amount of government intervention, which means executing an anti-trust policy that is fairly and uniformly applied across all sectors. This currently does not happen. The way anti-trust thresholds are calculated are often misleading or not stringent enough, resulting in an exacerbation of an already imperfect market. There are too many loopholes, exceptions, and inconsistencies, which is diluting competition and rendering market forces unable to correct imbalances. We already know that consolidation in the hospital market has raised prices to the consumer, so to start, we need far more research on how consolidation in different sub-sectors within healthcare is affecting pricing—including looking into payers, provider practices, pharmaceuticals, retail and other suppliers, and subsequently adjusting policy and regulations so that the result is more balanced and effective competition, where the savings are (for once) passed along to the consumers.

I would love to hear your thoughts, and I hope in 2019 I get to read more articles on the future of healthcare that don’t mention artificial intelligence, machine learning, big data, interoperability, or wearables.