The Healthcare Conundrum: Realigning Incentives for Better Outcomes

Hello everyone, Justin Burgess here.

Excuse my passion on this topic, but it’s time we have a real discussion about healthcare.

Healthcare is not broken; it’s designed wrong with misaligned incentives. The current system often prioritizes profits over patient care, leading to inefficiencies and gaps in service. By realigning these incentives to focus on patient outcomes instead of profit, we can create a more effective and equitable healthcare system.

The Truth About Our Healthcare System

The truth is that our health system is doing what it was designed to do. We have a mass production, industrial complex health system built on economies of scale, static processes, entrenched financial interests, opaque incentives, convoluted delivery models, legacy conflicts of interest, an innovation-stifling compliance blanket reflective of a massive Federal bureaucracy, and the necessary self-protectionism brought on by a hyper-litigious legal system.

Our health system isn’t broken; it’s massively inefficient, and that makes it massively expensive. What’s broken is how we’ve grown to accept the status quo of our health system and how those who pay for healthcare—employers, unions, and individuals—continue to engage with it. We accept entrenched mediocrity, and our approach to the status quo is a brittle strategy. We’re debating it because we realize that we can no longer afford the inefficiencies.

Our massive health system is actually a financial ecosystem feeding a multitude of dependents, and the question at the heart of the matter comes down to profits, efficiencies, and outcomes. Middlemen organizations, originally created to be advocates for those paying for healthcare—governments, unions, employers, and individuals—have evolved into entire industries unto themselves, busily building and feeding their own ecosystems with money siphoned from their original stakeholders.

Why do we keep paying them? Because healthcare is complex and difficult to navigate. We’ve moved from insuring against worst-case scenarios into easy-button managed cost mechanisms that ultimately result in massively inefficient financing arrangements with little to no attention given to efficiency or effectiveness. The sheer scale hides the inefficiencies and misaligned incentives, while the complexity ensures that it is incredibly difficult to sort fact from fiction.

In other words, we keep making the same mistakes because it is easier than the perceived effort to make meaningful changes, and there is a universe of players who are dependent on keeping things static. That is all fine and good when there is excess cash sitting around. The reality is that all employers are in the business of healthcare, and most of us can no longer afford to keep doing the same thing. The real battle over healthcare is about who keeps the money. If you are an employer or health consumer, I’m talking about your money.

So, What’s the Solution?

There isn’t a silver bullet, but there is a pathway to manageable change.

First, adjust your healthcare worldview. Why do you offer health benefits to employees? Attraction? Retention? Productivity? Doing the right thing? Naturally, it’s “all of the above.” There are solid business reasons from a human capital perspective and from a humanity perspective. With its strategic human resource and financial implications, healthcare demands high-level attention. Make healthcare a strategic imperative for your organization and lead it that way.

Second, understand the incentives. None of us make our healthcare decisions without outside input. Choose carefully. Brokers with massive bonuses attached to securing your business struggle to be objective in the guidance they give. Make no mistake, you will pay for the help you get one way or another. However, who pays for the counsel you get makes a difference. Be direct in asking how your advisers make their money. Look for financial disclosures in contracts and inform decisions you make with an understanding of the money trail. Remember, it’s your money.

Third, educate yourself. Make sure that you have the internal expertise to gather and evaluate options. This means that you, or someone on your team, needs to invest the time to understand the complexities of how the system works and what doesn’t work for you. It can’t be just about dollars—pricing is a blunt instrument for assessing options. By digging into the nuances, you will be in a better position to evaluate your advisor, question your options, and navigate the byways of healthcare planning. In the healthcare benefits space, trust remains an issue, and building your knowledge is one of the best ways to build confidence in others as well as in your ability to discern the options. Sorting through the noise can take time, but it is worth the investment. With time, patterns, gaps, and opportunities will reveal themselves.

Fourth, start with data but remember that it’s not enough. Understanding your data is a great place to start. However, it is only a starting point, and you must remember that data can, and often is, manipulated. Data must be converted into useable information from which insights can be drawn. Often data is hard to obtain, so keep pressing for it. Certain data points are often left out. Ask for them again. When you have others evaluate your data, they will almost always come back and tell you that they can save you money. Ask them how they will do it. Make sure you understand why their approach is better and how it differs. Data has to be kept in context, and insights must be actionable. For example, most groups have a challenge with diabetes within their employee population. Few solutions are effective at changing that situation, so ask the question: how is your approach different? Why will it work when most don’t? If you are working with someone who doesn’t offer ideas for addressing problem areas, keep looking; they are out there.

Fifth, look for strategic partners, not vendors. None of us can address our healthcare challenges in a vacuum, but the universe of those offering advice seems infinite. The word “partner” is one of those expressions that has approached cliché status over the years as suppliers have worked to position themselves as “high value.” Overused or not, it is an important reference point. Transactional relationships can add value, but they will rarely provide ideas or approaches unique to your situation. A strategic partner takes the time to get to know your business, understand your priorities and challenges, and works to help you achieve objectives. The best strategic partners win when you win. The best relationships require a lot of time and effort to build. Almost everyone will claim a desire to “partner” with you. One way to assess options is to look for those who give value first. Who comes with ideas? Who asks fresh questions? Are they “all-in” on helping you achieve your objectives? Do they adjust their approach as they gather information to reflect an evolving understanding of your unique requirements? Can they save you money while increasing the value of the products or services you use?

Sixth, size does not necessarily equal value. We all tend to make the mistake of assuming that the largest entities bring economies of scale and therefore low-cost, high-value solutions. In the world of manufacturing, that is traditionally the case but not in the complex health web we inhabit. Big inefficient organizations are often built on siloed service areas that don’t coordinate, take a narrow view of the client or patient, and have little incentive to worry about the collective whole of your relationship. Massive processors of claims do little to layer value in health transactions and mainly push money around while doing even less to help those who most need it navigate the complexities of their own healthcare experience. There are many reasons such massive organizations sit on top of the system, but most of them will not improve your experience or save you money. If you are the biggest of the big employers, there may be reasons to engage the biggest of the big vendors; however, it is no guarantee of service, quality, or value. If you are not big enough to command the biggest, then you are likely paying more and getting less than you could with other options.

Finally, remember that the status quo is a brittle strategy. I was recently told of an employer who, frustrated by their current health benefits plan, changed directions to save money and improve services. When it came time to draft a “plan document,” the employer asked, “Can’t we just use our old one?” If you want something to change, you’ve got to be willing to put in the work to change it. It doesn’t have to be painful or disruptive, but it does have to be different in the decisions you make and direction you take. One reason so many of us stick with status quo approaches is because we view departure as requiring a lot of effort, and we are unwilling to do the work to change. Keep the end in mind. Not all change requires massive effort, and, if it does, it is often very much worth it. Status quo approaches are often brittle because they cannot flex to the continually evolving needs of our businesses. This is why so many say that our healthcare system is broken when in actuality, it is simply too inflexible to give us what we want for what seems a reasonable price.

We’re not going to solve the challenges in a brief discussion. However, we can begin to think about the problems in a different way. Creatively nimble and cost-effective approaches are hidden by the monolithic shadow of a massive system built for entrenched mediocrity. It takes effort and pluck to step into that shadow, seeking workable alternatives that might solve seemingly intractable problems. For most, the apparent risk is too high. However, the rewards will go to the daring as they find pathways to lower costs and better health outcomes.

Thank you for reading, and I hope these insights help you navigate the complexities of our healthcare system.

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