Surgeons on a War Footing

As a healthtech CEO, I've been monitoring the intensifying conflict between healthcare providers and payers, a topic recently spotlighted by Brian Gragnolati at the Reuters Total Health conference in Chicago. The crux of this battle lies in the predominant model for healthcare delivery in the U.S., which pits providers' need for fair compensation against payers' drive to cut costs.

The extent to which denials have gone up is stunning. It’s almost like it’s a game that the payers are playing to try to wear us out. So we’ve had to really work hard to invest in strategies and technologies that help us understand the patterns of those denials and then how we can address those. - Brian Gragnolati, CEO of Atlantic Health System, Reuters Total Health conference in Chicago 2023

Navigating the Complexities of Surgery Costs and Insurance Challenges:

This standoff is deeply affecting the financial viability of providers and the larger health systems they operate within. In the world of surgery, for instance, the financial burden initially falls on the providers, whether they are individual practitioners, group practices, or part of a larger health system. Significant upfront investment is required for each surgical procedure, necessitating diligent planning and financial management. Yet, providers face increasing challenges in receiving timely and fair compensation from insurance companies after care is delivered.

The situation is further aggravated by insurance companies requiring excessive prior authorizations and frequently deviating from their own coverage guidelines. A notable example is UnitedHealth's current legal battle over accusations of using AI to inappropriately deny claims in mere seconds.

Moreover, the shift towards healthcare reform and more affordable monthly premiums for employee health plans has led to higher out-of-pocket costs for patients. Despite new laws against surprise billing, many patients are unable to afford their insurance, leading to delayed or non-payment, especially for high-cost treatments like surgeries.

How Surgeons and Health Systems are Responding to Financial Uncertainties:

Surgeons, in this context, find themselves in a relentless struggle, akin to being on a war footing. Their battle is not only for the survival of quality medical care but also for their staff, colleagues, and the families they support. They are contending with a system increasingly unsupportive of both providers and patients.

A key point in Mr. Gragnolati's comments are the inherent risk born by providers in the current model and the difficulty in transitioning to risk-sharing arrangements. This pivot to risk management is reshaping the surgical landscape, influencing the decisions and behaviors of all stakeholders.

Facing escalating uncertainty in reimbursements, providers are becoming hesitant to engage in advanced treatments or associate with less reliable insurance brands. Also, escalating risk is impacting their willingness to enter into contracts for high-priced medical devices or long-term pricing agreements. Consequently, surgeons and health systems are seeking greater value and flexibility in pricing to mitigate financial pressures.

The "war" with insurance companies is an undercurrent eroding the industry. It's not only impacting patient volumes and surgeons' expectations but also transforming the sales dynamics in medical devices. If not addressed, we might witness a shift similar to what occurred in pharmaceutical sales. The early 2000’s saw direct relationships with providers give way to more direct-to-consumer sales models where simple price discussions are now the norm.

How SaaS and HealthTech are Shaping Patient Care and Provider Viability:

Amid these daunting challenges, we are presented with an unprecedented opportunity for transformation and leadership within the healthcare sector. The integration of Software as a Service (SaaS) and cutting-edge HealthTech solutions marks a critical juncture for redefining a patient centric journey into cutting-edge care.

Innovative Leadership Requires Reimagination:

• To spearhead this transformation, leaders must exhibit foresight and a strong commitment to innovation. This involves a fundamental reevaluation of existing business models, particularly in structuring relationships within the healthcare supply chain. Moving away from traditional models that focus on fixed pricing and standard payment terms, there's a need to adopt more flexible and adaptive payment structures. This shift is essential for adding value and minimizing risk in business relationships.

Flexible Payment Models That Acknowledge Risk:

• A key strategy is the introduction of flexible payment models that align with the financial health and cash flow of healthcare providers and the systems they work in. This could mean dynamic pricing models, which take into account the diverse financial circumstances of various healthcare facilities and practices. Such models would enable providers to manage their finances more effectively, reducing the financial strain and accommodating the unique economic realities of different healthcare entities.

Collaboration in Value-Based Care Supported by Technology:

• There's a critical need for collaborative efforts between providers and health systems with medical device companies to develop and implement value-based arrangements. These models aim to align incentives among all stakeholders, with a focus on patient outcomes and care quality. HealthTech and SaaS companies can contribute significantly by offering solutions for better financial management, such as advanced analytics for insurance claim patterns, predictive revenue management models, and automated systems for efficient patient qualifying, billing, and claim processing. Leveraging these technologies can help providers navigate insurance complexities more effectively and stabilize their financial standing.

Embracing Change

The challenges facing surgeons and healthcare providers today call for a radical rethink of our current systems and processes. By embracing technological innovation and redefining our business models, we can create a more sustainable, efficient, and patient-centered healthcare ecosystem. The time for this transformation is now, and it will require the collective effort and leadership of all players in the healthcare sector.

Fire Up!