U.S. Healthcare Spending Has Reached a Turning Point – And There’s No Going Back

The U.S. GDP cannot and will not support additional healthcare spending. At around 20% of GDP, spending will go up no further. It’s unsustainable by the economy, and thus impossible to maintain socially and politically.

Over the last few years, spending has increased due to levers that can no longer be pulled:

1.????? Hospitals cannot continue to purchase “referral” sources. Inflation, regulation, and value-based agreements have curbed the economic benefit of this practice

2.????? Employers can’t compete in the marketplace (at home or abroad) with the kind of yearly increases to their healthcare benefits

3.????? Providers are much more limited in the investments they can make or cost-sharing they can take from payors due to rising expenses and lower reimbursement rates ?

4.????? The coding game is up. CMS’ V28 changes put an end to it

5.????? Consolidation in the healthcare space purely to benefit from contractual lift (aggregating entities to benefit from a better paying contract) is reaching its limit, as payors are pruning networks to contain costs

Healthcare will be about cost-effective technology, programs, and interventions that improve clinical outcomes and patient satisfaction. It’s long been talked about, but only recently are the economic incentives in place to force the change. Rather than the historical levers, the next big leaps in the evolution of the healthcare system will come from:

1.????? Expanding value-based care to cover all healthcare delivery. Simply put: there must be alignment on financial and clinical responsibility between all stakeholders

2.????? Putting patients in control – with better connectivity to providers, and broader access to their own data and healthcare choices

3.????? Using new treatments, technologies, and delivery systems which improve outcomes while decreasing costs ?

I believe the market will take care of most of the changes, by selecting the organizations, products, and services that meet the next big leap criteria described above.

The rest will come from government action, which will continue to shift services to the private marketplace in ways that increase competition while expanding access to care.

But one thing is for certain: U.S. healthcare spending has reached a turning point, and there’s no going back.