By Nick van Terheyden aka Dr Nick, Principal, ECG Management Consulting
Twitter: @drnic1
Host of Healthcare Upside Down – #HCupsidedown
Our healthcare system is broken. The most recent Commonwealth Fund report, Mirror Mirror 2021: Reflecting Poorly, compares 11 high-income countries’ healthcare systems and their outcomes across five domains. Despite the US spending far more of its GDP on healthcare than any of the other countries, we rank last in every category but one. “We the people” are not getting the value we want or could get from the healthcare system.
Meanwhile, business is faltering under the weight of healthcare costs, which in the United States are linked to employment. Employers know they need to change the economics, but the healthcare system is filled with a few large companies that dominate the space. They own the payment streams. They own the delivery options. They own the marketplace. And they push back on any change that affects their bottom line.
Dr. Brian Klepper is a healthcare analyst, commentator, and entrepreneur. He is the CEO of Worksite Health Advisors, a benefits consultancy focused on linking high-performance healthcare organizations with purchasers. Talk with Brian for just a few minutes and you’ll quickly realize how fed up he is with the status quo of healthcare and the industry’s resistance to disruption. “The only way out is to find new entrants into the marketplace that can make purchasers a deal they can’t refuse in terms of better health outcomes and lower costs,” he says.
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Brian joins us on this episode of Healthcare Upside Down, and together we challenge the notion that healthcare costs and premiums must continue to rise. Below are three takeaways from our conversation.
Not everyone is unhappy with the status quo.
If healthcare were like any other business marketplace, costs would decline as efficiencies rose. But with the market controlled by a handful of powerful organizations, effecting change is an uphill battle. “Everything is rigged,” Brian says. “Our policy environment is owned by the large healthcare companies, who lobby to get their way on every single thing that comes along in healthcare. The big players make more if healthcare costs more, so they’re not going to back off of that until they absolutely have to.”
The control exerted by those organizations makes disruption of the healthcare market a daunting prospect. But billion-dollar health plans are only part of the problem. In between the health plans and the organizations that purchase their services—employers and unions—are a group of stakeholders who are also resistant to change. Brian refers to the broker community, in particular, as “a very corrupt enterprise.”
“So we have brokers who are taking money from the health plans, advising purchasers on what the structure of their health plans needs to look like, [and] who the vendors should be,” he explains. “There’s the benefits managers who work for the employers and unions themselves, who like the status quo; they’re not being held accountable for the cost. Then you have the benefits advisers who are working presumably on behalf of the of the purchasers, but really are most often working for the health plans and other interests.”
Give them an offer they can’t refuse.
Although his description of the US healthcare market is discouraging enough that one might wonder whether there’s any point in even trying to change it, Brian is optimistic about potential disruptors. “You can’t stop people from creating new approaches and selling them in the marketplace,” he notes. “There are organizations out there that get wildly better health outcomes at much, much lower cost with much better patient satisfaction. The trick is getting purchasers to be willing to use them.”
That’s no easy feat. Benefits managers who sit outside companies who have a vested interest in maintaining the price and actually increasing it. Brian says accountability is key. Purchasers need to work with benefits managers who are accountable to the CFO and “on the hook to get better results that are obtainable.”
“You have to find a way to make healthcare purchasers an offer they can’t refuse,” he says. “It’s got to be so strong that if the benefits manager blows it off, and the CFO finds out about it, the benefits manager could lose their job.”
Promising better outcomes and guaranteeing significant savings—say, to the tune of 25%—might do the trick.
Proven solutions exist.
That might sound fantastical—a healthcare organization guaranteeing an employer better care and a substantial reduction of costs. But Brian is quick to cite a Florida-based musculoskeletal management company that’s worked with Michelin for 10 years. The organization spent several years developing a more accurate and precise care model—scrutinizing performance indicators, rethinking their model, and course-correcting as necessary. According to Brian, their data shows that “they get hugely better health outcomes…in half the recovery time, at half the cost of conventional orthopedics.”
That can translate to big savings. “You’re talking an area that is 20% of group health spend, 65% of occupational health spend,” he explains. And the organization promises results. “They will financially guarantee a 25% reduction in musculoskeletal spend.”
Offers like that tend to get purchasers’ attention. The question, of course, is whether an approach that works for a giant company like Michelin can be an option for smaller employers with limited resources.
About the Show
The US spends more on healthcare per capita than any other country on the planet. So why don’t we have superior outcomes? Why haven’t the principles of capitalism prevailed? And why do American consumers have so much trouble accessing and paying for healthcare? Dive into these and other issues on Healthcare Upside/Down with ECG principal Dr. Nick van Terheyden and guest panelists as they discuss the upsides and downsides of healthcare in the US, and how to make the system work for everyone.
This article was originally published on the ECG Management Consulting blog and is republished here with permission.