Photo of Affordable Care Act (ACA) and stethoscope.
It’s been 10 years since the passage of the ACA — a highly controversial piece of legislation that represented — depending on your perspective — a sweeping, bureaucratic intrusion into the healthcare industry at taxpayer expense, or an opportunity to expand healthcare coverage, curb insurance abuses, and pave the way to a new delivery model through experimentation. The ACA was sold as being built upon our existing healthcare delivery framework. One of the problems with this was that the framework itself was (and still is) fundamentally flawed.
I’ve been (and remain) a staunch critic of the ACA while being an advocate for healthcare reform. The ACA was marketed as a mechanism for reform — an effort to get to better health outcomes at lower total cost of care. We’re still a long way from achieving this goal, and we’ve spent a ton of money in the process. As I’ve written elsewhere, any true reform of the industry had to address 3 components — insurance (i.e. what gets covered, who has coverage), delivery (i.e. focus on the continuum of care and accountability for outcomes that matter to patients/consumers), and connecting payment to outcomes that matter to enable real competition.
A key reason the healthcare sector doesn’t deliver more value for lower cost is that with few exceptions, it has not been market-based. Such a model would be characterized by transparency in cost and quality, accountability for outcomes across the continuum, and payment tied to outcomes that matter.
An avalanche of regulations predictably sent physicians scurrying to become employees of healthcare systems, and hospitals to merge to form larger systems. Consolidation was publicly framed as necessary to take on risk. But private discussions revealed a very different reason — to create the scale to bring increased clout in contract negotiations with commercial payers. These large sprawling systems have made limited progress toward a market-based model. Together with the American Medical Association, they have generally resisted efforts by the CMS to increase accountability, improve transparency in cost and quality, or drive down total cost of care.
Meanwhile, the industry invested in technology because of financial incentives offered by the Federal Government to do so, not because it saw technology as a means of improving its core product. At some level this shouldn’t come as a surprise. People – and organizations – rarely change until and unless they are pushed to do so. There’s no question that healthcare delivery organizations face enormous pressure from increased competition, decreased reimbursement, increased scrutiny, and demands to function more like a business. And they are ill-prepared to deal with most of it. For more than 30 years they have perfected the business of ‘doing more to make more’, often without regard to whether the services were actually needed by the patients who received them.
Despite a frenzy of consolidation, profitability remains elusive for many organizations. The hard truth is that size is not protective, and even non-profit organizations need a bottom line. Ongoing skirmishes over out-of-network billing and site-neutral payment are symptoms of an industry desperately trying to wring profitability from a dying business model. CMS’ attempts to move the industry toward a market-driven model are regularly countered by the AHA, which, like some of its constituents, is firmly focused on the past.
With the consolidation of the industry and increased employment of physicians, few independent doctors remain. Is it any coincidence that physician burnout is once again an industry focus — reflecting a bureaucratic, production-oriented environment? The industry remains too often provider and consumer unfriendly with vast amounts of money spent with little if any improvement in health outcomes. There are lessons from history that shed light on what we need to do to fix the problems facing us.
Efforts to ‘bend the cost curve’ didn’t start with the ACA. In fact, DRGs, introduced in the 1980s, was CMS’ attempt to reign in spending. By moving away from a retrospective payment system based on ‘usual and customary rates’ to a ‘prospective system’ tied to bundles of linked services, CMS hoped to curb accelerating costs. It didn’t work, largely due to the failure to connect payment to outcomes, require transparency in cost and quality, and ensure accountability for care across the continuum.
Unless and until we come at healthcare through a different lens — a market-based model—we are unlikely to get the results we need — i.e. greater value reflected in better health outcomes at lower total cost. The possibilities are enormous, and selected segments of the healthcare industry demonstrate that such a model can work. It’s not surprising that Lasik surgery and cosmetic dermatology, both areas outside of traditional insurance coverage, have been more transparent and accountable. They’ve reflected a market-based model. Insurance coverage and accountability aren’t mutually exclusive. It’s time we change the model.