Why Only Non-Health Care Business Can Save America From The Health Care Industry

Brian Klepper

The attached PP deck is a presentation I’ve given several times that has received an overwhelmingly positive, if frightened, reception.

It is, perhaps, the most disturbing public argument of my career (which is going some), because it tries to document the health care industry’s “capture” of health care regulatory processes, particularly those that govern payment. The result, as many people understand, is that the health care industry, in its rapaciousness, is effectively driving the larger US economy off a cliff.

Only one group, the non-health care business community, has the heft, influence and motivation to save us, though health care has done a good job dividing and conquering this sector as well, insinuating itself into many of the most powerful institutions (e.g., the Chambers of Commerce). It remains very unclear that the business community can be galvanized/mobilized from its malaise to turn this problem around.

The argument goes like this:

  • The data are clear that the US’ health care economy is absorbing most gains in the larger economy, and driving the US economy toward collapse. For example, nearly all increases in total compensation have been directed at increasing health costs, which in turn flows into the health industry.

Why Transparency and Innovation Will Ultimately Trump Fee-For-Service

Lynn Jennings

The current FFS model does not compete in the open market the way that most services and commodities do, based on price, quality and availability.  If we had a transparent market for health care, providers would be forced to compete based on all three components.  Although most health care providers are paid based on some fixed fee schedule established by Medicare, HMOs or PPOs, a provider’s ability to differentiate is removed.  Consequently, the incentive to over treat becomes the only viable way to increase revenue.

Examine the health care market for services that are not covered by insurance, and you find dramatically different forces at play.  Prices have not escalated in the way that covered services have and, in fact, many elective procedures have declined in price. Medical tourism has flourished primarily in the cosmetic arena.

The internet, medical tourism and the public’s thirst for information have made transparency inevitable. But that evolution is being fought by nearly everyone with a stake in the old paradigm.  Large health plans and third party administrators perceive their value to be their networks and the confidentiality of those contracts.  Large health care providers, like hospital systems, also profit from the lack of transparency.

It will take small, independent, maverick providers to challenge the system by being transparent. As health care’s cost becomes increasingly unaffordable, purchasers will be more and more encouraged to shop for price and quality, and they will find providers who are willing and able to deliver transparency and value.  Once opened, that flood gate will never be closed!

Lynn Jennings is CEO of WeCare TLC, LLC, an online clinic and medical management firm based in Longwood, FL. 

Payment Transformation: From Volume to Value

Jaan Sidorov and Vince Kuraitis

First posted 7/7/11 on eCareManagement Blog

This is the 2nd installment in a series on the Strategic Realignment among Physicians, Hospitals and Payers

In our introductory posting, we suggested that a huge shift is underway in the health care industry.  Decades of hospital-physician cooperation are not only eroding, we suggest this trend could accelerate.  Instead of a natural clinical and economic affinity with hospitals, we foresee the potential for physicians forming a new dyad with insurer-buyers.

In this post, we will examine what we and many other commentators view as inevitable: the demise of volume-based payment systems and how the drive for greater value will cause physicians and insurers re-examine their normally antagonistic relationship.

Continue reading “Payment Transformation: From Volume to Value”

Don’t Kick a Unicorn When It’s Down

David Harlow

First published 6/3/11 on Health Blawg

400px-WLA_metmuseum_1495_Unicorn_captivityThere has been a significant outcry against the proposed ACO regs: everything’s wrong and nothing’s right about them, or so some would have us believe.  (The comment period is still open, and CMS is still soliciting input; much of the outcry is a form of posturing and negotiation … not that there’s anything wrong with that.)

Today’s “nattering nabobs of negativism” focus on: the estimated price tag for complying with the regulatory requirements (IT and other infrastructure incuded), the slim chance of success by ACOs in righting the wrongs of decades of bloat in the health care system, the premature pledging of allegiance to an idea only partly proven through the PGP demo, the likelihood of failure due to the whole endeavor’s being tied to FFS reimbursement, on the one hand, and due to exposure of ACOs to downside risk, on the other, the unreasonable reliance on dozens and dozens of quality measures . . . and the list goes on.  For further detail, see, e.g., David Dranove’s recent post decrying unproven theories baked into the ACO program (with a link to info on the PGP demo’s results, and differing interpretations of those results; check out the lively discussion in the comments to Dranove’s post on The Health Care Blog), Jeff Goldsmith’s opposition to ACOs as conceived in the ACA (and alternative proposal discussed in the linked post), and Mark Browne’s search for a few good quality measures. (This has been a recurring theme for me as well; I would love to find six or eight meta-measures that predict all others; Mark links to the AHA’s comments on the ACO rule, which are worth a read).

Continue reading “Don’t Kick a Unicorn When It’s Down”