We say we want to improve the cost effectiveness of health (CEoH). But what does that really mean? Let’s think about it for a moment. The most ambiguous word here is cost. Hearing it, most hospital- and provider-centric leaders would first think about the expenses incurred in their operations: Labor, supplies, utilities, purchased services, etc. And that’s understandable.
The cost driver in this objective, however, is really the cost borne by society. It’s the payment for services rendered that is so important in understanding and managing CEoH. And it’s up to us, as providers, to transform our revenue stream so we can deliver on this commitment of cost-effective health, a commitment that embraces the need for a sustainable healthcare system in the United States.
Our current healthcare model — one that is focused on healthcare not health — was built over decades and is doing exactly what it was designed to do: Treat the symptoms and direct causes impacting individual health and quality of life. We’re treating patients when they seek healthcare rather than helping people stay healthy. Unfortunately, the financial rewards to build hospitals and treat symptoms, compounded by a culture rooted in individual liberty and minimal financial accountability for maintaining health, have led us to a position of financial unsustainability and quality outcomes substantially below those of other developed nations.
Cost-effective health is not achievable in such a system.
Instead, we must shift our thinking away from solving direct cause issues and toward focusing on root cause issues. Financial incentives must be directed to the outcomes we value. The question is whether our nation is prepared to value health first and foremost. Our cultural challenges present themselves in the social determinants of health that are so broadly discussed: Education, nutrition, economic stability and social norms. Are we ready to invest in closing these gaps?
Hospitals across the nation are under historic financial duress. The healthcare system bore tremendous expense in supporting our population through the pandemic. Operating margins remain soft due to shifts in utilization of services and exorbitant increases in the cost of labor. In some cases, capacity has been limited due to staffing vacancies. At the same time, the aging population and increasing prevalence of chronic illness will demand added capacity in our system based on the current care model. This is capacity we cannot afford, never mind the absence of skilled workers to deliver the necessary care.
Has there ever been a more perfect moment for transformation? Is the burning platform not hot enough? The answers are in front of us: Address the most fundamental root causes in our society and shift our values toward the health of our communities.