Healthcare Business Trends

Who’s Driving the Bus?

December 18, 2018 9:26 am

It’s almost 2019. The healthcare bus is moving in the right direction. But who is in the driver’s seat?

We may have been slow getting started as an industry, but we’re finally on our way to managing the total cost of care—which is the best route to reducing the rate of healthcare cost growth. A recent analysis from the Office of the Actuary at the Centers for Medicare & Medicaid Services (CMS) found that the rate of healthcare spending growth has slowed for the second consecutive year, posting a rate of 3.9 percent in 2017. However, that is still well above the inflation rate. 

There is a growing realization that the acute care road maps of the past will not lead us to our destination. We must figure out how to navigate road hazards like chronic conditions, social determinants of health, behavioral health, substance abuse, and end-of-life care, which acute care players have tried to maneuver around in the past. Now that we know the only way around is through, who can guide this unwieldy bus safely through terrain that’s unfamiliar to many? With health care clocking in at almost 18 percent of gross domestic product, time is not on our side. We must pick up the pace. So far, a few traditional stakeholders are demonstrating that they have the skills to do so. 

Meanwhile, others are jockeying for control:

Our mapping tools are being rewritten by new alliances that are combining various data sets in unique ways . While traditional stakeholders are busy working on basic interoperability, others are collaborating to join entire data sets. Think Amazon/Berkshire Hathaway/JP Morgan Chase; Aetna/CVS; or the Health Transformation Alliance. We don’t know yet what they’re planning to do with the data, but we do know that they’re highly motivated and bring innovation skill sets that traditional stakeholders don’t have. 

It has been said that Amazon doesn’t just want to control retail; it wants to control the retail infrastructure, so that all retailers will eventually have to sell through Amazon. Is health care next on Amazon’s list of industry targets? There are already rumblings about a Prime Health. We’re kidding ourselves if we think Amazon and others that are investing heavily in health care are not planning disruptive maneuvers similar to those they have made in retail.

The government, traditional media watchdogs, and social media groups are trying to ensure that we’re transparent about the bus fare . Amid complaints that the healthcare industry is charging private-jet prices for basic bus service—and making it too hard to find out what those prices are—a spotlight is being shined on healthcare prices and price transparency. As CMS Administrator Seema Verma said at a conference this year, “In virtually every sector of the economy, you are aware of the cost of services before you purchase them, except for health care. Patients deserve and need to know [the] cost of services if they are going to be empowered to shop for value.” 

I couldn’t agree more with that statement in principle. In fact, I’ve said as much in various presentations and writings over the last few years. But I don’t always agree with CMS’s solutions, such as the new requirement that hospitals publish chargemaster prices online (in machine-readable format). This data will do little or nothing to help patients understand their financial responsibility or manage their out-of-pocket costs. 

Price transparency structures can be optimized if they are designed and implemented by those who work on the front lines of health care. However, our lack of progress as an industry has invited various external “solutions.” It is not too late to improve our price transparency, but we must get serious about it. 

The healthcare bus can’t keep hogging the road indefinitely. As the late Herb Stein, chairman of the Council of Economic Advisers under Presidents Nixon and Ford, famously said, “If something can’t go on forever, it won’t.” With the healthcare sector approaching one-fifth of the U.S. economy, frustration with refractory cost growth is mounting and emotions are running high, while venture capital is continuing to fuel healthcare start-ups. The industry is ripe for a big bombshell, but it’s too soon to predict what it will be or who will be behind it. 

One thing we know for sure: The mushrooming national debt is going to catch up with the healthcare bus if other buses, such as education, social services, or infrastructure, wind up being forced off the road. Furthermore, unless traditional healthcare stakeholders start thinking big-picture and acting like we’re in this for the long haul, we’re not going to be driving this bus. It’s actually not clear that anyone will be. And it will be hard to complain about the consequences when we are the ones who have relinquished the driver’s seat.

Joseph J. Fifer, FHFMA, CPA, is president and CEO, HFMA. Follow Joe Fifer on Twitter @HFMAFifer.


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