Health Care Reform? No. Health Care Perform!
I’m sure you’ve heard about health care reform <grin>, but I think we are missing the bigger picture.
The main point supported by the Supreme Court is about universal coverage—whether it is Constitutional to require all Americans to buy health insurance. I’m sure health care reform will continue to be contested politically, as well as legally, but there are much larger forces upsetting the health care industry, and they are driven by the major payors.
The Medicare and Medicaid programs are requiring health care providers to adhere to new provisions: move to electronic medical records; provide secure, confidential portability for patient medical records; etc. So, regardless of whether it is Constitutional to require health coverage, the largest payors in America are requiring significant changes to the industry. Could these provisions be attacked or blocked politically or legally? Sure, but I think the conventional wisdom of a major player is being underscored in this debate: the employers.
For the most part, major U.S. employers are, and have been, focused on improving efficiency for decades (not years… decades). They are using tools to improve processes, automate key business functions, and improve their bottom line by removing defects, waste, and inefficiencies from the delivery of products and services. Most have realized they can’t do this alone. Suppliers are asked to play a key role, and they are expected to focus on the same types of improvements that manufacturers make. A customer doesn’t care if a laptop doesn’t work because a supplier’s transistor was defective; he or she just knows the laptop doesn’t work and expects it to be fixed or replaced—now!
Employers have left the organizations that supply health care services to their employees out of this picture. There is a layer of bureaucracy (a.k.a., the insurer) between them and the direct health care provider, and this complicates the picture. The employer doesn’t know how to address this issue directly with the provider, but, in my opinion, this is going to have to start changing.
I think employers are going to expect health care providers (who are consuming more than 20 percent of every dollar employers earn) to use the same continuous improvement tools that have been effective for their other suppliers. Tools like business process management, Lean, Six Sigma, and other similar, proven improvement methods are used regularly across various industries, and they will work in health care. There are a vital few health care systems that have adopted these tools with great results. Many are starting to examine them, but not enough, though. And they are moving too slowly.
I know, I know. Health care is different. We’re talking about people’s lives, not laptops. But I would bet that an aircraft manufacturer would assert that the supplier that provides them sheet metal or electronic components for airplanes is equally important when it comes to human lives. The manufacturer still expects suppliers to provide high-quality services at a reasonable price while focusing on continuous improvement. Health care is different, but so is every industry. That isn’t the point. The point is that health care needs to embrace these battle-tested tools, apply them to their unique environment, and start pulling their weight in our economy.
Email this
2 Comments
So the fundamental question remains....Which stakeholder(s) absorbed more systemic risk from the SCOTUS ruling? To your point, the PPACA has little to do with the delivery side performance of the healthcare Leviathan. The economics and largess of the current system dictate its macro performance - high demand, artificially constrained supply, collusion between power players (government and large delivery systems) and clueless participants (aka consumers) comprise a system rife with sub-optimal performance, by most any measure.
Risk (cost) is moving within the system; the deliverers of services will continue to charge high dollars. The insurers will continue to respond with higher prices for the same or lesser coverage. The government will continue to legislate theft from everyone; businesses will react or respond in order to remain viable (or fail, as the ultimate response to intervention). The clueless will continue their "groping in the dark" until such time as demand and price approach infinity and supply is nowhere to be found.
PPACA is a win for the delivery side as well as the financial side of this behemoth (aka OBAMACARE). PPACA is an out and out disaster for employers, employees and citizens. No amount of well intended improvement in efficiency (the power structure precludes it) is going to slay the beast. Take a number, get in line and learn how to mingle gracefully among the herd while waiting for a turn at the trough.
A lot of great insight in the anonymous post, for sure. I think it is a bit fatalistic, but that just might be my shiny disposition.
I do agree that risk is shifting within the healthcare system. As we move to deliver care through Accountable Care Organizations (ACOs), the risk will shift to the provider. The provider will be given a capitated amount to provide all patient care services to a given population. That is a big shift from the fee-for-service reimbursement model they are under now.
This means there are a lot of activities that will need to be stopped, started, and changed. The providers will be in a very different world, needing to focus on activities that monitor and promote wellness, as well as monitor and provide services after an inpatient or outpatient procedure. The current system is geared towards providing those services (both inpatient and outpatient), but not the monitoring of events (and non-events) with a large population outside of a facility. It’s currently not even geared to deliver those patient care services efficiently and effectively in most cases.
That is why I feel the organizations who are using proven continuous improvement tools to focus on delivering effective care in an efficient manner and at an appropriate cost will strive. Those that don’t will find themselves not able to accept patients coming from Medicare, Medicaid, or through an ACO. I feel major employers will follow suit and adhere to the systems created for the large programs, and being these groups will represent the vast majority of the population, these non-compliant systems will find themselves out of business or purchased by a larger system that is compliant.
As for the insurers, if they aren’t adding value for their services, I feel the employers will continue to go around them; as many are doing now. I think the risk for the cost is relatively low for a large employer, or combined groups of smaller employers, to self-insure directly with those systems that are focusing on effective outcomes, delivered in an efficient manner, priced competitively. As I said in my original post, the large employers are used to working with suppliers that operate in this manner, and I think many will see the benefit of self-insuring worth the risk. That is if the insurance companies don’t react, as well, which many are. But, that is a topic for another post.
Ron Webb
Executive Director, Membership and Research Services
APQC