Kaiser Permanente recently announced an acquisition of Geisinger Health, raising new questions … [+]
Value-based healthcare, the holy grail of American medicine, consists of three parts: excellent clinical quality, easy access and affordability for all.
And as with the holy grail of medieval legend, the quest for value-based care is filled with failures.
In the 20th century, medical groups and hospital systems in the US could achieve at best two elements of value-based care, but always at the expense of the third. Until recently, American medicine lacked the clinical know-how, technology and operational excellence to achieve all three simultaneously. We now have the tools. The only thing missing is ‘system-ness’.
What is system-ness?
Systemic focus is the effective and efficient coordination of the many components of health care: outpatient and inpatient, primary and specialist care, financing and care delivery, prevention and treatment.
By bringing these disparate components together into a well-functioning system, healthcare providers have the ability to maximize clinical outcomes, reduce waste, lower overall costs, and provide greater convenience and access.
Who are the search parties?
Going forward, systems orientation will be the variable that determines whether healthcare transformation is led by (a) established health systems such as Kaiser Permanente and Geisinger Health or (b) the retail giants such as Amazon, CVS and Walmart. The latter group has become a growing threat in the healthcare arms race, rapidly amassing their own (though still modest) healthcare systems through multibillion-dollar takeovers.
While both incumbents and new entrants will struggle to implement value-based care on a national scale, the victor will reap hundreds of billions of dollars in added revenue and tens of billions in profits.
To better understand the power of systems-centricity and the challenges faced by all organizations, here are three examples of value-based care solutions that have been successfully implemented by Kaiser Permanente.
1. Preventing problems, controlling diseases
Research shows that preventive medicine and early intervention reduce heart attacks, strokes and cancer. Yet our country falls far short in these areas compared to its global colleagues.
An example is hypertension, the leading cause of strokes and a leading cause of heart attacks. With help from doctors, almost all patients can control high blood pressure. Yet nationally, hypertension is controlled only 60% of the time.
We see similar poor performance when it comes to prevention and screening for colon, breast and lung cancers.
Reversing these troubling trends requires systemic focus. In Kaiser Permanente, 90% of patients had their blood pressure controlled and were screened for cancer. Getting there required a comprehensive electronic health record, the willingness of each physician (regardless of specialty) to focus on prevention, leadership that communicated the value of prevention, and a salary structure that rewarded group excellence.
2. Continuous care, without interruption
Most doctor’s offices are open Monday through Friday during normal business hours – just one-fourth of the time a medical problem may arise.
At night and on weekends, patients have no choice but to visit the ER. There they often wait hours for care, surrounded by people with infectious diseases. Their non-emerging problems generate bills 12 times higher than if they had waited to be seen in a doctor’s office.
There’s a better way. In large enough medical groups, hundreds of clinicians can provide 24-hour care on a rotating, virtual basis, using video to assess patients and make evidence-based recommendations.
This approach, developed by physicians in the Mid-Atlantic Permanente Medical group, resolved the patient’s problem immediately 70% of the time without an ER visit and enabled coordination of medical care with ER staff for the remaining 30%.
3. Specialized medicine, immediate attention
When a primary care doctor needs additional expertise (from a dermatologist, urologist, or orthopedist), it is usually the patient’s responsibility to make their own specialty appointments, check with insurance for coverage, and provide their medical records.
This takes hours or days to coordinate care and can delay care by weeks, resulting in avoidable complications.
But in a well-structured system, you don’t have to wait. Using telehealth tools at Kaiser Permanente, primary care physicians can instantly connect with dozens of different specialists, often while the patient is still in the exam room. Once connected, the specialist evaluates the patient and provides immediate expertise.
This means that healthcare is not only faster and cheaper, but also better coordinated. Kaiser Permanente data shows that these virtual consultations solve the patient’s problem in 40% of cases without having to reschedule an appointment. For the remaining 60%, the diagnostic process can begin immediately.
The foundations for system-ness
Few organizations in the US can or will provide these system-based improvements. To do this requires skilled medical leadership, a shift in the financial model and a willingness to accept risk.
In fact, most organizations in the U.S. that claim to have “value-based” systems actually rely on physicians who are dispersed throughout the community, disconnected from each other, and paid based on volume (fee-for-service) rather than value (capitation).
As a result, patient care is often fragmented and uncoordinated, leading to repeated testing and ineffective treatments, increasing medical costs and compromising medical outcomes.
Value-based care (superior quality, accessibility and affordability) requires teams of clinicians working together as one team – all paid on a capitulated base.
Without capitulation, dermatologists will insist on seeing every patient in their office, where they can bill five times more than a teledermatology visit. And gastroenterology specialists will insist that all patients have a colonoscopy instead of recommending low-risk patients do a safe, convenient home colon cancer screening (called a fecal immunochemical test, or “FIT”) at 5% of the cost.
In these cases, individual doctors do not deliberately make care difficult for patients. Rather, it is the only choice they have when operating in a fee-for-service payment model. Ultimately, systems orientation is best achieved when health systems are too integrated, prepaid, tech-enabled and physician-led.
Amazon, CVS, Walmart know about systems
These three companies are world leaders in “systems orientation,” at least in retail. Combined, they have a $1.88 trillion market cap, employ 3.4 million Americans, and are looking to take over a share of the $4.3 trillion annual US health care spending.
They already manage complex order entry and fulfillment systems. They use technology to streamline everything from customer service to supply chain management. They are guided by a clear and effective reporting structure.
In terms of competing for the holy grail of healthcare, these are huge competitive advantages over today’s uncoordinated, individualized, leaderless healthcare system.
As retailers vie to bring their systems knowledge to American medicine, they are acquiring the pieces necessary to compete with the established healthcare system. They have spent tens of billions of dollars on medical groups committed to value-based care (One Medical, Oak Street Health, etc.). They have also spent huge amounts of money on home health care companies (Signify) and pharmacies (PillPak), along with expanding their in-store, home, and online health care options. Many of these healthcare delivery subsidiaries are focused on Medicare Advantage, the headquarters of Medicare, where financial success depends on quality medical care at a lower cost.
In addition, all of these retailers have a national presence with physical facilities in almost every community in the country – ahead of almost every existing health system.
Who will win – and why?
Trying to pick the winner in the battle to transform American medicine at this point is like picking the winner of a heavyweight boxing match after three evenly matched rounds. Intangible assets such as stamina, courage and willingness to absorb pain have yet to be tested.
In The innovator’s dilemma, the late Clayton Christensen explored historic battles between incumbents and newcomers. After analyzing dozens of industries, he concluded that new entrants routinely become the victors because the incumbents move too slowly and fail to embrace the need for major change.
And from that perspective, if I had to bet, I’d put my money on the retail giants.
But there is an even more worrying potential outcome: Neither those inside or outside the health care system will make the necessary investment or accept the risk to lead systemic change. As a result, the movement towards value-based healthcare will stall and die.
In that context, care purchasers (companies, government and patients) are faced with a difficult reality: over the next eight years, medical costs will almost double, creating an unaffordable and unsustainable scenario. As a result, our country is likely to experience reduced medical coverage, increased rationing, longer and longer delays in care and an increase in health inequalities.
When that day comes, our country will regret its inaction.