The most persistent myth in healthcare is that high cost equals high quality. It’s a proposition that holds across a great many products that are bought and sold in actual, functioning markets — but that’s not a description that applies to the U.S. healthcare industry.
Take the example of the iPhone. As a former Microsoft guy, I like to think I’m immune to the cult of Apple, but the truth is that under Steve Jobs the company really did earn its reputation for delivering high-quality products that “just worked.” Is the newest iPhone truly worth what it costs? Arguably, no, the same features are available in lots of competing phones that cost a lot less money.[REITs]
But it’s not as if the iPhone doesn’t work. It is as good or better than anything else on the market. And if Apple can charge a certain price premium because of brand loyalty, then that’s because of its track record of great products.
Healthcare is not like that.
When patients choose a hospital or other provider, they don’t know what they’re getting. There are no charts showing which medically-relevant features are available. Prices are completely opaque. But an “academic” medical center sounds good and also their great-aunt Martha went there for her cataract surgery and was happy, so it’s probably a great place to get a knee replacement.
If we are ever going to get a handle on the cost inflation and quality stagnation of healthcare in the United States, this is the issue we must address. Fortunately, we can attack it from two angles at once.
On the patient side, it’s all about primary care. For far too long, our medical establishment has given short shrift to primary care physicians, with a reimbursement and insurance system that crams appointments into less than 10 minutes and sets up primary care doctors as little more than required referral writers.
The fix is “value-based care” – especially value-based primary care. This system sets rates and reimbursements based on patient outcomes, not the volume of services provided. Not only that, the incentives inherent in value-based primary care reward doctors for spending more time on individual appointments, building relationships that can be called upon when it’s time to tell a patient that the specialist provider they think they want is not the one they actually need.
On the purchasing side, the solution comes with employers better understanding what they’re paying for and which providers are best for their employees. If employers turn a discerning eye toward the insurance policies available to them and locate where the value lies among the providers in their community, they can make more informed benefits decisions that lead to better outcomes and lower costs.
Combining these two approaches is exactly what the teachers’ union and school board leaders in Allegheny County, Pennsylvania decided to do. According to Jan Klein, business manager of Mt. Lebanon School District and Chairperson of the Allegheny County Schools Health Insurance Consortium (ACSHIC), the group devised their own direct contracting policy where value-based primary care is free, and visits to high-quality care providers involve small or nonexistent co-pays and deductibles. More wasteful or lower-quality decisions cost patients more out of pocket. Thanks to this new plan, Klein says about 99 percent of policyholders are picking smarter options — which benefit both value-seeking consumers and higher-value providers.
It can be hard to get employees to understand that these changes are good for them, not just for their employers’ bottom lines. It takes a solid communications program to help people understand that it’s not fewer choices — it’s better choices. It may take a period of transition for that message to really sink in.
The consequences can be drastic. The current “sick care” system is not financially aligned with the outcomes we desire: staying healthy, receiving high quality care when needed, and still being able to afford a satisfying life. When it comes to healthcare, cost and quality are unfortunately not linked. The sooner we can fix that, the better off we all will be.