Get the Health Incentives Right

MotivationThis post is based on a comment I made when Pritpal Tamber called for “Creating a parallel system to health care” in MedCity News.

At least for consumers, Modern Health Talk (www.mHealthTalk.com) can already be called the “Institute for New Health Thinking,” with over 100 articles on Legislative, Public Policy, and Health Reform topics written for consumers.

I personally think it all comes down to getting the INCENTIVES right, as I wrote two years ago when proposing a hybrid, public/private model of health care. The goal was to exploit the different incentives of public sector organizations that measure success in business terms such as profit, ROI, and payback period, with that of the public sector, which measures success quite differently and over much longer time periods. 

Given the fact that Americans spend twice as much as other nations but still live sicker and die younger, we “should” be able to cut our spending in half (now $3 trillion/year). But with annual revenue loss of $1.5 trillion or more at stake, entrenched incumbents in the medical industrial complex spend twice as much on political lobbying as the military industrial complex. Still, meaningful reforms have been forced upon them by a shift in incentives that they can no longer control or ignore.

Obamacare, in many ways, has caused market forces to now work toward addressing issues of our “sick care” system in favor of real health care. The insurance exchanges created new competition among payers by allowing consumers to comparison shop for the best gold, silver or bronze plans and find better value as a result.

But it’s not just the competition. Insurers can no longer cherry-pick the healthiest and most profitable customers or cut off coverage when care gets expensive, and that’s forcing them to invest in health & wellness programs – a parallel system if you will. Many of those wellness programs already exist and were already developed for self-insured corporations to improve work productivity by keeping employees healthy. So it’s almost just a matter of extending the programs to individual consumers.

Insurers are also offering low-cost policies with higher deductibles and copays, giving consumers more skin in the game and an incentive (often for the first time) to comparison shop for the best value in health care and to focus more on their lifestyle choices. To make such shopping possible, insurers are pressuring providers to transparently disclose their once-secret hospital charges, thus imposing new competition on providers too, who must now also innovate to maintain profitability.

New telemedicine and telehealth-based business models that include video consultations across state lines and even international borders are becoming possible as state licensing agencies consider policies that allow physician licenses to be recognized from other states, much as drivers licenses are. This too is an unstoppable trend, given the Internet and those new high-deductible policies. Medical tourism is also unstoppable when the cost of travel, the medical procedure, and recovery in a 5-star hotel on the beach is less than the annual deductible or what a local hospital charges.

Progressive insurers are already starting to reimburse for the costs of medical tourism, telehealth, and home health care when those costs are lower and outcomes better. That’s because financially it makes sense. All of this churn is putting intense pressure on the entrenched incumbents, and I expect that those who don’t dramatically change their ways will not survive.

With the aging population, we expect a doctor shortage of 90,000 by 2020, but the smart docs are finding new and better ways to deliver care and improve their value. They’re starting to push more of the medical functions downward from physician to physician assistant, nurse practitioner, RN, LVN, aid, and to consumers themselves. That is being done with a mix of sensor & medical imaging devices at the patient end and big data analytics (IBM Watson) on the backend as an expert advisor to the doctor, PA, NP, nurse, etc.

Smart docs, who may only received one semester on prevention in medical school, see the handwriting on the wall and are upgrading their skillsets to cover the three pillars of health: nutrition, exercise, and sleep. As for me, I’m working with a Ph.D. sleep consultant to open an Intelligent Sleep solutions center in Austin with plans to extend across Texas and then scale nationally and potentially internationally through a variety of scaling options. As such, Modern Health Talk will start to include more articles on Sleep, because of its close ties to various health conditions.

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