Health Care Disruption

Health Care Disruption“Can We Disrupt Health Care Even More?” That was the question posed by Commonwealth Fund, which is looking for the next big breakthrough in health care. I responded with what is included in today’s post.

First, Get the Incentives Right

Beyond innovative Technologies and new Business Models, the biggest disruption to health care will come with new Incentives that cause changes in behavior among patients, payers, and providers.

The Affordable Care Act has already had a very large influence, but more meaningful disruption won’t come easy. That’s because of the corrupting power of big money in politics. With $3 trillion/year at stake, the medical industrial complex, representing entrenched incumbents with lots to lose, spends twice as much on lobbying as the military industrial complex.

EMRs, telehealth, remote monitoring of sensor devices, personal genomics, and big data analytics are great; and so are accountable care organizations and the patient-centered medical home; but even more important in my view are the new incentives that consumers have to take responsibility for their own health and wellness. I see that trend as adding new competition across the entire health care delivery system, starting with the ability to easily compare bronze, gold and platinum plans on the insurance exchanges.

Insurers can no longer cherry-pick the healthiest customers or cut off customers when care gets expensive, so they are encouraging consumers to change behavior with low-cost policies that have high deductibles. And to help them seek out the best value, insurers are pressuring providers to make their once-secret charges more transparent.

Some innovative insurers are even starting to pay for telehealth video consults, home health care, home modifications that avoid nursing home stays, and even medical tourism when the cost is less and outcomes better. The health insurance model is clearly trending away from pre-paid medical care and instead toward financial protection against catastrophic illness or injury that can bankrupt families.

Next, Balance Public-sector and Private-sector Incentives

I earlier proposed a hybrid model of health care designed to exploit the best incentives of both public & private sector organizations.

Private companies in free-market societies are most efficient when there’s vibrant competition on a level playing field and where survival depends on improving service & product quality and driving down prices. These companies, often answering to the profit goals of shareholders, measure success in business terms such as Revenue, ROI, Payback Period, Stock Price, etc.

Public entities, on the other hand, measure success differently and over longer time periods. That’s why they can make more strategic and longer-term investments and fund them with bonds and tax revenues. Their goals can focus on infrastructure and the economic growth that comes from nurturing a skilled, healthy and productive workforce. While some people see public services as generally having large and inefficient bureaucracies, the public sector can actually be more cost-effective because of greater economies of scale and the lack of a profit incentive.

Finally, Focus on Health, Wellness and Prevention

It’s far less expensive to prevent chronic illness than to treat it, and with new incentives from health reform, consumers and practitioners alike are finally realizing this en mass.

Across the health care spectrum, there is new interest in Quantified Self, Nutrition, Exercise and Sleep as pillars to good health. Corporations and consumers are seeing benefits beyond just saving medical costs. These investments also contribute to improved performance at school, work, and in sports and result in higher earning capacity. Just improving sleep can improve lifelong earnings by over $8 million, as I wrote in The Economic Value of Sleep.

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