The following is an excerpt from Navigant Healthcare’s Pulse Weekly. Click here for a complete copy of this week’s article.
The cover story in this week’s Time is eye catching: “What I learned from my $190,000 Open Heart Surgery.” It’s the latest offering in Steve Brill’s unpacking of the U.S. health care system.
Brill, a 50 year old Yale grad and founder of CourtTV, turned his attention from public education (Class Warfare: Inside the Fight to Fix America’s Schools, 2011) to healthcare in 2013 with publication of a 24,105-word special report for Time(April 4, 2013) “Bitter Pill: Why Medical Bills Are Killing Us,” issue. The article marked the first time in the magazine’s history that the entire feature section of the magazine was dedicated to a single story by one writer. It drew widespread reaction, especially about its investigation of hospital billing practices and the questionable role of hospital chargemasters. The article became the basis for his 2015 book, America’s Bitter Pill: Money, Politics, Backroom Deals, and the Fight to Fix Our Broken Healthcare System (Random House).
His latest offering, “What I learned from my $190,000 Open Heart Surgery” (Time, January 19, 2015) is based on his recent episode as a patient at New York Presbyterian where he was treated for an aortic aneurysm. He re-visits his familiar Bitter Pill themes (see Quotable section), but concedes that in his time of personal need, theories about the value of price transparency and the appropriateness of necessary tests are academic. It’s about caregivers who provide care and caring, at whatever the cost.
Reflecting on his personal experience, Brill offers solutions to “fix” the system—encouraging the development of “integrated oligopolies’ that integrate insurance and health delivery run by physicians, caps on profits at 8% and executive compensation at no more than 60 times the lowest paid medical resident or clinician, a regulatory framework that prevents gamesmanship and others. He estimates that 10-20% of the costs of the health system could be saved if insurance and delivery (a/k/a fully integrated health systems) were responsible for the care and costs associated with services provided patients. He reasons that taking the middlemen (insurers, brokers, etc.) out of the equation and forcing physician-led enterprises to grapple with both the clinical and financial results of their work would solve the U.S. health system’s obvious problems—excess waste from unnecessary care, complexity, fragmentation and so on..
Central to Brill’s fix is the notion of fully integrated health systems that offer insurance plans along with medical care. Drawing on examples in Pittsburgh’s the fierce competition between UPMC and Highmark, and Geisinger Clinic, he concludes that having at least two strong super-regional, highly regulated “integrated oligopolies” compete in each market would reduce costs and improve care. They’d be run by physician executives and operate their own plans:
“Let the foxes run the henhouse…let these guys (physician executives) loose. Give the most ambitious, expansion-minded foxes responsible for the chargemaster but also responsible for providing stellar care…even more free rein to run the henhouse—but with conditions that would cut costs and, in fact, kill the chargemaster.”
Brill argues that cutting out the middleman would reduce administrative costs which now account for 15-20% of private health care costs. He goes on to say,“… hospitals and all the doctors it controlled would be subject to pricing and service-delivery standards that liberal reformers have sought since the mid-20th century. Health care in the U.S. would finally be treated as a public good, not a free-market product. However, the change would come jujitsu-style, not by a government takeover.”
Brill’s notion of super-regionals that are fully integrated is timely. Hospitals and physicians are fast becoming co-dependent as they tip-toe into risk sharing arrangements via accountable care organizations and bundled payments. The progression from these risk sharing agreements with payers to integrated financing and delivery wherein a hospital-physician enterprise owns and operate its own insurance plan is a bigger step. In some markets, it’s a logical destination for provider-led systems, in others, maybe not.
The notions of ‘provider-sponsored risk’ and ‘full integrated systems’ are timely and topical inside the industry and out. Inside, every hospital and its core physician enterprise is evaluating the pace and permanence of the shift from volume to value—how and how fast employers, individuals, Medicaid, Medicare and private insurers are shifting their financial risk to physicians and hospitals while requiring verifiable outcomes and best practices to enhance safety.
Outside, the industry’s stakeholders are watching closely. Private insurers are betting providers are incapable of managing risk and cautioning regulators about the negative impact of provider cost spirals likely to result. Regulators are watching to protect competitive markets and payments that are transparent and controllable. Device and drug manufacturers are watching the payer-provider clashes to see where gainsharing deals for their wares can be guaranteed while protecting their wholesale prices per unit. And physicians are watching to choose the most viable last man standing that affords professional security and clinical autonomy.
Brill’s piece is worth reading. It reminds us that healthcare is a different industry more than any other, not simply because its size and complexity but also because in times of need, like his, none of that matters.
For Brill, the $190,000 price tag for his heart surgery was money well-spent: he survived. But he concedes much could have been saved had it been delivered in a different system of care. And that’s the bitter pill he swallowed.
The opinions expressed in this article are those of the author and do not necessarily represent the views of Navigant Consulting, Inc. The information contained in this article is a summary and reflects current impressions based on industry data and news available at the time of publication. Any predictions and expectations noted herein are inherently uncertain and actual results may differ materially from those contained in this article. Navigant undertakes no obligation to update any of the information contained in the article.
© 2015 Navigant Consulting, Inc.