In healthcare circles, 2018 will be remembered as the year of big deals and new players. By contrast, 2019 is likely to be the year of THE GREAT DEBATE.
In 2018, the most notable storylines about healthcare were these:
Big Deals: 2018 was a record year for deal-making in healthcare. Per Refinitiv, big pharma, health insurers and providers agreed to record high $421 billion in transactions—11% of total. Examples: Optum’s $4.9 billion acquisition of DaVita Medical Group; Takeda’s $77 billion acquisition of Shire; CVS’ $69 billion acquisition of Aetna; Sanofi’s $11 billion acquisition of Bioverativ; KKR’s $9.5 billion acquisition of Envision; Celgene's $9 billion acquisition of Juno; Cigna's $67 billion acquisition of Express Scripts and others.
Corporate Dis-Grace: Blood-testing company Theranos and its founder Elizabeth Holmes joined the ranks of healthcare organizations that fell from grace for fraudulent activity. Drug-maker Mylan is under regulatory scrutiny for EpiPen price hikes. Numerous health systems and physicians paid fines for Medicare fraud violations and drug manufacturers’ campaign contributions were targets in mid-term attack ads. The collective credibility of the industry took a hit in 2018.
The Amazon Effect: The prospects that the Amazon/Berkshire Hathaway/JPMorgan not-for-profit venture might somehow impact how employers purchase healthcare is a hot topic. Speculation about the disruptive impact Amazon’s healthcare aspirations leveraging its 2018 acquisition of PillPack with its Whole Foods and Amazon Prime capabilities mounted. And big names like Apple, Walmart, CVS, Microsoft and others prompted the industry’s strongest incumbents to refresh their strategies in a broader context of a new breed of competition.
Mid-term Elections: Healthcare was the most important issue for Democratic voters resulting in their net gain of 40 seats and control of the House of Representatives. That gives Democrats leverage in 2019 budget battles and positions the party‘s populist messaging around healthcare in Campaign 2020.
Texas v. HHS: Friday’s ruling by the Texas court striking down the individual mandate in the Affordable Care Act means a divided Congress might be forced to pass patchwork legislation to protect its popular provisions like protections for the 52 million with preexisting conditions, coverage for young adults under 26 on a parent’s plan and others. Though an appeal is likely, the ruling added uncertainty to the fate of the ACA as the year ends.
Moving into 2019, the table is set for healthcare to be in the spotlight as never before. It will be the focus of the GREAT DEBATE. Invariably, it will start with the widely acknowledged shortcomings of the system:
Healthcare is expensive and costs are not sustainable.
Access to healthcare is uneven and inequitable.
Quality of care is highly variable and often inadequate.
From these, the GREAT DEBATE will then be framed in the context of current events:
Public Discontent: Gallup’s polling last week found the public consensus that healthcare is expensive, complicated and a fundamental right, but the majority favor a private system over a larger role for the government. And dissatisfaction is building, especially among urbanites, women and Millennials.
Campaign 2020: Per CNN, there are 34 potential Democratic aspirants for the White House. All will characterize the healthcare system as unaffordable, profit-driven and structurally flawed. Each will offer a unique solution that protects coverage, Medicaid expansion and popular elements of the Affordable Care Act. And some will promote a version of Medicare for All that’s phased in and cost effective.
Employer Activism: Employers are unhappy; they think hospitals and physicians are tone deaf to cost controls, and they are taking matters into their own hands. Reference pricing, bundled payments, direct contracting with providers and on-site/near-site primary care clinics are gaining momentum.
Regulatory Suspense: Beyond reaction to Judge O’Conner’s 55-page ruling in Texas v. HHS issued Friday, regulators will weigh in on cybersecurity exposure in healthcare organizations, modification of alternative payment programs, Medicaid expansion options, the role of telehealth and increased tension about contracting between insurers and health systems in local markets.
Provider instability: The healthcare workforce is unsettled. Physician discontent is palpable. Nurse shortages are acute. Margins are eroding and staffing is being cut. Hospitals are closing. And privately funded competitors are cherry picking their patients.
Against this background, the GREAT DEBATE will feature a wide range of views about the future of our $3.6 trillion system. Most of these will originate from three main sources and advance their perspective on the ultimate destination, needed changes, the pace of implementation, and funding.
Trade groups will tout the benefits of our private system (modern facilities, specialized care and technological innovation), our unique challenges (gun violence, drug addiction, suicide and poverty) and warn against radical changes that might disrupt the status quo (and the business interests of their members).
Academics will offer their views about healthcare’s future state supported by provocative theories and predictive models.
Healthcare think tanks will offer comparisons of the U.S. system to the 35 systems in developed countries, with their recommendations about how much we can copy and paste from others.
There will be no shortage of white papers, webinars, and punditry as the GREAT DEBATE unfolds. But unless and until four fundamental questions are addressed, the path forward for our healthcare system will be unclear.
Is healthcare a fundamental right or a privilege? Most Americans think access to healthcare is a fundamental right. What access means and how it’s managed, by whom and at what cost is where consensus erodes. Is access synonymous with insurance coverage or more? If healthcare is a fundamental right, our current approach to its financing and delivering care will be decidedly different than the status quo. If it’s a market accessible to only those who can afford it, then a model that addresses the needs of those who can’t afford it is needed and a two-tiered system is officially institutionalized.
Is the primary focus of the health system to enhance the health and well-being of the entire population or provide services to the sick, injured or diseased? The U.S. spends more on medical care and less proportionately for health-related social and preventive health services than any developed system of the world. Should the future state facilitate a re-disposition of capital and resources to a balance of resources committed to prevention and public health and services for the sick, disabled or injured? The current ratio is 1:3.
How should the system be structured to manage access, costs and quality more effectively and efficiently? The U.S. system assumes each sector operates independently of others in a private system except for the military, veterans, and special needs populations. It assumes a heterogeneous payer mix: public and private, employers and individuals, taxpayer funded and indirect mark-ups in the goods and services we use. It presumes its hospital emergency rooms and public health clinics are the safety nets for its under-served and it assumes older and lower income populations are paid for by payments from taxpayers circa Medicaid and Medicare. It assumes new drugs, technologies, facilities and processes are integrated into a cost structure that’s sustainable and elastic. It presumes physicians are its primary authorities on quality and delivery, insurers its primary vehicle for managing costs and hospitals the local organizer of its services. Is this model sustainable? Is it directionally the optimal model for its future?
What role should individuals play? Should the future-state health system be based on the presumption that individuals are capable of self-care management and capable of managing their health and its costs or should the system treat us as patients across varied states of health? Technologies that enable individuals to self diagnose or understand their treatment options and costs are proliferating. But data shows that the majority of individuals depend on their physicians and are ill-equipped/not inclined to competently self manage.
Answering these four questions provides the starting point for the GREAT DEBATE. They provide the context for policy making that resolve current industry disputes i.e. price controls vs. price transparency vs. total costs of care, alternative payment models vs. total costs of care, and others.
Do American’s think they receive $10,729 per capita of value from their health system? Polls suggest they’re skeptical. All think it needs dramatic improvement, but consensus about what that means and its ultimate destination is hard to find. A public discussion about the four key questions is a start.
2019 will be the year of the GREAT DEBATE about the future of our health system. Stay tuned.
P.S. I was in the balcony of the U.S. House of Representatives March 21, 2010 when the Patient Protection and Affordable Care Act passed by a vote of 219-212. I was at the Supreme Court June 28, 2012 when SCOTUS upheld its constitutionality notwithstanding its limits on the federal government’s effort for Medicaid expansion. It is a flawed law with provisions that make sense and hanging chads that need correction. It fundamentally presumes the health system is privately managed and subject to market forces like price transparency, competition and consumer engagement. It is the law today; it may or may not be the law tomorrow, depending on the eventual outcome of the TX. v HHS decision. But whether it appropriately frames the health system’s future is part of the GREAT DEBATE we’re about to have. Stay tuned.