Health Care in the Next Curve: Transforming a Dysfunctional Industry, 1st Edition (Hardback) book cover

Health Care in the Next Curve

Transforming a Dysfunctional Industry, 1st Edition

By John Abendshien

Productivity Press

252 pages | 25 B/W Illus.

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pub: 2018-08-14
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Description

Healthcare in the U.S. is a critical juncture. We face a sharp upward rise in the number of people with chronic diseases and disabilities. As demands on our current health system grow, so will costs. But as a society we are approaching the upper limit of how much we are willing (or able) to spend on health care. Health care policy makers know this. That is why major health reform measures are focused on population health and value-based care. These are the so-called second curve objectives. But these initiatives are doomed to failure. We are asking a system to do things that it was not designed to do.

In fact, we don’t have a health care "system" as such. We have a parts bin of disconnected silos. Fragmented delivery systems. Specialized caregivers. Professional groups. Trade associations. All with distinct cultures. Each with their own motivations and agendas.

Our payer and regulatory structures have evolved over the decades in response to political and policy initiatives. However well intentioned (or not), these structures defy logic. They reward and reinforce counter-productive industry behaviors. They pose formidable roadblocks to achieving needed changes.

Current reform initiatives are an implicit recognition that our health model is flawed. The attitude seems to be, "Yes, we know the overall health system is a problem, but we can make failure less severe if we implement these measures." We are at a critical juncture. We can continue to place additional demands on an industry model that has outlived its functional utility. Or we can take more of a clean slate approach and move toward a model that is in keeping with today’s needs.

The outlook is not good if we stay on the current curve. The demands on resources will continue their upward trajectory. The default scenario will be one of rationing and less to invest in new cures and new technologies. The good news is that we are within sight of a future state of health care that can really work. In this future state, we have gotten rid of the artificial barriers to effective and efficient patient care. Physicians and other health professionals work in a coordinated, inter-disciplinary fashion. They have accountability for the whole care cycle. Caregivers have both the flexibility and encouragement to innovate and come up with optimal delivery approaches. And because they are in a risk-reward relationship with payers, they have the incentives to provide true value. Patients feel intimately connected to a system that is focused on their specific needs.

The key to this future state is good old-fashioned market discipline. Other delivery models must either improve or get out of the way. The market will demand cost-efficiencies and won’t tolerate waste. Much of our regulatory structure will be rendered unnecessary. There will be not rewards for poor performance.

This book takes a unique macro-level perspective of clinical, economic, and regulatory problems and possible solutions. It takes an objective and something scathing look at current industry structure: a silo-driven culture and entrenchment that is driven by self-interest; as well as the complicity of government in preserving the status quo through regulations, licensure, payment systems, etc.

Table of Contents

Contents

Foreword …………………………………………………………………… xi

Preface ……………………………………………………………………… xv

Author …………………………………………………………………….. xix

SECTION I INDUSTRY DYSFUNCTION: ITS ROOT

CAUSES AND EFFECTS

1 It’s Not the Future We Used to Have ……………………3

The Old Future …………………………………………………………. 4

The Curves of Health Care …………………………………………. 6

The Root Causes of Industry Dysfunction ……………………. 7

The Economic Human and the Next Curve …………………10

Fast Forward: A New Future ………………………………………12

This Book: A Look Ahead ………………………………………….13

References ………………………………………………………………..15

2 Health Care’s Perfect Storm ……………………………..17

The Gathering Forces ………………………………………………..18

What’s Wrong with This Picture? …………………………………20

Costs on an Upward Trajectory …………………………………..22

Heading toward a Spending Ceiling ……………………………23

Is Rationing the Default Scenario? ……………………………….24

References ………………………………………………………………..25

3 What Happened to Health Insurance? ……………….27

A Perfectly Dysfunctional Model ……………………………….. 28

Affordable Access: Still No Fix ……………………………………30

Mandates Mean Fewer Products, Higher Prices …………….32

Employer Health Plans: Not What They’re Cracked

Up to Be …………………………………………………………………..33

Medicare Trouble Ahead …………………………………………….36

Medicaid Also Facing an Uncertain Future …………………..38

One Size Doesn’t Fit All ……………………………………………..39

References ………………………………………………………………..40

4 Follow the Money: A Broken Payment Model ………41

Why Not "Food Insurance?" ……………………………………….42

Fee-for-Service an Incentive for Utilization …………………. 44

Impact on Care Coordination ……………………………………..45

A Recipe for Waste, Fraud, and Abuse ……………………….. 46

Moving toward Value ……………………………………………….. 48

Problems Measuring Value …………………………………………51

References ………………………………………………………………..53

5 Silos, Everywhere …………………………………………..55

Automobiles Get Pretty Good Health Care… ……………….56

Where’s the "System" in Health Care? ………………………….58

The Problems of Service Fragmentation ………………………60

Information Silos: Part of the Problem …………………………62

Geographic Silos, Too ………………………………………………. 64

Population Health: More Teamwork Needed ………………. 64

Silo Culture Part of the Industry’s DNA ……………………….65

References ………………………………………………………………..69

6 The Real Costs of Regulation ………………………….71

The Perils of Regulatory Overreach …………………………….72

The Computer Will See You Now ……………………………….73

The Price of Regulating Prices…………………………………….76

Certificate of Need a CON Job ……………………………………78

More Regulation, Less Innovation ……………………………… 80

Frozen in Time ………………………………………………………….82

Tort Reform, a Critical Need ……………………………………….83

The Real Costs of Regulation ……………………………………. 84

References ………………………………………………………………..85

7 Where’s the Competition? ……………………………….87

Competition and Value …………………………………………….. 88

More Government, Less Competition …………………………..89

Independent Physicians: An Endangered Species …………92

Eroding Competition in the Insurance Market ……………..93

Conflicting Market Signals ………………………………………….94

Narrow Networks, Narrower Choices ………………………… 96

Consumers Caught in the Middle ………………………………..97

References ………………………………………………………………..97

8 Why Government Health Care Isn’t the Answer …..99

"It’s the Government: They Know Best…." …………………100

Medicare for None? ………………………………………………….103

Single Payer Means Higher Costs ………………………………106

Rationing Is an Inevitable Outcome …………………………..108

Impacts on Education, Research, and Innovation ……….109

Administrative Costs Aren’t Necessarily Lower …………… 110

Single Payer Very Popular—Until People

Understand What It Is ……………………………………………… 111

Americans Don’t Do Socialism Very Well ………………….. 114

References ……………………………………………………………… 115

9 Market Disruptors and Transformers ……………… 117

Big Data and a New World of Precision Medicine ……… 118

The Patient Is in ………………………………………………………120

A Fusion of Segments ………………………………………………122

Employers/Health Care …………………………………………123

Big Pharma/Insurance/Health Care ……………………….125

Providers/Health Plans ………………………………………….126

Providers/Suppliers ……………………………………………….126

Is the Community Hospital Becoming Obsolete? ………..126

Collective Consciousness and an Empowered Market ……129

References ………………………………………………………………130

SECTION II HEALTH CARE IN THE NEXT CURVE:

A ROADMAP TO INDUSTRY TRANSFORMATION

10 Destinations of the Next Curve ………………………135

Access, Choice, and Value ………………………………………..136

Access …………………………………………………………………136

Choice …………………………………………………………………137

Value …………………………………………………………………..138

A Roadmap to Industry Transformation ……………………..139

11 First, the Safety Nets …………………………………….143

Facing the Realities of Safety Net Needs …………………….144

I-1 Provide Universal Catastrophic Coverage ………….. 145

I-2 Put Invisible Reinsurance Safety Nets in Place

for Those with Pre-Existing Conditions ………………….146

I-3 Assure Guaranteed Issue, but with Incentives

for Continuous Coverage ………………………………………148

I-4 Overhaul Medicaid: Make It a True Safety

Net for the Chronically Ill and Disabled, and

a Transitional Program for the Able-Bodied …………… 149

I-5 Restructure Medicare to Ensure Long-Term

Solvency ……………………………………………………………… 152

I-6 Give Military Veterans Choices, Too …………………. 155

References ……………………………………………………………… 156

12 Insurance and Choice, Once Again …………………. 157

Restoring the Concept of Insurance ………………………….. 158

II-1 Promote the Growth of Consumer-Directed

Health Plans and Health Savings Accounts …………….. 158

II-2 Get Rid of the Employer Tax Exclusion; Give

Employees Options ………………………………………………160

II-3 Repeal Anti-Trust Exemptions; Energize

Competition in the Insurance Market ……………………..162

II-4 Eliminate Regulations That Standardize

Insurance Product Design ……………………………………..162

II-5 Revise IRS Rules to Make Preventive and

Health Maintenance Care Pre-Deductible ……………….164

II-6 Promote Interstate Insurance "Regulatory

Competition" and Sales …………………………………………165

13 From Production to Value ……………………………… 167

Value in the Next Curve …………………………………………..168

III-1 Complete the Transition to Value-Based

Payment Methodologies ………………………………………..169

III-2 Make the Patient-Centered Medical Home the

Standard for Primary Care ……………………………………. 170

III-3 Apply Bundled Payment Approaches to

Chronic Diseases and Conditions ………………………….. 171

III-4 Design Multi-Provider Payment Methodologies

to Support Inter-Disciplinary Care …………………………. 172

III-5 Pay Providers for High-Value Services and for

Virtual Care ………………………………………………………… 172

III-6 Make the Shift to Transparent, Market-Based

Reference Pricing …………………………………………………. 173

References ……………………………………………………………… 175

14 No More Silos: Patient-Centered Care in the

Next Curve …………………………………………………..177

A Team of Teams ……………………………………………………. 178

IV-1 Target High-Risk Patient Populations for

Early-Stage Intervention ……………………………………….. 179

IV-2 Organize and Coordinate Health Services

Delivery Around the Patient ………………………………….181

Develop Coordinated Disease Management

Centers …………………………………………………………….182

Integrate Behavioral and Social Services into the

Coordinated Disease Management Center Model …..184

Align Addiction Treatment with Medical Care ……..185

Develop Specialized Acute Care Units for

Elderly Patients …………………………………………………186

Manage Post-Acute Care Transitions and

Processes ……………………………………………………… 186

IV-3 Rationalize Delivery Platforms for Optimal

Access, Effectiveness, and Efficiency ………………………188

IV-4 Make the Home the New Health Care Center ….190

IV-5 Remove the Barriers to IT Interoperability ………192

IV-6 Track the Measures That Matter ……………………..193

References ………………………………………………………………194

15 Less Regulation, Better Health Care ………………..195

Putting the Economic Human to Work ………………………196

V-1 Get Rid of the Laws That Restrict Competition …….197

V-2 Remove Barriers to Market Pricing …………………. 200

V-3 Eliminate Restrictions That Discourage Care

Integration; Repeal the Stark Law ………………………….201

V-4 Change Laws to Make Drugs More Available,

Less Expensive …………………………………………………….203

Remove the Artificial Protective Barriers to

Market Competition …………………………………………..203

Streamline the Approval Processes for

Generic Drugs ………………………………………………….204

Enact "Right-to-Try" Legislation for Terminally

Ill Patients ………………………………………………………..205

V-5 Modify Rules in Order to Ease the

Administrative Burden on Physicians ……………………..206

V-6 Reform Medical Malpractice Laws ……………………207

References ………………………………………………………………209

16 Positioning Strategies for the New Future ……….211

A New Market Ecosystem …………………………………………212

Consumers Will Define Value ………………………………….. 214

Category 1: The Routine Stuff ……………………………….. 215

Category 2: Disease- and Condition-Related Care ……216

Category 3: Health and Wellness—Engaged

Partnership …………………………………………………………. 217

Positioning for the Next Curve …………………………………. 219

Unleashing the Spirit of Health Care………………………….222

Appendix: How We Got Here—A Brief History of

Health Care in the U.S. ………………………………………..225

Index ………………………………………………………………..239

About the Author

John Abendshien is founder and President of Integrated Clinical Solutions, Inc., a national healthcare consulting firm headquartered in Chicago, IL. He has over 40 years of experience providing consulting and advisory services to healthcare organizations in the areas of enterprise strategy, integrated clinical service line development, management/governance organizational design, mergers, and network formation. John has conducted over 400 consulting engagements across the United States and in Canada and UK. His work has encompassed engagements with a broad range of organizations, including community hospitals, healthcare systems, county systems, academic medical centers, physician groups, and professional and trade organizations.

John is a frequent speaker and lecturer on the subject of strategic planning and organizational change management. He is a Past Chair of the American Association of Healthcare Consultants, and has served as a member of the Governance 100. Previously he was a Partner of Ernst & Young and for a number of years served as National Directory of EY’s healthcare strategy practice.

John holds BS in Finance, MBA, and MS Health Services Administration degrees from University of Missouri-Columbia; and completed an administrative residency at University of Washington Medical Center, Seattle.

Subject Categories

BISAC Subject Codes/Headings:
BUS070080
BUSINESS & ECONOMICS / Industries / Service Industries
BUS087000
BUSINESS & ECONOMICS / Production & Operations Management
MED002000
MEDICAL / Administration