Healthcare costs in the U.S. have been on the rise for decades and are poised to soon reach 20 percent of gross domestic product, according to projections published by The Wall Street Journal in July 2018. In 1970, national healthcare expenditures amounted to 6.9 percent of GDP, according to CMS.
This article is sponsored by Strata Decision Technology
Wages have not risen fast enough for patients to keep pace with the rising costs of care, and many businesses are struggling to cover portions of rising employee healthcare premiums. In public discourse, this cost crisis is most often discussed in relation to insurance and legislative policy. But other industry experts, such as Robert Pearl, MD, believe the crisis should also be discussed in the context of care quality. In Dr. Pearl's view, the U.S. is dropping the ball when it comes to preventive care, which is contributing to America's lower life expectancy and higher maternal and childhood mortality rates when compared to the world's other most-industrialized nations.
Dr. Pearl is the former CEO of The Permanente Medical Group, Kaiser Permanente; a clinical professor of plastic surgery at Stanford (Calif.) University School of Medicine; and a faculty member of the Stanford Graduate School of Business. He is the author of "Mistreated: Why We think We're Getting Good Healthcare — And Why We're Usually Wrong," which was published in 2017 and named a bestseller by The Washington Post. Dr. Pearl will be the featured keynote speaker at Lift19: The Strata Decision Summit on October 23 in Chicago. Here Dr. Pearl discusses the U.S. healthcare cost crisis and what providers can do to prepare for the industry's future.
Note: Responses have been edited for length and clarity.
Question: What's your perspective on the cost crisis in U.S. healthcare?
Dr. Robert Pearl: The cost crisis is the biggest challenge in American healthcare today. The cost of care is going up and businesses are finding they can't afford to continue to raise healthcare contributions. Wages are flattening, and individuals are paying more and more out of pocket for their care.
While we call this a cost crisis, it's also a quality crisis. The cost crisis and the quality crisis are related — we do a terrible job preventing disease, and it's very expensive when you develop a cancer that could have been prevented or detected early. We do poorly around blood pressure control, which is the No. 1 cause of strokes, kidney failure and the primary contributor to heart disease.
The nation right now is thinking about this as an insurance problem. It's not an insurance problem. It's a cost of care delivery problem, and that is not being discussed enough.
Q: What do you make of the rise in high-deductible health plans?
RP: High deductible plans have been shown time and again not to accomplish what they were touted to do. The idea was that consumers would make better choices if they paid more out of pocket for care. The truth is, they can't make better choices because they don't understand what the price is, or they don't have the time to make an informed choice because they need emergency care. High deductible plans only do one thing — keep people from seeking the care they need.
The solution is to create a capitated system. Fee-for-service invariably leads to unnecessary utilization. We need to move to a fully capitated system, where quality outcomes and patient satisfaction are financially incentivized.
Q: What can providers do to prepare for the future of healthcare?
RP: Major change is always painful. The idea that we're going to lower costs, but not reduce the number of hospitals or specialists, is naive. Hospitals will close. Imagine if tomorrow, across the U.S., half of the patients in hospitals no longer had to be in the hospital. This is what could happen if we get better at prevention and improve operational efficiency, particularly on weekends. Quality would go up dramatically, fewer people would need to be inpatients, but hospitals would have to close. That's painful, but if you want to lower the cost of care, that's the type of thing that must happen. Every other nation of the world has far more primary care and far fewer specialists than the United States. We have to change.
Q: Would you advise someone to be a physician today?
RP: That is the easiest question you've asked me. Yes. Without a doubt. Physicians can earn a living while making the world better. They have the opportunity not only to treat disease but also prevent disease and to be with patients and their families in their most difficult moments. It is a remarkable profession and a great calling. I encourage the best and the brightest to go into medicine, to become physicians and to change healthcare for the better. We have the ability to improve American medicine and make it the best in the world once again.