Healthcare as we know it is in a state of flux. Medical advancements and innovations have given us the tools to maintain health and treat disease in a way that was never thought possible even a half century ago. Yet, at the same time Americans are unhealthier than ever before, and the cost of healthcare is rising, not declining. All of these forces have created a perfect storm for reforming how healthcare is delivered in the United States, and healthcare providers will be forever changed because of it. In fact, their success in the new world order will depend on their understanding of the changes and preparations for them. Here, futurist David Houle and Jonathan Fleece, JD, leader of the healthcare practice group at Florida-based law firm Blalock Walters, who together authored the recently released book The New Health Age: The Future of Healthcare in America (2011), discuss how healthcare must change and how providers will be forced to respond.
Q: In discussing the current state of healthcare in the U.S., your book points to our country's many advances in treating complex disease but foils that with our lack of success in preventing chronic disease. How did we end up this way?
David Houle: The fact that the two don't go together suggests great ignorance in what people think being healthy means. A national study released last Spring found that 82 percent of people in the U.S. believe they lead a healthy life. Yet, at the same time, 34 percent of Americans are obese and two-thirds are overweight. Additionally, medical science has been about treating illness, not prevention and wellness. It has essentially allowed us to be unhealthy because medical science can treat us. Now, we're moving to a new health age where healthcare will be about preventing sickness. Healthcare providers and society will become more aligned to focus on wellness rather than providers waiting to treat the negative consequences of society.
Jonathan Fleece: I'd drill it down to three categories: 1) a lack of awareness by the American population, 2) a lack of education and 3) a lack of incentive on both the patient and healthcare delivery side. Currently,
there are few incentives for healthcare delivery systems to focus on wellness and lifestyle changes because they are paid for providing services to treat illness, not prevent it. The same holds true on the patient side. There are very few incentives motivating Americans to live healthier lifestyles. As an example consider smoking. The U.S. Surgeon General announced the harmful effects of this habit in the 1960s, but the smoking rate barely changed. It wasn't until tax policy incentivized against it that we really started to see the smoking rate decline.
Another problem is access. Those without access (i.e, the uninsured) receive very little prevention services, which drives up cost. And currently these costs are shifted onto the private sector. The Patient Protection and Affordable Care Act is an attempt to expand access in order to curve some of these costs.
DH: For people who aren't sure if major changes are needed, I highlight the fact that three times as many people die because of mistakes in hospitals compared to driving a car. Hospitals can be more dangerous, but there's a disproportionate sense of risk. Healthcare must improve quality and lower costs through changing incentives.
Q: Your book argues that the goals of future healthcare delivery should be to 1) improve Americans' overall health 2) improve the quality of healthcare services and expand access and 3) control health costs. What are the major things providers and policy makers must do to achieve this?
DH: I like to use the 80/20 rule to explain this. Healthcare in our country is about 17.2 percent of GDP, which we round up to 20 percent. Everything else is the other 80 percent. That other 80 percent has, for the most part, been well developed through technology. Information has been digitized and can move with us. For example, imagine you bank at a large national bank. You may bank at a location in Chicago, but if you travel to California, you expect they'll have your information. If you asked for your balance and they said "we don't know" you'd be outraged. Or, imagine buying a plane ticket that required you to pay separate fees to the pilot, flight attendant and baggage handler. This is how healthcare operates. An overly simplistic way to think about healthcare reform is to think about all the connectivity and transparency we take for granted in other parts of our lives. Now, that's coming to healthcare.
JF: Our book uses the concept of dynamic flow to explain the way healthcare delivery is going to change. The economics of healthcare are going to drive the current characteristics of our healthcare system toward different ones. Some of these include:
• Treatment to Prevention
• Reactive to Proactive
• Episodic to Wholistic
In the era of the new health age, the concept of getting the highest quality for the least amount of cost is the primary goal. How is this going to happen? Payors will start paying providers around a new model. This is starting to happen some today and will continue to become more prevalent.
Q: So you both contend then that it will be the payors that drive these fundamental changes?
DH: Yes. One of the reasons for this is because we are in a global economy, which means corporations have to compete economically with those in different countries. In the U.S., our companies have a huge line item of healthcare cost. When you look at it that way, it's not just about who is in the White House. At this stage in the global economy, it's essential U.S. companies lower healthcare costs. In five years, we do expect employee benefits will increasingly be tailored toward prevention. We also expect the creation of what we've coined EACOs — or employer accountable care organizations— whereby self-funded employers work more directly with providers to lower healthcare costs and share in the savings. They may work through insurers, but eventually we expect systems to offer their own products to employers.
JH: On the public side, we'll have Medicare ACOs and more systems jumping into managed care contracts for Medicare and Medicaid patients. Delivery systems will take on risk for these patients, but by shifting the dynamic flows, they will lower costs to the point taking on the risk can be profitable. Managed care in the 80s and 90s failed because it was focused on restricting care without realizing the need for cultural or lifestyle change. The new mantra will move away from managed care and toward health management. And, as we develop technology and incentives for behavior change, we'll be able to better move in this direction.
Q: Given all these changes on the horizon, what must health systems do to prepare for success under new models?
JF: We predict massive consolidation of providers and a reduced need for hospitals. Health systems need to be reengineering their entire model to embrace these new dynamic flows. Health systems that don't focus on that will be the losers. Better alignment and integration across the vertical delivery system model will be required as will disease management capabilities. We also expect a lot more healthcare systems to create their own health plans or e ACO offerings direct to end users. They will likely partner or joint venture with traditional insurance carriers in ways we never thought possible.
DH: In a landscape where things will be transparent, connected and known, health systems that don't improve their efficiency and quality will cease to exist. They also need to understand everything will be measured, so it will be very clear who provides high quality low cost care and who doesn't. Once you consolidate, the question comes how do you bring about efficiency and transparency? These are two qualities that will become very prevalent in healthcare, and they are virtually nonexistent today. Systems will also need to become more patient centric.
There is also a need to reach beyond providers and involve citizens. That's why we recently launched The Race to a Healthy America, an idea we believe all Americans can support. When I think back to when I was a young man, there was this national vision of putting a man on the moon, and all Americans could support it. We have a lack of vision in the country today. The Race to a Healthy America has a vision of making America the healthiest country in the world by 2025. By any metric, it's something we can do. The Race will launch in Tampa in February. It's about being better physically and socially, lowering healthcare costs and helping people live longer.
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Q: In discussing the current state of healthcare in the U.S., your book points to our country's many advances in treating complex disease but foils that with our lack of success in preventing chronic disease. How did we end up this way?
David Houle: The fact that the two don't go together suggests great ignorance in what people think being healthy means. A national study released last Spring found that 82 percent of people in the U.S. believe they lead a healthy life. Yet, at the same time, 34 percent of Americans are obese and two-thirds are overweight. Additionally, medical science has been about treating illness, not prevention and wellness. It has essentially allowed us to be unhealthy because medical science can treat us. Now, we're moving to a new health age where healthcare will be about preventing sickness. Healthcare providers and society will become more aligned to focus on wellness rather than providers waiting to treat the negative consequences of society.Jonathan Fleece: I'd drill it down to three categories: 1) a lack of awareness by the American population, 2) a lack of education and 3) a lack of incentive on both the patient and healthcare delivery side. Currently,
there are few incentives for healthcare delivery systems to focus on wellness and lifestyle changes because they are paid for providing services to treat illness, not prevent it. The same holds true on the patient side. There are very few incentives motivating Americans to live healthier lifestyles. As an example consider smoking. The U.S. Surgeon General announced the harmful effects of this habit in the 1960s, but the smoking rate barely changed. It wasn't until tax policy incentivized against it that we really started to see the smoking rate decline. Another problem is access. Those without access (i.e, the uninsured) receive very little prevention services, which drives up cost. And currently these costs are shifted onto the private sector. The Patient Protection and Affordable Care Act is an attempt to expand access in order to curve some of these costs.
DH: For people who aren't sure if major changes are needed, I highlight the fact that three times as many people die because of mistakes in hospitals compared to driving a car. Hospitals can be more dangerous, but there's a disproportionate sense of risk. Healthcare must improve quality and lower costs through changing incentives.
Q: Your book argues that the goals of future healthcare delivery should be to 1) improve Americans' overall health 2) improve the quality of healthcare services and expand access and 3) control health costs. What are the major things providers and policy makers must do to achieve this?
DH: I like to use the 80/20 rule to explain this. Healthcare in our country is about 17.2 percent of GDP, which we round up to 20 percent. Everything else is the other 80 percent. That other 80 percent has, for the most part, been well developed through technology. Information has been digitized and can move with us. For example, imagine you bank at a large national bank. You may bank at a location in Chicago, but if you travel to California, you expect they'll have your information. If you asked for your balance and they said "we don't know" you'd be outraged. Or, imagine buying a plane ticket that required you to pay separate fees to the pilot, flight attendant and baggage handler. This is how healthcare operates. An overly simplistic way to think about healthcare reform is to think about all the connectivity and transparency we take for granted in other parts of our lives. Now, that's coming to healthcare.
JF: Our book uses the concept of dynamic flow to explain the way healthcare delivery is going to change. The economics of healthcare are going to drive the current characteristics of our healthcare system toward different ones. Some of these include:
• Treatment to Prevention
• Reactive to Proactive
• Episodic to Wholistic
In the era of the new health age, the concept of getting the highest quality for the least amount of cost is the primary goal. How is this going to happen? Payors will start paying providers around a new model. This is starting to happen some today and will continue to become more prevalent.
Q: So you both contend then that it will be the payors that drive these fundamental changes?
DH: Yes. One of the reasons for this is because we are in a global economy, which means corporations have to compete economically with those in different countries. In the U.S., our companies have a huge line item of healthcare cost. When you look at it that way, it's not just about who is in the White House. At this stage in the global economy, it's essential U.S. companies lower healthcare costs. In five years, we do expect employee benefits will increasingly be tailored toward prevention. We also expect the creation of what we've coined EACOs — or employer accountable care organizations— whereby self-funded employers work more directly with providers to lower healthcare costs and share in the savings. They may work through insurers, but eventually we expect systems to offer their own products to employers.
JH: On the public side, we'll have Medicare ACOs and more systems jumping into managed care contracts for Medicare and Medicaid patients. Delivery systems will take on risk for these patients, but by shifting the dynamic flows, they will lower costs to the point taking on the risk can be profitable. Managed care in the 80s and 90s failed because it was focused on restricting care without realizing the need for cultural or lifestyle change. The new mantra will move away from managed care and toward health management. And, as we develop technology and incentives for behavior change, we'll be able to better move in this direction.
Q: Given all these changes on the horizon, what must health systems do to prepare for success under new models?
JF: We predict massive consolidation of providers and a reduced need for hospitals. Health systems need to be reengineering their entire model to embrace these new dynamic flows. Health systems that don't focus on that will be the losers. Better alignment and integration across the vertical delivery system model will be required as will disease management capabilities. We also expect a lot more healthcare systems to create their own health plans or e ACO offerings direct to end users. They will likely partner or joint venture with traditional insurance carriers in ways we never thought possible.
DH: In a landscape where things will be transparent, connected and known, health systems that don't improve their efficiency and quality will cease to exist. They also need to understand everything will be measured, so it will be very clear who provides high quality low cost care and who doesn't. Once you consolidate, the question comes how do you bring about efficiency and transparency? These are two qualities that will become very prevalent in healthcare, and they are virtually nonexistent today. Systems will also need to become more patient centric.
There is also a need to reach beyond providers and involve citizens. That's why we recently launched The Race to a Healthy America, an idea we believe all Americans can support. When I think back to when I was a young man, there was this national vision of putting a man on the moon, and all Americans could support it. We have a lack of vision in the country today. The Race to a Healthy America has a vision of making America the healthiest country in the world by 2025. By any metric, it's something we can do. The Race will launch in Tampa in February. It's about being better physically and socially, lowering healthcare costs and helping people live longer.
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