Cracks to Canyons: COVID Reveals the Depths of the Cost of Care Crisis

Redefining where value lies in the current payer-provider business model is lofty - how do we make true impact?

The Problem with Cost of Care

There’s a major irony in the American healthcare system. Though payers, providers, and pharmaceutical companies are all focused on providing patients with effective treatments, each party is often operating at odds with one other. Their relationship during each episode of care is fraught with fiscal tension and a long history of adversarial positioning that, in many cases, still persists. There’s an inherent push-pull to their dynamic that continues to drive up the cost of care. The unwieldy administrative processes that result, along with care monopolies that are beginning to arise in certain regions, have led to an environment where healthcare costs are rapidly increasing while the markers of a healthy population do not reflect the excessive spend.

 Now more than ever, there is a need for new care solutions that proactively acknowledge the impacts of social and economic determinants of health and the disparities and inequities that exist in current care models.[1] New solutions must also better acknowledge the impact of behavioral health determinants on overall health and well-being. COVID-19 has exacerbated and brought acute awareness to the limited resources and scope of current care offerings available. Communities across the nation are experiencing increased suicide and depression rates along with an increase in substance abuse, anxiety, and other mental illnesses.^[2] To have the necessary scope of impact, outreach and out-patient mental health solutions must not only be designed to be more accessible, but also more affordable.

 Unsustainable Trends

Today, the cost of healthcare has become a competitive disadvantage. Current reports project a continuing trend of 5.5% year-over-year growth in national health expenditure, outpacing the economy as a whole and creating a ripple effect across US markets.^[3] Some reports indicate US doctors – many of whom have spent close to ten years doing specialized training – spend up to two-thirds of their time doing paperwork and other EHR related tasks.^[4]   Not only do the volume of administrative tasks decrease the number of patients these doctors can adequately care for, it also impacts provider satisfaction, which in turn affects quality of care.^[5]

 Bottom line, current trends are not sustainable.

 By 2026, healthcare is expected to make up 20% of the US GDP, straining federal budgets and cutting into other investments like education and infrastructure.^[6] With higher spending in the United States per capita compared to other developed nations, cost does not correlate to better health outcomes.^[7] From infant mortality, to all-cause mortality, to premature death, to disease burden, the US population is not as healthy as other countries, despite spending twice as much on healthcare as any other industrialized nation.^[8]

 To avoid perpetuating an unsustainable care model, payers and providers need to work together to form productive partnerships. With aligned payer-provider relationships, pharmaceutical companies will be forced to adjust their prices and billing structure accordingly. We must collectively work to bring an end to the days where these three parties play a cat and mouse game of maximizing individual profit. Meaningful change lies in value-based care. Without increased cooperation, all parties will continue to waste huge amounts of time and money in administrative labor and navigating disputes, while patients bear the brunt of the collateral damage.

 Making an Impact

Redefining where value lies in the current payer-provider business model seems lofty at best – it can be challenging identifying points where applied development will have a lasting impact. Bob Bausmith, Founder of Accelerate Innovation and current Interim Chief Information Officer at Blue Cross & Blue Shield of Kansas City, identifies three key areas for change:

• Bi-directional integration of data and workflows between health systems and population health programs
• Real-time exchange of information between payers, providers and patients
• Seamless consumer experiences that blur the lines between health plans and health systems

With an impressive record of architecting and modernizing complex systems as the former VP & Chief Enterprise Systems Architect for UnitedHealth Group and former Head of Architecture Delivery at Aetna, Bausmith speaks from experience:

“Unlocking value in health care will require new products and business models that leverage these three key areas to build systems that enable behavioral change. This means that until we change the consumer experience of care (including quality and satisfaction) we will fall short of our goals of improving population health and reducing the per capita cost of health care.”  

 To test new solutions and capabilities and evaluate their impact on care, Bausmith advocates that payers and providers create and operate incubation offices, where user and customer value hypotheses can be tested before committing to expensive integration and scaling. “It’s important to demonstrate value and traction before taking a new product or service to market,” Bausmith explains. Operating an incubation office encourages internal innovation, reduces technical debt, and increases enterprise adaptivity in the long-term– all of which contributes to a more sustainable financial model for growth. As the onset of COVID-19 in Manhattan, and then the rest of the nation, demonstrated, there is already a dire need for a better integrated and better-connected health system that leans into mobile, remote, and telehealth solutions.

 COVID-19 led to a rapid uptake of telehealth options and vocal appeals for the development of more mobile and remote access solutions. Restrictions for Medicare and Medicaid around telemedicine coverage – a long time barrier to widespread access of telehealth – were also temporarily lifted as many primary care physicians scrambled to take their practices online.^[9] Prior to this change in coverage, the lack thereof was one of the primary barriers to telehealth adoption cited by the American Hospitals Association in 2019.^[10]

 New Possibilities in Healthcare

The ongoing pandemic reveals many gaps in integration within our current system, as administrative waste continues to be one of the leading contributors to cost. With better information capture and data exchange, new possibilities open up for care delivery, who is able to access information, and how easily it can be obtained. In turn, better workflow integration between parties within the care system will maximize the potential impact of care. Data collection does not inherently equate to data application, so creating ways to bi-directionally share and filter information is necessary for American healthcare to evolve.

 In the stark reality of our current climate, we have a clearer picture than ever of the long-term cost implications of both social and behavioral determinants of health. The necessity for preventative health applications has never been greater, and herein lies an opportunity. With a new focus on preventative care through the realignment of the payer-provider business models exists real opportunities for patient-centered care. Without this evolution, the context of patient-centered care becomes lost in a whirlwind of forms and fine print.