These nuances to the healthcare market were heavily discussed and debated with the financial executives at HFMA. We landed on several basic realities that make the health care space very difficult to “uber.” The key tenets:
- Asymmetry of Information:The premise of a free market – economics 101 – is equitable access to information so consumers can make informed decisions and thus drive efficiency in the market. This is simply not a reality in health care. There is a massive disconnect because physicians always have far more information than the patients they see. This reality is levered exponentially when we layer in the unpredictability of health care demand – we never really know when we will need an emergency cardiothoracic surgeon, and even if we did, what information would we rely on to inform our decisions? Many healthcare start-ups would have you believe that consumers can “shop” for healthcare in this instance, but ask anyone diagnosed with a serious illness and you’ll realize that’s simply not how it’s done. People get referrals from friends and family or they go to the doctor or hospital that is close to their home or workplace. Large and complex health care claims exacerbate the problem. A person dealing with a complicated illness that requires multiple doctors or treatment protocols simply doesn’t have the time, expertise, or access to the data that is necessary to evaluate all possible care options and then put together the most effective treatment plan.
- High Barriers to Entry: There are only so many doctors working in certain specialties. While the proliferation of telemedicine tools and entry of primary care resources – e.g. Physician Assistants and Nurse Practitioners – has significantly increased the resources on the front lines of care, there is a limited impact these resources can have on healthcare trend and clinical outcomes. Thirty percent of all healthcare costs come from .6% of the population, and these claims are all large, complex and require multi-disciplinary care. There is a fundamental reality here – large claims and Specialty Rx have exacerbated the clear supply and demand realities within the health care “market.” The high barriers to entry radically alter the performance of the health care “market” and distort the principles needed for it to function normally – or at least as some would argue it currently functions.
- No Focus on Total Cost of Care. This ties in to the point above. When payers begin scrutinizing the total cost of care for patients, not just the raw PPO discounts offered by insurance carriers, they will make large strides toward managing costs long term. It is critical to know which health systems – and which individual providers within those systems – consistently show lower total cost of care and improved outcomes through rigorous clinical protocols and patient care. Armed with that information we will be able to move to a system that focuses more on those outcomes and their associated costs, rather than focusing on what discounts that particular network can provide.
These realities violate the core premise of the PPO model we’ve been living with for 30+ years. It is predicated on total freedom to choose from 90+% of all available physicians and health systems. While this is a clear response/backlash to the HMO days, the ability for members to choose any provider – at any time – may actually fly in the face of healthcare economics.
In light of this, how do apps/engagement tools help solve underlying issues in healthcare supply side issues? It should be apparent by now that creating an “uber” for health care is absurd – since seeing an orthopedic surgeon is not remotely similar to hiring a ride downtown with friends. There’s innovation that makes a lasting impact on how we live our lives, and then there’s innovation done for innovation’s sake—because technology is fun and cool and everyone loves new apps. Financial managers are looking for more true innovation in healthcare—both in delivery and financing. When they come up with an app for that—I will be the first to download it.
Note: I’ll be speaking on this topic and others at HFMA’s State Conference April 14-16, 2019 in Austin. Hope to see you there!