Value-based health care, the holy grail of American medicine, has three parts: excellent clinical quality, convenient access, and affordability for all.
And as with the holy grail of medieval legend, the quest for value-based care has been filled with failure.
In the 20th century, U.S. medical groups and hospital systems could — at best — achieve two elements of value-based care, but always at the sacrifice of the third. Until recently, American medicine lacked the clinical know-how, technology, and operational excellence to accomplish all three simultaneously. We now have the tools. The only thing missing is “system-ness.”
What Is system-ness?
System-ness is the effective and efficient coordination of health care’s many parts: outpatient and inpatient, primary and specialty care, financing and care delivery, prevention, and treatment.
By bringing these disparate pieces together within a well-functioning system, health care providers have the opportunity to maximize clinical outcomes, weed out waste, lower overall costs, and provide greater levels of convenience and access.
Who are the search parties?
In the future, system-ness will be the variable that determines whether health care transformation is led by a) incumbent health systems like Kaiser Permanente and Geisinger Health or b) retail giants like Amazon, CVS, and Walmart. The latter group has become an ever-growing threat in the health care arms race, quickly amassing their own (though still modest) systems of care through billion-dollar acquisitions.
Although both the incumbents and new entrants will struggle to implement value-based care on a national scale, the victor stands to earn hundreds of billions of dollars in added revenue and tens of billions in profits.
To better understand the power of system-ness, and the challenges all organizations will face in providing it, here are three examples of value-based-care solutions implemented successfully by Kaiser Permanente.
1. Preventing problems, managing disease
Research demonstrates that preventive medicine and early intervention reduce heart attacks, strokes, and cancer. Yet our nation falls far short in these areas when compared to its global peers.
One example is hypertension, the leading cause of strokes and a major contributor to heart attacks. With help from doctors, nearly all patients can keep high blood pressure under control. Yet, nationally, hypertension is controlled only 60% of the time.
We see similarly poor rates of performance when it comes to prevention and screening for cancers of the colon, breast, and lung.
Undoing these troubling trends requires system-ness. In Kaiser Permanente, 90% of patients had their blood pressure controlled and were screened for cancer. Getting there required a comprehensive electronic health record, a willingness for every doctor (regardless of specialty) to focus on prevention, leadership that communicated the value of prevention, and a salary structure that rewarded group excellence.
2. Continuous care, without interruption
Most doctors’ offices are open Monday to Friday during normal business hours — only one-fourth of the time that a medical problem might occur.
At night and on weekends, patients have no choice but to visit ERs. There, they often wait hours for care, surrounded by people with communicable diseases. Their non-emergent problems generate bills 12 times higher than if they’d waited to be seen in a doctor’s office.
There’s a better way. In large enough medical groups, hundreds of clinicians can provide round-the-clock care on a rotating, virtual basis — using video to assess patients and make evidence-based recommendations.
This approach, pioneered by physicians in the Mid-Atlantic Permanente Medical Group, solved the patient’s problem immediately 70% of the time without a trip to the ER and, for the other 30%, enabled coordination of medical care with the ER staff.
3. Specialized medicine, immediate attention
When a primary care physician needs added expertise (from a dermatologist, urologist, or orthopedist), it’s usually the responsibility of the patient to make their own specialty appointments, check with insurance for coverage, and provide their medical records.
This takes hours or days to coordinate and can delay care by weeks, resulting in avoidable complications.
But in a well-structured system, there’s no need to wait. Using telehealth tools at Kaiser Permanente, primary care doctors can connect instantly with dozens of different specialists — often while the patient is still in the exam room. Once connected, the specialist evaluates the patient and provides immediate expertise.
This way, care is not only faster and less expensive, but also better coordinated. Data from Kaiser Permanente show that these virtual consultations resolve the patient’s problem 40% of the time without having to schedule another appointment. For the other 60%, the diagnostic process can begin immediately.
The foundations for system-ness
Few organizations in the U.S. can or do offer these system-based improvements. Doing so requires skilled physician leadership, a shift in the financial model, and a willingness to accept risk.
In fact, most organizations across the U.S. that claim to operate “value-based” systems actually rely on doctors who are scattered across the community, disconnected from each other, and paid on the basis of volume (fee-for-service) rather than value (capitation).
As a result, frequently patient care is fragmented and uncoordinated, leading to repeated tests and ineffective treatments, thus increasing medical costs and compromising medical outcomes.
Value-based care (superior quality, access, and affordability) requires teams of clinicians working together as one — all paid on a capitated basis.
Without capitation, dermatologists will insist on seeing every patient in their office where they can bill insurance five times more than with a teledermatology visit. And gastroenterology specialists will insist that all patients have colonoscopy rather than recommending low-risk patients do a safe, convenient, at-home colon cancer screening (called a fecal immunochemical test or “FIT”) at 5% of the cost.
In these cases, individual doctors don’t consciously make care inconvenient for patients. Rather, it is the only choice they have when working in a fee-for-service payment model. Ultimately, system-ness is best achieved when health systems are integrated, prepaid, tech-enabled and physician-led.
Amazon, CVS, and Walmart know about systems
These three companies are global leaders in “system-ness,” at least in retail. Combined, they have a market cap of $1.88 trillion, employ 3.4 million Americans, and are looking to take a slice of U.S. health care’s $4.3 trillion annual expenditures.
Already, they manage complex order-entry and fulfillment systems. They use technology to streamline everything from customer service to supply chain management. They are led through a clear and effective reporting structure.
In terms of competing for health care’s holy grail, these are huge competitive advantages compared to today’s uncoordinated, individualized, leaderless health care industry.
As retailers vie to bring their system know-how to American medicine, they are acquiring the pieces needed to compete with the health care incumbents. They’ve spent tens of billions of dollars on medical groups that are committed to value-based care (One Medical, Oak Street Health, etc.). They’ve also spent massive sums on home-health companies (Signify) and on pharmacies (PillPack), along with expanding their in-store, at-home, and online care options. Many of these care-delivery subsidiaries are focused on Medicare Advantage, the capitated half of Medicare where financial success is dependent on high-quality medical care provided at a lower cost.
What’s more, all these retailers have a national presence with brick-and-mortar facilities in nearly every community in the country — a leg up on nearly every existing health system.
Who will win — and why?
Trying to pick the victor in the battle to transform American medicine at this point is like selecting the winner of a heavy-weight championship boxing match after three evenly matched rounds. Intangibles like stamina, courage, and willingness to absorb pain have yet to be tested.
In The Innovator’s Dilemma, the late Clayton Christensen examined historical battles between incumbent organizations and new entrants. After analyzing dozens of industries, he concluded new entrants routinely become the victors because the incumbents move too slowly and fail to embrace the need for major change.
And from that perspective, if I had to wager, I’d put my money on the retail giants.
But there’s an even more worrisome potential outcome: neither those inside nor outside of health care will make the necessary investments or accept the risk of leading systemic change. As a result, the movement toward value-based health care will stall and die.
In that context, purchasers of health care (businesses, the government, and patients) will encounter a difficult reality: over the next eight years, medical costs will nearly double, creating an unaffordable and unsustainable scenario. As a result, our nation will likely experience reduced medical coverage, increased rationing, ever-longer delays for care, and a growth in health disparities.
If that day arrives, our country will regret its inaction.
Robert Pearl is a plastic surgeon and author of Uncaring: How the Culture of Medicine Kills Doctors and Patients. He can be reached on Twitter @RobertPearlMD.