Health care is in turmoil. But it’s not chaos — it’s change. Irresistible market forces, disruptive as they may be, could mean change for the better — a better health care marketplace.
Most people accept the need for a higher-value health care system with a price tag our society can afford. But many health care stakeholders are straddling two worlds, unsure when (or even whether) to exit the old and enter the new.
We believe that the stakeholders who cross the threshold quickly will find business success and professional pride on the other side. That bold move involves four key steps.
- Make value for patients the overarching goal. The new marketplace must focus on meeting patients’ needs, and it must be affordable. Putting patients at the center doesn’t mean they alone determine what care they should get — it means that providers organize themselves to optimize patients’ care plans, reduce suffering, and earn patients’ trust with compassionate, coordinated care. That’s what it will take to play the game; to succeed at it will mean excelling at meeting the needs of particular patient segments efficiently.
- Welcome competition. Competition drives innovation, improvement, and efficiency. It creates fear of losing, which is often what motivates individuals and organizations to contemplate change. Like any incentive, though, competition can be a blunt instrument that produces unintended effects. But we think that the alternatives to competition, such as shifting costs to patients or regulatory actions, are less desirable. Cost-shifting can make patients forgo care that might help prevent illness and disability, and it often breeds resentment. Regulation creates a floor below which performance should not go, but competition is likely to improve performance above that floor.
- Create social capital. Providers should respond to competition by developing relationships that increase the value of their care. Many providers are wondering whether they should merge or form other kinds of partnerships. Payers are asking the same questions. What matters in the end is not how organizations are structured, but the results they achieve through their collaborations. In short, do they increase the value of care? The London Stroke Initiative, which has concentrated acute-stroke care at just eight of London’s 34 hospitals, is a clear example of how social capital can lead to productive collaboration. The result: a 25% reduction in mortality and 6% lower costs.
- Encourage insurance choice. Every consumer should be able to pick his or her own insurance product. Insurance options used to be limited to something like vanilla versus French vanilla. Employers offered products that pretty much let patients go anywhere, thereby giving providers tremendous negotiating power if they just managed to get patients in the door. On today’s public and private exchanges, by contrast, many people with limited or no subsidies are selecting products with narrow networks for a powerful reason — they can afford those products. If more people choose insurance according to what they value and can afford, providers will be under great pressure to lower their costs and improve their services so that those services are included in the products that people are buying. They will compete to attract and retain patients by actually meeting their needs.
Value. Competition. Social capital. Insurance choice. These are the likely pillars of the new health care marketplace — one where people get care they want and can afford.