New Marketplace I

The Road to the New Health Care Marketplace

Article · November 25, 2015

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.

  1. 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.
  2. 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.
  3. 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.
  4. 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.

New Call for Submissions ­to NEJM Catalyst

Connect

A weekly email newsletter featuring the latest actionable ideas and practical innovations from NEJM Catalyst.

Learn More »

More From New Marketplace I

Predicting the Future — Big Data, Machine Learning, and Clinical Medicine

By now, it’s almost old news: big data will transform medicine. It’s essential to remember, however, that data by themselves are useless.

Caring for Older Adults in a Value-Based Model

Using patient stratification and more primary care visits, Chicago-based Oak Street Health aims to reduce hospitalizations.

Caring for High-Need, High-Cost Patients

Five foundations committed to improving U.S. care for complex patients outline promising program models and keys to success.

How 30 Percent Became the “Tipping Point”

Received wisdom for meaningful change in health care payment and delivery system reform.

Two-Year Costs and Quality in the Comprehensive Primary Care Initiative

Midway through this four-year intervention, participating practices report progress in transforming the delivery of primary care. But savings and improvements in the quality of care or patient experience are lagging.

The Coming Battle over Shared Savings — Primary Care Physicians versus Specialists

The way physicians are organized and reimbursed in the United States is undergoing a once-in-a-generation transformation from a fee-for-service system to alternative payment models. PCPs are well positioned economically and strategically, but specialists must adapt.

How a Pediatric ACO Coordinates Care for Children with Disabilities

Ohio-based Partners for Kids is charting new territory in care coordination for a high-need population.

My Favorite Slide: Transitions in Health Insurance Coverage Type Are the Norm

Age and income play a role in both short- and long-term fluctuations.

Mixed Early Performance of Medicare Accountable Care Organizations

The earliest participants in MSSP contracts reduced Medicare spending, but the second cohort did not. Meanwhile, some quality measures improved among MSSP participants, while others were unchanged.

Why UnitedHealthcare’s Withdrawal Is Not the Main Concern for Exchanges

United’s announcement will affect some local markets, but the giant insurer has not been a major player in health insurance exchanges. And exchanges are only one part of the complex payment reforms under way.

Connect

A weekly email newsletter featuring the latest actionable ideas and practical innovations from NEJM Catalyst.

Learn More »

Topics

Reframing the Conversation on Drug Pricing

We can’t afford for current trends to continue. There is only one solution.

Bundled Payments

36 Articles

Economic Investment and the Journey to…

Early evidence suggests that value-based payment and care delivery can transform our health care system,…

Value Based Care

127 Articles

Jumping into Value-Based Reimbursement with Two…

What payers would like to see when it comes to engagement in value-based reimbursement and…

Insights Council

Have a voice. Join other health care leaders effecting change, shaping tomorrow.

Apply Now