New Marketplace
Payment Reform Is a Play We’re All Watching (11:14)

NEJM Catalyst New Marketplace Theme Leader Leemore Dafny likens payment reform to a play everyone is watching. “We’re all walking into this play called U.S. health care reform somewhere in the middle of it. And this act that we’re talking about now — navigating payment reform — it isn’t the gripping opening. Or the spellbinding finale,” she says.

That gripping opening, Dafny says, was expanding health insurance coverage. “Twelve million newly enrolled in Medicaid. Ten million signing up for private health insurance plans through the exchanges. Eighty percent of them reporting that they’re satisfied with their plans. For a number junkie like me, that’s completely gripping. That’s the opening. That’s why everyone’s watching this play. And the spellbinding finale is supposed to be a completely different way of delivering and receiving health care and maintaining health in this country.”

But to get from that opening to the finale, Dafny says we need to figure out how to use payments to align the stars, and that’s the part she believes can feel like a reality TV show. “A long one, where the characters have names like Cavanaugh, and Price, and Verma,” she says. “We need organizations that are in the field who engage; who don’t just sit and watch it happen — because if they don’t, that gripping opening could be repealed and we might never even see our fantastic finale.”

So the question is, how do we get the show on the road? Or really, on the highway? Dafny lays out four principles for organizations to follow.

  1. Be clear and transparent about the goal. President Obama ran into some trouble with this because of the spin used to promote the Affordable Care Act, Dafny says. “You probably recall these words — it was once announced as the lie of the year: if you like the plan you have, you can keep it. But a bunch of those plans were pretty lousy plans, and Congress and Obama didn’t want consumers to keep those plans — they wanted protections in place.” But that isn’t really transparency, Dafny says. We’re not going to get what we want if we aren’t clear about what that is.
  2. Play the notes that aren’t being played. That’s the advice that Miles Davis gave to aspiring jazz musicians. Dafny mentions Oak Street Health, an organization that’s building oases in areas that are known as primary care deserts — where others see complete blight, and the potential to lose millions of dollars, Oak Street sees opportunity. That is a note that is not being played enough.
  3. Make tradeoffs. It’s the core of business strategy: find a segment, find an access channel, find a set of needs, and make tradeoffs so you’re focusing on that set. “Strategy is as much about what you don’t do as it is what you do I’d like to see more providers making tradeoffs and not trying to serve all conditions and all patients, but really doing a great job of serving the conditions and patients where they’re going to focus. And I’d like to see buyers making tradeoffs, too. Employers and insurers, for example, should stop paying full price for incremental pharmaceutical innovation,” Dafny says.
  4. Don’t be afraid to fail. Dafny says that if we don’t try things that turn out to be complete busts, we aren’t trying hard or differently enough. If we keep trying to perfect this mousetrap, we’re going to be so far from where we need to be. But that does mean taking some risks. Business as usual won’t work. We may feel like we’re too big to feel, but are we too big to innovate? “What great, big ideas came from concepts that we knew were sure things? We’re not thinking big enough or boldly enough if we’re always conceiving of things we actually know will work and know exactly how to implement,” she says.

In the end, Dafny remains optimistic. “I hope we don’t think about navigating payment reform as a long episode of a reality show, but rather, the most important act: the act where we translate good intentions into actual good.”

From the NEJM Catalyst event Navigating Payment Reform for Providers, Payers, and Pharma, held at Harvard Business School, November 2, 2017.

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