Markets For Health: 3 Realities That Lack Common Sense

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U.S. healthcare has failed. As an industry, we can point to a number of collective failures, including perverse incentives, commercially siloed data, and resistance to change. But the worst malfunction of all is the delivery system’s disregard for the consumer.

Consumers are shielded from basic buyer essentials like price information and the opportunity to make choices. During their encounters with the healthcare system, consumers are met with confusing logistical hurdles and surprise bills. It’s a bad user experience from beginning to end.

A functioning market — which healthcare is not — responds dynamically to new conditions and creates new products or services based on the needs or preferences of buyers. The sellers who offer a better experience are financially successful, and those who do not simply fade away. True market forces are usually quite efficient in separating the winners from the losers.

But this is not the case in healthcare. Instead, we have created a reality with artificial forces that lack common sense. While there are some promising bright spots among the emerging value-based models of care, we must unlearn our old ways and challenge “the way we’ve always done it.”

1. Hospitals and provider offices are the default care settings

As the Dartmouth Atlas has consistently revealed, the supply of hospital beds and specialists in a geographic area is what drives utilization — not the actual clinical needs of the local community.  Increase your hospital beds, and voilà, you’ll see an increase in admissions and readmissions.

It’s time to stop building clinical capacity through brick-and-mortar investments. Consumers want to spend less time in the hospital, not more. And they shouldn’t have to bundle themselves off to a faraway clinic when they’re feeling sick just so life is easier and more lucrative for the supporters of the fee-for-service status quo.

The superior, market-smart action is to build capacity by investing in home-health and virtual-care models. Widely available technology now allows us to do just that with excellent quality. It makes common sense, but it also makes financial sense. Deliver good quality care that’s less costly and serves consumers in the way that they want to be served, and the market will reward you.   

2. Data is sequestered in proprietary silos

Consider the fact that the United States Congress recently had to create regulations to stop information blocking. Rules now prevent unfair contractual restrictions on physicians’ authorized use and exchange of medical information as well as excessive fees for the interfaces that allow EHRs to talk to each other.  Rules also mandate that consumers must have the opportunity to access their own health data without navigating through ridiculous obstacles or paying high administrative fees.

Congress had to make regulations to force this common-sense activity. Additionally, as we’ve noted before, Congress also had to make regulations requiring hospitals and health systems to post their prices online for consumers to view and assess when making decisions on elective procedures.

These are new functions that should have been part of the healthcare market all along — driven by the market and not by the heavy hand of government. Price transparency and information sharing will begin to reshape the landscape by democratizing data and placing the consumer’s needs, preferences, and best interests first.

3. Nothing is aligned with the consumer’s vision

Whereas healthcare crony capitalism preserves the status quo for the biggest of the big, markets are all about helping people satisfy their needs. Currently, we don’t ask consumers what they really want, then align the payment system around that vision.

Consumers can make their own healthcare choices when they have the information. We don’t need to insulate them in submissive roles where they must conform to the existing system rather than the other way around.

In a functioning market, what does an active participant look like? Think in terms of online shopping. The buyer — or in this case, the patient — knows what services he needs, shops for them to compare quality and cost, then decides for himself where to spend his money. No employer, insurer, ACO, or public program steers the choice implicitly or explicitly.

It’s a philosophical question, but why are outside entities making healthcare decisions that families themselves should be making? And I’m not talking about “skin in the game,” but a step back even further to gut-check the human element of healthcare and the dignity of empowering the consumer through rational economics.

If you’re positioning to win in the new healthcare economy, reach out to the Canton & Company team. We’ll get you there faster and accelerate your growth for the long term. Start a conversation today!