Markets, if competitive and functioning within the bounds of rational pricing structures, produce the best results for consumers. But the absurdities of healthcare have perpetuated terrible inefficiencies and dramatically misaligned incentives.
As a result, consumers are waffling about in an opaque system that’s delivered through a patchwork approach, which is largely driven by a legacy of crony capitalism. Everyone’s out in the market passionately protecting their slice of the $3.8 trillion pie with all their might.
A better outlook for healthcare can be achieved by leveraging some market principles, such as:
- A consumer-first approach to rebalance market forces
- Transparency to empower smart choices
- Innovation to unleash new potential
Consumer-first approach
When we put the consumer first and orient toward products and services that are more responsive to their needs, we reshape the market in a way that allows consumer choice to determine the winners and losers. Absent that, today’s healthcare winners are those who have grown via consolidation to a point that few buyers can refuse them, creating oligopolies in many regions across the country.
That’s changing to some degree. For example, healthcare has finally embraced digital technologies — although we’re a bit late to the party — opening up the potential for unique solutions like remote patient monitoring, virtual care, and artificial intelligence. These aren’t just provider- and payer-facing platforms, either. Many of the latest offerings touch individual patients and cater to their preferences.
Technology has advanced to the point that it can be leveraged to disrupt the status quo. Fueled by consumer demand for a better healthcare experience, the Amazons of the world are angling to woo patients over to a virtual model that supplants some of the traditional hospital and office settings.
In fact, a recent Canton & Company online survey found that our network of followers believes Amazon will have the greatest influence on the industry in the near future (41 percent), with Walmart in close second (36 percent), Apple barely making a mark (18 percent), and Google furthest behind (6 percent). No surprise there. Although Amazon might be surprised by how much harder it is to serve a diverse population of patients in the larger healthcare market in contrast to its own younger, healthier workers.
Transparency that empowers
When consumers have some way to compare what they’re buying, the market takes on contours that reflect cost and quality. Competitively priced products and services win. So do higher quality products and services.
Healthcare doesn’t have these competitive features now, but again, that’s beginning to change in small increments. With price transparency rules for hospitals and similar forthcoming rules for insurers, consumers theoretically can shop around for lower-cost services if they are so motivated to take the initiative.
And yes, consumers are indeed insulated from the bulk of service costs thanks to insurance coverage, but high-deductible plans increasingly are peeling away more and more layers of that insulation. Any authentic innovation that will re-engineer our broken healthcare system must include the power upfront pricing information.
Private health insurers pay an average of 247 percent of what Medicare pays for hospital care, and Medicare itself is paying something like 150 percent of what other industrialized nations are paying. That’s quite a spread.
The equally important issue is that doctors rarely know how much a test, treatment, procedure, or prescription will cost, so they are incentivized to order all of the above somewhat indiscriminately. And who essentially makes the decision on which services a consumer will receive? The doctor. Consumers almost never question their doctor’s recommendations.
An empowered provider-patient relationship in which cost is part of the decision making, however, will help reshape the market. Working together with the right information about what the patient needs, why, and how much it costs, both the provider and the patient can arrive at a common-sense choice.
Innovation that unleashes potential
The healthcare industrial complex must be released from restrictions that stifle innovation and be allowed the freedom to place bets with an entrepreneurial spirit. Creative disruption can be a good thing. It inspires leaders and businesses to solve problems instead of guarding their bowls of revenue with menacing growls.
For example, the services that are delivered in the hospital or provider office don’t necessarily need to be delivered in those settings. But they are. Why? Because it’s good for the provider’s bottom line, based on how payment mechanisms are set up. Open up the payment model, and you open up creative solutions.
Here’s just one of the many bonuses: Reworking the default position to opt for care outside the hospital will have considerable impact on hospital-acquired infections, which we all know costs lives and money. The Centers for Disease Control and Prevention estimates that each year we tally 1.7 million infections and 99,000 associated deaths. By comparison, car crashes accounted for about 42,000 deaths in the United States in 2020. We wouldn’t accept unsafe cars causing more than double the number of automobile fatalities, but we’re accepting exactly that amount in hospital-acquired infections. It’s a head-scratcher.
We can create a new healthcare market that puts the consumer in the center, offers choices thanks to price transparency, and inspires innovation through flexible payment models. Such transformation can be achieved if businesses rethink their strategic positions and work toward the vision of a different future.
Canton & Company can help you get there. Our team of experts has a wealth of experience in business transformation, strategic planning, operations, technology, and go-to-market. Let’s start a conversation about the future you envision.