The United States spends the highest percentage of GDP in the world on healthcare, yet we have some of the highest rates of heart disease, obesity and infant mortality. We also have the shortest life expectancy compared to developed Western Europe, Japan, Australia and Canada. Clearly, what we're doing here isn't working and has resulted in an inefficient healthcare system with the highest costs in the world and disappointing clinical outcomes.
Given the state of our health system, let's imagine that we're just starting over and creating a health plan from scratch. To move to a more successful health plan model, we would need to reset competencies and focus on the following: 1) operating at peak administrative efficiency, 2) engaging consumers, 3) shifting risk in productive ways and 4) creating the clinical outcomes-driven business. I'll talk about these core competencies here, then discuss their technology enablers in part two of this blog.
Operating at Peak Administrative Efficiency
Few would argue that existing health plan administrative processes are efficient. Because operating at peak administrative efficiency will be a new competency for our ideal plan, it will have eliminated pervasive inconsistencies in work processes that all too often lead payers and providers to make different clinical and financial decisions, which in turn take time and money to resolve. To achieve operational excellence, our health plan will need to focus on "transparent collaboration," which entails providers and payers clarifying and agreeing on their goals, roles and responsibilities and openly sharing clinical and claims data from a common database to enable collaboration. This is critical to delivering efficient accountable care and creating a foundation of trust between providers and payers.
Engaging Consumers
The ideal health plan will understand that its relationship with "purchasers" is shifting rapidly away from one-to-many toward one-to-one and will therefore need to be adept at both B2C and B2B processes. In this environment, consumers will expect highly personalized and responsive customer service, including more and better tools to keep them informed. Here, health plans will need information to understand the needs of individual members, including preferred methods of communication, the types of health information and tools they need, and the care management initiatives that members will embrace to improve their health.
To truly affect change, the plan will also need to establish a consumer engagement competency using "influence behavior" models that can impact risk profiles. For example, with healthcare reform we may have 20 to 60 million consumers receiving coverage through insurance exchanges, and many of these consumers may be very ill and costly. Plans may not be able to manage this population unless they can influence the behavior of these consumers and lower their risk. This will not happen unless plans develop retail/consumer competencies. Exchanges, private or public, will push health plans to develop these competencies. Our ideal plan will need to combine the best tools and practices of the consumer world with the wholesale efficiencies of employer-based coverage.
Delivery models are also changing. Many consumers may well elect to receive urgent care, vaccinations and other procedures at mini-clinics within retail chains, such as Walgreens or CVS. This shift will affect the economics of care delivery as patients flow away from emergency rooms and physician offices to lower cost retail outlets. Our ideal plan will need to leverage retail as an extension of the delivery system while capturing and sharing clinical and financial data to all points of care, to retain an integrated delivery system.
Shifting Risk in Productive Ways
As providers take on more risk under new care delivery and payment models, all stakeholders will need to collaborate in a very transparent manner to ensure that the shifting of processes is not simply a shifting of the burden; it has to be motivated to increase productivity and outcomes. Our ideal plan will be an expert in productive risk shifting by leveraging value-based reimbursements to mitigate downstream MLR risk. Value-based reimbursement enables plans to maximize the effectiveness of their medical expenditures by paying for value versus volume, and by providing incentives for team-based performance. For example, in a PCMH model, payers can reimburse providers for care coordination and preventive care. When you give providers the tools to manage risk and make informed clinical and financial decisions, you can effectively incent them for these activities through innovative reimbursement models such as value-based reimbursement and bundled payments. These incentives can engage providers to deliver the best clinical outcomes and will play a critical role in ensuring productive risk shifting.
Creating the Clinical Outcomes-Driven Business
Health plans have been quantitatively driven organizations employing actuaries and accountants to project payouts and financial performance. Our ideal health plan will put equal emphasis on clinical and financial outcomes when measuring performance. Each competency that the plan develops will be assessed for how it affects the cost and quality of care. Navigating this shift from an actuarial mindset to a clinical outcomes mindset will be a critical success factor for next-generation healthcare.
While there are certainly other many considerations, the ability to address these four competencies would start any new health plan on the right foundation, but should also be critical strategic goals for existing plans. Not only will these competencies address today's reform-driven initiatives but they are fundamental principles for long-term success. In part two next week, I will discuss the technology stepping stones, including technologies that exist today and those that are emerging, that can lay the groundwork for the new health plan.