Sounding a theme increasingly common at healthcare industry gatherings, the outgoing CEO of Kaiser Permanente called for fundamental changes to U.S. healthcare's business model during a speech at the 2013 AHIP Institute on Wednesday.
George Halvorson, Kaiser's chairman and CEO, was the main attraction at the morning keynote panel kicking off the annual meeting of U.S. health insurers. He didn't disappoint, issuing strong statements about the failure of the existing reimbursement and care model.
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"The piecework model of healthcare has to change," Halvorson said, referencing the existing fee-for-service payment system. "This model must change because it penalizes people who improve care and rewards hospitals that do not provide ideal care."
To underscore his point, Halvorson gave the example of pressure ulcers in U.S. hospitals. Pressure ulcers are a terrible healthcare complication, but they generate almost $40,000 in revenue per patient for hospitals, he said.
"Five and 10 percent of hospital patients suffer from pressure ulcers, but at Kaiser we are now under 1 percent," Halvorson said. "That's because we have implemented a different business model, one that is patient-focused."
Halvorson said that the healthcare delivery system could be on the cusp of a "golden age," in which care delivery could become increasingly personalized and interactive. He predicted that the home would be a major site of care, as would the Internet, which he said could prompt the "equivalent of an industrial revolution in healthcare."
Joining Halvorson on the opening panel was David Lansky, president and CEO of the Pacific Business Group on Health, who said large employers could help drive the industry transformation that the Kaiser CEO had praised.
"Employers can use their purchasing power to influence provider and health plan behavior," Lansky said. "Employers have unmet expectations that has led many to consider an exit from their health benefit offerings."
He said PBGH members have a laundry list of means to control healthcare costs, which if implemented, would help inaugurate the transformation critical to the industry's financial survival.
That list includes: payments to providers based on value of services provided; incentives and information for consumers that would allow them to choose high value providers; the alignment of public and private purchaser actions; and an increased focus on tools that constrain prices.