Our current healthcare system was born of necessity when the federal government, fearing runaway inflation due to World War II costs, required all salaries to be capped in 1942. To receive a salary increase, workers had to leave their jobs for another company that paid them more. In response to this employee revolving door dynamic, business managers saw a regulation loophole and started paying for their employees’ healthcare insurance to hang onto talent.
Thus our fee-for-service system was established, and healthcare paid by individuals declined. This fee-for-service system creates incentives adverse to the public’s interests. Doctors are paid to see people, but less often for developing ways to help patients remain healthy. Hospitals are paid for full beds, not empty ones. Our system’s inefficiencies resulted in a 45th-ranked life expectancy for US citizens, just after Albania and well below France and Germany. Yet annual US per-capita healthcare costs of $12,914 are the world’s highest; 43 percent higher than $73,83 for the second most expensive, Germany, and more than double France’s costs of only $6,125. We are leaders in caring for the sick, leaving others to care for the healthy.
The top healthcare cost driver in the US is multiple hospitalizations of the chronically ill. Many chronically ill patients quickly return to a hospital due to their chronic illness becoming critical because other health problems have gone unnoticed. In most cases, a chronically ill individual’s negative trends can be reversed before hospitalization is necessary. These trends are often driven by medication management mistakes, which are quickly corrected. Several techniques have been proven to sharply reduce the number of patients needing re-hospitalization if negative trends are identified.
The New England Journal of Medicine published a study in 2010 that reported that almost 20 percent of Medicare patients were re-hospitalized within 30 days of their former hospital stay. Several well-known organizations have proven their ability to reduce such re-hospitalizations by up to 60 percent by implementing telehealth systems. These systems, available for over 20 years, collect an individual’s vital signs and electronically transmit them, alerting clinicians about developing adverse trends.
One of these organizations, the Veterans Administration Hospital System, successfully developed its telehealth system many years ago. Yet lessons learned by the VA have yet to be recognized by its sister organization, Medicare, which is headquartered only blocks from the VA’s central offices. CVS Health, Walmart, Walgreens, Amazon, and more, are redesigning our healthcare systems in ways that will prove more effective within a decade. Better progress would be achieved if governments in general, and Medicare specifically, would support efforts to reduce hospitalizations of the chronically ill.
Studies of healthcare costs have shown that 90 percent of all such expenses are driven by the care provided to the chronically ill. Opportunities to achieve savings are vast and have been estimated to be enough to offset the cost of providing healthcare insurance coverage to all who are now uninsured. The uninsured already receive healthcare services, but that care is most often provided by hospitals’ emergency rooms, the most expensive healthcare venue, and the federal government reimburses hospitals for much of this charity care. For those who worry about the many hospital rooms that would become vacant, there are answers.
Almost fifteen years ago, I participated in a study that included Baylor Scott & White Health system that studied this subject and found significant opportunities for empty spaces due to reduced re-hospitalizations to be repurposed profitably. We found that unused hospital space could be used to house growing senior living, assisted living and memory care operations, office space for many healthcare businesses, doctor offices, and outpatient telemedicine units.
Ultimately, everyone will use smartphones, watches, and rings, all available today, to monitor and manage their health. This trend is already being developed by major retailers–disrupters of our traditional healthcare industry. Also, the future hospital’s “artificial intelligence” systems will read each newborn’s DNA and create a HealthMap, based on the strengths and weaknesses identified. Physicians and hospitals will become healthcare consultants to large groups of people so that US citizens’ health profiles, rather than lagging, will lead the rest of the world. All technology needed to reach this goal of Population Health already exists. If Medicare were to develop a payment system incentivizing preventative health, physicians and hospitals would adjust to their new reality, and we would become world leaders. The only missing piece needed to reach this goal? Political will.
Wayne Bazzle retired after decades in the healthcare industry in 2014 as CEO of home health company CareCycle Solutions, LLC.