To simplify health care delivery for providers and patients alike, what is needed are new care models, new measures, and new money.
For health systems, doctors, and nurses, 2022 feels like the hardest year yet of the pandemic. The initial heroic response has left the system in financial tatters,1 staffed by burned-out clinicians2 who are dissatisfied with the fee-for-service model of care that promotes patient visits over improving care outcomes. Covid-19 did not break American health care; rather, it revealed the hidden cracks in an already broken system.
While the high-end innovation and curative care in the United States is the envy of the global health ecosystem, U.S. health outcomes lag other nations.3 The U.S. health care system is unique in developed countries, separating the financial benefit to the hospitals, health plans, and clinicians from the benefit to the customer — the patients. In a fee-for-service world, hospitals are paid to care for patients needing inpatient care. “Heads in beds” generate revenue, meaning that lower-cost, more convenient venues of care such as ambulatory surgery centers pose an existential threat to a thriving hospital ecosystem. Health plans want the opposite; less care means less payments to the people providing care, which creates increased costs to clinicians for electronic medical records tailored to billing optimization, managing prior authorizations, and fighting denials. And physicians paid based on relative value units (RVUs) earn money on care inputs rather than care outputs. Physicians are incented to bring in patients for care even though a curbside consult may meet the need — because otherwise clinician time is not valued. From the patient perspective, none of these financial incentives are aligned with optimizing their health outcomes. In fact, they operate to the detriment of relationship-based patient care.
Two key lessons can help inform a path forward out of the quagmire that American health care is stuck in today. Michael Porter and Tom Lee taught us to look at the entire health care value chain4 to understand what actions create value for customers, focusing management’s attention on the factors that matter most. But with misaligned incentives, few organizations are doing so. Aaron Martin joined Providence after helping build the Kindle Store at Amazon. He taught us there are two fundamental customers in health care: patients and their doctors. Just like the Kindle helped ease friction between authors and readers, health care needs to ease the path to connecting patients who need care with people who provide care.
