Healthcare Cost & Quality–Who Cares (for the patients)? Act Two
When we last left the scene in Act I of my previous blog, the meeting between the payers and providers had just moved past a brief moment of alignment as they agreed that their shared objectives were healthier people and cost management. As they turned towards solutions, opinions in the room diverged again. This time, it wasn’t payer versus provider; Instead, members of each group began to align with one of two likely future states, each with very different views on economic drivers and the roles of payers and providers.
The “Collaborative” camp predicted a more harmonious system where shared risk and aligned incentives keep payers and providers collectively focused on improving outcomes and optimizing utilization of their local population. Payers, leveraging their scale and analytic capabilities, would offer analytics as a service to providers to help them manage patient and financial risk. By integrating their claims assets with clinical data from providers and members’ self-reporting information, they would create richer sources of fuel for more powerful analytics engines. Providers would share data more freely and use payer analytic capabilities to anticipate potential patient health issues and provide optimal care. Deepening this collaborative approach, providers would use scale of payer operations to cost-effectively extend their patient reach. For example, payers could deliver services to identify at-risk patients and use their teams of phone and field-based clinicians to conduct targeted outreach.
The “Competitive” camp predicted further deterioration of payer-provider relations. This view assumed ACOs (Accountable Care Organizations) and other risk-sharing mechanisms would not get enough traction to align incentives. Instead, payers would continue to be market-makers for health consumers and focus on fixed-pie negotiations over share of premium with providers. Payers would focus on extracting deeper insights from their claims data in order to refine their products and medical policies. Payers would rely on a combination tighter medical management and delegating risk to manage cost and outcomes. To shore up their own positions, providers would mine their clinical data for insights that would strengthen contracting positions during payer negotiations as well as improve their internal cost management. This competitive behavior would also play out among providers as they compete for a patient base large enough to strengthen their bargaining position with payers.
With so much market uncertainty, either future seemed plausible, and the group appeared destined for another gridlock. Reflecting on the conversations of people he had brought together, the patient advocate got up again and went to the whiteboard. This time, he wrote the following:
Allowing the participants to agree to disagree, he reflected on the growing needs for certain capabilities required at any levels of collaboration or competition in the future. He pointed out that richer stores of proprietary clinical and claims data will be augmented through outside sources in the private and public sector, as well as from patients themselves. In addition to having the technical capacity to deal with increased data volumes, variety, and velocity, payers and providers will need to develop and implement data governance strategies to make the information useful. Even with the capabilities to refine and extract meaningful bits from the raw data, sophisticated analytics are tools that process and extract the most value from these assets. Because trust is such a critical requirement for all participants in the healthcare industry, enhanced security and reliability will be table stakes for all. Enabling these sweeping changes will depend on more than knowing the right answer. It will also require the ability execute broad transformations in the way the business and IT operate.
Using this fictional drama as a thought experiment can shed some light our likely future. Whether it unfolds as collaborative, competitive, or somewhere in between, there are at least some predictable requirements for viability in any scenario. Payers and providers alike, will need manage and analyze big data, create a fabric of trust, and enable large-scale transformation. Whether they choose build these capabilities together or separately remains open for debate and fodder for a potential sequel.