The U.S. healthcare delivery system is in critical condition. As I explained in my last column, in the wake of Covid-19, many hospitals and health systems have been forced to focus their time, energy and resources to address severe operational challenges, including the impact of higher staff wages and benefits along with increased medical staff shortages and burnout. They must also come to grips with outside competitors stepping in to fill the gaps left by a broken fee-for-service (FFS) reimbursement model that has long failed to deliver on the basics: efficiency, affordability, accessibility, transparency and most importantly, health outcomes. While these disruptors, and consumers, are not waiting for healthcare delivery organizations to play catch-up, piecemeal “fixes,” alone will not be enough to save a system in dire straits. Healthcare delivery can no longer afford to continue down this path – the system must course correct altogether.

As I explained at length in my last book, Bringing Value to Healthcare, the system is incredibly complex. There are a multitude of stakeholders, including consumers, pharmaceutical and medical device manufacturers, payers, and providers, who each play an important role along the patient care journey. Thus, each stakeholder bears some responsibility for today’s healthcare delivery failures.

For instance, in their focus on clinical value to meet regulatory approval, manufacturers have historically ignored bringing economic value to innovation. New technologies have typically come with large price tags. Consumers have demanded prescriptions and procedures without any insight into the true costs of their care, nor the incentives to find out given that someone else has historically paid their bills. The nation’s largest payer, the Centers for Medicare and Medicaid Services (CMS), has tried for years to rein in rising healthcare costs and improve quality. However, CMS has only nibbled around the edges of reform in an effort to minimize legal backlash from hospitals, physicians and their powerful lobby groups – a subject I covered in a recent article. For hospitals and physician providers, which are critical decision makers in the equation, the failures have been particularly acute and for one primary reason: historically, they have not been held accountable for cost management and quality outcomes across the continuum.

Healthcare is a big business, and like every industry, it comes down to money – who pays for what and how. For years, a perverse FFS system, which assigns an economic value, procedure by procedure, has been modus operandi to keep the lights on and the cash flowing. Although this system was not designed maliciously, this “heads in beds” mentality has ultimately left us with care that is expensive, uncoordinated, deficient in quality, overutilized and in many cases just unnecessary. While we didn’t get here overnight, healthcare delivery can ill afford to stay on this current downward trajectory.

Hospitals, health systems and physician providers are staffed by scores of dedicated doctors, nurses, medical technicians and other key staff who work tirelessly around the clock to deliver critical care to patients in the communities they serve. As I wrote about, and the country witnessed firsthand, these heroes worked above and beyond the point of exhaustion in the face of great danger throughout the worst of the pandemic, while putting themselves and their loved ones at great risk. These highly dedicated professionals care deeply about their calling to improve patient outcomes. Sadly, though, the antiquated structures and bureaucracies that define most of the organizations in which they work have hampered their ability to realize their full care delivery potential.

Thanks to frontline healthcare workers and providers, we are slowly able to leave the worst of Covid in the rearview mirror and return to a sense of normalcy. However, the repercussions that the pandemic had on the healthcare delivery system remain. Not only did it expose the many shortcomings of a FFS reimbursement model that could not withstand the financial stress of the virus, it also forever shifted consumers’ perceptions and expectations of American healthcare that has, up to now, failed to deliver.

While signs of a new market-based model, defined by greater accountability, payment connected to outcomes and greater transparency in cost and quality, are afoot, this can only be fully realized if delivery organizations pivot in both mindset and operations in a way that, first and foremost, puts the patient consumer squarely at the center.

The acceleration of telehealth is one such major transformation that has realigned the severed relationship between provider organizations and patients practically overnight. For years, hospital/medical office-based care and responsiveness has been failing patients in a big way. At some point in our personal care journey, most of us have experienced being put on hold to book an appointment, sent to voicemail, or worse yet, having to wait days and weeks or longer to see a physician. When the pandemic took office-based care off the table, this model pivoted dramatically. Consumers now realize that virtual physician visits offer numerous immeasurable benefits, including increased convenience, affordability, accessibility and good outcomes under specific applications.

According to the Centers for Disease Control (CDC), close to 40% of U.S. adults used telemedicine in 2021 alone and, even when offices reopened to in person visits, statistics show that its popularity and preference are only trending upwards. In addition, thanks to government-mandated hospital price transparency, consumers have also been empowered to ask what their health care actually costs, and are not afraid to take their business to WalMart, CVS Health or Amazon if this expectation is not met. These changes have been a long time coming.

With the telehealth genie now out of the bottle, healthcare systems and other providers will have to commit themselves to investing in its various forms, in a cost-effective and timely manner. Three years ago, our Numerof & Associates Telehealth in an Evolving U.S. Marketplace Report found that 86% of provider organizations expected to invest more in telehealth going forward. These expectations have largely come to pass as our 2022 State of Population Health Survey Report revealed that 80% of hospitals and health systems are now providing telehealth programs that are owned solely by their organization, along with preventative care/wellness programs (72%), urgent care centers (69%) and home health services (58%). These measures to provide critical services and meet consumers at the point of care where they live and work is promising, but even more needs to be done.

Organizations in many industries often stay competitive by centralizing support functions, integrating sales forces and specializing in manufacturing. However, when it comes to healthcare, this has not historically been the case – largely because payment has not been tied to patient outcomes. In other words, by design, hospitals are in the sickness business rather than the healthcare business: they have gotten paid more for what they do to diagnose and treat each patient. A major problem is that hospital units are often siloed, historically each with their own information systems that haven’t communicated with each other. While central information systems have been put in place in recent years, they have largely been structured to ensure payment, not outcomes. Scheduling systems have also been centralized along with procurement related activity. Regardless, in these arrangements, too often line management is not engaged by administration in making the case for and supporting organizational progress focused on improved outcomes across the continuum of care. This is a major reason why we are seeing a mass exodus of healthcare workers today.

In an article published in The Atlantic during the height of the pandemic, Ed Yong rightfully reported that “health-care workers aren’t quitting because they can’t handle their jobs. They’re quitting because they can’t handle being unable to do their jobs. Even before COVID-19, many of them struggled to bridge the gap between the noble ideals of their profession and the realities of its business. The pandemic simply pushed them past the limits of that compromise.” We wrote about this very issue in a previous book back in the early 1980’s, which reaffirms just how little has changed.

In the transition to population health management, healthcare delivery organizations must rethink their systems, role and capabilities and leaders must translate their strategic vision to the people, processes, and capabilities critical to realizing it. They will need to redefine roles, ensure the right accountability incentives are in place, develop key capabilities, modify processes, and design new evidence-based outcome metrics. Comprehensive communication plans will be critical for major initiatives, as will management tools that enable sustainable performance.

In our 2023 US Healthcare Delivery Outlook, we identify a number of other key areas where delivery organizations will need to pivot in order to drive and sustain growth, value and performance, now and in the future. But at the heart of each action step, the underlying goal is the same: efficiently delivering the right treatment to the right patient in the right way at the right time. So, what does that look like when properly implemented?

In a new world, nurses can get back to focusing on bedside care, coordination, education and health outcomes, while providing a smooth patient transition back to their home and community. The same holds true for physicians, who can be rewarded for taking more time with their patients, and understanding the social determinants of health (SDOH) to help manage chronic conditions and other maladies, instead of wasting precious hours coding their interventions for maximum reimbursement and sending their patients off to see more specialists for more care. This leads to better care coordination, personal accountability for health outcomes, more choice and competition and less reliance on superfluous intervention and costly procedures. Taken together, we estimated in 2016 that healthcare delivery can easily redeploy $500 billion in savings by just reducing medication errors, length of hospital stays and unneeded care. Six years later that number is significantly higher.

I recently had a conversation with an oncology surgeon in a major U.S. city who told me that 8 years ago, his hospital was using telephonic and other virtual means to do follow-up visits for patients that lived in suburbs far away. He said they were not getting compensated for it – instead, they were incentivized because it was the right thing to do. Another confidant of mine told me about his recent experience at a well-established retail clinic. After an hour spent with the nurse practitioner, she decided not to bill him for the visit. My assumption is that a level of care and concern developed for the patient in need of further care. He still, however, came away with good advice, a positive outlook and a desire to take the next actionable steps.

These cases don’t happen every day, but it illustrates that getting to a new market-based model is possible. Our population health report shows, year-after-year, that more than 80% of organizations say population health will be “critically” or “very important” to their organization’s future success. But they also say financial loss remains the number one fear for making the transition. Clearly, they can’t connect the dots to conceptualize a different model and put in place the infrastructure to achieve it. Imagine where we’d be if the industry lobbyists spent less time advocating for the status quo and instead worked toward a more cost effective, higher value future. Old habits clearly die hard.

For better or worse, the next catalyst for change is coming to this industry. Given the heavy human, financial and psychological toll Covid exacted on victims and their families, now more than ever we need to be able to rely on our frontline healthcare workers and delivery system. The vision is there – we can’t afford not to take action.

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