The (Healthcare) World Turned Upside Down

Some of the biggest changes in the industry's history are rapidly approaching and no one seems to know it.

Last week, I was at a meeting that featured a keynote presentation from a prominent Harvard economist. During his almost two-hour talk, I was struck at how outdated his message was. Most notably, he failed to mention some of the most essential things to take place in America’s healthcare system in over 60 years.

During the Q&A, I asked about one of these particular things. His answer indicated he had no idea what I was talking about.

That begs the question: if such exciting things are on the horizon, why aren’t they better known? Why isn’t there more enthusiasm? Why isn’t there some big rallying cry to make the very best of the opportunities that might be presented to us in the months and years ahead?

This presenter and thousands of people far more intelligent than me have failed to see how different things happening in other areas of the industry are fated to connect in a significant way.

What are these “things?” I’ll explain.

If you’ve listened to the show, you know that one of the primary inefficiencies of the healthcare system is the lack of detailed information available to purchasers. Competitive markets thrive on information that is relatively well known to both the seller and the purchaser. Our system is built on the complete opposite dynamic where these parties have little to no information readily available to the other.

More specifically, we lack information on two critical subjects: how much care actually costs to deliver and the quality of that care.

So let’s look at what’s emerging in the healthcare landscape and why it matters.

The More You Know….

First, we are on the cusp of having enough accessible data to assemble a picture of how much care actuallycosts to deliver in different places. The Rosetta Stone finally interpreting this comes through a new federal regulation that requires health insurance companies to post the contracted reimbursement rates in a public forum that anyone can access. Insurance companies will have to share what they pay every provider for the litany of services they offer.

Let me be clear about something here. These are not files most people will be able to download, process, analyze, or even take action on, at least not at first. Similar to current federal requirements that hospitals post a single schedule of charges for services, these files will not be all that useful to most of us as we grapple with difficult healthcare purchasing decisions.

However, when this contract information is combined with other data sets that have become increasingly accessible over the last few years, there will be an unprecedented ability to apply statistical science to better understand the economics of providers all over the country.

Companies and capital will flow into this space to build advanced analytics engines that can help to make sense of the byzantine data. You can bet that a whole industry of new intermediaries will pop up, creating a business out of helping consumers and businesses make better-informed healthcare purchasing decisions.

And Yet, Price Does Not Singularly Determine Value

However, as noted above, defining “value” requires a two-part equation. The other part is quality. The best way to know and understand quality comes through clinical information that very few people or entities have a right to have. There are only three entities today that have access to our health information: Electronic medical record (EMR) companies (think of the terminal your doctor or nurse uses when they interact with you), the doctors and nurses that interact with you, and you, the patient. A law passed in the 80s called HIPPA prevents others from having such access.

However, even though you may have a right to this information, retrieving it has been far from easy. Suppose you wanted copies of your clinical records. The onus falls on you to navigate the maze of departments within a hospital or clinic, request the records, follow up when nothing happens, and ultimately wait a few weeks or months for a big econobox full of paper or a DVD with an array of files impossible to navigate or decipher.

The inability to readily share this clinical information between providers is one of the most significant hallmarks of why our system is so inefficient. And this inefficiency has made a lot of people and companies very, very wealthy.

The significant change here is the growing ability to transfer this information electronically. Recent laws now require all companies that sell an EMR to providers to make clinical information transferrable electronically. More importantly, do-gooders in our industry have been hard at work to create a common data standard that allows for quick and easy data transmission. Your doctor will soon be able to access your clinical history at the push of a button.

If that scares you, don’t let it. Your medical information remains protected through HIPPA, and you’re the only one that can unlock it.

However, think of a world where your employer or insurance company can be granted permission to pull the information to create a better, more tailored, and lower cost structure for health services for you. That’s where we’re going.

Why does that matter?

Because every patient that allows for sharing that information with a secure and neutral party will unlock the gates to the holy grail of health information.

The Bottom Line

The cross-section of more information on prices and cost, along with the clinical data that allows for an improved understanding of a physician’s performance, leads us to the ability to draw conclusions on what is valuable and what is not.

And that, my friends, is a big deal. Today, value is an arbitrary, almost academic topic for healthcare. But in the next couple of years, it will go from theoretical to practical. It will challenge provider performance and excess where it exists, identify physicians with poorer track records of performance, and raise the collective expectations for every part of the industry.

More importantly, it will equip you (and/or those purchasing on your behalf) with the information to shift buying decisions, presumably leading to higher quality, lower cost, and more accessible networks. And maybe, just maybe, you’ll even be able to know what something will cost before you seek out the service(s).

So now you’re currently more up to speed than even the most well-known researchers at Harvard and in the country. Hell, you’re now more informed than most people who do the work I do.

But know this. If I’m right and these changes are as significant as I believe they will be, you can bet much cheese will move. And we know how resistant human beings and institutions are to moving cheese. So feel emboldened to ask your insurance company, doctors, and anyone else you interact with about their approach to transparency. And keep listening to the show because we will be going to the mat to hold people accountable to play by the rules so the system can move to a new period of efficiency.