Why Health Care Will Change. How Health Care’s Cost Crisis And The Drive Toward A Health Care Market Will Change Everything. January 2013 Brian Klepper. Did health care think it could hold back market forces forever?. Pithy Observations.
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How Health Care’s
And The Drive Toward
A Health Care Market
Will Change Everything
Did health care think it could hold back market forces forever?
“How many businesses do you know that want to cut their revenue in half? That’s why the healthcare system won’t change the healthcare system.”
Governor of Florida
Former CEO, Hospital Corporation of America (HCA)
Quoted by VinodKhosla at the Rock Health Innovation Summit in August (video here)
“When an employer sits down with his health care relations – the broker, health plan, doctor, hospital, drug and device company – everyone in the room wants it to cost more except for him, and they’re all positioned to make that happen.”
CEO, WeCare TLC Onsite Clinics
Of Vegas Physicians
Source: Jerry Reeves MD, Culinary Fund Heatlh Plan, 2005
Challenge: Maintain/Grow Revenue & Margin
Solution: Grow Market Share
Requirement: Prove Better Care at Lower Cost
Is Lowest In Industrialized World
Worker Contributions for Family Coverage, 2008-2012
Growth in Health Insurance Premiums, Workers’ Contributions
to Premiums, Inflation, and Workers’ Earnings, 1999-2011
Premium has grown 4x inflation for more than a decade.
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2011. Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April), 1999-2011; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey, 1999-2011 (April to April).
11/11/11 – Gallup/Healthways Survey of 90,000 American Adults
& Compensation Net of Health insurance Premiums
Chris Conover on the Forbes Pharma/Healthcare Blog, 12/22/12
Nearly ALL Economic Growth
In the decade preceding 2009, 79% of all household income growth was siphoned off by health care.
Source: Auerbach DI and Kellermann AL, “A Decade of Health Care Cost Growth Has Wiped Out Real Income Gains for an Average U.S. Family,” Health Affairs, 30:9, 9/2011.
If health care costs tracked general inflation over the past 15 years, average family income would have been $8,410 (13.9%) higher in 2010 than it was. ($68, 805 vs. 60,395)
Young and Devoe
Family Medicine, Oct 2012
Source: White House Council of Economic Advisors
Source: Bureau of Labor Statistics, Cited 12/07/12 on WashPostWonkBlog
Source: R. Kocher & N. Sahni, Rethinking Health Care Labor,NEJM, 10/19/11,
Source: International Federation of Health Plans, Cited in NYTimes, 1/22/12
“Our research found that wasteful spending in the health system has been calculated at up to $1.2 trillion of the $2.2 trillion (54.5%) spent in the United States.
[R]edundant, inappropriate or unnecessary tests and procedures [were] identified as the biggest area of excess, followed by inefficient healthcare administration and the cost of care necessitated by conditions such as obesity, which can be considered preventable by lifestyle changes.”
The Price of Excess
(Lobbying For The Special Interest)
Over-values specialty services while under-valuing PC
Inhibits PC’s moderating influence and accountability function over specialty services.
Creates systemic incentives to perform more services, and more expensive services. (Specialists “practicing to the codes.”)
Payment disparities between PC and specialties. Crisis-level PC shortage now.
Fee-For-Service fosters “Merchant Medicine.”
Every product/service produces a margin, creating incentives to provide more care
and more expensive care, independent of quality.
Klepper & Kibbe, Rethinking the Value of Medical Services, Health Affairs Blog, 8/1/11.
Health Care’s Excesses Threaten The Stability Of The Larger US Economy.
Policy Formulation Has Been “Captured” By The Health Care Industry, So The Greatest Promise For Change Lies In Market-based Reforms.
Attacking Waste Becomes
A Powerful Market Opportunity
But we mostly haven’t
managed the care process,
like businesses would.
Market forces are influencing mainstream health care for the first time in decades.
This means health care vendors will ultimately need to appeal to purchasers on the basis of cost, quality and safety performance.
Health Care’s Regulatory Capture
A New Effort That Galvanizes/Mobilizes Non-Health Care Business’s Influence
To Be A Counter-Weight
To The Health Care Industry’s
is a health care analyst and commentator. He is Chief Development Officer for WeCare TLC, LLC, an onsite primary care clinic and medical management firm based in Longwood, FL, and Managing Principal of Healthcare Performance Inc., a consulting practice based in Atlantic Beach, FL.
An active author and speaker, Dr. Klepper has provided health care commentary to CBS Evening News, the Wall Street Journal, the New York Times, and the Washington Post. He has published articles on Kaiser Health News, Medscape, Healthleaders, The New England Journal of Medicine, Modern Healthcare, Business Insurance and newspapers nationally.
Brian is a columnist on Business of Medicine and Primary Care for Medscape, the most-read medical site. He is an editor for The Doctor Weighs In, an online professional health care magazine, and a regular contributor to the Health Affairs Blog, Kevin MD,Health Care Policy and Marketplace Review, and other expert health care blogs. With his wife, he also maintains Elaine’s Journey, which details their struggle against primary peritoneal (ovarian) cancer.
Brian serves on the American Academy of Family Physicians’ Primary Care Services Valuation Task Force, and is a reviewer for Health Affairs and The Journal of Ambulatory Care Management. He is an Advisor to the Lundberg Institute, the Patient-Centered Primary Care Collaborative, which advocates for medical homes, and the Center for Value Health Innovation, which helps business identify and implement approaches proven to improve quality while reducing cost.
In January 2011, with David Kibbe MD, he began a campaign, Replace the RUC!, that focuses on the most important driver of inappropriate health care cost. That effort resulted in a lawsuit by six Augusta, GA primary care physicians against the US Centers for Medicare and Medicaid Services (CMS) over its longstanding inappropriate relationship with the AMA’s Relative Value Scale Update Committee (RUC).
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