Zachary Alexander co-wrote this blog post with Florent Moise.
At a recent conference with health plan leaders, a debate started on the roles of the different players in the U.S. healthcare system: Can health plans, providers and life science companies provide better care and outcomes at a lower cost?
U.S. healthcare spending has exceeded $3.5 trillion and is increasing by approximately 5% each year. Population growth and inflation only account for about half of the healthcare spend increase. Treating a heterogeneous population is a complex, expensive puzzle, but a puzzle worth solving.
According to a recent JAMA study, $760 to $935 billion of U.S. healthcare spending is wasteful. Two examples of this inefficiency are: 60% of diabetic patients on oral medications are still uncontrolled, according to a ZS study, and non-adherence costs $100 to $300 billion annually, according to NIH. This lack of transparency and trust frustrates all well-intentioned parties: pharmaceutical gross-to-net (list price vs. post rebates) has been growing dramatically and patients still often complain about high drug prices. As a result, the U.S. government is taking dramatic steps to promote transparency in pricing.
Despite limited initiatives such as Blue Button, medical records are still siloed in various EHR systems. The U.S. government has attempted to make it easier for patients to access their data across healthcare entities, however the true impact has yet to be seen.
New entrants, such as Haven, Amazon’s collaboration with Berkshire Hathaway and JPMorgan Chase to reduce healthcare costs and increase satisfaction among its employees, sense opportunities in the overall inefficiency to challenge the status quo.
Health plans, providers and life science companies own major pieces of the U.S. healthcare puzzle and cannot solve it alone. Here are a few possible solutions to the puzzle:
- Vertical integrations: Large health plans have fully integrated with PBMs and acquired provider groups to increase bargaining power with life science companies and steer patients to lower-cost, better-outcome care. Although beneficial, vertical integrations are unrealistic for some organizations, take a great amount of time and cannot encompass all potential positive alliances.
- Government takeover: Some presidential candidates are suggesting Medicare for All as a solution that could threaten health plans’ existence. Government takeover is undesirable for patients, as evidenced by systems in the U.K. and France where physician shortages are common and innovation is not encouraged.
- Increased collaboration: Value-based care has been a step in the right direction but is limited as it stands; so far, it has largely been a tool for incentive compensation and measuring. Many more opportunities exist for health plans, providers and life science companies to work together.
Collaboration is a path all health plans, providers and life science companies should consider. Imagine a scenario where a health plan, health system and life science company align to tackle an issue, such as diabetes treatment, among a certain population. Say that a life science company creates a new connected insulin pen. Data can be routed to the local health system and health plan care managers to improve compliance and thus reduce hospitalization costs. Health plans can also use the data to study population health characteristics. By collaborating through data sharing and adherence programs, organizations can reduce costs, improve outcomes, increase prescription frequency and strengthen the patient experience.
Many opportunities for collaboration exist in our complex healthcare environment. However, such collaborations need to be organized to overcome communication and trust challenges. Potential steps could be:
- Identify relevant parties to determine which health plans, providers and life science companies should be involved.
- Identify potential areas of interest and issues that can be addressed through collaboration.
- Create an “opportunity workshop” that describes the potential benefits of tackling problems within a certain population.
- Gather facts and develop insights to formulate potential solutions and share them with all partners.
- Design a solution, discuss potential solutions and identify areas for cross-collaboration.
- Test the solution for a set of patients or certain geography.
- Measure the results and determine what was effective.
- Expand the impact by translating findings to actionable insights for other issue areas, populations or geographies.
However, collaboration is not easy, and barriers must be addressed to facilitate productive collaborations:
- Trust and transparency: Use a third party to make sure the environment is truly collaborative and honest.
- The right people at the table: Bring in people who can think critically and have the power to make necessary change in their organizations.
- Financial interest and funding: Include mutual benefits for all parties that drive top- or bottom-line results.
- Regulatory hurdles: The government may need to grant special carve outs for innovative programs.
- Proper expectations: Accept that there will be some dry holes when searching for solutions and expect some trial and error along the way.
Health plans, providers and life science companies should not view each other as enemies and vertical integration or government takeover are not the only solutions. Increased collaboration can create win-win-win-win results for health plans, providers, life science companies and patients.