In healthcare, most behaviour depends on system structure, funding and regulation. All three must change for a sustainable system focused on population health, prevention, outcomes and experience.
If an ounce of prevention is truly worth a pound of cure, then it must be incentivised as such.
Commenting on the US healthcare system in his 2008 book, The Innovator’s Prescription: A Disruptive Solution for Health Care, Clayton Christensen wrote:
“There are more than 9000 billing codes for individual procedures and units of care. But there is not a single billing code for patient adherence or improvement, or for helping patients stay well.”
Fast forward to today, and the funding dynamics in the US system are progressively changing to value-based models where payors and providers of care are increasingly willing to take two-sided risk for population health outcomes.
Notwithstanding serious failings in US value-based funding models, and the US healthcare system more broadly, at least they’re trying.
In most other parts of the world, we’re still wedded to funding models that, in various guises (eg, fee-for-service, activity-based funding, etc.), reward volume of services delivered.
Most private hospital operators rationally seek to maximise utilisation and occupancy with the highest value case-mix, while outpatient providers maximise yield by optimising throughput and unit economics. All other actors in the private system, from pharma to devices, are similarly incentivised.
In such a funding environment, private providers stand to lose financially if people remain well.
Funding barriers are not just a private system issue
In almost every state and territory in Australia, a greater share of health expenditure now goes to hospital care than it did five or 10 years ago and the trajectory is going in the wrong direction.
On a trip to Asia, I spoke with the CEO of a public hospital regarding diversion of low-acuity presentations away from overcrowded emergency departments. Dismissively, he remarked that his public hospitals were compensated for every ED attendance and would never entertain such a service.
He followed this with an observation I’ve heard repeatedly in the public system – that even if preventative measures were successful in lowering morbidity and avoidable hospitalisation, demand is sufficiently overwhelming that public hospitals would still be full, and the preventative initiatives simply represent an additional cost on overstretched budgets.
The division of responsibility between operating and capital expenditures in public budgets clearly prevents a holistic view of system sustainability and ROI.
Also in today’s edition:
Structural barriers to prevention are pervasive
Even if funding models incentivised prevention through value-based mechanisms, in most markets outside of the US, few providers have population health management capability given the paucity of vertically integrated models or coalitions of like-minded providers.
In practice, a hospital operator without the levers on primary care has little, if any, prospect of establishing an effective, scalable population health model.
For example, in Australia, the state governments that operate and co-fund public hospitals are not responsible for primary care. In the private system, none of the major hospital operators are invested significantly in primary care (though are not prevented from doing so).
The UK private health system has similar structural dynamics and the NHS is reliant on reimbursement rather than ownership levers with a privately owned primary care sector.
Regulation is rarely supportive
Regulation is often as obstructive to contemporary care models as the structural and funding challenges.
For example, population health management depends in large part on high quality, holistic patient data, yet data remains siloed and inaccessible.
Morbidity and avoidable hospitalisation in healthcare can be predicted and prevented with current and comprehensive data. AI has strengthened this capability.
Regulation should be propagating this, not thwarting it. Similarly, every general practice should be performing data runs against established preventative guidelines to identify patients with care gaps that need closing and for these patients to be proactively recalled.
Yet, in most markets, few can access a complete and current data set, and, critically, there is rarely reimbursement for such activity or the tools to deliver it.
Related
Where to from here?
Healthy people can be prevented from developing risk factors. Those with risk factors can avoid becoming chronically ill. Chronic conditions can be well managed. People frequently hospitalised can be prevented from deterioration and readmission.
Successful preventative health models with demonstrable ROI abound. This is not the issue.
If we are serious about prevention as a core tenet of our healthcare system, as opposed to the myriad of individual pilots and subscale services in the market, we need fundamental change in the structure, funding and regulation of healthcare.
At a minimum, fragmentation of care provision needs to end, either via vertical integration or provider coalitions, healthcare funding must transition to value-based models, comprehensive, high-quality and current data must be available for population health and preventative purposes, and the regulatory environment must be conducive not restrictive.
Some of this reform is within the sphere of provider control, yet much depends on government policy.
Some countries and regulators are embracing change with foresight and ambition. The Kingdom of Saudi Arabia is a good example as it moves its entire public system to integrated clusters and value-based healthcare in a few short years. Its private system will, no doubt, soon follow.
Other countries need similar courage, else they are bound to perpetuate the “sickcare” model and cycle of rationing, debt and deficit that increasingly characterises the healthcare landscape.
Marc Miller is a senior director in WTW’s global health practice.