Healthcare Revisited

Consider how healthcare should be…

What’s the difference between healthcare and Cinderella?

No Comments »
Share

;

Glass slipper

Healthcare and Cinderella

The US healthcare system is facing an eminent change in its business model. Over the last several decades, through poorly aligned reimbursement systems and convoluted, market distorting subsidies, the business of our delivery system has become the filling of hospital beds. Sure, as a group, healthcare is filled with people who want to provide quality care, help patients, and improve outcomes, but that’s not what we get paid for. The vast majority of money in US healthcare is made by filing hospital beds, and by shortening length of stay.

In just the last decade, there’s been an increasing awareness of how broken our system is. We pay 2-3 times more than any other developed nation, and we have very little to show for it. In terms of performance, the World Health Organization ranked the US system 37th in the world; just above Cuba and Slovenia, and just behind Costa Rica and Dominica.

With the increasing visibility of how broken our system is, and the increasing industry awareness of the fact that the business models that have led to this travesty must change, you would think that more delivery systems would be seeking to shift to a more progressive solution. In an effort to help communicate part of why we’re moving so slowly, I wanted to share an analogy.

Let’s start by imagining a healthcare delivery system, all dressed up in a ball gown and glass slippers. Sould a little silly? Stick with me for just a minute more…

For those of you without kids, I’ll give a quick recap of Cinderella. She’s at the ball, and she knows that she has to get out at midnight or things will go badly. She watches the clock, and at 11:59, she edges close to the door, but doesn’t worry about it too much. That’s because she knows that when the bell tolls, everyone else will still be busy dancing, so the exit path should be pretty vacant. She can make a clean escape, with minimal fuss.

OK, so maybe that’s a slightly over-abbreviated version of the original, but it helps make an interesting analogy to the situation that the US healthcare industry finds itself in. Except Cinderella’s situation was substantially better.

Now, as our delivery system dances around the ballroom of fee-for service, it’s become pretty obvious that, as with Cinderella, the Fee-for-service festivities are going to have to come to an end. There aren’t many people who still believe that the days of fee-for service will continue indefinitely, and at midnight, she’ll need to scoot out the exit and move on to some type of Accountable Care model of reimbursement. The problem is that in the healthcare scenario there’s no clock on the wall to provide an early warning before the switch happens. This lack of clarity on when the proverbial bell will toll makes planning an orderly exit much harder. The delivery system just doesn’t know when to start edging closer to the door.

To make things worse, there’s a second key difference. While Cinderella knew she was the only one who needed to sneak out come the witching hour, when the clock finally does strike at the Fee-for-service ball, and it’s clear to our delivery system dancer that accountable care is emminent, she’ll suddenly find herself surrounded by an entire industry of other exiting delivery systems, all needing to quickly make it out the door before badness befalls them. It’s not going to be a quiet scoot out the ballroom door. It’ll be more like a fire at a heavy metal concert. There’s a high likelihood of some fatalities. Some will be trampled as the mob rushes for the doors. Others will be too late, and won’t make it out of the building in time. There are some predictions that as many as 30% of hospitals will close by 2020.

Now, this all sounds like a fairly grim situation, and if anything, it seems like even if the exact timing for exit isn’t clear, there would be some tremendous impetus for delivery system CEO’s to start moving towards the ballroom door to help ensure that they are among the survivors. So, what’s the delay?

The final problem is that during our time at the ball, our dancing healthcare Cinderella has developed a tremendous appetite. She’s built lots of hospitals, which represent a tremendous capital investment, and an enormous operating expense. The finances of these lumbering systems make our ballroom dancer positively ravenous for revenues. To make things even more challenging, as it turns out, at this ball, the cake table is on the complete opposite side of the room from the exit. Under the current fee-for-service business model, there isn’t a good way to make nearly as much money keeping patients out of hospitals. To clarify, that means that every step towards the accountable care door is also a step away from the fee-for-service food.

And being hungry hurts.

Leave a Reply