By Ron Vianu, CEO and Cofounder of Spreemo
In order for the broader healthcare system to solve many of its current problems, it will have to adapt and change into a system that more closely reflects the workers’ compensation market, which is value-focused and outcome-driven.
The Broad State of Health Care
Escalating costs are strangling the healthcare sector. Healthcare spending accounts for 17.7 percent of U.S. GDP, up from 12 percent in 1990, and is likely to be even higher in the future. This is far greater than other industrialized nations and, yet, outcomes are not measurably better in the U.S. For example, a hip replacement can cost $100,000 in the U.S., whereas it costs under $15,000 in Belgium for the same procedure and outcome.
In part, this is a problem of over-treatment and over-testing. By way of another example, an MRI is almost a “standard” procedure in the U.S., where one in 10 of consumers undergo an MRI every year. In other industrialized countries, the utilization is half that.
Put simply: America pays much more (in nominal and GDP-adjusted figures) for healthcare without any broad-based dollar-for-dollar benefits over our global peers.
That dichotomy has brought the healthcare system to a point where policy makers, insurance companies and healthcare practitioners recognize it needs to shift from reactionary, volume-based care to outcome, incentive-driven healthcare – just what workers’ compensation has been doing from the very start. That is central to the goals in the Affordable Care Act (ACA), which emphasizes shared risk by holding providers accountable for outcomes.
However, simultaneous to ACA’s launch, employers are taking their own steps in response to escalating costs by sharing the burden with employees through high-deductible healthcare plans. The perceived long-term benefit of this systemic transformation is that patients are becoming medical consumers. And to a degree, this seems to be working; more and more patients are asking if a procedure is necessary or whether it can be obtained at a lower price point. In fact, a recent TransUnion Health survey found that pricing was an important factor in a patient’s decision to seek care, with two-thirds of respondents wanting more transparency into both what they are paying out-of-pocket and what their insurers are paying.
But cost is just one aspect of the overall healthcare landscape. By way of hyperbole, if price were the only thing that mattered, we should all travel to third-world countries for our most expensive procedures. Of course, we inherently understand that the U.S. facilities are better equipped and the doctors better trained than those in the third world. But we almost certainly do not understand how New York City hospitals differ among themselves.
Outcomes are the other. Once everyone has a stake in the cost, the natural next question is to ask: “What am I getting?” This is particularly challenging for procedures with no discernable difference to the average healthcare consumer (or sometimes even among doctors). How does a patient choose between a spine MRI that costs $2,000 with one that costs $200? In short, today they can’t. Identifying quality and measuring performance in the context of healthcare remains challenging. Dr. Robert Berenson, former vice chairman of the Medicare Payment Advisory Commission (MedPAC) goes so far as to say that the government cannot “accurately measure any physician’s overall value.”
Part of the Solution
Pay-for-performance is an element of the ACA, but its measures are reactive and provide little visibility, if any, to patients before a medical procedure is performed. Walking into a physician’s office, a patient is not provided with a graded score of how “good” a provider is in treating a specific injury or illness – all that is evaluated is the outcome of that specific procedure.
Think about it: for most people, a doctor’s quality is skin-deep. They are selected based on bedside manner, the convenience and appearance of their office, and a cursory understanding of credentials and whether your insurance is accepted. The closest patients really get is whether that doctor is recommended by a friend or trusted physician.
But if we look to workers’ compensation, we see an environment where shared incentives exist between the employer and patient, an environment in which many more factors are considered. Is that doctor known for ordering potentially unnecessary tests? What is the cost relative to other doctors? Have they delivered good results in the past? In other words, what is the value of the medical services being provided? In the context of healthcare, value is the correlation between cost and quality.
The lesson learned is that the success of any reforms will depend on the common alignment of all stakeholders, something the workers’ compensation market has recognized from its very inception.
About Ron Vianu
Ron Vianu is a 20-year veteran of the healthcare and technology space. Ron is constantly trying to solve problems to bring value to our partners. He works tirelessly to realize his vision of empowering patients to select better providers and to connect all stakeholders online to improve efficiency and quality of care. Prior to Spreemo, Ron successfully founded several healthcare technology ventures. In his free time, you can often find him at a NYC café or enjoying Sushi at his favorite eatery, Momo’s Sushi Shack in Williamsburg, Brooklyn. Ron studied Philosophy and Chemistry at NYU.
Spreemo is a cloud-based healthcare marketplace specializing in radiology services for the workers’ compensation market. Spreemo offers quality-based metrics and predictive analytics that enable employers and insurers to provide the best treatment for injured employees, improving outcomes and lowering the total cost of care. To learn more, please visit www.spreemo.com.