In 1970, “Bridge over Troubled Water” was the #1 song on the Billboard charts, gas was 36 cents per gallon, “Patton” was on its way to the top prize at the Academy Awards, and healthcare spending was just under 7% of US GDP.
Today, at more than 18%, healthcare spending accounts for nearly a fifth of the economy. In each decade since 1970, per capita growth of the healthcare sector has outpaced that of GDP overall. Adjusted for inflation, the average American consumer of healthcare services spends 6 times more today than they did in 1970.
Americans pay more for healthcare than any country on earth
By a lot. But given that we pay top dollar for health services, perhaps even more concerning is the fact that key health indicators and outcomes show that we don’t receive the kind of performance that would justify the cost. By now, many of us have heard the rankings rattled off: 55th in infant mortality; 43rd in life expectancy; 180th in obesity; 46th in maternal mortality ratio; 82nd in child vaccination rates; and the U.S. is dead last in per capita health expenditures compared to peer countries. Among peer countries, our disease burden and years of life lost are stark outliers by comparison. So, if we accept a definition of “value” as “what we get [divided by] what we pay”, why is the value of American healthcare so low?
Many reasonable hypotheses abound: the high cost of innovation, the aging baby boom generation, intellectual property law’s impact on pricing, cost-shifting from an overwhelmed public safety net, consumers demanding unnecessary care that drives high levels of utilization, and so on. While none of these answers is “wrong”, I would point toward a unifying theme, which this blog series and the accompanying eBook unpacks: the problem of misaligned incentives and how that drives an inefficient—and costly—output.
Power in alignment
The question we ultimately need to answer is: how do we help the constituents of the healthcare ecosystem work together more effectively?
In this blog series and companion eBook, Aligned Incentives: How Employers, Payers, and Providers Can Partner to Fix Healthcare, we unpack, with specificity, the role each of these sectors must play to help create the long-needed and sustainable healthcare system fixes capable of renewing the U.S.’s reputation as one of the most innovative, effective, and affordable healthcare delivery systems in the world.
Here are three key industry sectors that have the power and collaborative opportunity to bring this change to life:
Employers. We will primarily focus on larger self-insured employers in this series. These constituents are the organizations that operate as buyers of healthcare on behalf of their employees and dependents
Payers: We will largely focus on commercial insurance carriers in this series, though government payers play a huge role in the industry, as well. With employers as their customers, commercial health plans execute network contracts with providers and pay them for healthcare services.
All three sectors can together drive improved healthcare system value. But they are poorly positioned to drive the needed change entirely on their own. We’ll examine what the healthcare system needs from each sector, what each sector needs from the healthcare system, and how together they can chart a path forward to change healthcare value for the better.
We’ll look at how innovative thinking, careful management, and new resource deployment strategies can dissolve away the core challenges we face now to be replaced with an aligned interplay among employers, payers, and providers that benefits everyone, most especially patients.
4-Part Blog Series:
- Part I Intro - The Work to Be Done
- Part II - Employers’ Role in Delivering Change
- Part III - Payers’ Role in Delivering Change
- Part IV - Providers' Role in Delivering Change