Business Should Attend the June 24 Oregon Health Forum Breakfast

Michael Rohwer argues that the business community must begin to re-engage the problems of health payment reform. The upcoming Oregon Health Forum Breakfast is a vital and important starting point.

OPINION -- Everyone agrees: Healthcare is unsustainable in its current form. Its cost growth has been the top category of inflation for decades. It is in fact growing faster than the economy, and it cannot and will not go up forever. How did we get here?

Cost was a big concern in the 1980s, so we concentrated our effort on the delivery system and zeroed in on constraining “unnecessary care.” Along the way, the purpose of healthcare shifted from serving the patient to a focus on the delivery system. If you step back and look at what we have done and measured over the last three decades, you see lots and lots of process.

“Fee for service” is payment for process. “Value-based bundles” are processes bundled into a bundle process. And many of these processes need a big cast of supporting organizations and administrative layers that span the breadth of the system. We don’t seem to know how to manage without filling the system with process and activity. Yet none of this is truly containing costs or getting us where we need to go.

Our present business model is based on price control and limited access. We dress it up in different language, of course. We call it “fair payment” and use a range of artificial formulations to determine what’s fair. We say it’s “prevention of unnecessary care,” yet the criteria and enforcement of necessity is by people who never see or touch the patient. Truth be told, the system is really serving itself. The patient’s needs are defined by and for the system.

No one believes this is how it should be. Our current system is behemoth and consolidating. It has inertia through scale, rigidity, and a firm belief that it knows what is best. In reality, it’s strangling the health out of healthcare. Practitioners who still hold a professional perspective are burning out and emotionally disconnecting. Others have lost sight of their noble calling and see their work as nothing more than a job and a paycheck. This is a distinct problem because healthcare is a knowledge business. The point of care is where we deliver our product. If the point of care lacks knowledge or professional commitment, we risk becoming mired in hopelessness. But that is not the only problem.

Our system’s massive infrastructure is maintained by a disproportionate burden on employees with private sector insurance. Their premiums make up for high system cost not covered by public sector health insurance. Healthcare will collapse when those purchasing insurance for their employees fully comprehend our faulty business model, see how little they control, and decide to step back without a better solution. When that begins to happen, the probable outcome is that more will snowball to the same conclusion and 18% of GDP will become deeply “red.” So-called solutions that bend the cost curve only delay the inevitable. We will run out of money. The question is when, not if. More important, however, is the fact that the problem is structural and will persist in single payer solutions. We cannot keep doubling down on what hasn’t worked for more than 30 years.

My view of what is possible

The good news is that today’s healthcare can be transformed every bit as much as the computer and information systems were in the 1990s. That market was dominated by big and robust systems. Costs were enormous and inflation high. But then the PC and the internet enabled powerful networks of knowledge workers and gave them the opportunity to create new value. Cost fell, not because we restricted unnecessary access, but because we now had new value at lower cost. Healthcare can do the same, but it requires looking at the problem in a different way.

The solution is to understand the nature of healthcare and how it functions, and move to a better business model. Today’s “Big Iron” healthcare is in a similar position to “Big Iron” computing of the 1990s. The healthy disruptive change of that industry can be achieved in healthcare. This is possible because of better system science, scale-free adaptive networks, the potential of virtual organizations, and the examples from other knowledge-based industry. This is what the new Community Health Innovation Accelerator project is about.

If you are a member of the business community and interested in a better future, come to the Oregon Health Forum Breakfast on June 24. I am just one member of a panel that will discuss several perspectives on how we can make a difference. We have valuable information to share and would appreciate your feedback. We look forward to seeing you there and together we can bring healing to healthcare.

Dr. Michael Rohwer is Founder of the Community Health Innovation Accelerator Project and Former CEO, PH Tech. He can be reached at [email protected]

To register for the June 24 breakfast forum, click here

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