In healthcare, as in life, people spend a lot of time and attention on how things should be. They would rather focus on what they can actually do.
As an example, between 57% and 70% of American voters believe our country should have a single-payer healthcare system like Medicare for All. Similarly, public health advocates are spending much of the country’s $4 trillion health care budget to combat the social determinants of health (such as housing insecurity, low-wage jobs, and other socioeconomic stresses). “should be spent” on None of these ideas will come to fruition, nor will the dozens of positive healthcare solutions that “should” come to fruition.
There is always a reason why things that should happen don’t happen. In healthcare, the biggest obstacle to change is what I call the monopoly complex, which includes hospitals, drug companies, private equity physicians, and private health insurers. These powerful entities have exclusive control over the country’s healthcare delivery and funding. And they continue to vehemently oppose changes in health care that limit their influence and income.
This article concludes my five-part series on medical monopolies by explaining why (a) things that “should” happen in the healthcare industry, but (b) industry-wide disruptions.
Why governments don’t take the lead
With the U.S. Senate split 51-49, with virtually no chance of either party securing the 60 votes needed to evade the filibuster, Congress will, at best, tinker with the health care system. That means no Medicare for everyone and no radical redistribution of healthcare funding.
Health care incumbents will lobby and withhold campaign contributions (which have exceeded $700 million a year over the past three years), even as elected officials begin on the road to major reforms. threaten and defeat legislative efforts that may harm their interests.
In American politics, money speaks. Even if voters believed they should, that’s not going to change anytime soon.
American Employers Don’t Lead
Private payers wield great power and influence of their own. In fact, the Fortune 500 makes up two-thirds of US GDP and generates more than $16 trillion in revenue. And they provide health insurance to more than half of the American population.
With all this clout, you’d think management would demand a lot more from a healthcare monopoly. You might want to oppose the popular “service fee” payment model, replacing it with a form of reimbursement that rewards the quality (rather than quantity) of care provided by doctors and hospitals. You might think that we would insist on having employees receive treatment through technologically advanced multi-specialty medical groups.
Instead, companies take a more passive stance. In fact, employers are willing, with little resistance, to pay premium increases of 5% to 6% for him each year (twice his average earnings growth).
One of the reasons they’re more willing to raise rates than fight insurance companies, hospitals, and doctors has to do with the startling truth about insurance premiums. Business leaders figured out how to pass much of the added premiums on to their employees in the form of health insurance plans with high deductibles. Plans with high deductibles require beneficiaries to pay the “first her dollar” of medical bills, which significantly reduces the premiums employers pay.
Companies also recognize that high deductibles only put a financial strain on employees who experience an unexpected and devastating illness or accident. feels no pain. When it comes to employees with ongoing and costly medical issues, employers typically don’t mind seeing them go out with high out-of-pocket costs. Their retirement will only reduce the company’s medical expenses in the future.
Finally, businesses know that their employees’ medical expenses are deductible, mitigating the impact of premium increases. So starting with a 6% annual increase will ultimately cost the employee 3%, the government 1% and the business 2%. In today’s strong labor market, which boasts the lowest unemployment rate in 54 years, companies are reluctant to demand change from the biggest players in healthcare.
Leading healthcare transformation
If there was a job posting for “Leader of America’s Healthcare Revolution,” the pool of applicants would be shallow.
Elected officials shied away for fear of losing election contributions. Businesses and executives missed this opportunity, preferring to pass insurance costs on to their employees and governments. Patients will be overwhelmed by the power of work and incumbents. Doctors, nurses and hospitals, despite their dissatisfaction with the current system, will want to take small steps out of fear of monopoly complexes and the risk of disruptive change.
To revolutionize healthcare in America, leaders must possess three characteristics:
- Sufficient scale and financial reserves (not just a fraction) to disrupt an entire industry.
- Nationwide presence to leverage economies of scale.
- Willing to accept the risk of fundamental change in exchange for the potential to generate huge returns.
Leading people don’t make these investments because they ‘should happen’. They’ll take their chances, as they’ll be more dramatically upturned than sitting on the sidelines.
Potential Winner: American Retailer
Amazon, CVS, Walmart, and other retail giants are the only entities that fit the innovative criteria above. In the healthcare monopoly game, it is they who are willing to take risks and can disrupt the industry.
Over the years, these retailers have acquired the necessary game elements (pharmacy services, health insurance features, innovative healthcare delivery organizations, etc.) to one day take over America’s healthcare.
CVS Health owns health insurance company Aetna. He acquired value-based care company Signify Health for $8 billion and national primary care provider OakStreet Health for $10.6 billion. Walmart recently signed a 10-year partnership with UnitedHealth, the largest U.S. insurer, giving him access to 60,000 employed doctors. Walmart then acquired LHC, a large home health care provider. Finally, Amazon recently acquired primary care provider One Medical for $3.9 billion and maintains close ties with nearly every self-funded business in the country.
Harvard business professor Clay Christensen says that most disruptive change comes from outsiders. Because incumbents cling to overly expensive and inefficient systems. The same is true of American healthcare.
Retail giants recognize that healthcare is prohibitively priced, uncoordinated, inconvenient, and technically deficient. And they’ve recognized hundreds of billions of dollars in revenue, which they’ve been able to make by offering a consumer-focused, highly efficient alternative.
How will transformation happen?
Initially, I think retail giants will take a two-pronged approach. They will (a) continue to promote paid medical services through pharmacies and retail clinics (both in-store and virtual) and (b) seize every opportunity to grow their market share with Medicare Advantage, a leading option for people. make use of it. 65 years of age or older.
Also within Medicare Advantage, we are exploring ways to leverage sophisticated IT systems and economies of scale to provide better coordinated, technically supported, and lower cost care than is currently available. To do.
Rather than including physicians from all regions in our network, we rely on our own clinicians, augmented by a limited cohort of top performing medical groups in the region. And instead of including every hospital as an option for inpatients, we contract with highly respected Centers of Excellence for procedures such as cardiac surgery, neurosurgery, total joint replacements, and transplants for low prices and high volumes. trade.
Over time, they have reached out to self-financed businesses that offer proven superior clinical results and guaranteed lower total costs. Make a human head model. Along the way, we will apply consumer-driven medical technologies, including the next generation of ChatGPT, to empower patients, provide continuum of care for those with chronic diseases, and ensure that the care provided is safe and most effective. I assure you that it is valid.
Longtime Los Angeles Dodgers manager Tommy Lasorda once said: Those who see what happens, those who make it happen, and those who wonder what happened.
Lasorda’s irony describes today’s healthcare. Incumbents are watching closely, but as retailers acquire medical groups and home health functions, they are missing the big picture. Retail giants are making big moves, gathering the ingredients they need to completely transform the way we think of American healthcare today. Finally, tens of thousands of clinicians and thousands of hospital administrators ignore or underestimate retail giants. And when they are left behind, they will wonder: What happened?
A collection of monopolies dominates healthcare today. Amazon, CVS, and Walmart think they should rule. And if I had to bet on who would win, I would bet my money on the retail giants.
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