So, how did we get there?
By way of our payment system. Our long-standing fee-for-service system has encouraged a focus on the volume of services, and not so much the value of them — and certainly not the need for reducing them.
That, of course, is starting to change as we move toward risk-based payment structures. It’s about time.
Finally nonprofit healthcare providers will be able to generate revenue to carry out their missions in a way that is more aligned with those missions. And, the for-profits can continue to drive revenue and margins through even greater efficiencies and aggressive risk-based contracting. More revenue for the bearer of the risk will come not from the provision of services, but from keeping patients healthy enough so that they don’t need them — or, for those patients that do, providing them in the lowest-cost setting possible.
Executives of healthcare provider organizations have been conditioned throughout their careers to drive results that aren’t that different from those desired by Wall Street — greater revenue, greater profit. But the truth is healthcare is very different from the industries closely followed by Wall Street. The goal should never be for greater revenue if greater revenue means more services and sicker people. And unfortunately, we’ve been operating in such an environment for decades. One day revenue will denote success at keeping people healthy and managing chronic illness — what we’ve wanted from our healthcare providers all along. Let’s hope our industry moves swiftly toward this new end-state, since doing so will mean patients too will benefit when investors do.
