Goodbye ACA: Will innovation go with it?

Written by Steve Gordon, MD, and Hannah Berson, Point B Management Consultants | January 24, 2017 | Print  |

Whatever the future holds for ACA, the shift to value-based care is here to stay – and the role for disruption and innovation along with it.

Unsustainable cost inflation, unconscionable millions of uninsured and under-insured, and embarrassingly poor and variable healthcare quality and outcomes compared to other nations. These characteristics of the U.S. healthcare system spawned the Affordable Care Act (ACA). Disruption and innovation, evident in the healthcare industry prior to the ACA, accelerated after adoption. While the ACA may have been a recent catalyst for change, the U.S. healthcare industry was already headed toward a value-based system, as experts and policy analysts warned that the fee-for-service healthcare model is unsustainable. And now Donald Trump and congressional leaders are targeting the ACA for an extreme makeover. Is there still a burning platform for market-based change and innovation?

The U.S. pays more for and gets less from its healthcare system than peer nations. Diverse explanations exist but stem mainly from misaligned incentives, a dominant fee-for-service payment model, and fragmentation of care delivery. Persistent under-performance spells trouble for long term competition in the global marketplace. The question is not whether the ACA will be rolled back…it will. The real question is if not the ACA, then what? How will providers accelerate efforts to improve quality and efficiency and drive out waste? How will payers meet consumer demand for simplified and personalized experiences that won’t break the bank? How will healthcare organizations demonstrate that integration through mergers and affiliations improves bottom lines by driving true value creation (more for less) and not just pricing power (the same for more)? The time is riper than ever for innovation and market-based reforms as an alternative to government-based solutions. Necessity is the mother of invention.

The shift to value-based healthcare creates opportunities in the market for innovation. Delivering a new kind of healthcare experience is driving existing and new players into entrepreneurial partnerships—and competition—unlike what the industry has previously experienced. There is a window of opportunity for strong organizations to affirm their roles as market leaders.
Disrupt, Innovate and Win
So, what’s next? While the ACA itself will change, the overall direction of healthcare as an industry will not. The drive and pressure to reduce costs and deliver value will accelerate among industry stakeholders, resulting in new models of care, new partnerships, and new demands for each to clearly delineate the value they contribute. Organizations must continue to invest and innovate. Along with cost pressures, competition from sources such as retail health, concierge medicine, and mobile technology are changing the market.
Many large healthcare systems have the resources needed to generate and implement innovative ideas. Others are developing solutions suitable for commercialization in partnership with expert entrepreneurial companies capable of scaling and selling outside the healthcare organization’s market.
Entrepreneurial energy is being applied to healthcare solutions as organizations work to develop and scale workable models. One such example is Delta Dental, the leading dental benefits company with the largest statewide market share in Washington. Leveraging methodologies more typically used by start-up organizations, Delta Dental helped one of its own clients make employee health benefits more accessible, valuable and relevant. The solution was to create an on-site dental clinic just for employees that would be a hassle-free way for employees that couldn’t get away from the office to get their dental needs taken care of by professional dental providers.

As the Delta Dental example illustrates, healthcare organizations that invest in partnerships, learn and integrate innovation-spurring approaches, and implement structural changes that support consumer-centered care will position themselves to be the cost and quality leaders. The need for innovation increases dramatically as provider and payor systems reach the limits of their existing infrastructure for improving care and service quality, reducing internal costs, and delivering services at the most cost-effective access points for consumers.

As organizations look to innovate and drive change across the organization, be sure to:

• Decide what your organization must do to meet emerging consumer trends
• Identify what you can realistically accomplish in-house and your limitations
• Find partners to fill in the gaps.
• Build pilot programs with quick iterations and low risk to failure
• Top down: ensure clear strategic alignment, prioritization governance, and budget process
• Bottom up: ensure the pieces are in place for execution, including project teams with necessary expertise
• Incorporate voice of the customer into product/process development
• Remove organizational siloes.

Despite what becomes of the ACA, disruption is here to stay. Shape your organization’s future—and the future of healthcare—by using a consumer-centric filter and a flexible approach to strategic planning. Those that fail to anticipate trends and competitive forces stand to lose out to new entrants to the market. Organizations that re-create themselves and are willing to partner with others to meet emerging needs will flourish. Both roads are painful—but the latter is what the healthcare industry has wanted to do for many years. Market conditions for innovation and change are better now than ever.

About the authors:
Steve Gordon, M.D. is a national principal healthcare consultant with Point B Management Consultants. Steve has three decades of progressive healthcare experience as a clinician, educator, executive, and board member. Steve trained in internal medicine at Massachusetts General Hospital and attended Harvard University for his Bachelor, Master in Public Policy and MD degrees.

Hannah Berson is a consultant with Point B Management Consultants. She has more than two decades’ experience in the consulting industry spanning healthcare, financial services, telecommunications and media. She holds an MBA from London School of Economics, BA, summa cum laude, Hebrew University.


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