The Design Flaw in a $3.6 Trillion Health Economy

Walter Vasconcelos

Writing on the new world disorder triggered by the coronavirus, Thomas Kaplan, political reporter for The New York Times, sets our focus with language that reinforces the status quo: the payment mechanism.

"The future of America’s health insurance system has already been a huge part of the 2020 presidential campaign," Kaplan writes in his column yesterday, ‘It’s a Leadership Argumen’t’: Coronavirus Reshapes Health Care Fight. "At campaign events over the past year, voters have shared stories of cancer diagnoses, costly medications and crushing medical debt."

Except we’re still flailing in our strategies to reshape the health care fight. The storyline that’s been driving the kinetics and perpetuating the feedback loops behind the hand wringing and crisis — our mental frame —hasn’t changed in more than 50 years. Literally.

In 1967, President Lyndon B. Johnson convened a National Conference on Medical Costs. It brought together more than 300 of the Nation's health leaders, representing both providers and consumers of health services. The membership of the Conference included men and women trained in medicine, dentistry, pharmacy, economics, administration, and in other relevant disciplines. They represented a significant proportion of the men and women in this nation who have studied the rising costs of health care and the effect of these costs on the availability of medical care to all Americans.

In its final report delivered to this country’s executive leadership at the time, the “urgent need for a wide range of actions to deal with the rising costs of medical care” was clearly indicated by the members of the Conference. The projection of problems arising from increasing demands for health manpower, and the need for expanding and strengthening the Nation's supply of health personnel, was the subject of deep discussion and analysis.

“Even the most optimistic estimates of future manpower in the health services indicate chronic shortages for the foreseeable future. Emphasis was placed not only on the need for more physicians, dentists, nurses and other health personnel, but for the development of new and better ways to utilize the available and future supplies.”

Decades before Bernard Tyson, the late chairman and CEO of Kaiser, mainlined the concept that the hospital of the future would be the home, the Conference proposed focusing on “communities” as a path to producing health.

“Every community is responsible for well-organized, effectively implemented planning— broad gauged and long-range — to achieve the best possible system for delivering the highest possible quality of healthcare to all its people at the most reasonable cost,” summarized the report’s authors. “Through such planning, local priorities can be set up, duplication of services eliminated, and participation of all socio-economic groups encouraged.”

Their conclusion, as captured by John Gardner, the Secretary of Health, Education and Welfare at the time:

‘Everyone seems to agree that the existing system— or lack of system—has rather marked shortcomings. But there is not yet any agreement as to what a more perfect system would look like. It seems likely that we will go through a period of experimentation and in true American fashion may end up with several variation in different parts of the country, suiting local preferences and conditions.

Whether the health care system of the future should develop around the hospital as an organizational focus, or around the payment mechanism, or around group-practice plans, or around all of these in some sort of collaboration with State health planning councils— or whether other variants will emerge— is still a wide-open question.

You have listened to a lot of words in the past two days...I think it is fair to say that the discussions have reflected a universal recognition that change is necessary."

We’re still waiting.

The $3.6 trillion system of markets that comprise the U.S. health economy is organized as inputs for niche impacts, not outcomes from a coherent whole. At an individual level, the story is everyone doing the right thing for their businesses, brands and shareholders. At a system level, the story is collapse.

Value extraction for shareholder benefit vs. value creation for stakeholder benefit. Health care needs a new orientation. Reducing cost is not the same frame as producing health.

"The answer to why we’re running out of protective gear involves a very American set of capitalist pathologies,” writes Farhad Manjoo, op-ed columnist for The New York Times. His column this week, “How the World’s Richest Country Ran Out of a 75-Cent Face Mask,” described a uniquely American story about the nature of capitalism consuming our national preparedness and resiliency. “The rise and inevitable lure of low-cost overseas manufacturing, and a strategic failure, at the national level and in the health care industry, to consider seriously the cascading vulnerabilities that flowed from the incentives to reduce costs."

Failure takes time.

The next health care needs to be imagined around outcomes, not the insurance system. And for that, the gospel of innovation needs new words to think new thoughts.

#bigdesign

/ jgs