Health care at half the cost: What will that actually look like?

Health care costs far too much. We can do it better for half the cost. But if we did cut the cost in half, we would cut the jobs in half, wipe out 9% of the economy and plunge the country into a depression.

Really? It’s that simple? Half the cost equals half the jobs? So we’re doomed either way?

Actually, no. It’s not that simple. We cannot of course forecast with any precision the economic consequences of doing health care for less. But a close examination of exactly how we get to a leaner, more effective health care system reveals a far more intricate and interrelated economic landscape.

In a leaner health care, some types of tasks will disappear, diminish, or become less profitable. That’s what leaner means. But other tasks will have to expand. Those most likely to wane or go “poof” are different from those that will grow. At the same time, a sizable percentage of the money that we waste in health care is not money that funds health care jobs, it is simply profit being sucked into the Schwab accounts and ski boats of high income individuals and the shareholders of profitable corporations.

Let’s take a moment to walk through this: How we get to half, what disappears, what grows and what that might mean for jobs in health care.

Getting to half

How would this leaner health care be different from today’s?

Waste disappears. Studies agree that some one third of all health care is simple waste. We do these unnecessary procedures and tests largely because in a fee-for-service system we can get paid to do them. If we pay for health care differently, this waste will tend to disappear.

Prices rationalize. As health care becomes something more like an actual market with real buyers and real prices, prices will rationalize close to today’s 25th percentile. The lowest prices in any given market are likely to rise somewhat, while the high-side outliers will drop like iron kites.

Internal costs drop. Under these pressures, health care providers will engage in serious, continual cost accounting and “lean manufacturing” protocols to get their internal costs down.

The gold mine in chronic. There is a gold mine at the center of health care in the prevention and control of chronic disease, getting acute costs down through close, trusted relationships between patients, caregivers, and clinicians.

Tech. Using “big data” internally to drive performance and cost control; externally to segment the market and target “super users;” as well as using widgets, dongles, and apps to maintain that key trusted relationship between the clinician and the patient/consumer/caregiver.

Consolidation. Real competition on price and quality, plus the difficulty of managing hybrid risk/fee-for-service systems, means that we will see wide variations in the market success of providers. Many will stumble or fail. This will drive continued consolidation in the industry, creating large regional and national networks of health care providers capable of driving cost efficiency and risk efficiency through the whole organization.

What’s the frequency?

So what’s the background against which this has to take place? What’s going to affect health care from the outside? Mainly three broad trends:

The economics of yawns. We can expect more of the same, with continued inequality, most economic gains going to the top 1%, and continued deprecation of the middle and working classes. This will express itself in an ever mounting need and demand to bring people greater access to health care, which includes bringing the actual costs to the consumer/patient/voter down.

Boomers again. Boomers will continue bulking up the Medicare demographic. The current trends will become even more stark: costs per beneficiary down, overall costs up. Just pre-retirement Boomers were the group hit hardest by the great sucking sound of 2008 which magically disappeared massive amounts of equity in home values, IRAs and 401(k)s. The effects span generations: Not only are the Boomers struggling themselves, they have far fewer resources available to give help when their children and grandchildren sink into a health crisis.

Political momentum. The relative success of the ACA in getting people covered  gives the political momentum to expanding coverage further, such as through expansion of Medicaid in states that have not accepted it. It will especially add oomph to any political or market attempt to lower the actual cost of health care for the patient/consumer/voter.

What will grow anyway?

However successful we are or are not at making health care leaner, one thing the next few years will not be is business as usual. The current trend toward massive regulatory complexity will most likely continue. There are no forces or mechanisms emerging yet that would change that trend. At the same time, the economics of running a health care organization will get much more complex, which means so will strategic planning, capital planning, and every other top management task.

So we can expect growth in the regulatory compliance sector of health care employment. At the same time, health care planning, forecasting, financing, and strategy skills need to put on muscle, whether in-house or through consultants.

How will parts of health care get lean, trim down, atrophy?

Waste. Any payment system that gets around fee-for-service and puts the health care provider at some risk for good outcomes will push health care providers to compete to give the best possible outcome at the best available price. Any such competition will tend to drive wasteful, unnecessary, and unhelpful practices out of the market — you’re not going to do it if you can’t get paid for it. These include such common practices as complex back fusion surgery for simple back pain, computer analysis of mammograms, the use of anesthesiologists in routine colonoscopies, the routine use of colonoscopies for mass screening, some two thirds of all cesarean sections, over $1 billion worth of unnecessary cardiovascular stents done every year, and on and on. If your business model or your career depends on a technique that honestly doesn’t score all that well on a cost/benefit scale, this would be a good time to rethink your business model or career.

Prices. With growing price transparency and a growing willingness of buyers to go far afield if need be to find the right deal, it will become increasingly difficult for manufacturers of devices, implants, pharmaceuticals — indeed, any supplier to health care — to continue to insist on outsize profit-driven prices. It will be hard to charge $21,000 for a knee implant when the exact same device can be bought in Belgium for $7,000. Similarly, with reference pricing and comparison shopping becoming more common, it will be very difficult for your hospital to get business if you insist on charging over $100,000 for a new knee.

Automation. Many job categories across health care, from messengers and janitors to neurosurgeons and oncologists will be supplemented or in some cases entirely replaced by robots and software.  We are already seeing widespread automation of  labs and pharmacies. HVAC systems are auto controlled and remotely monitored. Security is enhanced with surveillance cameras, robotic patrols, and position sensitive ID badges. But automation will move much higher up the skill scale, as DNA analysis and volumetric CT and MRI scans replace much of the work of many oncologists, and next-generation scan-driven high precision proton beams replace neurosurgeons at some of their most delicate tasks — even as new custom-built DNA-based personal pharmaceuticals may obviate any need for surgical removal of tumors at all.

Automation of various kinds will show up increasingly in every task category throughout health care, extending individual’s powers, raising productivity, and increasing the team’s capacity while eliminating jobs.

Cost accounting and lean. Under a fee-for-service system, in which you can charge for each item, inefficiency is a business model. If you’re getting paid a bundled price or a per-patient per-month stipend, suddenly inefficiency is a drain on the bottom line. You simply must recognize your true costs and use strong “lean manufacturing” protocols to get them down. In the organizations that get this right we can expect large increases in productivity, which will mean both increases in capacity and loss of some jobs, either in the organization that is succeeding or the organizations that it is competing against.

What will grow?

In a health care economy that is moving toward “leaner and better,” which categories would increase?

A leaner and better health care will have to do far more in preventing and managing chronic disease. We are losing rather than gaining the extra primary care physicians that we need to lead that charge. The most successful disease prevention and management programs are based on team care. The most efficient and effective way to influence behavior, especially of “super users,” is through trusted lines of communication with real clinicians — being efficient requires putting a crew on it, increasing rather than decreasing the people who have actual patient contact. So we can expect strong growth in any category that could add to that crew, such as:

Complementary and alternative practitioners. When you get paid to do medical stuff to people, why give any business to rival modes? But when you get paid to help people be healthier, why not throw into the mix modalities such as chiropratic, acupuncture, and others which can often show strong results at a fraction of the cost? Why not try them first?

Physical therapy. Remember those Boomers massed at the gates? Many of the aches and pains of aging are better served by cortisone, ibuprofen and yoga than by back fusion surgery and new hips. Physical therapists, like chiropractors and acupuncturists, can be a first line of defense against higher medical costs.

Home health. Vulnerable populations (such as pregnant women, newborns, people with multiple chronic conditions, and the frail elderly) can often be cared for in the home for far less cost than any acute care that can be avoided. New communication technologies can make home health care cheaper, more constant, more data-driven, and more effective.

Enhanced medical home. The Vermont Blueprint and other programs have shown the efficiency and effectiveness of expanding the “medical home” home concept into teams staffed by physician assistants, nurse practitioners, community health specialists, behavioral health specialists, indeed any category of helper that can strengthen and deepen the bond with the family caregiver or the patient.

Behavioral health and addiction. In a fee-for-service world, the behavioral practices have been given short shrift. Considering how much illness and accident is driven in one way or another by addictions and other behavioral problems, any health care system run by “value” rather than “volume” is going to hire a lot more psychologists and family counselors.

IT support. The next health care will be modulated not only through docs’ BYO devices, but through multiple types of cheap sensors, gadgets, dongles, and apps. In order for them to be medically useful, they must be integrated into the system’s IT and EMRs. The need for integration and support of the device swarm will grow rapidly.

Tech industry. We can expect that creating such devices and software, especially those connecting the patient and caregiver to the clinic and clinician, will be a big growth area in the tech industry.

What’s the trend?

The shift can’t be captured in one big trend that devours everything. But there is this: Most of the things we will doing less are the kinds of things that have made a lot of the “procedure guys” rich over the last few decades, unnecessary procedures and tests that use lots of big machines, expensive implants and other hardware. Most of the parts that will grow emphasize real patient contact, though often at a lower skill and expense level. “Fewer back surgeons and implants, more physical therapists and exercise classes” could stand as a metaphor for the shift.

So while “health care at half the cost” would definitely mean fewer jobs in health care, it would not mean half the jobs. It would mean more jobs in direct patient handling, especially in primary care, while allowing less profit for suppliers and providers and high-end procedure specialists doing unnecessary work as well as charging unsupportably high prices. And that, my friends, would be a success.

Joe Flower is a health care speaker, writer, and consultant who blogs at Healthcare Futurist: Joe Flower

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