My old boss Bruce Broussard, for whom I worked at US Oncology when the company was acquired by
Broussard now is the CEO of
With this backdrop, Bruce’s words had a certain resonance. He got the audience perked up by reciting some well known features of the American healthcare system: we spend about three trillion dollars annually and waste one of every three of those dollars, while as much as 60% of the average physician’s time is unproductive or unhelpful to their patients. And it is likely to get worse before it gets better, he noted, since the American system was designed to treat episodic illness rather than handle the chronic care that increasingly typifies the needs of our aging population.
Now that he had the crowd of industry executives and employees listening with rapt attention, he was ready to proselytize in a way befitting a Texas Baptist. He warned everyone that they would not like his message, but they needed to heed it: our dated policy perspectives and ingrained business practices are inhibiting progress as we try to reform a broken system that rewards activity instead of value. We don’t need more technology, he said, we need effective leadership.
Specifically, insurance companies need to make billing and collection simple and to change the conversation from restricting coverage to improving health. Providers need to transition from fee for service to value based incentive payments; and by the way, we have far too many hospital beds and we need to shrink the asset base. Technology firms need to make their product readily available to improve efficiencies and interconnectedness, and stop charging tolling and license fees for each user or patient at every stage. Pharmaceutical and medical device manufacturers should be paid on the basis of the beneficial outcomes provided by their products, and not by point of sale transactions that drive revenue and earnings.
I don’t have any doubt that, should all of these things occur, we would have a more efficient and less costly healthcare system in America. However, each of these solutions would require that industry executives behave in ways that are demonstrably opposite their vested economic self-interest. Should we expect the private sector to reform itself while going against the grain of market forces? I don’t believe that economic principles are inherently contrary to ethical values and the public good, but I have always thought that government existed precisely to tackle the very kind of societal problem that Broussard is describing. Regardless of what you think about Obamacare, it did establish incentives in an effort to reduce healthcare costs and improve quality. As an aside, consider the Dodd-Frank banking reforms and the Volcker Rule; does anyone seriously believe that Wall Street would have increased capital requirements and limited proprietary trading on its own?
I noticed some uncomfortable shifting in the seats around me. Broussard bolstered his point by identifying three companies that had, largely on their own initiative, changed their business model and in so doing changed the industry paradigm:
We were in the Windy City, and as the crowd filed out the Blues Brothers classic recording of “Soul Man” blasted from the massive ballroom speakers. Maybe it’s just me, but I couldn’t help wondering if it was prophetic or merely ironic that lead singer John Belushi died at the ripe old age of 33.
