In 1929, former teacher and Dallas school superintendent Justin Ford Kimball was hired by Baylor University to oversee its medical school, reverse falling occupancy rates in its hospital and address the financial problems posed by patients who couldn’t pay their bills. He saw that many unpaid

Justin Ford Kimball
bills were those of Dallas schoolteachers, so Kimball devised a plan that allowed teachers to prepay 50 cents a month for 21 days of hospitalization at the university’s hospital. In less than a year, 75% of Dallas schoolteachers had joined his prepayment program, and other employers followed suit. Kimball’s program became a forerunner to Blue Cross Blue Shield and an early model of employer-driven health insurance. 

Nearly 90 years later, the health care system and the insurance model that’s grown up around it has come to account for nearly 20% of U.S. GDP. The country spends about $3 trillion on health care, a total of nearly $10,000 per man, woman and child. What’s more, the Centers for Medicare and Medicaid Services projects that national health spending will rise an average of 5.6% per year from 2016 to 2025. 

Health care costs are rising at double the rate of inflation, and according to recent research by Gallup, the cost of health care is the greatest family financial concern for 17% of Americans, topping other concerns about high debt, lack of money and college expenses. About the same percentage of Americans (15.5%) said in 2016 that they had been unable to afford health care or medications their family needed over the previous 12 months.

In his 2017 book “Mistreated,” Dr. Robert Pearl, executive director and CEO of the Permanente Medical Group, sums up the problem this way:

“As a nation, we spend 50 percent more on medical care than any other country, and yet we rank seventieth globally in overall health and wellness. We pay U.S. physicians far more to intervene during a heart attack than to prevent one in the first place. We have the best-trained doctors on the planet, and yet their avoidable mistakes kill nearly 200,00 Americans each year. And as consumers, we demand the latest technologies from our banks, telecom providers and retailers, but we passively accept last century’s technology in our hospitals and medical offices.”

But while politicians in Washington, D.C., debate the hows and whys of delivering affordable health care to Americans, larger and less-discussed trends are afoot in the U.S. health care system that promise to change the way we get our care.

JB Silvers, Weatherhead School of Management

“We are on the edge of a lot of interesting changes,” says Dr. J.B. Silvers, professor of health care finance at the Weatherhead School of Management at Case Western Reserve University and a former insurance company executive. “This is a great time because everything is unfrozen. If you can think of a better way to do something, you’re going to find a receptive audience. We will have a lot of changes that will make a difference.”

THE INNOVATION ADVANTAGE

“Innovation is often overlooked as we have the policy debate at a national level,” says Baiju Shah, CEO of BioMotiv, which helps to commercialize new therapies developed at The Harrington Project for Discovery & Development at University Hospitals in Cleveland, Ohio. “It’s important to remember that innovation is critical for the industry and for patients — bringing to them more effective care, more efficient care, and more accessibility to care.”

Any discussion of the state of health care in the U.S. often drifts toward comparisons of our standards and quality of care with that of other countries, namely the fact that we spend double what other countries pay for their care. That’s an assertion for which Shah always has a quick response. 

Baiju Shah, BioMotiv
“People try to oversimplify comparisons of the American system to other systems and come to the conclusions that people elsewhere are getting better health care at a cheaper price,” he says. “It’s a gross oversimplification for political reasons. I can tell you that patients in other countries do not have access to the types of treatments or quality of care that we have here in the U.S. That’s why people travel here when they have complex needs.”

Many of the flaws of our current health system can be attributed to the fact that it is a system built for a different time, says Aaron Turner-Phifer, with a patchwork of modifications that have built up over the years but aren’t in sync with the way care is delivered today. 

“A lot of the requirements and laws and rules were designed for a delivery system in the 1960s,” says Turner-Phifer, who serves as director of government relations for the Washington, D.C.-based health care accrediting agency URAC. “Simply creating exceptions to 50-year-old laws and rules built for a different era won’t be sufficient to encourage or keep up with innovation that’s going to occur.”

While the innovation we hear about most in splashy headlines is in new pharmaceuticals and medical devices, there is also quiet innovation happening in the models for health care delivery. First among them is the shift away from fee-for-service — those individual billing codes you see for each visit, test, procedure and therapy — and toward the idea of paying for value. 

It’s a change that’s already underway, and it’s one that will continue apace regardless of the fate of the Affordable Care Act or its potential replacement. The idea is to reimburse health care providers based on value measures like patient outcomes, effective use of resources, clinical practice improvements and more. It challenges all health care providers — including doctors, pharmacists, specialists, pharmacists and more — to provide coordinated care with the patient at the center. 

“There’s universal agreement among the stakeholders in health care and bipartisan support and acknowledgement that the move from volume to value has to take place,” says Turner-Phifer. “We are headed down this track, and regardless of who controls Congress or the White House this will likely continue.”

As the shift toward value-based payments proceeds, Turner-Phifer says patients will begin to notice increased communication at each touchpoint with the health care system. They’ll get more phone calls from their doctors checking in with them, and interactions with case managers or others tasked with keeping track of their care. Accountable care organizations (ACOs) were created as part of implementation of the Affordable Care Act to encourage health care providers and systems to form networks of coordinated care for Medicare recipients, and nearly 800 such organizations exist today. 

“One of the exciting things about moving away from fee-for-service is that there will be spaces and opportunities for innovators that didn’t exist in the fee-for-service world, just by the virtue of changing how we are paying,” says Turner-Phifer. “When we talk about delivering and paying for care around an entire person and their care needs, there will be things done differently, and in those spaces is where innovation will be done.”

PRIMARY CARE AT THE CORE 

One of the innovations in care delivery that  Dr. Kurt Stange is most excited about is direct primary care, a small but growing movement of primary

Dr. Kurt Strange, Neighborhood Family Practice
care physicians seeking to return to a traditional approach to family medicine. Such practices charge a monthly fee — with rates for individuals or families — for unlimited primary care separate from the insurance system. Most patients also carry a high-deductible insurance policy to use in cases of hospitalizations or specialty care. Patients get access whenever needed to their doctors without copays; physicians get to take their time with each patient without the administrative burden that comes along with insurance.

“There’s been a corporatization of health care, which is not really the way to get better results,” says Stange, a family and public health physician who practices at Neighborhood Family Practice, a federally-qualified community health center in Cleveland, Ohio. He is also a faculty member in the Case Western Reserve University School of Medicine. “When you have an idea for an innovation, it’s a huge deal to get it through the corporate bureaucracy. There’s a lot more innovation happening in these small direct primary care systems than in the big systems.”

A shortfall of more than 20,000 primary care physicians is projected by 2020. Where investment in primary care occurs in major hospital systems, Stange sees the benefits negated by the increase in patient volume expected. 

“What we really need to do is invest in the people on the front lines, developing relationships with people, getting to know people, so you know when a person with a headache really needs a CAT scan,” he says. “If you can integrate care, invest in both sides of a relationship, when something bad does happens you have someone who knows you.”

As the health of Americans has changed, it’s also changed the way health care is delivered. According to the Centers for Disease Control and Prevention, about half of all adults — 117 million people — had one or more chronic diseases in 2014, and one in four had two or more. Seven of the top 10 causes of death were chronic conditions and two of them — heart disease and cancer — accounted for nearly half of all deaths. Chronic disease accounts for about three-fourths of all health care spending. The trend isn’t headed in the right direction, either; rates of obesity, diabetes, heart disease and more continue to rise.  

“We haven’t figured the right way to incentivize the development of new approaches, treatments or otherwise, that would support wellness as opposed to health care,” says Shah, who previously led BioEnterprise, a partnership of Case Western Reserve University, Cleveland Clinic, Summa Health System and University Hospitals that provided business formation, recruitment and acceleration to bioscience companies in Northeast Ohio. “We have a lack of incentive for firms to bring to market products and services that would support keeping people healthy. That needs to change.”

The shift to value-based care likewise holds promise for more integrated approaches to care of chronic diseases. “Most people who are costing a lot of money but aren’t well served by the health care system have multiple chronic diseases,” says Stange. “We are giving them disease management for each illness. We need horizontal integration, not just integrating people for each disease, but integrating care for people and communities. You need to bring together public health and health care.”

PATIENTS? OR CUSTOMERS? 

On any given trip to an electronics store, consumers are just as likely to be cruising Amazon comparing prices as they are reading up on a product’s capabilities. Big data allows advertisements to be pushed out to us at every digital moment, tailored to our buying behavior. We are consumers that expect exceptional customer service in nearly every turn of daily life, so why should health care be any different? Increasingly, we “shop” for health care the way we “shop” for anything else, and it’s changing the way health care is delivered.  

“If you would have said ‘patient experience’ 10 years ago, people wouldn’t have known what you were talking about. … Now they are beginning to think about it as a service organization,”  says Silvers. “But when you compare with other service organizations, we’re still doing a pretty bad job. But we are actually paying attention for the first time. That definitely will get better.”

Treating healthcare like a service organization
Billboards and ads trumpet hospitals’ low emergency room wait times. Health care organizations compete in their marketing to become your choice for that knee replacement you need, or herald their adoption of the latest in noninvasive surgery techniques. And patient satisfaction surveys have become increasingly common, joining so many other retailers and service providers. 

Tools like Hospital Compare allow patients to search and compare health care systems in their area to see ratings from other patients on how well their doctors and nurses communicated with them, how well their pain was controlled, how much understanding they had about their care before going home and other measures. 

Many physicians oppose the growing emphasis on patient experience on the basis that when it comes to medical care, customer satisfaction doesn’t necessarily correlate to quality. But Turner-Phifer predicts that the trend toward bringing consumer behavior to health care consumption will only increase with the shift away from fee-for-service.

“We’re likely to see increased attention on winning you as a customer,” he says. “Assuming that the patient is the focus, increased interactions will happen, patients will have more options in their care, so you will see hospitals, physicians, pharmacies, and others directly engaging and promoting their services to the patient.”

ENVISIONING THE FUTURE

The problems are systemic, and change will be slow. Though the health care debate in Washington seems intractable to many, these experts are seeing developments today that give them hope for a renewal of the health care system of tomorrow.

“What makes me most hopeful for the future is the changing dynamics among stakeholders,” says Turner-Phifer.

You are seeing physicians, employers and insurers all start to engage with each other. … They are starting to change the way they look at the problem of delivering affordable health care and are starting to think in new and innovative ways.

The consolidation of health care will continue, asserts Silvers, meaning that roadblocks to grassroots innovation will persist. Health care technology will continue to develop toward fulfilling its potential as a tool in providing coordinated care and encouraging population health. 

“Right now [electronic health records] are used primarily as a clinical system,” Silvers says. “One of the the next big things will be ‘what can I tell that will let me do a better job designing the locations of my services? What else needs to work with this? How can I reach out to patients? Where do I really do a good job and where do I not do a good job?”

The promise of these trends is a health care delivery model where patients are placed in the center. 

“If we can figure out how to do this the right way, we are talking about a delivery system where you only go the hospital when you absolutely need it, the folks with the most complex conditions and greatest issues getting access to care will live in a world where they are only one phone call away from getting the care that they need,” says Turner-Phifer. “The amount of lives that can be changed and saved in that world is pretty amazing.”