Evolving Models – Will it help shift the cost base of Healthcare?

Couple of months back when the democratic and republican candidates were fighting over their turf, healthcare was one of the agenda on the boxing ring. Both the candidates proposed their plan for healthcare which was taken sides by people who find it favorable to them. Patient Protection and Accountable care act, publicly known as Obamacare, has been named aptly with addition of over 30 million people into insurance net and being protected from pre-existing condition as well. Accountable part is also interesting as it incentivises the healthcare provides to improve the quality of delivery and outcome upon which their reimbursements from Medicare and Medicaid will be provided. On the other hand, Romney with his voucher system is shifting the mandate of providing healthcare from government to the private health insurance. This is as well a good decision as any government should provide the framework and should not be a sponsor. It should let competition decide on the premiums for insurance. But the imminent fear in the minds of people on the thought that the excess cost has to be taken care from out-of-pocket expenses has caused trouble.

The other complementary act in terms of HIPPA, HITech act and ICD-10 enabled the rapid adoption of IT systems though at a lower base. The establishment of HIE for exchange of information between providers about the patient at any of their clinics within an alliance or provider network has helped in getting first-hand information about the patient and avoiding repeated tests. Establishment of EHR is also the right step in this direction so that the patient will have the choice to move around his complete health history to any of his visiting physicians. The increasing collaboration between providers and payers is also witnessed with private insurers such as Aetna and Cigna taking lead on this direction. The focus of care management that eliminates repeated and unnecessary readmissions tats costing billions of dollars in hospitalization costs and bringing case management to the fore.

The problem with the existing setup is the dearth of primary care physicians and long time spent in processing insurance documents. This prevents physicians from paying enough attention to the patients. Increasing queue and lesser time spent with patients is also making the system unsustainable with the Obamacare act as the numbers of insured patients are going to rise. There are also evolving models such as “Concierge Medicine’ that might possibly address this condition to an extent. Please refer the link from Business week dated November 29^th 2012, http://www.businessweek.com/articles/2012-11-29/is-concierge-medicine-the-future-of-health-care. The article also mentions how the fees paid by patients in advance is eliminating 80% of documents as they don’t have to fill in any insurance information. Also, these physicians were able to spend longer time with patients and also providing them with extended care in terms of visiting their home, talking over phone at any time, consulting through web and sending prescription to the nearby pharmacy. They are also charging a very lesser amount per month and the patients get increased attention and care from his physicians. The article sows seed in terms of having a two tier approach where essential primary care costs can be taken up by patients with the above mentioned low cost models and secondary care costs being borne by insurance players. This is interesting with the current premium levels are increasing and are bound to increase with wider risk pools on the addition of new people into individual mandate.

The private equity investors are investing in these low cost concierge models. This raises a question on the sustainability of the model as they focus on profit margins. They may also be the best people in the business who understand the ways to cut down on the costs of healthcare by having a lean operation across the value chain. Extending the thought on the similar lines, Is it possible for people to become investors as well as patients at this setup? They could possibly raise a collective investment fund that could support the fees to be paid to physicians. Government could step in with subsidies for the investments in equipments and other facilities. Physicians and surgeons should be provided with incentives to be part of this model. This brings a model that is self-sponsored by patients and supported by government with subsidies and increasing the focus of government on education to raise new set of doctors (which should be the primary objective instead of healthcare). 

The raising healthcare costs, supply and demand mismatch on the availability of physicians, cost of drugs and growing chronic conditions, it becomes important to find a fit on the healthcare delivery models to curb unnecessary costs and focus on preventive care. I am not sure which one will stand out before it becomes a big mess for the government to handle with complicated laws and regulations.

P.S. These are personal views and not an expert in this field.