Healthcare Innovation: It’s All About The Business Model – ForbesPosted: January 23, 2014
Henry Doss, Contributor
Sit down before fact as a little child, be prepared to give up every conceived notion, follow humbly wherever and whatever abysses nature leads you, or you will learn nothing. – Thomas Huxley
I have been talking with Dr. Brad Stuart on the topic of innovation in healthcare. This is the third installment in that series. Our topic in this conversation is “accountable care” and the implications this movement has for cost control, for quality of care, and for fostering innovation. In the first part of this series,here, I set up the health care issue as one that is as much about paradigms and conversations as it is about medicine. In the second, here, I talked with Dr. Stuart about what he sees as some of the more critical high-level challenges in health care and his views about what we as a country should focus on as we continue our work to improve health care delivery.
Henry Doss: Let’s start at the beginning. Just what is “accountable care”?
Dr. Brad Stuart: At it’s very simplest, accountable care is bringing all of the parts of a health system into one carefully integrated delivery process, focused on outcomes, not treatments. And even though that sounds so very simple in the saying, it is really revolutionary in medicine. In fact, I believe very strongly that the change to the accountable care business model will be the biggest large-scale health system innovation in the United States since Medicare was created in 1964. And it will drive some remarkable innovations.
Doss: It does sound pretty simple, and long overdue. And, in fact, kind of obvious in a way. What exactly is so revolutionary and innovative about this change?
Dr. Stuart: Our clinical and business models in health care are upside down and there is a growing sense that we need to change things — quickly and significantly. As a consquence, all of healthcare in the U. S. is undergoing a revolutionary paradigm shift, on a number of fronts. Accountable care strikes at a foundational, fundamental flaw in how we view medicine. The way we deliver health care today is really a 19th century model, grounded in assembly line mentalities and piece work payment systems. In a very real sense, we are not paid or evaluated on the basis of patient outcomes, but on how well we deliver bits and pieces of the health care model. Think about it like this: It doesn’t matter whether a patient lives or dies, gets better or worse, is helped or not: As long as a test or a procedure is done, a payment follows. So, naturally, we tend to focus on doing the “pieces” well, but not paying a lot of attention to the whole human being.
Doss: All of this sounds a little insensitive to the patient. Do you see health care as essentially not operating in the best interests of patients?
Dr. Stuart: Absolutely not. In fact, I strongly believe that the vast majority of health care practitioners, as well as all the great people involved in the business of delivering medical care, are conscientious, highly motivated, caring people. The challenge is the delivery system, the business model, not the individuals operating inside that business model. That’s why I think we need to focus on changing the business model more than anything else. I think the medical community and the patient will be better served in this new model. And I think both will find it liberating.
Doss: What has to happen, structurally, for accountable care to have this kind of impact?
Dr. Stuart: Again, this may sound a little oversimplified, but it’s really just a matter of changing your point of view. In the accountable care model, we will move from paying for volume to paying for value. Doctors will have to stop doing whatever procedures and tests they can think of, billing for them, and getting paid whatever they charge. Instead, they will be accountable for the health and well-being, as well as the healthcare costs, of the population they serve. Healthcare will no longer be about seeing one patient at a time and forgetting about the rest. Providers will have to think about their community. They will no longer get paid by the piece. And if we change our outcomes from volume to value, from piecemeal to holistic, I’m convinced we will see revolutionary innovations in how we deliver care.
Doss: It sounds to me like the critical piece of this change involves shared risk.
Dr. Stuart: Yes, it does. Remember, outside of accountable care, almost all the financial risk is held by the health insurance companies, Medicare and Medicaid. They pay all the claims submitted by hospitals, doctors and everyone else who touches the patient. This hides the real costs from patients, who feel they’re entitled to all the treatment they want in return for their health insurance premium. Still, patients and families wind up paying for things that aren’t covered by insurance, which in turn causes about 60 percent of all bankruptcies in the US. But, in the accountable care model, patient and provider (and patients and communities) agree to operate in a shared-risk model. And the bottom line is that the further the system moves in the direction of risk sharing, the more important savings will become, and the more providers will invest in and support innovation.
Doss: How is it that structural changes in the health care business model will drive innovation?
Dr. Stuart: Well, for one thing, a business model change of this magnitude is highly disruptive. It will force the health care community to realize that the way forward is very likely just the opposite of what they’re doing now. This creates huge opportunities for innovation in healthcare. It will force us to do a complete 180 degree turn in our thinking about some of the most basic things in health care. I’m pretty sure that a great deal of innovation will come from that level of disruption and volatiity.
Doss: Can you give me an example of something that might be innovative coming out of this paradigm shift?
Dr. Stuart: Let me give you an example of something that needs to be disrupted in this shift. In my view, thinking about people as patients is a loser. “Patient-centered care” has become a mantra of health care reform. It sounds like a great idea, but it’s got a fatal flaw. Whenever I hear reformers and planners talking about “patient-centered care” I know they’re not talking about patients at all. They’re really talking about providers. They’re talking about things like how to design a new medical office building so patients will have a nice experience when they come in to see their doctors. But the conversation is really about the office building. It’s not about people and their real-world needs. If we are deploying accountable care thinking, this fundamentally flawed paradigm is going to be disrupted — to good ends, I think.
Doss: Next week we are going to talk about your area of professional interest, advanced care. How does the challenge of accountable care relate to the challenge of innovative delivery of advanced care?
Dr. Stuart: Again, it’s about changing the way you think about delivery. To provide accountable care and live to tell the story, doctors and hospitals have to radically change their approach. Providers are used to sitting still and waiting for patients to bring clinical problems to them to solve. We are passive. So as people with chronic illness get sicker, they have no choice but to call 911 and show up at the hospital. This is the costliest possible way to treat patients, and the closer people get to death, the more this “care” looks like cruel and unusual punishment. The accountable care model will help us to fundamentally rethink and re-engineer the way we deliver all of medicine. But I think the biggest potential impact is in how we deliver advanced care.
Next week Dr. Stuart will be talking about innovation in his field of advanced care. Dr. Stuart has more than thirty five years of experience in internal medicine, palliative care and hospice, and is a nationally recognized innovator in healthcare. He is co-founder and CEO of ACIStrategies.