Transformation Rx Vlog: The Affordability Crisis – A Call to Action

The Transformation Rx Vlog provides a variety of perspectives on efforts to improve the quality and affordability of healthcare. 

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The Affordability Crisis: A Call to Action

With Elizabeth Mitchell, President and CEO, Network for Regional Healthcare Improvement

While healthcare has dominated the national policy discussion for months, the conversation has largely focused on the rising cost of health insurance while ignoring the underlying problem – the cost of healthcare. Elizabeth Mitchell, President and CEO of the Network for Regional Healthcare Improvement, says that you can’t solve one without looking at the other. “Until we make care affordable and make people healthier, insurance will never be affordable. We have to focus on the right things and the real cost drivers.”

Containing costs requires significant reductions in price, overuse of services, and waste.

There are two key elements of healthcare costs: price and utilization. To address each requires different strategies. “About 40 percent of healthcare increases can be attributed to the way hospitals, providers, and others price and charge for care and services,” says Ms. Mitchell. “There’s a lack of transparency, a lack of market leverage for negotiation of lower prices and a lot of consolidation that often drives prices higher.”

But pricing is only part of the equation. Patients often receive services that don’t contribute to their health – adding not only cost but risk for patients. To prevent overuse of services, providers and patients must work together to identify care that is necessary and effective and will lead to better health outcomes. Then providers, practices, health systems, and community organizations must carefully coordinate care to ensure quality and affordability. “Too often we are having services that don’t add any value, that don’t improve health. We live in a culture where more is better,” say Mitchell. She points out that the National Academy of Medicine has determined that as much as 30 percent of spending can be attributed to unnecessary services or wasteful practices.

A combination of better utilization driven by clinicians, dedication to coordinated, team-based care, and effective pricing is needed to make care truly affordable. “Then employers and purchasers – both public and private – can make sure that they are paying for value and families can finally benefit from better and more affordable care.”

All stakeholders, including patients, play a critical role.

Ms. Mitchell says that all stakeholders must take responsibility for reducing costs – no one can do it alone. “Physicians and clinicians need to understand prices so they can be true partners in value-based care. Purchasers who are spending resources on behalf of their employees need to demand and hold providers accountable for high value care. Those employees, or patients, need to stay informed and engaged in their own health and care – which includes understanding costs and questioning whether care and services are necessary and valuable to their overall health.”

Affordability requires a shift from “squeezing the balloon” to gaining a firm handle on the total cost of care.

People often talk about trying to reduce healthcare costs as “squeezing the balloon”: if you remove costs in one area they just pop up somewhere else. People haven’t effectively tackled how to  spend less. Mitchell advocates for a broader, more comprehensive approach involving the “total cost of care,” which looks at what all payers are paying. “To really reduce overall spending, that means redesigning how we deliver care and removing payment barriers to needed changes. While we often pay high prices for some services like joint replacements or MRIs, too many times purchasers and payers don’t reimburse adequately for services that we know would improve heath.” These services include telemedicine visits, behavioral health services, and a greater reliance on primary care services. Mitchell says some communities across the country that have addressed changing care delivery and payment to enable more appropriate services are seeing hospital admissions decline by 25 percent. “We know those costs can be avoided if care is provided at the right time in the right setting.” But to do this on a large scale will require major changes.

 Policy can and should enable greater affordability.

Legislation and regulation that enable value and provide clear ways to hold all parties accountable can enable greater affordability, according to Mitchell. “With the advent of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), we have the largest payer in the world going in this direction and the commercial payers are following suit.” Policy changes can require better health outcomes in order for the services to be reimbursed. This means developing new measures for effectiveness and new payment systems- which are daunting but necessary lifts. “Policymakers can create the environment in which these changes can occur and we need them as partners at this table.”

Regional Health Improvement Collaboratives are leading efforts to address the affordability crisis.

Changing the healthcare system in these fundamental ways means bringing all stakeholders together around a table and establishing common goals. This is work that regional health improvement collaboratives (RHICs) are uniquely qualified to lead. “One thing many RHICs can provide is data across the community. This enables all stakeholders to understand the total cost of care in their region and the relative performance of providers, health systems, and community organizations. It also enables more coordinated care. That informs purchasers decisions, patient decision and improvement.”

America can’t afford NOT to address this crisis.

The Centers for Medicare & Medicaid Services and the Census Bureau estimate that families typically spend up to $18,000 on healthcare coverage. That amounts to more than a third of the median family income per year. In addition, studies show that increases in healthcare costs over the last decade are outpacing salary increases, and the extra cost to employers is crippling their ability to give raises or even create jobs. State governments are putting money into healthcare that could be used to improve essentials like education and infrastructure. “The cost of healthcare has increased by almost a trillion dollars since 2009 alone. This is unsustainable. We have got to address affordability for the sake of struggling families and the U.S. economy as a whole.”