The Burning Platform: Healthcare is in Dire Need of Change
In late 2019, CMS had recently issued a regulation requiring the implementation of expanded interoperability capabilities between hospitals and outside medical providers. The goals were to improve the coordination and quality of care while also lowering healthcare costs by reducing the duplication of services. Unfortunately, the healthcare industry was instead about to experience more disruption and chaos than that seen in the previous four decades.
In fact, the COVID-19 pandemic only worsened problems that the healthcare industry had been struggling with for many years.
My day job is focused on helping to improve the accessibility and affordability of quality healthcare. And that’s also why I was pleased to join the Board of careMESH in 2019 because, in my view, neither of CMS's goals was headed in the right direction.
The Real Cost of Fee-For-Service
Hospitals and clinics used to indicate that facility constraints were the biggest barrier to improving accessibility. Now clinician burnout, retirements, and even strikes have resulted in serious staffing shortages requiring healthcare facilities to reduce patient access and close patient units. These shortages, in turn, created a huge demand for expensive temporary staffing services and significant wage inflation, which will negatively impact affordability in the future.
Healthcare providers are also currently held hostage by a fee-for-service payment system that used to provide a predictable source of revenue. This same reimbursement system has now decimated the financial performance of providers due to lower patient volume (and revenue) combined with higher costs. In addition, healthcare providers’ cash reserve levels significantly declined in 2022 along with the financial markets.
This downward pressure on both patient volume and provider finances has certainly been a factor in slowing the progress of both interoperability and care coordination between unaffiliated healthcare providers. I personally know of two instances in my local healthcare market where radiology scans from a well-established independent radiology practice were not accepted or were subsequently duplicated; one by a large orthopedic practice and another by a large hospital. Fee-for-Service continues to rule the day.
What Happens Next?
The reality is that the healthcare industry is at a Burning Platform moment: we must build a bridge between the current fee-for-service business model and a value-based, population health model.
The days of relying on increasing patient volumes and the cross-subsidies between profitable and unprofitable service lines must come to an end.
Fortunately, there is no shortage of private investment and innovation occurring within the healthcare industry. The COVID-19 pandemic accelerated the acceptance of telehealth and new patient modalities such as “hospital at home.” These technological enablers and specialty niches have provided some improvement for both the accessibility and affordability goals. However, they have not fundamentally changed the healthcare fee-for-service business model.
Achieving True Collaboration
Only significant collaboration and ongoing communication among all healthcare stakeholders (i.e., patients, employers, insurers, providers) will build that bridge to a sustainable healthcare industry; one that truly focuses on population health, evidence-based medicine, and care coordination.
Achieving this goal will require digital transformation, and the tools to enable communication between and among all types of healthcare providers, insurers, and technological enablers, while being agnostic as to specific IT platforms. Again, a big reason for my ongoing support of careMESH.
When I was the CFO of a large academic medical center, I used to say that “miracles happen here every day.” My hope is that together the healthcare industry will continue to reinvent itself and find affordable ways to continue to provide those miracles.
Thanks for reading,
Scott
Scott Glasrud is a member of the careMESH Board of Advisors, the President and Owner of SAG Enterprises, and a seasoned executive with over 40 years of experience in the healthcare industry. His experience includes over 15 years as the Chief Financial Officer of The University of Kansas Hospital and nearly 3 years as Senior Executive Vice President & COO for UHC. Previously, he served as a Regional Director for Mercy Health Services Corp, providing overall financial direction to the Iowa Region of MHS, a $2 billion non-profit health system. You can read more from Scott by visiting his blog at healthcarebigideas.com.