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Picture this, it's Thanksgiving and you're shopping at your neighborhood grocery
store in preparation for that big family dinner.
But something's different.
None of the shelves at the store have any price tags, nutrition facts,
expiration dates, and even labels on quantity are nowhere to be found.
You decide to ask an employee how much a can have stuffing costs and she responds,
don't worry about it.
As a member here, you pay nothing upfront.
You proceed to the back to pick up a preordered turkey and
lock eyes with the butcher.
Who, instead of handing you the bird,
loads three roasted hams into your shopping cart.
You still want that turkey?
You'll have to book another appointment in about six weeks, he says.
You politely decline and a store clerk promptly double bags each of the hams,
stuffing them with extra napkins and plastic forks.
You're going to need all of these, the clerk reassures you.
Bypassing the smiling cashier, you leave the store with the three hams.
Thanksgiving passes, and all is well until about a month later.
You open up your mailbox and find a bill for a $20,000 turkey,
with breakout line items for stuffing, mashed potatoes, and
cleaning service fees for the grocery store's floor.
At the bottom of the list, you find a $521 charge for
paper goods and assorted cutlery.
Confused?
If you're like me, you're thinking, I'm not going back to that store for anything.
But it's only a matter of time that you or your loved ones will return.
This neighborhood store isn't selling groceries, it's selling health care.
Welcome to the typical American hospital.
One of the least transparent players in the modern economy.
A cornerstone of local communities, and often the largest employer.
Hospitals are one of the few remaining institutions,
along with higher education, that openly price discriminate against customers.
And at $1.2 trillion, hospital acute care is the largest slice,
31% of our nation's healthcare expenditure pie.
Now, let's remember the fact that American hospitals create miracles for
families every day.
Some of the most caring and empathetic people in society are frontline workers
who dedicate their lives to delivering quality patient care to those in need.
Hospitals employ 7.2 million Americans with meaningful, mission-driven work.
And when you need real emergency care, the hospital is exactly where you want to be.
In 2021,
Americans spent an average of about $5,000 a year on out of pocket healthcare costs.
All in, the system pays roughly $12,000 per capita, which is twice as much
compared to what Americans paid for healthcare in the 1980s.
So what's really driving up our medical cost?
It's not utilization.
Despite paying on average twice as much on healthcare per capita as our European and
Asian counterparts, we have 30 to 50% fewer visits to the doctor and
lower overall life expectancy.
For that half of Americans carrying commercial insurance, premiums have
increased 26% over the past decade and consistently outpaced inflation.
Over the last two decades, the inflation adjusted prices for inpatient visits
are higher and growing faster for those with private insurance than for
the other half of Americans insured by Medicare and Medicaid.
Famed health economist Wei Reinhart once said, it's the prices, stupid.
If you ask someone inside a hospital how pricing works,
she will first point you to the charge master,
an internal record of accounting for all the services provided within the facility.
No two charge masters look exactly alike.
If you've seen one, well, you've seen one.
But the charge master is a starting point for negotiations between hospitals and
health insurance companies to determine commercial reimbursement rates.
In January 2021, recent price transparency regulation brought these closed door
negotiated rates to the public for the first time.
It turns out that charge master values are uncorrelated with different rates of
reimbursement for delivered care.
This means that no one, not even those who work in the hospital,
knows what healthcare should cost.
The complexity of hospital pricing masks the highly stable and
change resistant nature of the US healthcare system.
Which Warren Buffett called, the tapeworm of the American economy.
Each constituent in the system, be it pharmaceutical manufacturers,
physician groups, or commercial payers, will fight tooth and
nail to keep their piece of the healthcare pie.
The losers have been employers, and the government,
and by proxy the American taxpayer.
But the COVID-19 pandemic brought our fee for
service healthcare system to its knees.
It forces us in the industry to double down on value-based care, or the idea that
only value adding care that delivers real outcomes is worth paying for.
With better information and data sharing in place, physicians could become
accountable for real patient outcomes, and not just through input and volume.
Value-based care also shifts the zero sum negotiation dynamics between providers and
payers towards cooperation and shared risk.
The truth is we in the industry had been working on value-based care for over
a decade, building back end technology that pays primary care physicians more to
manage and lower the overall cost of care, while maintaining high quality.
We haven't succeeded because we neglected to include the most important
stakeholder of all, you.
So now that you know a little bit more about how the healthcare sausage is made,
how do you begin thinking about value in your own healthcare?
The best advice I ever heard on this matter came from my grandma
quoting the poet Virgil, health is wealth.
It's simple, short, and would make a great bumper sticker.
Grandma taught me that no matter how much money you have,
you can't enjoy it without good health.
So it's best to think about optimizing both of them together.
Your appetite for risk changes as you age.
As we proceed through our 30s, 40s, 50s and 60s, the likelihood of each one of us
having a run in with the fee for service healthcare system increases.
Call it a collision course between our health and our wealth.
In 2004, David Cutler, Professor of Applied Economics at Harvard,
wrote a book called Your Money or Your Life.
His big idea is that we as individuals should be
thinking prudently about how we spend money on
healthcare versus other aspects of our lives that may lead to healthier outcomes.
To prevent diabetes, for example, spending a little extra to cook low carb,
healthy meals at home may be a better recipe for
success than merely checking in with a doctor for an annual visit.
Startups and wellness programs are gamifying weight loss through forming
accountability groups and
paying individuals who meet the weight loss goals.
Now, to be fair, it can be hard to balance your financial and
physical well being, especially when the latter is in jeopardy.
I still remember that Autumn Sunday morning as a teenager when I found grandma
fallen over and shaking at her house.
She had just had a stroke.
I called my parents frantically to notify them, and we rushed her to the.
In those tense hours, all the money in the world didn't matter.
We just wanted to know that grandma would be okay.
Fortunately, grandma got the care she needed.
I knew that my grandparents had saved enough money to cover her medical expenses
because grandma would talk about that being important, especially for
emergency situations.
Now you're young, but one day you'll be like me, I'm old, she would tell me.
But no matter how much grandma saved,
she could never buy a better health outcome for her stroke treatment.
I watched as she was discharged from the hospital back to her home.
And over the subsequent years as she transitioned from a walker to
a wheelchair.
No amount of wealth could have restored her to her pre-stroke days.
While you can manage both your health and wealth over time,
your health is more likely to be taken away in an instant.
For that reason, it's particularly important to plan ahead and
lower your own risk of getting sick.
So here are a few steps to shepherd you, your family, and
your employees' future healthcare needs.
Number one, stay healthy and stay out of the hospital.
Sounds easy, right?
You can start with simple steps, like adding 30 minutes of walking to your
daily routine, wearing a fitness tracker, or tracking calories in the food you eat.
Small habits like these help increase the length of your health span,
the part of your life that's free from chronic disease and disability.
Two, if you get sick, get help.
But before booking a visit to the doctor's office,
consider using convenient digital tools to triage your care.
Telehealth and asynchronous messaging have made accessing the right level of care
easier and more affordable than ever.
For more pressing health issues, consider going to an urgent care centre before
heading to the And using ride sharing apps when you can.
Avoiding a 15 minute ambulance ride can save you hundreds or
even thousands of dollars.
Three, have a list of preferred providers near your home that meet your
family's needs and medical budget.
Check in advanced to ensure the provider you choose is in network for
your health plan.
If you don't have insurance and are paying cash,
be prepared to negotiate using reference-based pricing.
Regardless of your insurance status,
new price transparency data online makes it easier to anticipate your costs.
Don't be afraid to ask for a discount.
Insist on seeing the bill in writing.
Four, take your medications.
50% of prescriptions in the US are never filled by patients.
By taking your medications as directed by your provider,
you dramatically reduce the likelihood of ending up in the emergency room.
And five, if your doctor recommends elective surgery for
a non-urgent condition, consider getting a second opinion before agreeing.
Value-based care has taken longer to find a foothold among surgeons who have
traditionally been incentivized to maximize volume.
Seek out Centers of Excellence, which reward high quality surgeons that perform
sufficiently high numbers of the same procedure.
As a rule of thumb, outpatient surgeries performed in ambulatory surgery
centers are less expensive than hospital-based procedures.
Finally, take care, of yourself, of your loved ones, and your neighbors.
Because this is your life, and good health is worth more than anything money can buy.
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