The state of American healthcare

Over the last 45 days, I have interviewed executives from healthcare payers and providers. And while it is clear that American healthcare remains complex and most importantly, expensive compared to the rest of the world—it is approaching $4 trillion dollars (20% of US GDP), it appears that the interests of payers and providers are aligning. This is an opportunity that should not be squandered by politics or even worse by the narrow interests of individual stakeholders at each organization type.

The strategic opportunity is clear

One hospital executive described the strategic change taking place in healthcare today as being about moving healthcare away from “a broken fee for services model”. It is about, in his opinion, “moving healthcare to managed care on a capitated, pay for performance model”. This hospital executive says, that progressive institutions are already well along to changing their business models. However, he said the middle of the market is only working on taking modest steps forward and 60% of the 5,000 healthcare institutions in the US have decided they are not changing regardless of the cost or impact. The consensus is that these institutions will either be acquired or slowly go out of business.

A hospital CIO summarizes the changes in healthcare as a move from ‘fee for service to fee for value’. For those of you not in healthcare, healthcare providers historically have been paid by the service event rather than for actually keeping you healthy. However, today both payers and providers are focused upon reducing the number of hospital stays and the length of stays. Payers are forcing this by capitated payments and paying instead for value.

While healthcare payers say their goal is to lower costs and by doing so to recoup more money, this in the end is a good thing. This is because by responding to the edicts of the Affordable Healthcare Act, they will actually improve healthcare outcomes. “We and healthcare providers need to get paid for doing the right things”. This will over time lowering costs for payers at the same time as it improves care. Part of achieving this involves payers increasingly ‘influencing the care’ delivered. At the same time, payers say that they want to create a seamless experience for their members and create an integrated delivery system. They say that they want to be person centric–to be a personal healthcare advocate”. They want to manage the financial risk of healthcare by increasing the quality of care delivered.

This is a huge cultural shift, but it is a moral imperative and, increasingly, an economic imperative”, Julie Hill, Anthem Blue Cross Board

While these organizations may have different roles in the healthcare system, this change actually means that the interest of both are congruent with each other.

So what do each need to provide to solve these issues?

To accomplish the above goals, both payers and provider need to put two things at their centers—1) patient centric care to improve care of patients on a patient by patient basis and 2) population health at payers and providers with value based incentives to drive continual improvement in healthcare. If you want to get a sense for what patient centric care looks like take a look Salesforce’s Health Cloud.

The key enabler for patient centric care and population health is data. One hospital CEO said to me, we believe that data is key to go forward strategy. However, “to date, we have not gotten any value from our EMR systems. There is honestly no ROI”. A hospital CIO agreed but said “in era of ubiquitous computing, users expect on-demand access to all data via any device, so integrating mobile data with legacy systems and the Healthcare Exchanges under HL7 are issues that need to be overcome. Fundamentally, he said that we need to prove ‘meaningful use’ for certified EMR technology and in particular that it improves quality, safety, efficiency, and reduces healthcare disparities”.

Meanwhile, a healthcare payer says “we want to see the whole customer. If we can just get the right data, then we will be able prevent things that are harmful to patients. Both providers and payers believe that it is essential to use data to reduce hospital readmits. Doing this will help providers respond to the edits of a value based pricing market.

Both payers and providers see “good actionable data is the magic sauce”. They both need and want it. For payers, they say that they want to acquire data increasingly as it occurs. They want as well to use IoT data to impact care once for patients have left the hospital. Interestingly, providers want to limit the range of IoT devices to approved care devices.

Regardless, both payers and providers openly say that they are struggling to put together big data strategies that work. Clearly, this is about more than discrete data sets. Big data should be about mixing data from internal and external systems. This requires the ability to put larger datasets together.

What are the technical limiters?

Healthcare organizations say that while data is where the value is created in healthcare, their data practices often get in the way. One hospital CIO says, “done well–it is the gift that keeps on giving. The problem is often starting with what we have. Healthcare organization are typically swimming in data but are their systems struggle at creating data efficiently. The above healthcare CIO says honestly, “we have a big time data quality problem”. He says data governance is required to make our organizational data valuable and self-service is needed to power citizen data scientist. Both healthcare providers and payers believe that with data in the right state, it can help them solve business and clinical problems.

A piece of good news is that healthcare providers and payers are working to apply healthcare data standards such as HL7 and FHIR. Hospital leaders say they want a Healthcare Information Exchange which allows doctors, nurses, pharmacists, other health care providers and patients to appropriately access and securely share a patient’s vital medical information electronically. But I have been told that duplicates are too easily created and clearly, a smart way to prevent this is with good data governance. Part of fixing this is seen as employing master data management approaches. One healthcare CIO said that “data in the real world needs to have one person, one facility, one everything”. EMR silos clearly do not work for anyone and just like with ERP having one system type is unrealistic for organizations especially as healthcare organizations continue to consolidate. We need to have one face to the customer if we are to drive patient centric care and population health improvements. “We are amassing huge amounts of data. We want to do this without creating duplicates and delivering actionable insights in the end. It is a recursive process”.

When asked whether cloud is part of this journey, healthcare payers and providers say it depends on the organization. Progressive CIOs, they say, are working towards it. Old school organizations are focused on premises. Two examples of progressive organizations were given as Cleveland Clinic and UPMC. They have already worked through compliance and other issues. One healthcare CIO suggests that the public cloud discussion has changed from ‘hell no’ to ‘cloud first’. People, he said, distrusted it. However, many are determining that data centers are not part of their future. Regardless, of approach, everyone clearly is living with a ‘data mess’.

Parting thoughts

Healthcare change will not happen overnight. As we have discussed, data has a big role to play in the journey forward. Healthcare executives clearly need a data governance model to take a step forward. One healthcare CIO is honest when he says this takes leadership and a maturing organization. But other healthcare executives says they are optimistic about the future. In the next 3-5 years, they believe that they will be able to bring together data from various systems. The government, CMS, and a growing chorus on healthcare payers all want this. The opportunity is clearly there for those that are ready to lead starting with their data practices.