Panel
Health Care Delivery in the 21st Century
Milken InstituteSue Siegel, Annie Lamine, Larry Jamison, Jared Bernstein, Peter Bach, Carolyn Gallagher, Rachel Brathen, Eric Schmidt, David Levinson, David Freeman, Jr., Jared Dillian, Jr., John Keegan, David Kelley, Sue Killey, John McCurry, Jr., John McWhorter
- The healthcare sector faces a radical transformation over the next decade or two driven by the convergence of technology, shifting payer structures, and the necessity of innovation beyond incremental improvements to survive.
- Future cost control relies on integrated care systems and consumer transparency regarding costs and outcomes, which are expected to shift patient decision-making and address the current unsustainability of high unit prices and rising drug costs.
- Rising median costs for cancer drugs and other treatments have outpaced medical inflation, creating a scenario where the industry operates on a curve of diminishing returns, with specific examples like Hepatitis C drugs projecting potential costs of $250 billion if administered to the entire US population.
- Spending growth has slowed recently due to recessionary pressures and managed care intercepts, but the trend is expected to resume once the economy recovers unless delivery changes and new ideas can effectively maintain cost reductions.
- A shift toward value-based models and transparency is commoditizing services and reducing readmissions through direct incentives, though wait times and variable costs (such as the 20-fold range in MRI pricing) remain challenges.
- Employment structures are evolving with 80% of physicians projected to be hospital-employed by 2020, driven by the high costs of electronic health records, the 340B drug discount incentives, and a secular trend among younger doctors to join large systems.
- Regional self-assembly efforts, such as those in Cincinnati, Erie, Louisville, and Houston, aim to coordinate care and achieve savings, with initial reports showing $200 million in savings from reduced admissions and readmissions in Cincinnati alone.
- Policy and demographic shifts include the expansion of Medicaid waiver programs for dual eligibles in states like Illinois, Florida, Hawaii, and California, which target $300 billion in expenditures to reduce mismanaged care and spending for the sickest patients.
- Potential savings from delivery-side advances and structural changes are projected by the Congressional Budget Office to reduce spending by $1.2 trillion over the next 10 years, though regulators remain unconcerned with current market perturbations caused by hospital acquisitions.
- Despite potential savings, caution is advised regarding the use of economic incentives to change consumer behavior, as evidence indicates that increased cost-sharing can lead to negative health outcomes, such as the cessation of necessary treatments like tamoxifen or mammograms.