Healthcare Business News
Bernard J. Tyson is chairman and CEO of Kaiser Permanente, Oakland, Calif.
Bernard J. Tyson is chairman and CEO of Kaiser Permanente, Oakland, Calif.

Kaiser's Bernard Tyson calls healthcare affordability "our obligation"

By Bernard J. Tyson
Posted: May 10, 2014 - 12:01 am ET

A tremendous amount of time and energy has been devoted to discussing the number of people who have gained health coverage through the insurance exchanges. While it's premature to draw any concrete conclusions from the figures, it's encouraging that this journey begins with 8 million newly enrolled.

This ongoing discussion over enrollment, however, has overshadowed what should be the true focus of the healthcare system: Making high-quality care affordable and accessible to all Americans.

After countless conversations with patients, physicians, large employers and others over the past year, it is clear we need to have a different conversation about what “affordable care” really means.

The new starting point must be how much individuals and families can afford to spend on healthcare, how much companies can afford to spend on coverage plans for their employees, and what portion of the budget governments can afford to set aside for care. Then it becomes the responsibility of the healthcare industry to figure out how to deliver high-quality care at that price.

Some might consider this radical. However, given all the opportunities for improving care while driving down costs, it's not as radical as many might think. The Institute of Medicine has estimated that about 30% of health spending is wasted on unnecessary services, excessive administration costs, fraud and other problems.

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As a country, we spend nearly $3 trillion on healthcare every year, much more than most other countries and far more per capita. That figure is still growing. At the same time, we have fallen behind many other nations when it comes to key metrics such as life expectancy. This is an unsustainable and unacceptable path for our country.

We have an affordability problem for many reasons, including an industry currently built around a fundamentally flawed fee-for-service model that rewards volume.

As a country, we are investing huge amounts of money in healthcare, particularly in the last year of people's lives. While we are often getting more care, it's not necessarily better care.

Tremendous work is already being done by dedicated physicians and care teams around the country to address these issues, but the system needs to be more focused on clinical outcomes and prevention, early detection and treatment to help Americans lead healthier lives. We must work to provide coordinated care for patients, always considering the whole patient and helping to prevent chronic conditions, long-term consequences and hospital readmissions that are costly and that negatively impact quality of life.

Translating this into actual dollars and cents is something we need to start doing now, because it won't be an easy process. It will mean coming face to face with some assumptions we've held for a long time, and rethinking them. It will affect every part of the healthcare industry—hospitals and physicians, insurers, devicemakers and drug companies.

It will demand a close look at how we organize the delivery of healthcare and where we provide it—including technology, diagnostic equipment and specialized procedures. It will mean making changes along the care continuum, delivering the right care at the right time at the right location to achieve the right outcomes.

And it will mean looking at how the industry is compensated and refocusing around quality instead of quantity of services provided—and how we take that $3 trillion in spending and start to make it move toward $2 trillion instead of four.

Promising work is underway. The Patient Protection and Affordable Care Act is an important first step, as pieces of the law seek to encourage providers to better coordinate patient care and compensate them when it is delivered efficiently and safely. The establishment of accountable care organizations within Medicare is a concrete step.

This year, the law allows employers to tie insurance costs to participation in wellness programs for the first time.

Providers and health plans must now lead a conversation about how to build on this progress. This will at times be uncomfortable. For too long, we have not listened to what individuals, employers and governments consider affordable. Every one of us must now be focused on continuing to drive quality up and cost down, making this new vision of affordability a reality. We must recognize we don't have all the answers today, and we will need to constantly refine and search for ways to get where we need to go.

As daunting as that may seem, I'm as confident that we can find the solutions as I am passionate about getting there. This is our mission—and our obligation.

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