The healthcare landscape is again being reshaped by consolidations, with the prospect of more to come. The question is, will consolidation transform the industry, giving us a new business model that will deliver higher-value results?
Consolidation may be a necessary condition, but it is certainly not sufficient to drive the needed changes in the industry. The transformation that is desperately needed is a move toward more integration of care delivery, involvement of patients in their care, and alignment of financial incentives.
Among notable recent consolidations are deals affecting health insurers: Anthem's announced acquisition of Cigna and Aetna's offer for Humana. In addition, Walgreens Boots Alliance has agreed to buy Rite Aid Corp., and CVS Health recently bought Target Corp.'s pharmacy business. These realignments could increase pressure on hospital systems to combine. To this point, all we're talking about is size and market power, none of which necessarily creates more value in the market.
Consolidation may well increase efficiencies, standardization and bargaining leverage, but whether or not it leads to integration will, in the end, determine its contribution to healthcare improvement. Only integration enables the key components of paying for and providing care to work together toward the shared goal of improvement.
That's key when 30% or more of healthcare in the U.S. is not indicated by evidence and, therefore, might be described as overtreatment. Simply reducing the cost of that overtreatment misses the biggest opportunity for improvement. If we can create a healthcare system that provides all the care people need but none of the care they do not need, we will improve quality and reduce cost.
Why would any organization provide care that's not indicated? First, there are not enough evidence-based standards. Second, patients are not sufficiently engaged in their care or the cost of it. Third, in a fee-for-service system, there is a misalignment of financial incentives, with providers being paid to test and treat—and being paid more to do more of those things.
The need to transform those three conditions has led Intermountain Healthcare to pursue what the system calls “shared accountability.” This initiative emphasizes evidence-based care, patient engagement and alignment of compensation with quality of care. It requires systems of providers and patients to take responsibility for managing health and wellness.
This initiative is fundamental to fulfilling our mission of “helping people live the healthiest lives possible.” Integration is key to realizing it, thereby maximizing population health.