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 / Autumn 2009 / Issue 56(originally published by Booz & Company)


A Better Model for Health Care

One such product might be a cardiac care package for outpatients that includes consultation, treatment, and rehabilitation, as well as follow-up care such as the monitoring of lifestyle and diet. Other products might include basic surgery for sports-related injuries, including all the potential procedures and physical therapy involved; annual preventive care for children ages 5 through 13; and cataract treatment. Each would present to the purchaser a consistent overall price tag reflecting the standardized practices that every hospital and doctor would be equipped to deliver. Price adjustments — for example, incentives for preventive care — would be like options on a car: easy to recognize in the context of the basic, universal service. Today’s intricate pricing codes would apply only to the 20 percent of care for which complexities or uncertainties make customized procedures necessary.

In such a world, electronic records would not be such a critical issue for reducing costs. After all, no one needs intensive electronic documentation to keep track of payments for groceries, or even for a car. The financial clearing system through which transactions are processed among banks around the world could serve as a model. Any bank can participate for any type of transaction, because there are international standards and protocols.

The Florida Experiment

The Healthcare of the Future experiment has been under way now for two years. It currently involves three of the system’s major structural sectors — consumers, plans, and providers. It also has the potential to integrate high-tech suppliers and pharmaceutical companies. The project addresses some of the system’s biggest cost components: current and downstream costs of complex conditions such as cancer, and big-ticket acute interventions. (In its initial stages, HOF does not address chronic disease or end-of-life costs.) Its leaders are moving deliberately, thoughtfully, and quietly to develop new programs, protocols, structures, and relationships that will fit into a reformed pluralistic system, or even into a more radical national system.

The cast of characters driving the HOF concept and initiative include Blue Cross and Blue Shield of Florida (the state’s largest health plan provider), along with a not-for-profit regional medical center with a leading cancer treatment facility, a large community hospital and its doctors, a for-profit hospital system and its physicians, and a large group of consumers who have taken part in in-depth surveys and interviews. (During this early stage, the names of most of the participating institutions have not been made public.) To varying degrees, the participants share a set of beliefs and hypotheses about what ails the health-care system and what could be done to control costs and improve outcomes. Based on these foundations, a vision is emerging about the characteristics that a transformed insurance and delivery system should have.

In this vision, the variability of both treatment decisions and the delivery of care would be dramatically reduced. In the selection of care, the best offerings would be given preference, regardless of a particular hospital’s full-service line. Because strong-form products include prevention and disease management, not just big-ticket acute care, smaller hospitals and rural providers would have more opportunities to attract consumers. With more insurance plans involved, health care could become a true retail marketplace — and bundled payments for doctors and hospitals would mitigate the “do more, bill more” mentality of many providers. In short, health-care services would mimic other retail markets. Consumers would have a better idea of the costs, timing, billing arrangements, and expected events and outcomes in advance. (Eighty percent of the surveyed consumers showed very high interest in this feature.)

After two years of analysis and consumer research, the HOF players are planning to move forward with three pilot programs, each representing a different but crucial product type to demonstrate efficacy.

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