the health strategy review
management, engineering & technology
for in-person health
and digital health strategy
Joaquim Cardoso MSc.
Senior Research and Strategy Officer (CRSO),
Chief Editor and Senior Advisor
January 17, 2023
ONE PAGE SUMMARY
The healthcare industry in the United States is facing significant challenges, with high costs, inefficiencies, and suboptimal outcomes.
The concept of value-based care, aiming to provide high-quality, affordable, and convenient medical services, has gained traction as a potential solution.
However, the implementation of value-based care has been slow, and the healthcare system is in need of a transformation.
In April, Kaiser Permanente acquired Geisinger Health to form Risant Health, combining over 185 years of care-delivery experience.
Both Kaiser and Geisinger have been recognized as leaders in the value-based care movement.
However, the success of this mega-merger remains uncertain, as it could either lead to a significant healthcare transformation or prove to be a desperate move for relevance and survival.
The need for value-based care is urgent due to the projected rise in healthcare expenditures, from $4.2 trillion to $7.2 trillion by 2031, representing approximately 19.6% of the U.S. Gross Domestic Product.
The current dominant payment model in the U.S., fee-for-service, incentivizes providers to focus on maximizing revenue rather than delivering value-based care.
This model has contributed to inefficiencies and the misuse of medical resources.
Kaiser and Geisinger, despite their reputations for high-quality care, face challenges in implementing value-based care on a national scale.
Kaiser has struggled with growth, while Geisinger has faced financial losses and operational difficulties, leading it to abandon independence.
To succeed in the value-based care paradigm, healthcare organizations must navigate complex operational improvements and shift from fee-for-service to capitation-based payment models.
The healthcare industry is witnessing the entry of retail giants such as Amazon, Walmart, and CVS, which have acquired various healthcare components, including clinicians, home-health services, pharmacies, and insurance arms.
While they have potential in disrupting the healthcare market, their core businesses are also facing struggles, posing challenges in implementing value-based care and gaining experience with capitated payment models.
The key to success for both incumbents and new entrants is embracing “system-ness,” focusing on integrated care delivery and capitation-based payment models.
Incumbents like Kaiser and Geisinger must overcome challenges in involving clinical experts, going all-in with value-based care, and inspiring effective leadership.
Meanwhile, retail giants need to expand their medical offerings, capitalize on capitation, and establish effective clinical leadership structures to shift the culture of medicine.
The future of value-based healthcare in the U.S. will likely be determined by which organizations can effectively implement system-ness and successfully transition from fee-for-service to capitation-based care models.
The battle between incumbents like Kaiser-Geisinger and retail giants like Amazon, Walmart, and CVS will shape the future of healthcare delivery in the nation.
TO READ THE ORIGINAL VERSION
Forbes
Robert Pearl, M.D.
Jul 17, 2023
