6 Megatrends in Healthcare

One of the architects of Obamacare explains why he believes the law will revolutionize the American medical system.

An illustrated x-ray of an adult male
Illustrated by Gwenda Kaczor

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When it was first enacted, the Affordable Care Act (ACA, “Obamacare”) was a political disaster for President Obama and the Democrats. It produced a strident conservative backlash, which, in 2010, led to one of the largest electoral landslides in recent memory. And, until the ACA was affirmed by the Supreme Court this past June, it left the Obama administration in a perpetually defensive stance, deprived of the political capital needed to achieve progress in other important policy areas.

But regardless of these short-term political costs, in the longer sweep of history, beginning in 2020 or so, the ACA will increasingly be seen as a world historical achievement, even more important for the United States than Social Security and Medicare had been.

The ACA is stimulating a transformation of the entire American healthcare system — that is 18 percent of the economy. Before the ACA, the American healthcare system was literally killing the country. Government estimates were that the population of uninsured Americans would rise from 45 million in 2009 to 54 million in 2019. More abstract but worrisome was the impact of healthcare costs on the United States’ long-term fiscal stability. If nothing was done, Medicare and Medicaid would drown the country in a bowl of red ink.

But something was done, and that was the ACA. Although it’s far from perfect, it has stimulated change in a way nothing had been before. And these changes are just beginning.

I predict that the Affordable Care Act will create new institutions, such as the insurance exchanges, and establish new ground rules for many activities as well as for the key players in the system — insurers, hospitals, physicians, employers — and ultimately the public will respond to these new ways of delivering healthcare and conducting business.

Although everyone knows that making predictions is risky, with a knowledge of the history of the system, a knowledge of the various actors’ previous responses to change, and after discussions with hundreds of current actors, I will offer some thoughts about six megatrends for the future of healthcare. I recognize the challenges — and high probability of error — in making such forecasts. Nevertheless, such predictions are necessary to inform current decisions.

1. The End of Insurance Companies as We Know Them

Everyone hates insurance companies (for valid and sometimes not-so-valid reasons). But the good news is you won’t have insurance companies to kick around much longer. The system is changing. As a result, insurance companies as they are now will be going away. Indeed, they are already evolving.

A major initiative in the ACA for this evolution is through accountable care organizations (ACOs), which are networks of physicians or physicians, hospitals, and other providers that take both clinical and financial responsibility for the care of patients. These ACOs and hospital systems will begin competing directly in the exchanges and for exclusive contracts with employers. This health delivery structure is in its infancy. Today there are hundreds of these organizations being created and gaining experience within government-sponsored programs or getting contracts from private insurers. They are developing and testing ways to coordinate, standardize, and provide care more efficiently and at consistently higher quality standards. Over the next decade many of these ACOs and hospital systems will succeed at integrating all the components of care and provide efficient, coordinated care. They will have figured out how to harness their electronic medical records to better identify patients who will become sick and how to intervene early as well as how to care for the well-identified chronically ill so as to reduce costs. Then they will cut out the insurance company middle man — and keep the insurance company profits for themselves.

2. VIP Care for the Chronically and Mentally Ill

Today about 10 percent of patients account for nearly two-thirds of all healthcare spending. To control costs and improve the quality of care, physicians and hospitals need to focus on this small fraction of patients because they account for most of the money spent in healthcare. Who are they? They are patients with chronic or multiple chronic conditions, such as heart failure, emphysema, diabetes, coronary artery disease, asthma, hypertension, and cancer.

A key to controlling costs — and improving quality of care — is prevention. Not the kind of prevention most of us think about, such as cancer screening tests or immunizations. That is primary prevention — preventive services for healthy people who do not have diseases. Instead, what is needed is tertiary prevention, or preventing people with serious illnesses from having an exacerbation of their condition or side effects of treatment that require hospitalizations or other expensive interventions. Avoiding these kinds of repeat emergency room visits and hospitalizations for preventable problems is a major area for cost control. In other words, the key to cost control and quality improvement is to keep sick patients with chronic illnesses healthy — or at least healthier. Ensure that they are managed well so that they do not have the exacerbations or amputations or that they are treated to mitigate predictable side effects.

Today, the best healthcare systems are focusing on this type of prevention with standardized treatment processes, and the results can be pretty remarkable. For example, by monitoring patients who have just received chemotherapy and by treating those who develop symptoms the same day in the office, a cancer group is able to reduce emergency room visits and hospitalizations of cancer patients by more than 50 percent. Keeping patients with chronic illnesses healthy can really pay off. Over the next decade every medical group will develop, implement, and refine care processes that keep chronically sick patients healthier so as to reduce their use of healthcare services, especially the emergency room and hospital.

The next area to focus for cost control will be mental health. It turns out that mental health problems are actually among the leading drivers of healthcare costs. Mental health disorders are more widespread than we think. Approximately one-quarter of adults experience one or more disorders. More importantly, about 6 percent of adults suffer from seriously debilitating mental illness. Some of this relates to complex patients with schizophrenia and bipolar disorders whose care is not well coordinated, whose chronic medications are expensive, and whose institutionalizations for exacerbations can be prolonged. But a lot of this relates to patients with chronic illnesses who become depressed or anxious because of their health problems and whose depression then exacerbates their other illnesses because they fail to consistently take their medications or exercise or adhere to some other health program. Isolated and depressed patients use the healthcare system because it offers attention and meaningful social interactions. Patients with mental health issues are expensive.

Currently, the healthcare system responds poorly to these patients. It is estimated that only about a third of people with mental health problems receive treatment, and only about a third of those — 12 percent overall — are actually receiving adequate treatment. Why? Primary care physicians usually do not like dealing with mental health issues. So they refer patients to psychiatrists. But getting a new patient appointment with a psychiatrist, especially for patients who have Medicare or who have no or inadequate insurance, can take two or three months. By that time the patient may have gone to the emergency room a few times and been admitted to the hospital.
Besides, these patients need more than just the care of a psychiatrist; they need to be connected to social services, engaged in social activities that replace the meaningful but expensive attention they receive from nurses.
Today, the most advanced systems are experimenting with interventions. The next big area for improving quality of care and reducing costs will be routinely integrating standardized mental health interventions into primary care practice. Then, over the next decade, the 2020s, patients’ mental health problems will be taken seriously and seriously addressed by the mainstream. Mental health parity with physical health will finally happen — not because any legislature mandates it but because health systems find it necessary to improve quality and reduce total healthcare costs.

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