The United States spends the most on healthcare every year. Data has shown that we spend about $3.3 trillion every year which comes out to about $10,000 per person, per year. These costs average out to about 50% more than Norway and Switzerland and exceed costs in any other country in the world. What do these numbers mean to patients and providers? What is happening in an average health check-up that is causing this spending to exponentially increase?
To date, fee-for-service reimbursement models have been embedded into services and health exams. Doctors and healthcare professionals have grown dependent on providing more and more healthcare services regardless of value added to the patient. The United States’ dependence on the fee-for-service system has shown burdening financial and health consequences. Understanding the driving need for value-based care can be the ultimate force in eliminating fee-for-service models and high costs related to healthcare.
Sheena Thakkar | April 9th, 2018
Higher income countries such as the US, Switzerland, and Norway spend more per person on health care and related costs than lower income countries. However, the United States still has the highest exceeds the cost of healthcare per person – about 30% higher than Switzerland which has the next highest per person spending. This excessive spending doesn’t only impact patients, but also providers and the healthcare delivery system as a whole. Despite the increased healthcare spending in the US, populations continue to get sicker and aren’t receiving the care they need.
Solving the problem with greater spending has been one of our country’s longtime issues. The question at hand is: How do we manage continuously increasing costs that aren’t improving the overall health of the population? These bloating costs are attributed to the historic fee-for-service reimbursement system that incentivizes higher volumes of tests, exams, and treatments because payment is dependent on the quantity of care rather than quality, as services are unbundled and paid for separately. As it relates to managing high-risk, long-term illness, this type of payment system has become less relevant in our society – especially as the prevalence of chronic diseases and comorbidities have been increasing. By 2025, chronic diseases will affect an estimated 164 million Americans – nearly half (49%) of the population. As more individuals experience chronic and comorbid diseases, there is an increase in the number of referrals, exams or treatments they are receiving per condition. However, there is no evidence of people feeling or getting better.
Patients are often unsure of the ‘right’ amount of care they need to be receiving. In a study conducted by JAMA, primary care physicians were interviewed to see how much of the care they gave they felt wasn’t entirely necessary. 42% of physicians believed that patients in their own practice were receiving too much care and only 6% said they were receiving too little. Physicians also believed that financial incentives encourage aggressive practice: 62% said diagnostic testing would be reduced if it did not generate revenue for medical subspecialists (39% for primary care physicians).
Phasing-out and eliminating fee-for-service reimbursement models and continuing to strategically phase-in value-based reimbursement methods will be key in reducing in our healthcare costs while improving overall health outcomes, as we’ve seen recently.
Shifting reimbursement models, expectations and related workflows won’t happen overnight, however, there are an increasing amount of tools that can be used by organizations to effectively phase in higher-value reimbursement models. The recent shifts, supported by the quality reporting required by Center for Medicare and Medicaid Services (CMS) have driven the monitoring of quality metrics and has been at the forefront of incentivizing value-based care. At Veta Health, we’re focused on creating sustained, long-term behavior change for patients and populations with digital tools in non-traditional settings, to connect patients and providers at the right time throughout the care journey.
Through technology, patients are able to actively become managers of their own health and can take care of themselves. The flexible tools allow for integration into any patient’s unique care plan that gives the provider a standard way of creating a treatment plan that are both standardized and dynamic on a per patient level. They are able to communicate with providers at their own time and use guidance tools to interpret their care plans. Allowing patients to take control of their healthcare not only gives them a greater engagement opportunity with their provider but also allows them to take care of themselves. That switch to personalized and value-based care will longitudinally have a greater impact on future healthcare trends.