PROCESS DESIGN TO FIX THE US HEALTHCARE SYSTEM

BACKGROUND

The delivery of healthcare to the citizens of the United States is failing. The costs are high, satisfaction is low and many do not have access to care.

Currently a large number of citizens have employer provided insurance. For those not covered through employers, there is an existing federally mandated effort that is failing. Others have healthcare services through Medicare and Medicaid and others simply have no protection.

Two major challenges are (1) decisions are primarily political and (2) healthcare expense is the highest in the world.

COST

The cost of healthcare is 18% of the GDP and rising. This is in excess of $3.3 trillion. Currently the average person is spending $10,345/year. All in. Actual annual cost of healthcare is about $7,000/year/person. On the face of it, this is a delta of approximately $3,000 per person or 30% totaling almost $1 trillion.

Why the discrepancy? Much of it is political in nature. Healthcare insurance lobbies are some of the largest in Washington DC. Premium taxes, profit motive of providers, hospitals, pharmaceutical companies and the list goes on and on.

Look at the cost of malpractice and litigation. If there are 850,000 docs in the U.S. and if the cost of malpractice insurance is $5,000 per doctor that is almost $5 billion dollars. An OB/GYN is five or ten times that amount.

Pharmaceutical companies pay huge amounts to settle product liability claims. For example Merck paid $4.5 billion for Vioxx liability. However, big pharma companies are among the most profitable publically traded corporations. Prescription drugs are sold outside the US for much less, sometimes a fraction of the cost.

These are just some examples of unnecessary expense that should be addressed to benefit all citizens.

ANALYSIS

Healthcare should be a right, not a privilege. According to government statistics, 91% have some sort of health insurance and 9% are uninsured. Of those insured, about 37% are Medicare or Medicaid. And 63% obtain coverage through employment. Those covered by any form of insurance has increased under the Affordable Healthcare Act.

Currently healthcare is in a crisis. This is almost exclusively because of cost. The government estimates that Medicare’s net underwriting losses are approximately $590 million. The cost of Medicaid is roughly $550 million. Therefore over $1.1 trillion are spent by state and federal agencies.

It is not possible to overestimate politics in the healthcare equation. There are many vested interests it something that is such a high percentage of the GDP. Where this exists, battle lines are drawn. In politics, as in life, compromise is not a solution.

For all of this bother and the highest costs in the world, is our healthcare the best in the world? No! The World Healthcare Organization rates the U.S. at #37, well behind Canada, U.K. and most of the European countries.

Considering the current state of healthcare and healthcare funding in the U.S. is it possible to change or “repeal and replace” Obamacare? No! It would leave all the same models and players in place and be the proverbial “rearranging the deck chairs on the Titanic”. For example, health insurance premiums are computed based on Age, Gender and Zip Code. If you are in New York and get a quote from Utah, the cost will be the same. Yet politicians lie (because they must know better) and state that change in the law allowing purchase across state lines will increase choice and lower cost.

The healthcare crisis conundrum must be looked at through new eyes with politics removed.

PROCESS DESIGN

Wise organizations recognize that some challenges cannot be resolved without outside insight. As a result, consulting firms are used to do the analysis and recommend solutions. There are specialty consulting firms that work in one segment and others that are very large and have various specialized practices.

What is being suggested is that our country needs a solution and we should go outside the government to find it. Doing it, within the government, guarantees nothing will change. There are too many vested interests and posturing to ever arrive at a productive solution.

The process would be to issue a Request for Proposal (RFP) outlining the desire to have a “blank sheet” solution. In other words, there would be no sacred cows. Considering non-U.S. best practices would be an excellent source of intelligence. Tort reform would be a must. Drug companies and institutions would greatly benefit by limiting legal redress other than for willful and gross negligence. Costs of prescription drugs would plummet.

Responses to this RFP would be accepted from consulting firms, joint-venture consultants and educational institutions. The one proviso would be that those who were chosen would be anonymous. Any contact with the political segment of the government would be cause for termination. A large amount of data would be available in the beginning as well as along the way.

In terms of fees, those chosen to offer a conceptual plan would be paid $1 million plus defined expenses. There would be, say, six or eight firms retained.

The implementation phase would have a $50 million fee, plus expenses. These fees and expenses are computed to attract the “best and brightest”. Can you imagine the career opportunity to oversee the restructuring of the healthcare system of the largest economy in the world?

The final presentation would be made to the government, the healthcare industry and the public with projected implementation steps and savings.

Considering everything involved and if done correctly, the savings should reduce the percentage of GDP to single digits or, at least, savings of $1 trillion. There is so much waste and frictional costs to be eliminated that we could cover everyone, provide excellent care and improve our healthcare to the “world-class” status it once enjoyed.

RBS (3.30.2017) No rights reserved