"We don't have a healthcare system problem, but we have a problem in how we treat people at their highest level of usage," he says.
He says by focusing on the highest utilizers of the most expensive care, healthcare leaders and policymakers can "tune out the static" and have a better chance of solving the problem, and he adds that the Patient Protection and Affordable Care Act does little to nothing to address this.
"We tend to look at an insurmountable problem like fixing the healthcare system," he says. "I wonder how healthcare costs would be viewed as a problem to be fixed if we just focused on that population."
Banner is one of the hospitals in CMS' Pioneer program, the most aggressive and risky form of Medicare ACO, and despite a large exodus after the first year, Banner stayed. Fine says Banner approached the 50,000 lives in its Pioneer ACO by focusing on the 5% of those patients who were the highest consumers of healthcare services.
"We were one of the organizations who did pretty well," says Fine. "It could be dumb luck or focusing on the 5% who are the greatest drivers of cost. We could also reduce costs if we forced every Medicare enrollee to have a healthcare power of attorney and a living will and they had to produce these documents upon enrolling."
While Fine's suggestions could, indeed, go a long way toward reducing healthcare cost inflation, they have little to do with limiting market dominance or with allowing employers and consumers to better compare cost and quality among a group of organizations. And as Sonenreich notes, size does matter and is a factor in driving costs higher.
"We looked at state-level data of large systems in our marketplace. The reimbursement and pricing they were able to receive from insurance companies was at times 45% higher than all other hospitals in the marketplace. So all consolidation did was drive up price and cost," Sonenreich says. "Such systems are profiteering through pricing instead of efficiency."
He says employers must drive change.
"The difficulty in our marketplace is we're not in an area of large employers," Sonenreich says. "We have a lot of small and medium-sized ones. It takes the clout of very large employers to do this and create motivation from insurers to participate in this three-legged stool. From an economic standpoint, transparency in pricing for employers, employees, and insurers is at the crosshairs of affordability in healthcare."
This article appears in the March 2014 issue of HealthLeaders magazine.