The Affordability Innovation, Part 2: The Service Solution

Civilization's call to caring is the common denominator for access and affordability, value and equity.

"We can't solve problems by using the same kind of thinking we used when we created them."

Attributed to Albert Einstein, the quote raises an important question: Can healthcare solve a problem it helped create?

Affordability innovations exist because the cost of healthcare itself is a social determinants of health (SDOH) risk factor for a growing number of Americans. Kaiser Family Foundation (KFF) reports that nearly half of U.S. adults say they could not afford an unexpected $500 medical bill out of pocket. Rates are higher for black and Hispanic adults.

Additional KFF data shows that the cost of both coverage and care is becoming too high to bear, causing nearly 25% of adults to delay or avoid needed care or ration medication—a number that is also higher for black and Hispanic adults, as well as women. Multiple stories on the cost of prescription drugs note the choices people are forced to make between basic needs—food, clothing, shelter—and medical costs.

The next profit center

There is enough SDOH data for the industry to agree that it has a problem, but somehow not enough to keep talk of elusive business cases from creeping into the health equity conversation. But one thing is certain about healthcare: problems create profit centers and the business of SDOH is shaping up to be one of them.

A 2021 Population Health Management analysis documents the rise of the SDOH industry, which as of July 2021 includes "at least 58 companies with $2.4 billion in funding and a total valuation of $18.5 billion." The authors note that funding and valuation is already concentrated around a select group of these organizations:

• Seven companies represent nearly 74% of total funding
   
• Twenty-two companies represent nearly 98% of funding
   
• Eleven companies represent nearly 97% of valuation

The authors add that it seems likely that "these larger, well-funded companies will continue to accumulate the vast majority of capital injections."

Addressing affordability and equity is tough work. So are the business model changes needed to achieve them. The right profit formulas and priorities are integral to success. But so are an organization's mission and vision. In its recent strategy guide, Improve or Transform: Choosing the right business model to deliver health, The Christensen Institute notes that some beliefs about the future may include the following:

• Hospitals will become commodities with commodity margins.
   
• Nontraditional competitors will thrive in a consumer-oriented marketplace.
   
• New business models are required to succeed in an environment defined by value-based health.

This suggests a healthcare landscape in which unique players may be best suited to address 21st-century challenges, requiring each stakeholder to focus on what it does best. This may be difficult to tease out in an era when tech companies define themselves as providers and smaller percentages of commercial payer profits come from health insurance products.

Related: The Affordability Innovation, Part 1: Cottage Industries and Blue Light Specials

"Forty years of trying"

The aforementioned Christensen Institute was "founded on the theories of [now deceased] Harvard professor Clayton M. Christensen." More than a decade ago in The Innovator's Prescription, Christensen and his co-authors—Jerome Grossman and Jason Hwang—described how industries develop:

"The products and services offered in nearly every industry, at their outset, are so complicated and expensive that only people with a lot of money can afford them, and only people with a lot of expertise can provide or use them…It's the same with health care. Today, it's very expensive to receive care from highly trained professionals. Without the largesse of well-heeled employers and governments that are willing to pay for much of it, most health care would be inaccessible to most of us."

Healthcare has stayed close to its complex, expensive origins. In his May 2021 blog, Tom Robertson, executive director of Vizient Research Institute, wrote:

"We are fast approaching the point where health care spending will exceed the carrying capacity of the middle-class working family's income. We cannot slow the rate of increase in health care spending sufficiently by curbing utilization. If they haven't already done so, prices are on the verge of eclipsing the middle-class household's ability to pay; the market has failed to rein in health care prices despite forty years of trying."

The link between service and civilization

Just three years of COVID-19 have demonstrated that healthcare can do hard things and that the nation owes an unpayable debt to its front-line providers.

In addition to Einstein's previously cited advice, another popular quote—this one attributed to anthropologist Margaret Mead—identifies caring for the injured as the first sign of human civilization. Not technology, tools, or the rise of an industry.

Taken from Fearfully and Wonderfully Made, author and physician Dr. Paul Brand cites a Mead lecture, stating:

"To her, evidence of the earliest true civilization was a healed femur, a leg bone, which she held up before us in the lecture hall. She explained that such healings were never found in the remains of competitive, savage societies. There, clues of violence abounded: temples pierced by arrows, skulls crushed by clubs. But the healed femur showed that someone must have cared for the injured person — hunted on his behalf, brought him food, and served him at personal sacrifice."

It will take this same kind of commitment to ensure healthcare remains a service—one that is affordable and accessible to all.