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Now What?

Analysis  |  By Laura Beerman  
   December 20, 2024

Is the murder of a healthcare executive enough to finally change our broken healthcare system?

Hope is not a plan. Neither is anger, retribution or grief. And all too often, it takes a crisis to motivate both immediate action and the kind of sticky commitment needed for long-term change.

Just as COVID re-surfaced the long-standing disparities hiding in plain sight in the U.S. healthcare system, the murder of UnitedHealthcare CEO Brian Thompson has surfaced the collective anger of the American public with that system.

Jamie Towey, vice president of Advocacy for Aging with Dignity, captures this sentiment and the why in his AWD newsletter post "Humans Come First": "There is an underlying reason for [this] anger . . . most Americans don't trust health insurance companies. Gallup polls consistently show that a majority of people view health insurance companies negatively, a percentage that has steadily increased and that stands in stark contrast to the public's perception of physicians and hospitals."

Towey adds: "Healthcare is an immensely complex system with many more players and variables than just health insurance providers."

Ann Somers Hogg, director of health care research at The Christensen Institute, agrees and that our current system must change — despite and because of that complexity.

Hogg and The Institute have just released Zero-Inflation Health Care: A national strategy for unlocking and scaling insurance innovation. The report summarizes healthcare's cost inflation problems, consequences and solutions via an Innovator's Roadmap for achieving the best care at the best cost, every time.

Part one of this series will detail the problem part of the roadmap, and part two the solution.

1. Understand the root cause of the healthcare inflation problem

In a Dec. 13 New York Times op-ed, Andrew Witty — CEO of UnitedHealth Group, parent company of UnitedHealthcare — wrote: "We know the health system does not work as well as it should, and we understand people's frustrations with it. No one would design a system like the one we have. And no one did. It's a patchwork built over decades."

Witty's history lesson on why healthcare is broken was as misguided as the cruel responses to Brian Thompson's murder. Not that Witty is wrong, but payers and other industry players have also exploited that patchwork with actions that too often put profits before people.

Hogg notes that in 2022, the U.S. spent $4.5 trillion on health care "thanks to a complex, four-party system — insurers, sponsors [employers], providers, and consumers — that disrupts normal market dynamics."

"This system is why premiums keep rising, leaving individuals, families, and businesses struggling."

2. Acknowledge the three systemic consequences that innovators must address

"Even though the problem is systemic, we don't suggest changing the four-party system as a first step," says Hogg. "Instead, innovators must tackle the consequences of that system."

Per her report, those consequences are:

  • The cost-plus business model of incumbent insurers
  • Weak market forces that limit competition and innovation
  • No supply chain visibility to see and correct waste

Hogg adds detail to each of these, starting with the cost-plus model that has yet to be disrupted and that includes four dimensions:

  • Value Proposition: Good enough care at high and rising costs.
  • Resources: Used in part to incentivize leaders to maximize margins. This is in addition to the resource of enterprise data/transaction platforms.
  • Processes: Risk estimation without attempts to change it, and limited data sharing resulting in no supply chain visibility.
  • Profit Formula: A traditional fee-for-service model that creates inflation, yet limited profit sharing with providers participating in value-based care contracts.

"A systemic problem requires systemic solutions."

A combination of perverse incentives, waste and greed is grifting an industry whose primary product is — or should be — human health.

The Christensen Institute offers a two-part solution: 1) innovate the business model, and 2) build a new value network, with the U.S. government leading the charge as the largest payer.

"This approach gets to the root of the problem and avoids the missteps of past attempts to disrupt the industry," she adds.

Part 2 of this series will detail this solution, including an Optimal Care Business Model — the counterpoint to the current payer cost-plus approach.

Laura Beerman is a freelance writer for HealthLeaders.


KEY TAKEAWAYS

The murder of UnitedHealthcare CEO Brian Thompson and the motivations behind it make one thing clear: the healthcare status quo cannot continue.

But how do we disrupt it? A new report from The Christensen Institute includes an Innovator's Roadmap for creating "an intelligent, scalable model that could change the game for everyone."

HealthLeaders connected with roadmap author Ann Somers Hogg on why our healthcare system is broken and how we can fix it.


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