Healthcare Systems- Moving from Competition to Co-Opetition


This is Alan Pitt with Healthcare PittStop. I’ve often wondered why American health care systems don’t talk more with each other. After all, they have a common goal to take care of their communities. This may represent our capitalistic nature—the need to compete. However, at least in part this is driven by insurance contracting. In an effort to offer simplified contracting insurers often ask systems to offer every imaginable type of care. Still, not every center of excellence is excellent. Having a heart, cancer, neuro-center on every corner can’t be good for care or for costs. This often results in a perverse environment where competition reigns and opportunities for collaboration—what some call co-opetition—are ignored.

For the past three years I’ve participate in a working group on population health run by #Health Leaders Media. This event is hosted by Jim Molpus and his excellent staff. Jim brings together health care systems to discuss common problems and potential solutions. Often these hospitals compete with each other back at home but freely share ideas in this unique forum. As always, I learned a lot and thought I’d share a few observations.

First the volume to value transition isn’t quite right: As was pointed out by one attendee, no business can be built on value alone. There has to be volume. Obamacare, or the Affordable Care Act, has prompted most health care systems to offer guarantees. For example, the hospital is only paid if the patient stays out of the hospital for a certain amount of time. However, ultimately volume will rule the day. Our aging population will require more care moving forward. It’s not about the transition from volume to value but rather the transition from volume to volume and value.

Second- social determinants of care: Dr. Pam #Beckwith, a Senior Vice-President for Quality at the Carolinas Healthcare System, mentioned that the state of North Carolina often does their long term 20-year prison plan based on the number of citizens in the state with less than a third grade education. Useful numbers. But wouldn’t it be better to invest in the education system rather than prison cells?

Social determinants of health care have some overlap here. Health care systems are paid to treat disease rather than wellness. However, for patients it’s hard to think about your diabetes, obesity, or COPD when you have no place to sleep and the only food you can afford is fast food. Imagine a business where one of your main suppliers was unreliable; at some point you’d be forced to address the supplier or risk going out of business.

Ultimately, to improve on wellness, social factors need to be addressed simultaneously with medical factors. In my dream, my system #Dignity Health would become “Dignity.” Dignity would manage all aspects of the supply chain for their community. Grocery stores and housing would be branded under Dignity. It’s just a question of whether they can make enough money on improved health care outcomes to subsidize the presumed loss on caring for the poor. However, the current model—owing in large part to this assembly line in treating only illness—does not seem to end in an effective product, namely wellness. Notably Kaiser has taken the first steps on this path by making sure grocery stores in their areas have fruits and vegetables available to the community.

Third: Urgent cares versus on-line care. Every health care system seems to be exploring direct-to-consumer online visits as a way to improve patient satisfaction and market share. There’s also some vague sense that this will reduce the cost of care by replacing urgent care and emergency room visits with online visits. However, as was pointed out by Dr. Rick #Vaughn, there’s a clear difference between telehealth and tele-visits. Although the direct-to-consumer video visits have been well received by patients, these are typically patients who would not have seen a provider. Video visits have thus created a totally new group of patients, actually increasing utilization and, from the vantage point of the payer, increasing costs.

For Dr. Vaughn, telehealth could be better used as a technology to enable care for those that are chronically ill, allowing a lower cost of care for those already in the system. This confusion has in fact led to a misunderstanding about telemedicine more generally. A recent RAND study suggested that telemedicine paradoxically increases the cost of care when in reality telemedicine, as it has been used today, has created an entirely new market.

These are just three topics that were discussed at the meeting. While the current fee-for-service free market system will likely last longer than was predicted three to five years ago, things have to change. The cost of care in America is simply too high. Rather than have each system try to figure out the solution on their own, I applaud health leaders. We need to get together and talk more about problems and solutions. Thank you.

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