This is the second half of an opinion piece that lays out the business case that events of the past year amplified the flaws of FFS sick care and the benefits of value-based care models:
- Despite decades of frustrations with the industry’s poor performance record, FFS waste and low-value services still account for 25% of total spend, or nearly $1 trillion every year.
- Under-investment in digital health and virtual care solutions for the connected patient exacerbated the pandemic crisis for many people, understandably fearful to access on-premises treatment options.
- Massive FFS losses caused by plummeting volume of elective procedures—lost revenue unlikely to be fully recovered when demand for elective care returns in 2021.
- Near-record profits by health plans bearing financial risk.
The pandemic has only strengthened the business case for value.
We witnessed remarkable leadership by many over the past year. We admire the unprecedented pace of decisive actions by many executive teams across the country who recognized the urgency of the situation caused by the pandemic and took steps to act in a matter of days, even hours. Actions that in pre-pandemic times would have taken months, if taken at all, stood up and delivered virtual care solutions to handle spiking demand for triage and treatment.
That leadership bodes well for the future, but only if the lessons learned during the pandemic serve to accelerate the digital transformation of operations and the related efforts to reimagine consumer-first care models designed for value.
Consumers welcomed virtual care during the pandemic, effectively issuing a call to action to the industry: put the connected patient at the center of everything you do.
The inflection point we all lived through with awareness as it happened was how quickly consumers welcomed virtual care and, even as the pandemic fades, how clear the connected patient is here to stay.
Arguably, consumer acceptance of — even outright preference for — virtual care is a massive gift to the healthcare industry. Digital automation and self-service fulfillment will eliminate significant costs associated with common manual processes that have made the health care consumer experience so frustrating and expensive.
The new goal is to build more value into that customer experience by relentlessly improving the yield from digital assets to fulfill the needs of the unwell consumer shopping for care; detect rising risks so that patients living with demographic risks and/or chronic conditions avoid irreversible harm and the high costs of reactive sick care; and maintain health, in between appointments, for consumers aging in place at home.
Earn a return on health.
The pandemic and the ensuing historic changes in consumer preferences and demands set the stage to embrace value over fee for service volume.
Transforming operating and revenue models yields a return on the investments in digital assets and builds a competitive moat -- durable customer loyalty and brand equity. It’s also good for the bottom line. A recent Accenture study found that organizations that prioritized the consumer experience earned a six-fold difference in profitability compared to underperforming peers. Applying that priority to health care means putting the patient at the center of everything you do to earn a return on health.
The market for the new connected healthcare consumer is just beginning, but as the incumbent providers of healthcare services, it is arguably a contest for healthcare organizations to lose. The alternative for all but a small number of health systems is to be relegated to a commodity service—a price-taker—with little control over their own revenue channels.
Looking forward, expect rising consumer expectations for virtual care and a better digital experience. That digital transformation in consumer demand sets the stage for health systems to leverage their incumbent advantage as providers of care, but it will require commitment to a consumer-first operating model. While that is a cultural and operational challenge for nearly every healthcare organization, it’s essential to winning the consumer in a marketplace of innovators that are getting more assertive and dynamic by the day, but lack the trust and opportunity to create relationships that most consumers still want and expect from their healthcare providers.
