Yes, we can control healthcare costs

  | March 27, 2017

The United States is ready for a new era of healthcare, one that better serves doctors and patients alike. Change will be driven by employers and by patients, who are increasingly approaching healthcare with a consumer mindset and demanding transparency far beyond simple pricing information.

For a long time, hospitals profited from companies not managing their costs because it was other people's money, but those days are over. There's going to be scrutiny on costs and budgets like never before. As with any industry or business, health systems will be forced to meet employers' and consumers' needs and demands — or risk financial instability.

This represents a critical departure from the kind of paternalistic incarnations of healthcare that thought it better to keep patients in the dark. But that's not the only change needed. The healthcare industry must also leave behind its present-day overcorrection, where, in the rush to hit cost and quality goals, doctors and nurses have been unwittingly turned into stenographers and glorified billing clerks.

Currently, every hour of a doctor's care generates two hours of computer work. Providers are frustrated, burnout among doctors has reached epidemic levels, outcomes haven't meaningfully improved, and costs remain largely out of control.

Moving forward, the inviolable patient-doctor relationship must be preserved and protected. So must advances that are clearly beneficial, like evidence-based decisions, analytic insights, and population health management enabled by technology.

Hospitals will have to adopt new forms of value- and outcome-based care. If not, they'll risk both their profitability and the very quality of the care they are charged with delivering.

Today, most hospital CEOs are forced to act like hotel managers because of cost structures that require them to keep their beds filled to maintain the bottom line. In countries like Denmark, hospitals aren't reimbursed through fee-for-service incentives. That means there's no incentive for them to perform unnecessary procedures or keep patients longer than is absolutely necessary.

As a consequence, the number of beds in Danish institutions is more than 50 percent lower than in the United States. Smart health system leaders are aligning cost structures and processes for the near future when hospitalizations will shift from a revenue driver to a cost center.

Health system and hospital CEOs must seize this important opportunity to transform in accordance with our country's need for better care at reduced costs. If they embrace a common-sense business model that aligns with their institution's mission statement, healthcare will be able to serve the common good and help people stay well.

Most employers and consumers don't realize that they're the ones who can drive these critical changes. Patients get shortchanged by the way most healthcare organizations have been set up and operate. We shouldn't buy into the lie that healthcare costs can't be controlled, because they can and increasingly are.

Demanding accountability and improvements in care is the best way to slash costs. Employers have to wake up and realize they've been sold a bill of goods. Enough is enough.

Dave Chase is a venture capitalist and the executive producer and director of "The Big Heist." This article originally appeared in "The Future of Hospitals," a sponsored series appearing in the Wall Street Journal.

Yes, we can control healthcare costs