The ACA will now help to offer clarity on pricing and payment
Our country now has its plan to overhaul 16% of the economy. For good reason, the individual mandate for insurance captured the debate spotlight. The Patient Protection and Affordable Care Act will bring in some 30 million Americans at coverage ratios that more reflect Medicaid and Medicare rates. This influx means U.S. healthcare delivery system utilization will go up, but available dollars and cash flow will go down.
For that reason, I contend that the law’s seminal impact is found in the provisions designed to allocate healthcare resources based on delivering safer, more efficient and less costly care.
Under reform, all stakeholders share in savings. That fact flies in the face of today’s perverse business model. The U.S. healthcare sys- tem is the most expensive in the world because it is uncoordinated and its payment model is based on cost; yet cost, price and value bear no rational relationship to one another. How else to explain that the fundamental laws of supply and demand do not exist in the U.S. pharmaceutical industry? We use more drugs than any other country in the world, but we pay the highest prices. Rather than incenting collaboration, doctors and hospitals have long been incented to warily co-exist with each other for payment of specific, discrete treatments and services, but not necessarily overall patient health goals.
Our system also has led to a lack of clarity for the consumer, who is unable to discern the value of alternative healthcare services across the entire care continuum of service options. Those who sell new technology to physicians oftentimes miss the chance to engage the wider delivery system and explain the true cost-to-value ratio of their products and services. In this paradigm, new technologies have driven increases in cost largely through physi- cian relationships, and the price-to-value comparison for the patient cannot be measured, nor for that matter, even found.
The Affordable Care Act, for all its unknown consequences, attacks this insanity. It will reduce opaque pricing and payment for more services. When the healthcare marketplace becomes transparent and people understand the rational cost and price for services, all stakeholders will be driven to become more efficient and to make pricing more rational and market-driven. It’s an antidote good for the patient and the U.S. economy.
John Bardis is chairman,
president and CEO of MedAssets.