Trans­par­ent ef­fect

The ACA will now help to of­fer clar­ity on pric­ing and pay­ment

Modern Healthcare - - LETTER FROM SPONSOR -

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.

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