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- Herausgeber: John Wiley & Sons
- Kategorie: Fachliteratur
- Sprache: Englisch
Expert review of how the antiquated United States healthcare system is transforming
The Coming Healthcare Revolution: The 10 Forces that Will Cure America's Health Crisis identifies and describes five top-down macro forces and five bottom-up market forces that have sufficient strength to transform the U.S. healthcare industry from the outside-in. The powerful macro forces are demographic determinants, funding fatigue, chronic pandemics, technological imperatives, and pro-consumer/market reforms. The equally powerful market forces are whole health, care redesign, care migration, aggregators' advantage, and empowered caregivers. Written by David Johnson and Paul Kusserow, professional healthcare advisors operating at the intersection of healthcare economics, policy, strategy, and capital formation, this book provides expert insight on how the U.S. healthcare system is becoming cheaper, better, more balanced between prevention and treatment, easier to access, and more empowering for both frontline caregivers and consumers.
In this book, readers will learn about:
- Factors leading to rising healthcare costs, including an aging population, perverse economic incentives, armies of middlemen, and expensive breakthrough therapies
- U.S. healthcare in comparison to other high-income countries—twice as expensive per-capita, and inferior in terms of health status metrics
- Similarities between the U.S. automobile industry crisis in the 1980s and today's adapt-or-die situation for healthcare providers and suppliers
- How the healthcare industry is reorganizing to decentralize delivery of whole-person health in ways that will improve health outcomes and overall societal health
The Coming Healthcare Revolution is a must-read for professionals and organizations seeking to understand and react to the paradigm-shifting forces revolutionizing the healthcare ecosystem.
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Veröffentlichungsjahr: 2024
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Table of Contents
Cover
Table of Contents
Title Page
Copyright
Dedication
Foreword
References:
Introduction: Healthcare’s Roaring 2020sintroduction
A GARGANTUAN “GAS GUZZLER”
“FORTUNE” TELLING HEALTHCARE’S DYSFUNCTION
CHANGE IS THE ONLY CONSTANT
BACK TO THE FUTURE?
FORCE MULTIPLIERS
MACRO FORCES
MARKET FORCES
Notes
PART I: Macro Forces
Introduction: Look Out Below
1 Demographic Determinants
DEMOGRAPHICS, PSYCHOGRAPHICS, AND THE SEARCH FOR MEANING
THE TWO-PRONGED DEMOGRAPHIC THREAT
CONCLUSION: DEMOGRAPHICS ARE NOT DESTINY
Notes
2 Funding Fatigue
MACROECONOMICS: THE END OF HEALTHCARE’S GRAVY TRAIN
PLATEAUING MEDICARE AND COMMERCIAL FUNDING
PIZZA, PRODUCTIVITY, AND HEALTHCARE
CONCLUSION: SWIMMING NAKED
Notes
3 Chronic Pandemics
CHRONIC DILEMMAS: STORIES FROM THE FRONT LINES
HEALTHCARE’S PROFOUND SERVICES–NEEDS MISMATCH
THE FOUR FACES OF CHRONIC DISEASE (HCDD)
THE ORIGINS OF CHRONIC DISEASE
CONCLUSION: TACKLING AN IRRESISTIBLE FORCE
Notes
4 Technological Imperatives
ACCELERATING DIGITAL AND VIRTUAL TECHNOLOGIES
HEALTHCARE’S VAST INTERMEDIARY PROBLEM
BYTES AND BITS
CONCLUSION: THE MACHINES ARE COMING! THE MACHINES ARE COMING!
Notes
5 Pro-Consumer/Market Reforms
BETTER REGULATION
BETTER PURCHASING
CONCLUSION: LET THERE BE LIGHT
Notes
PART II: Market Forces
Introduction: It’s Complicated
6 Whole Health
I-WE-I
TIME TO CHANGE TACTICS
REVITALIZING INNER-CITY HEALTHCARE ON CHICAGO’S SOUTH SIDE
SENSE AND NONSENSE IN MINNESOTA
CONCLUSION: A HEALTH-PROPELLED “UPSWING”
Notes
7 Care Redesign
FORD’S BETTER IDEA?
VALUE’S DISRUPTIVE ONE-TWO COMBINATION
WHOLE-PERSON HEALTH
AHOY COLUMBUS: HEALTHCARE’S NEW-FOUND TERRITORY
CONCLUSION: RECKONING AND REDEMPTION
Notes
8 Care Migration
GOING NORTH
STAGING DECENTRALIZATION
HOMEWARD BOUND
THE UNDER-USED AND OVER-APPRECIATED HOSPITAL
DEMAND MANAGEMENT AND DISINTERMEDIATED PROVIDERS
PRE-EMPTIVE DIAGNOSTICS
CONCLUSION: DECENTRALIZED, DEMOCRATIZED, AND DELIGHTED
Notes
9 Aggregators’ Advantage
HEALTHCARE’S FINAL FRONTIER: ENGAGING CONSUMERS
THE PERILS AND POSSIBILITIES OF HEALTHCARE APPS
TRANSCARENT IS COMING!
BAYLOR SCOTT & WHITE’S PLATFORM PLAY
CONCLUSION: CONSUMERISM NOW
Notes
10 Empowered Caregivers
THE WAY HEALTHCARE’S WORKING ISN’T WORKING
CHANGING MINDSETS
CHANGING MECHANICS
WOMEN AND HEALTHCARE
THE DOCTOR DILEMMA
CONCLUSION: BELIEVE IN PEOPLE AND HUMAN-CENTERED TECHNOLOGIES
Notes
Conclusion: Guns and Butter
HEALTHCARE INC. WILL “END IN A WHIMPER”
Notes
Glossary of Acronyms
Acknowledgments
About the Authors
David W. Johnson
Paul Kusserow
Index
End User License Agreement
List of Tables
Chapter 8
Table 8.1 Cycles of Centralization and Decentralization in Medical Procedure...
List of Illustrations
Introduction: Healthcare’s Roaring 2020s
Figure 0.1
Figure 0.2
Fortune Magazine
cover.
Part 1a
Figure 0.3
Figure 0.4
Chapter 1
Figure 1.1 A larger and older projected U.S. population (1960 vs. 2060).
Figure 1.2 The rapidly aging U.S. population (2015–2060).
Figure 1.3 Increasing obesity in the United States, 1999–2018.
Figure 1.4 U.S. healthcare expenditures for chronic disease equivalent to th...
Figure 1.5 Falling U.S. birth rate (2010–2020).
Figure 1.6 Crossover point in 2035: More seniors (65-plus) than children und...
Figure 1.7 Declining ratio of workers to Social Security beneficiaries.
Figure 1.8 Malthus’ mistake: Global population estimates for 1700–2022 and p...
Chapter 2
Figure 2.1 Graphic illustration of an inflection point: The point at which a...
Figure 2.2 Flattening relationship: Healthcare expenditure as a percentage o...
Figure 2.3 U.S. Government’s astronomical debt levels.
Figure 2.4 Per-capita Medicare spending.
Figure 2.5 Healthcare affordability index calculation.
Figure 2.6 The Healthcare Affordability Index, 1999–2022.
Figure 2.7 Americans are working harder but earning less, 1992–2022....
Figure 2.8 Commercial health plans subsidizing the rising costs of U.S. heal...
Chapter 3
Figure 3.1 Cancer rates differ significantly by state.
Figure 3.2 Cancer death rates highest in low-income communities.
Figure 3.3 Categorization of cancer types and deaths by organ, 2023.
Figure 3.4 Skyrocketing incidence of Type 2 diabetes in the 10–19-year age g...
Figure 3.5 Higher percentages of U.S. Black and Hispanic adults aged 65 and ...
Figure 3.6 Moving less.
Figure 3.7 U.S. spending more on healthcare.
Figure 3.8 And achieving poor or mediocre health outcomes.
Chapter 4
Figure 4.1 Major technological advances in 2007.
Figure 4.2 Humans cannot out-compute machines: Adapting to accelerating rate...
Figure 4.3 The “A’s” have it: Machine versus human intelligence....
Figure 4.4 Healthcare dominates U.S. industry.
Chapter 5
Figure 5.1 Campaigning against ONC’s new interoperability rules: Screenshot ...
Chapter 6
Figure 6.1
Figure 6.2 The Gilded Age lives: Economic, political, social, and cultural t...
Figure 6.3 Poster for the “Rumble in the Jungle,” 1974.
Figure 6.4 An American dilemma.
Figure 6.5 An unacceptable “death gap” in Chicago.
Chapter 7
Figure 7.1 Ford’s 1968 advertisement.
Figure 7.2 Negative outlier: U.S. healthcare system spends more and performs...
Figure 7.3 Veteran’s Administration’s “Circle of Health”...
Figure 7.4 Whole-person health requires a comprehensive approach.
Figure 7.5 Whole-person index: Clinical, social, behavior, and genetic compo...
Figure 7.6 A payer’s journey: Migration from fragmented, treatment-centric c...
Figure 7.7
Chapter 8
Figure 8.1 Migration from centralized to decentralized care delivery (c. 202...
Figure 8.2 The delivery of healthcare services is transitioning rapidly to l...
Figure 8.3
Chapter 9
Figure 9.1 Fee-for-service medicine reigns: Health system revenue compositio...
Figure 9.2 Healthcare’s “old math” is more difficult to square in a “new mat...
Figure 9.3 Mistaking articulation for accomplishment.
Figure 9.4 Diffusion of Innovations.
Figure 9.5 Clinical care drives only 20% of health outcomes.
Figure 9.6 Fogg Behavioral Model.
Figure 9.7 User profiles are helpful in assessing the level of consumer enga...
Figure 9.8 Screenshot of Transcarent app.
Chapter 10
Figure 10.1 Aligning employee and company needs.
Figure 10.2 Tools that improve employee–company alignment.
Figure 10.3
Figure 10.4 It’s time for a change: “Old Medicine” vs. “New Medicine” leader...
Figure 10.5 New Medicine’s practitioner paradigm.
Conclusion: Guns and Butter
Figure 1
Guide
Cover
Table of Contents
Series Page
Title Page
Copyright
Dedication
Foreword
Introduction: Healthcare’s Roaring 2020s
Begin Reading
Conclusion: Guns and Butter
Glossary of Acronyms
Acknowledgments
About the Authors
Index
END USER LICENSE AGREEMENT
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A fascinating recounting of how we got to where we are now, what challenges our healthcare system faces as a country, as well as the paths that will propel us forward and upwards. Essential reading for anyone who wants to understand healthcare today, the necessity of transforming the world’s largest industry, and the ideas, companies and people that will lead us back to the top. As a medical practitioner, federal policymaker, and health services entrepreneur, I applaud this brave book.
—William H. Frist, MD,former U.S. Senate Majority Leader; Co-Founder and Managing Partner, Frist Cressey Ventures
An important and provocative book on the current state of healthcare in the U.S., a plea for needed changes that have been delayed for decades, and a roadmap of innovative initiatives that could get us to a better place.
—Nancy-Ann DeParle,former White House Deputy Chief of Staff; former Administrator, Center for Medicare and Medicaid Services (CMS); Managing Partner and Co-Founder, Consonance Capital
A critical warning bell for our current healthcare system and a call to arms to drive the necessary changes that will allow the United States to lead, not follow.
—Jeb Bush,former governor of Florida; Chairman and Founding Partner, Finback Investment Partners
Johnson and Kusserow capture the shock and awe accompanying the digital and biological advances propelling clinical care into uncharted territory. They persuaded me that widespread adoption of pre-emptive diagnostics, personalized therapies and integrated, whole-person health is not only possible, but probable within the next 10 years.
—David Feinberg, MD,Chairman, Oracle Health
I think the healthcare system in the United States is the best in the world in many respects, but the industry, like the education industry, is terribly fragmented. This fragmentation creates inefficiencies for the system, variation in outcomes for patients, and barriers to adoption of innovative new models of care that are proven to be better. The book provides a deep analysis about the current challenges in the healthcare industry and some possible pathways forward to improve it.
—Sam Hazen, CEO,HCA Corporation
Johnson and Kusserow have finally discovered healthcare’s Holy Grail: creating one place for all your health and care needs in a seamless, easy-to-use platform will empower consumers to live better and healthier lives. Unifying benefits navigation, clinical guidance, and care delivery, within one quality experience will change everything, much as Amazon did in the rest of our world.
—Glen Tullman, CEO,Transcarent
An insightful perspective into the current threats and emerging opportunities in the U.S. healthcare system. Change in our current system is inevitable and necessary, and this book shows us the path that got us here and a way to move forward.
—Kim Keck, President and CEO,Blue Cross Blue Shield Association
Healthcare is the largest industry in the world and the only industry that every one of us interacts with: what choice do we have? In this essential book, healthcare executives and experts Johnson and Kusserow demystify the healthcare system and make the case for the revolutionary change that needs to happen. They eloquently reveal the coming transformation of our healthcare system and give us a glimpse as to what new and better world can evolve.
—Trevor Fetter,Senior Lecturer and Henry B. Arthur Fellow, Harvard Business School; former Chairman and CEO, Tenet Health
Using surgical deftness and delightful literary references, authors Johnson and Kusserow open the reader’s eyes to five societal forces that will put massive pressure on our current healthcare system. With that as a foundation, they detail five solutions capable of obviating the crisis and restoring health to our nation. The Coming Healthcare Revolution is a must-read for both the providers and recipients of medical care.
—Robert Pearl, MD,Stanford University; former Executive Director and CEO, The Permanente Medical Group
The Coming Healthcare Revolution portrays the constellation of irresistible macro-economic and market forces that are disrupting and rewiring the U.S.’s largest industry in real time. Johnson and Kusserow predict more change in the next 10 years than in the last 100. Buckle up!
—Wyatt Ritchie,President, Cain Brothers
At Amazon One Medical, we believe deeply in working backwards, as described by Johnson and Kusserow, from customers’ health and healthcare “jobs to be done.” Our experience in doing so suggests that there are many ways, many of which are highlighted in the book, to reduce friction and eliminate waste, that all too often we admire rather than address in healthcare.
—Trent Green, CEO,Amazon One Medical
The Coming Healthcare Revolution concretely describes the 10 forces rewiring America’s health care industry in real time. It is a must-read for leaders navigating through a changing health care marketplace, as well as for employers who want to become better buyers of high-value healthcare to help their employees live healthier, happier and more productive lives.
—Dan Mendelson, CEO,Morgan Health
The combined impact of the forces articulated in this insightful book will drive dramatic change and shape our healthcare ecosystem for years to come. Johnson and Kusserow provide a front-row seat to the coming revolution. You don’t want to miss it.
—Jonathan Kolstad,Henry J. Kaiser Chair at the Haas School of Business and Economics Department, Director of the Center for Healthcare Marketplace Innovation at UC Berkeley
This book eloquently highlights how we got here, what the consequences of doing the same things we’ve been doing have been, and what we do next.
—Richard Ashworth,President and CEO, Amedisys
The two “B’s” in the authors’ clever acronym CB2E2 (Cheaper, Better, Balanced, Easier, Empowering) really resonates. Balancing health promotion and population health with better and more equitable access to treatment is exactly what will enable all Americans to thrive.
—Michelle Williams,former Dean, Harvard T.H. Chan School of Public Health
Healthier futures for all Americans depend on aligning payment and performance metrics with desired outcomes. As Johnson and Kusserow’s compelling narrative depicts, market-driven restructuring of healthcare services is now occurring through value-creation, health promotion and consumerism. It’s time for all industry stakeholders to convene and legitimately address opportunities for better health outcomes for all.
—Ann Jordan, JD, CEO,HFMA
A clarion call for change and transformation from two of the most strategic minds in healthcare.
—Lucinda Baier, President and CEO,Brookdale Senior Living; Chair, Nashville Health Care Council; author of Heroes Work Here
THE COMING HEALTHCARE REVOLUTION
10 FORCES THAT WILL CURE AMERICA’S HEALTH CRISIS
DAVID W. JOHNSON | PAUL KUSSEROW
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ISBN 9781394286454 (cloth)ISBN 9781394286461 (ePub)ISBN 9781394286478 (ePDF)
COVER ART & DESIGN: PAUL MCCARTHYBACKGROUND PATTERN: © GETTY IMAGES | FOTOATA
To my younger siblings Doug, Sue and Liz.We have suffered, survived and thrived during our long lives together.
—Dave
For my Mom, Suzanne Kusserow, whose pioneering and fearless work in nursing, public health, and women’s health inspired a grateful son. With gratitude and love to my wife and partner, Serena. And to my daughters — Maude, Marina, and Francesca, for their enduring love and patience.
—Paul
Foreword
Dave Johnson and Paul Kusserow are optimists. They can foresee a time in the not-too-distant future when American health care costs will be lower, access to services will be more convenient, care will be more personalized and more focused on prevention and wellness, quality will be uniformly high, and everyone—patients and clinicians—will be more satisfied.
The authors term this future of medicine “3D-WPH”—Democratized and Decentralized Distribution of Whole-Person Health. Maybe 3D-WHP is not something yelled at the ramparts of a revolution—even a health care revolution—but it accurately describes what they think the future will bring. What makes them optimists is that they believe this future is not just a utopian vision, but is both inevitable and imminent, arriving by 2034.
There was optimism and excitement after the passage of the Affordable Care Act (ACA), but that was 15 years ago. Despite concrete gains in access and costs since then, optimism about American healthcare is distinctly out of fashion. Today, pessimism about and dissatisfaction with the US healthcare system are the norm. In this sense, Johnson and Kusserow are out of step with the times. But that does not mean they are wrong…it means they see things most Americans cannot discern.
On access, the passage of the ACA, and more recently, COVID-driven increased subsidies and prohibitions on Medicaid recertifications and redeterminations, drove the uninsured rate down to as low as 7.7%.1 This constitutes a huge achievement. However, today, those temporary COVID policies have ended, and the country is about 26 million people – and growing – short of universal coverage. There is no plausible path to that goal, certainly none in the next 10 years.
On costs, the 15 years since passage of the ACA have seen an unprecedented plateau in healthcare costs as a fraction of GDP. In 2022, the US spent about 17.3%2 of GDP on healthcare – about the same as it was in 2010 and much lower than predicted for 2022 at the passage of the ACA in 2010. This cost plateau generated almost $4 trillion in savings for Medicare alone.3 Simultaneously, however, premiums for family insurance coverage increased from $13,871 in 20104 to an average of just under $24,000 in 20235, which constitutes a whopping 32% of median household income. Furthermore, out of pocket costs, separate from premium costs, are nearly $1500 per person per year. And over 60% of Americans say they forego healthcare services because of cost.6 Even worse, predictions are for 5% or higher annual growth in healthcare expenditures through 2032.7 Whatever savings from reduced cost growth the ACA generated seem to be evaporating if they are not already gone. And predictions are for healthcare costs to be 19.7% of GDP by 2032.
Finally, healthcare quality remains uneven and not good, maybe even outright poor. Yes, the US is a world leader in cancer care, but for almost everything else, health outcomes are embarrassing.
Hypertension is a paradigm of bad outcomes in the United States. Nearly 120 million American adults, close to half of all adults in the US, have hypertension8, of which, estimates say that between 109 and 2410 million don’t even know it. Hypertension control is dismal, at under 50% by a “loose” definition of controlled (a blood pressure under 140/90) and under 25% by a more “stringent” definition of controlled (a blood pressure under 130/80). The result and reality for our citizens is worse cardiovascular, renal, and stroke incidence and rising rates of maternal morbidity and mortality around pregnancy and delivery. Indeed, hypertension is associated with hundreds of thousands of deaths each year. And this number has increased, not decreased, since 2000.11 Keep in mind, this poor American performance occurs for a disease that is relatively easy to diagnose and treat with cheap, automatic blood pressure cuffs, a clear consensus care algorithm to guide treatment, and plenty of low-cost generic medications.
The story for type 2 diabetes is not much better. Fully 38 million, or 14.7% of all US adults, have diabetes.12 Of them, about half have their diabetes under control with a hemoglobin A1C under 7%. According to the National Committee for Quality Assurance (NCQA), about two-thirds of people with diabetes do not have their blood pressure “controlled”13 (by the more lax standard) and just under 65% had an annual eye exam14. With only half of people having their disease under control, it is no wonder diabetes causes over 100,000 deaths annually, making it the 8th leading cause of death in the United States.15
Given these data, it is no surprise the American public is far from optimistic about health care. According to various polls – Gallup, Ipsos, and Pew – 60% of Americans say the healthcare system is a hassle, and a similar proportion find it stressful.16 Indeed, the proportion of Americans who think the system has “major problems” or is in a “state of crisis” is, for the first time, over 50%.17
Such data and the pervasive dissatisfaction expressed by Americans make one wonder how Johnson and Kusserow can be so optimistic about the future of the US health care system?
There is no doubt that if the US pushed prevention and wellness, the country would be healthier, happier, with lower costs. What is exciting about Johnson and Kusserow’s book is not just that they can envision this new future that really is better for all Americans – lots of researchers and commentators have done that – but that they discern the larger and powerful forces driving system-wide transformation and have described the types of actual companies and policies, that can overcome the barriers – especially the financial barriers – to bring the country closer to their 3D-WPH.
In particular, they discern 10 large macro and -economic market forces that are coalescing at the same moment to propel the American healthcare system not just to the precipice but tipping it over into revolutionary change. These forces include demographic changes: the aging of the population and increase in the incidence of chronic illnesses and mental health conditions. They also include limits to the willingness of businesses and the public to pay more for healthcare, forcing a focus on efficiency. They also examine positive forces from advances in digital technologies to more care in the community and in patients’ homes to creative redesign of care to a shift in focus toward prevention rather than more treatment once diseases have manifest.
These forces, to change metaphors, make Johnson and Kusserow believe the US is entering the steep upward portion of the S-shaped curve of healthcare improvement. In Johnson and Kusserow’s view, the 10 forces are “irresistible” and that creative destruction will produce a better healthcare system. Ultimately, in their view, in “2034 US healthcare will bear little resemblance to our current system.”
How do these forces manifest? One way is a massive shift to virtual or digital care. They cite a McKinsey study that suggests “virtual care could replace $250 billion of in-person care.” This “decentralization” will enhance patient access and convenience and produce cost savings. Another element of decentralization is the outmigration of procedures – the profit drivers at hospitals – from expensive, inefficient institutions to lower-cost venues including ambulatory surgical centers and outpatient physician offices. They see this occurring through a small but powerful change in payment termed “site-neutral payment” in which the pay for a procedure is the same regardless of where it occurs. Many policy experts, including myself, have been advocating for this for years, and it seems as if it will finally occur in the near future. They also recognize the numerous ways in which patients can receive whole-person care in the comfort of their own homes. One is a palliative care model which encompasses more than just pain management, incorporating “non-clinical home-based care that enhances delivery of ADL and SDoH/health multiplier services.” Models like these can both enhance the quality of care and save money by employing patients’ families and friends to provide some services such as preparing meals or even just chatting with patients.
Johnson and Kusserow profile many start-ups that are transforming care because of a change in financial and quality incentives being offered by employers. One company they praise as “interesting and promising” is Apree Health, a primary care company that is backed by JP Morgan Chase (JPMC) and is managing care for JPMC’s 36,000 employees and dependents in and around Columbus, Ohio. Apree combines “independent advanced primary care clinics with easy-to-use technologies, risked-based payment models and performance metrics” to focus on whole-person health. Their clinics serve as a single point of contact that provide integrated clinical care teams – including navigators, coaches, and behavioral health specialists – to work seamlessly for each patient. To ensure convenience, Apree augmented “its robust digital and virtual care platforms with five new clinics…on or adjacent to JPMC’s Columbus offices.” Apree is rewarded not based on fee for more services but based on prevention, patient satisfaction, quality, and costs and cost savings using metrics such as Net Promoter Score (NPS), responsiveness to appointment requests, SDoH screens, Healthcare Effectiveness Data and Information Set (HEDIS) scores for quality, emergency room use and hospitalizations. As Johnson and Kusserow conclude: “The key takeaway from this [Apree] case study is that whole-person health works at scale with aligned financial incentives and appropriate resource allocation.” They admonish existing healthcare payers, hospitals, and other providers to be afraid…“very afraid.”
With the various means to democratize care delivery, including through but not limited to virtual care, Johnson and Kusserow also detect a reduction in the enormous numbers of intermediaries in the systems. Intermediaries – insurers, pharmacy benefit managers (PBMs), pharmacy services companies, management service organizations (which implement the non-clinical services of physician practices) and others – are proliferating. According to one estimate, these intermediaries now account for over 40% of all healthcare revenue in the United States. Just this past July, the Federal Trade Commission (FTC) released a 73-page report hostile to PBMs, formally labeling them “the powerful middlemen inflating drug costs and squeezing main street pharmacies.”18 This kind of bullish activity from the federal government is a sign that the power of intermediaries may be ending. Decentralization and democratization should shrink this sector and bring patients and clinicians closer and improve satisfaction for both.
According to Johnson and Kusserow, new delivery models like Apree and fewer intermediaries portent the creative destruction that will transform the delivery and quality of care in the next decade. They foresee that the current, inefficient incumbents – what they call Healthcare Inc. –will disappear with substantial dislocations but real cost savings and thus improvements in the lives of most Americans.
It is impossible to argue with many of the social forces Johnson and Kusserow see as shaping the future of healthcare. The aging of the population and increase in chronic and mental health conditions are indisputable facts, as are the rise of digital technologies and greater biologic understandings of diseases with more insights about how to prevent and treat chronic illnesses. But even with strong forces pushing change, it is also a fact that old, deteriorating dysfunctional organizations and systems can teeter for a long time, decades, even centuries, without being replaced. Witness the Holy Roman Empire and the Ottoman Empire, not to mention antiquated and dangerous water and sewage systems, or almost any big city’s public transit system in the US, or antiquated companies.
While they cite start-up examples like Apree and many others, both the existing infrastructure of healthcare – the facilities, contracts, relationships, usual practices, etc. – and Healthcare Inc. – the existing hospitals, insurers, pharmaceutical companies, device manufacturers, high-priced specialists, skilled nursing facilities, and all the other organizations that profit from the status quo – will use their tremendous financial, political, and PR resources to fight back against the innovators. But for Johnson and Kusserow, as forceful and well-financed as this counter by incumbents might be, the 10 macro and market-economic forces, acting through companies like Apree, as well as government and employer policies, are making it financially possible to bypass these giant but lumbering and antiquated parts of the healthcare delivery system. The rise of different payment models as embodied in Apree–JPMC example, and the consequent decline in fee-for-service incentives, are becoming more common and soon will reach a tipping point. And this will make it financially viable, indeed even highly remunerative, to deliver whole-person health, especially prevention and wellness. And then – to adopt yet another metaphor – the change will trigger a chain reaction that will completely refashion the system.
If you read this book with its numerous illuminating examples, you may start to believe revolutionary change in US healthcare is possible. As Johnson and Kusserow say, be afraid, very afraid, you too might shed your dissatisfaction and become an optimist about the future of US healthcare.
Ezekiel J. Emanuel, MD, PhD, is the Vice Provost for Global Initiatives, the Co-Director of the Healthcare Transformation Institute, and the Diane V.S. Levy and Robert M. Levy University Professor at the University of Pennsylvania
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Introduction: Healthcare’s Roaring 2020s
This book’s working title was “Gradually, Then Suddenly.” The phrase comes from Ernest Hemingway’s The Sun Also Rises, perhaps Hemingway’s greatest literary achievement. In the novel, Hemingway fictionalizes his own post–World War I life in Paris and Spain as a member of what author Gertrude Stein termed the “Lost Generation.” Two of the book’s central characters, Bill Gorton and Mike Campbell, are hard-drinking war veterans. One evening, the two men fall into a conversation about Mike’s financial problems. Bill asks Mike how he went bankrupt. Mike responds, “Two ways. Gradually, then suddenly.”
Like the sigmoid function (commonly known as the “S” curve) in mathematics, Hemmingway’s quote captures the underlying pattern (emergence, acceleration, climax) of transformative change. Disruptive innovations build their capabilities “gradually” before “suddenly” unleashing themselves on unsuspecting and ill-prepared incumbents.
By their very nature, markets adjust, adapt, and advance. Disruption of healthcare’s status-quo business practices has been quietly underway for more than a decade. Institutional resistance and a lax regulatory environment have enabled Healthcare Inc. (our shorthand for the massive U.S. healthcare industrial complex) to avoid the market-driven transformation forced upon other industries. Until now.
As a result, revolutionary transformation of the U.S. healthcare system is much closer to the “suddenly” stage than most incumbents can imagine. Complacency has lulled them into a false sense of security that their massive and interdependent business practices are impervious to transformational change. It’s hard to fault this conclusion.
A GARGANTUAN “GAS GUZZLER”
U.S. healthcare is the largest industry ever created by human beings. “The National Health Expenditure Projections (2022–31)” published in June 2023 by the Centers for Medicare and Medicaid Services (CMS) estimates that 2024 healthcare expenditures in the U.S. will equal $4.9 trillion or 17.8% of the nation’s $26.5 trillion economy.1
That number – $4.9 trillion – is massive. World Bank data for 2022 identifies Japan as the world’s third-largest economy at $4.2 trillion. It’s almost impossible to believe, but U.S. healthcare expenditure now exceeds Japan’s aggregate economic activity. By itself, U.S. healthcare is the world’s third-largest economic engine. If it were a car, healthcare would be a gas guzzler. Despite being the largest segment of the U.S. economy (or perhaps because of it), the healthcare industry over-consumes resources without delivering commensurate value.
An October 2022 meta-analysis in Health Affairs pegged healthcare’s administrative costs at between 15% and 30% of total expenditures with at least half of that amount attributable to waste.2 The high end of that percentage range for 2024 equals $1.47 trillion. Unbelievably, at that level healthcare’s administrative expenses would be bigger in size than any other U.S. industry. Think about this for a moment. Administering healthcare services conceivably generates more economic activity than any other non-healthcare enterprise.
Gargantuan as it is, the $1.47 trillion figure excludes the “administrative sludge” imposed on American consumers to navigate through the system. Jeffrey Pfeffer of Stanford Business School found that Americans spend 12 million hours per week hassling with health insurance administrivia. Over half of this activity occurs on the job.3
CMS projects healthcare expenditures will grow 5.4% annually and reach $7.2 trillion by 2031, representing almost 20% of the U.S. economy.4 For that to happen, healthcare will constitute 25% of the incremental growth ($2.5 trillion out of $10.0 trillion) in the U.S. economy between 2023 and 2031. With these projected growth rates, it’s not surprising that private equity and venture funds are moving aggressively into healthcare. Private investment follows growth.
Healthcare Inc. operates within a hospital-, physician-, and disease-centric payment system that prioritizes treatment over prevention and disease management. One hundred years ago, healthcare created this operating model to apply scientific discipline to physician training and clinical care delivery. For its time, this revolutionary approach propelled the U.S. into becoming the global leader in medical research and discovery. That was then. Healthcare Inc.’s inability to adapt to changing consumer demands and market dynamics in recent decades makes its incumbents vulnerable to disruptive competition.
Due to its size, complexity, fragmentation, lack of accountability, and artificial economics, Healthcare Inc. is failing the American people. Rising maternal mortality, declining life expectancy, a massive misallocation of facilities and practitioners, uneven care access, skyrocketing costs, demoralized caregivers, fearful consumers, and poor customer service testify to the current system’s shortcomings. Healthcare Inc. needs to die, so that a new, better, and more balanced healthcare ecosystem can replace it.
The U.S. healthcare system’s structural flaws are not new. What is new are the numerous macro and market forces that are coalescing to upend Healthcare Inc.’s status-quo business practices. Despite incessant discussion of the need for system-wide reform, most incumbents don’t appreciate the revolutionary change that is at their doorsteps. They apply an incremental analytic lens to a marketplace confronting exponential transformation. Indeed, the CMS expenditure projections through 2031 use a linear forecasting methodology that assumes tomorrow will be like yesterday. It misses the paradigm-shifting forces that are reconfiguring healthcare’s supply–demand dynamics.
The changes coming to healthcare in the U.S. are revolutionary, not evolutionary. They will originate more outside-in than inside-out and will be messy. A transformed healthcare system will properly align its service delivery to consumers’ actual health and healthcare needs. Costs will decrease as outcomes improve. Applying Reverend Theodore Parker’s famous quote on justice to economics, “The arc of the marketplace can be long, but it bends toward value.”
“FORTUNE” TELLING HEALTHCARE’S DYSFUNCTION
Healthcare Inc.’s systematic dysfunction has been evident for decades. In January 1970, Fortune Magazine published an investigative report with the provocative title, “Our Ailing Medical System.” The magazine’s cover is a play on Aesculapius, the ancient Greco-Roman god of medicine. Modern medicine has incorrectly added a second snake into the design of its iconic symbol (see Figure 0.1). This error is suggestive of American medicine’s “original sin,” an unbending commitment to volume and payment-driven business practices (medicine’s “twin snakes”) that place secondary importance on outcomes, value, and customer experience.
Getting it right, the Fortune Magazine cover (see Figure 0.2) has a single serpent wrapping itself around and strangling, boa constrictor-like, the American flag. The cover’s designer, Walter Allner, made the wry observation that any resemblance between the snake and a dollar sign was purely coincidental. Then as now, money is at the center of American healthcare.
Figure 0.1
Figure 0.2Fortune Magazine cover.
Unfortunately, the healthcare boa constrictor has gotten much larger, more predatory, and voracious since 1970. The healthcare system’s fundamental organizing principle is revenue optimization. Just follow the money. Since 1970, U.S. healthcare expenditures have grown from 7% of GDP in 1970 to 18% today. In the process, Healthcare Inc. has used its economic and political leverage to enrich itself at the expense of American society. Much of Healthcare Inc.’s gains have come, in large measure, by increasing what America’s beleaguered working families must pay for healthcare services. The opportunity costs associated with this massive overpayment are incalculable. They manifest as lost wages, lower family wealth, and reduced social mobility.
Despite being written over 50 years ago, the magazine’s opening commentary has a contemporary feel. Titled “It’s Time to Operate,”5 the commentary characterizes the chaos and challenges confronting the U.S. healthcare industry circa 1970 in this compelling language:
American medicine, the pride of the nation for many years, stands now on the brink of chaos. To be sure, our medical practitioners have their great moments of drama and triumph. But much of U.S. medical care, particularly the everyday business of preventing and treating routine illnesses, is inferior in quality, wastefully dispensed, and inequitably financed.
Medical manpower and facilities are so maldistributed that large segments of the population, especially the urban poor and those in rural areas, get virtually no care at all – even though their illnesses are most numerous and, in a medical sense, often easy to cure.
Whether poor or not, most Americans are badly served by the obsolete, overstrained medical system that has grown up around them helter-skelter… . The time has come for radical change.
Remarkable! By changing the word “manpower” to “personnel,” we can apply the 1970s Fortune language verbatim to Healthcare Inc. today. Unfortunately, the system’s structural flaws have magnified since then and contribute even more to the nation’s declining health status. As the Fortune analysis identifies, the system’s inability to prevent and manage routine illnesses may be its greatest failing. That failure manifests itself in the catastrophic levels of chronic disease that now plague the American people.
The most predictive indicator of future chronic disease is the onset of obesity. Adult obesity has skyrocketed from just under 15% of Americans in 1970 to more than 40% today.6 During the same period, childhood obesity rates have almost quadrupled.7 Circumstances aren’t improving. An analysis by the Harvard T.H. Chan School of Public Health highlights that almost 70% of American adults are currently overweight and that half will be obese by 2030.8
As an industry, Healthcare Inc. has gotten much better since the 1970s at keeping sicker people alive longer. This is a logical response for an industry focused on treatment rather than prevention. The rise of chronic disease, however, is a broader societal challenge.
The explosion of highly processed foods within the American diet combined with a less-active population are causal factors of the chronic disease pandemic. This is particularly true in low-income urban and rural communities where “food deserts” make healthy eating almost impossible. Healthcare’s disease- and treatment-centric orientation limits its ability to apply proven solutions to overcome these counterproductive lifestyle behaviors.
It’s not that there hasn’t been progress. Hepatitis C now has a cure. CRISPR technologies enabled creation of the remarkably effective COVID vaccine in under one year. The new GLP-1 drugs (e.g., Ozempic and Wegovy) appear to be quite effective at enabling and sustaining weight loss. Despite these bright spots, the long-term trends in healthcare have been ever-higher expenditures to treat an ever-sicker population. Healthcare Inc.’s strategic orientation remains reactive to disease as it manifests, not proactive to prevent disease transmission.
Under the current payment systems, however, Healthcare Inc. benefits when Americans are sicker. It’s not in Healthcare Inc.’s current financial interests to attack the root causes of chronic disease. It really is that simple. Consequently, it is naïve to believe that this vast, intricate, and rigid healthcare system will change of its own accord.
The industry’s incumbents have been strong and clever enough to maintain a stranglehold on service access, delivery, and pricing. This is why U.S. healthcare costs are higher and health outcomes worse than those found in other high-income countries. Like a volcano about to erupt, however, demographic inevitabilities and societal pressures are intensifying.
The first stanza from William Butler Yeats’ 1920 poem “The Second Coming” captures the uneasiness and fatalism of an adrift American healthcare system, cut from its moorings and heading toward an uncertain future:
Things fall apart; the center cannot hold; …
The best lack all conviction, while the worst
Are full of passionate intensity.
Overbuilt and inequitable, Healthcare Inc. is collapsing under its own weight. The forces described in this book are accelerating this collapse.
CHANGE IS THE ONLY CONSTANT
The Buddha observed, “Change is never painful. Only resistance to change is painful.” As Buddha’s insight implies, change and its byproducts are elemental to human experience. Consequently, it’s not surprising that understanding and accommodating change are constant and recurring themes in art, literature, and theology across all cultures.
Buddhism teaches that an individual’s response to change is more important than the change itself. Detachment from human experience is the ultimate objective. An individual’s ability to accept and adapt to never-ending change determines their ability to find happiness and a sense of self-worth within an imperfect world.
In the blessed state of nirvana, Buddhists experience life’s continuous changes with equanimity. The Sanskrit root of “nirvana” literally means to blow out flames of worry and desire, both of which increase with change. Buddhist teachings reflect a universal truth: Change is constant.
From ancient history to the current day, humankind has searched for unchanging principles to bring stability and understanding of the human condition. We rely on these truths to explain injustice, suffering, and death. Many find solace in the concept of an afterlife. Despite the human desire for stability and permanence, the tectonic plates still move. Circumstances change. Game-changing technologies emerge. Industries rise and fall.
We know that change is inevitable even though we humans often lull ourselves into complacency. We take false comfort in the permanence of institutions. Given the reality of constant change, the optimal human and organizational response is consistent, predictable adaptation. Moving from the philosophical to the economic realm, disruption within other industries (from transportation to entertainment to hospitality) reveals the vulnerability of market-leading but asset-heavy companies (e.g., Blockbuster) to more nimble digital interface companies (e.g., Netflix).
Emergent service and technology companies have lower capital needs. They rely on software more than hardware. They exhibit greater strategic flexibility within dynamic markets. Investors increasingly value “interface” companies, like Netflix and Airbnb, with seamless, easy-to-use, customer-friendly integrated service platforms that can adapt quickly to new circumstances. Market valuations reflect this. As of March 2024, Airbnb, with few tangible assets other than its digital platform, has a market capitalization significantly greater than that of Marriott and Hyatt combined.
In today’s digitizing marketplace, capital-intensive industries are increasingly vulnerable to competition from disruptive asset-light companies. As a consequence, healthcare’s capital-intensive sectors, notably hospitals and health systems, are highly vulnerable to the disruptive threat posed by tech-savvy, asset-light competitors. Absent external intervention (i.e., another government bailout), hospitals will decrease in size and number. As the winnowing occurs, health systems able to embrace innovation, adapt to new supply–demand dynamics, reinvent themselves, and deliver tangible value to customers will retain market relevance. Those that cannot, will not.
Purposeful deconstruction of a product’s original architecture is a way for incumbent companies to internally disrupt themselves. The concept makes sense. Profitable product and service lines mature and decline. Enlightened companies anticipate this decline and incorporate strategic pivots into their assets’ life cycles. In this way, the old becomes new and improved with modest reinvestment. Along with prudent diversification, purposeful deconstruction enables companies to address market evolution. Together, they provide a resilient strategy for surviving and even thriving as market environments shift, often in profound ways.
Strategists study history to divine specific patterns, improve their prognostication prowess, and avoid surprises. Mark Twain famously said, “History never repeats itself, but it does often rhyme.” While companies strive for stability, they also look for ways to predict and anticipate changing market dynamics. This deductive knowledge search combined with forward preparation often differentiates successful companies from their competitors.
Going back to the 1920s can provide fresh perspectives (rhymes) on addressing the social and technological changes confronting modern-day America, particularly in healthcare.
BACK TO THE FUTURE?
Today, for the first time in history, human beings must adapt to change at a rate beyond our natural capabilities. Weaving digital technologies into the fabric of daily life to ease adaptation, reduce stress, and promote wellbeing is the challenge of our times. Big challenges require big solutions.
In a March 1944 speech to the Royal College of Physicians, Winston Churchill observed, “The longer you can look back [into history], the farther you can look forward [into the future].” With these Churchillian connections to health, history, and our collective future, let’s “look back” a hundred years to the rollicking 1920s. As we do, let’s search for insights into how life and healthcare will unfold throughout an equally rollicking 2020s.
America in the 1920s was a place of big ideas, boundless energy, big personalities, and big dreams. There were huge winners and losers. By the decade’s end, so much had changed that it was hard to recognize or even remember the decade’s humble origins. 1920s America has much to teach today’s Americans about adapting to fast-paced and sometimes chaotic change.
Then and Now
The 1920s began in the immediate aftermath of World War I and a crippling global pandemic. The 1918–1919 Great Influenza killed 625,000 Americans and as many as 50 million people worldwide. Weary of global war and disease, America entered the 1920s with a profound sense of loss and deep uncertainty regarding its future.
Long roiling beneath a sunny facade, America’s contradictions, conflicts, and restlessness burst forth and found expression during this turbulent decade. Efforts to resolve these tensions triggered a titanic wave of creativity, innovation, social conflict, dazzling technological advances, and status-quo-busting dynamism.
The 1920s also became the decade when American medical education, research, and clinical care were standardized, professionalized, and modernized. Breakthrough discoveries expanded medicine’s healing powers.
Not surprisingly, this exuberant, freewheeling, and tumultuous decade is the only one to have its own nickname. The Roaring Twenties launched America into the modern era. For better or worse, there was no turning back.
A century later, the U.S. is just emerging from the grip of another massive pandemic. Living under COVID fundamentally changed the way people in America and around the world live, work, and play. Virtual technologies have made remote connectivity easier and better. On-demand delivery gets us what we need when we need it. On-demand transportation gets us where we need to be when we need to be there. COVID accelerated the adoption of these game-changing technologies.
During and since the COVID pandemic, long-simmering tensions exploded into the public arena. High-voltage rhetoric has politicized and polarized the national discourse. Restless Americans confront an uncertain future. There is a desperate need for creative solutions.
Like the 1920s, there’s no going back to our pre-pandemic existence. Nowhere is this truer than in medicine and healthcare. Reconciling the industry’s inherent contractions is putting enormous pressure on incumbent business practices even as it creates opportunities for new business models that create value and promote whole-person health. Mining the post-pandemic 1920s for insights deepens our understanding of the technological, economic, and cultural forces reshaping America today. It also provides a useful context for assessing how efforts to transform healthcare’s long-calcified and counterproductive status quo will proceed.
Medicine’s Golden Era
By the early 1900s, the United States had only a few elite medical enterprises that incorporated rigorous training, scientific research, and clinical consistency into their operations. The most notable was the then-new Johns Hopkins School of Medicine (founded in 1893). By contrast, most medical organizations were squalid, unregulated, clinically inadequate, and staffed by quacks. With the support of the American Medical Association (AMA), the Carnegie Foundation engaged Abraham Flexner in 1908 to survey medical education in the U.S. and Canada. Flexner published his findings in 1910.
The Flexner Report revolutionized American medicine. It called for rigorous admission criteria, adherence to scientific protocols, and state regulation of medical organizations. Few medical schools met Flexner’s standards. He recommended closing more than 120 of the 150-plus medical schools then operating in the country.
Response to the Flexner Report was rapid and profound. Within four years, 31 states refused to license graduates from substandard medical schools. Within 10 years, almost a hundred medical schools closed or merged. Despite a fast-growing population, the number of U.S. medical students dropped from 28,000 in 1904 to just 14,000 in 1920.
The Flexner Report also promoted the Johns Hopkins training model of medical education: two years of science education and two years of clinical training, followed by extensive residencies at teaching hospitals. Medical schools universally adopted the Johns Hopkins model and operated within a tripartite mission (education, research, and clinical practice) that emphasized the power of science and the necessity of academic freedom.
The broad adoption of the Johns Hopkins model during the 1920s transformed American medicine and enshrined science as its core organizing principle. The decade witnessed breakthrough discoveries (penicillin, insulin, vitamins), advancing diagnostics, and the dramatic expansion of public health departments. By the close of the decade, America had become the global leader in medical research and clinical care.
While the Flexner Report did much to advance U.S. medicine, its narrowed focus within a highly segregated nation had significant negative consequences. Post-Flexner, five of the seven historically Black medical schools closed, greatly depressing the numbers of future Black physicians that continues into the current day. In 2018, only 5% of physicians were Black when Black people represented 13.4% of the total U.S. population.
The Flexner Report also led to the closure of almost all medical schools that emphasized a more expansive whole-person health approach to medical practice. These closures and the stigma assigned to “non-scientific” practices stifled development of complementary and alternative approaches to health and wellbeing. The invasive and reductionist bias embedded within American medicine today has its origins in the Flexner Report. This bias has limited the acceptance and application of functional medicine, which employs systems biology to address the root causes of chronic diseases.
Flexner’s tripartite academic model promulgated during the 1920s remains largely intact today; however, it’s showing its age. Despite a century’s worth of medical advances, the American healthcare system was unprepared and ill-equipped to address the COVID pandemic. COVID exposed weaknesses in Healthcare Inc.’s supply chain, the inadequacy of the nation’s public health infrastructure, the health risks of unchecked chronic disease, and profound disparities in access to healthcare services. The result was needless death and suffering.
Healthcare at the Crossroads
Frontline healthcare professionals battled COVID for several years. Their heroism and selflessness inspired the nation. Post-COVID, these professionals often labor with inadequate resources and suffer from high stress/burnout levels. Union organizing of healthcare employees is at record levels. Dissatisfied workers are no longer willing to accept status-quo work rules and compensation. Going forward, health companies must take better care of their workers and give them more tools to manage their own health as well as their patients’ health.
The elimination of elective surgeries in March 2020 and relaxed regulatory barriers accelerated the adoption of innovative digital and virtual technologies. Almost all medical visits moved to telemedicine platforms. In the process, the healthcare industry pivoted to become more decentralized, consumer-oriented and cost-effective. Hospital-at-home care proliferated.
Concurrently, breakthroughs in vaccine development and genomic underpinnings of health suggest medicine is on the precipice of systematic improvements in diagnoses, treatments, and personalized wellness. Several virtual care, care management, and consumer health companies gained market traction. Many have become “unicorns” with valuations greater than $1 billion.
Despite these near-term advances, healthcare still largely operates in the same ways it did during the 1920s with an emphasis on hospital-centric care delivery, fee-for-service payment, and fragmented service provision. Post-COVID, most payers and providers desire a return to pre-pandemic business practices.
