AHRA: Fierce competition looms in new healthcare marketplace
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Klepper is chief development officer for WeCare, a Longwood, Fla.-based firm that builds primary care clinics for employers, hospitals and payers by aggressively negotiating prices far below area competitors. One example he provided came from Indiana, where his firm contracted with an imaging provider to provide clients with an MRI exam and reading for $450—clients had been paying $1,750 to $3,200 for the exact same service.
The message was that even if it isn’t Klepper’s firm, it will be somebody else because healthcare providers are about to enter an era of unprecedented competition.
“What we are talking about is the sudden creation of markets in healthcare, which has [not] been around for the last 50 years,” said Klepper.
It’s no secret that healthcare services cost more in the U.S. than in other developed nations. Klepper cited MRI as one example. An MRI costs an average of $187 in Britain, $304 in Canada, and $1,009 in the U.S. But for all the extra money, the results are middling.
“We have the highest cost healthcare with mediocre quality, spotty quality. In other words, we have the lowest value healthcare in the world.”
The current system has resulted in healthcare service prices that not only surpass those of comparable services in other nations several times over, but there also seems to be no rhyme or reason for the distribution of prices within the U.S. Stepping outside of imaging, Klepper pointed to a recent Health Affairs study in California which demonstrated a 122-fold difference between the lowest and highest identified prices for an appendectomy.
And the problem isn’t getting any better, said Klepper. Premiums have grown at four times the rate of inflation for more than a decade and 79 percent of household income growth was siphoned off by rising healthcare costs over that same span. “The American healthcare industry will eat up all the money that it possibly can and it will pull the rest of the U.S. economy off the cliff,” said Klepper bluntly.
Change is unlikely to come in the form of policy, said Klepper, because policymaking has been “captured” by the healthcare industry. When the Patient Protection and Affordable Care Act was being crafted, $1.2 billion was spent on lobbying efforts, and there were eight industry lobbyists in Washington for every member of Congress.
The greatest promise for a solution lies in market-based reforms, though Klepper admits these also don’t have a great track record. Over the past 20 years, employers and health plans have introduced wellness programs, offered incentives and required employees to shoulder more of the financial burden of their choices with little impact.
But some market-based approaches—collaborative benefits management, payment to manage process rather than fee-for-service, analytics technology—can work, said Klepper. And while market forces in the past were not strong enough to compel providers to improve, the pressures and competition of today’s environment will ensure the only practices that succeed are those that can provide superior cost, quality and safety performance.
“And that…is the challenge you are about to face in imaging. That somebody like me is going to come into your market and your volumes are going to plummet because there’s no way you can compete with a $450 imaging price when you’re used to getting $2,800.”
Evan Godt, Writer
Evan joined TriMed in 2011, writing primarily for Health Imaging. Prior to diving into medical journalism, Evan worked for the Nine Network of Public Media in St. Louis. He also has worked in public relations and education. Evan studied journalism at the University of Missouri, with an emphasis on broadcast media.