Five Old Trends for a New Year

The end of the year is often a time for rehashing the events of the past twelve months and looking into the future. I want to resurface five trends that health care futurists have been discussing for years, but which still sit about waiting to have an impact on the daily reality of health care. That these trends have not yet materialized the changes that were anticipated should not call their power into question. Rather, our timeframe for change in health care needs to incorporate the enormous power of maintaining accepted ways of financing and delivering care services. In the coming year, these forces, independently, but more powerfully in concert with one another, will begin to meet the promise they hold.

The idea of more individual responsibility for the financing of health care has been around for a while. We are all aware of the need to connect financial responsibility and accountability to the consumer to bring more discipline and control to health care costs. But the idea hasn't moved much in the past. That is about to change for several reasons. As the domestic agenda of the second Bush administration changes from "compassionate conservatism" to "an ownership society" social security will likely be the most at-risk for significant change, but health care financing is not far behind. The second generation of medical savings accounts now called health savings accounts are more attractive, the providers more experienced, more at the core of the health insurance industry and there are more people who, having lost traditional coverage, are looking for alternatives. With no other concerted policy to control costs or expand access, you can look for the Bush administration to push health savings accounts as the answer to both. The second big driver will be the unending rise in health care costs. As employers see no end in sight to cost increases, and with the control gained by managed care in the mid-nineties a fading memory, they will move to contribution-oriented programs and begin to redefine their obligation to support a defined benefit. As these plans are more accepted and grow it will encourage some employers who cannot afford to maintain their health benefits to abandon them altogether knowing that there is a viable, publicly-sanctioned stop-gap available to their employees. Such developments will of course obliterate the long sought desire for a universal health benefit and a reunited risk pool. I mourn this loss as much as anyone, but it is time to look beyond this and realize that it is not the future. Health savings accounts will not help a large part of the population who are ineligible for Medicaid, as food on the table will always be more important than tax-exempt savings for possible health care costs. Perhaps efforts for reform should be directed at improving and expanding the safety-net delivery system.

A growth in health savings plans will fuel the long anticipated, but little realized consumer revolution in health care. For more than a decade health prognosticators have hailed this trend as the great engine for health care reform, only to witness the continued sheep like behavior of patients and hardback resistance of a delivery system showing little openness to restructuring. Fueled by more direct financial contributions to their health care and growing obliteration of a defined benefit, consumers paying more of their share will also demand what they want. Much of what they want will not be what traditional settings - hospitals and clinics - are prepared to sell. This prospect is dismaying to many within the health system, but it is time to get over it and realize that when given choices much of what is proffered and how it is packaged will simply not meet the demands of the contemporary consumer. Taking a page from a current advice book to the lovelorn, health care and its professionals need to recognize that many folks are "just not that into them " (1) or their systems, wait times or performance. It will be uncomfortable, but successful practices and systems will be those that aggressively embrace this approach to understanding and defining consumer needs as they are emerging from the rigid tyranny of the dominant system. Models for this transformation are more likely to be in other deregulated parts of the economy such as financial management and commercial aviation: think Charles Schwab and Southwest Airlines. There is a growing body of evidence demonstrating that real alternatives are beginning to distinguish themselves in the market as it exists today (2). These differences will be magnified as consumers are brought, however kicking and screaming, to having more control over how their resources are spent. Changing course midstream is not easy, particularly when accountability and responsiveness are not important traditions. But this creates even more opportunity for those who understand the changes and move hard and fast to respond.

The capacity to respond to the new financial and consumer reality will be in part predicated on the ability to move old highly individualistic approaches to health to more systemic efforts at mass customization of care. The existing system values the individualized approach, but it is often one that works more in the interest of the system and its incumbent professionals than in the interests of service recipients. Individuals receive focused attention, but without a system behind such care what is delivered is often highly idiosyncratic and variable. In a way, the current approach has neither the benefits of a system or an individually crafted approach. This amalgam is one of the primary elements contributing to making American health care expensive, unsafe and unsatisfying. Mass customization does not mean that things are uniform, but that highly heterogeneous consumer needs are met at near-mass production efficiency. Nothing could be a better description of where health care needs to move. In John Naisbet's thirty-year old maxim, we need "high tech and high touch" in the same encounter; to move to this reality will require better knowledge of consumer needs and wants, an information technology well beyond where health care is today and a willingness to aggressively remake the core processes associated with the provision of care. As difficult and expensive as the first two of these will be, it is the willingness and ability to engage in the later that will present the greatest challenge. Two other elements associated with mass customization will be usefully brought into the change process in health care:

  • Open innovation invites communities of customers to join producers in the creation of new products, services and financing arrangements. How else can health care expect to design a new system?
  • Customer integration engages the customer in the actual production of value - think ATM. As health care struggles to share control and design with patients, families and communities, customer integration will have to be genuinely embraced so that old services are not just repackaged and dumped back into the environment.


Experiments to test innovative approaches like these are already underway. (3)

None of these trends go forward without a wholehearted embrace of technology. Biomedical technology has delivered great promise to the American health care system, but it has been accompanied by great cost. Information technology promises to help make sense of the muddle of processes and information associated with health care, but the task of bringing standardized platforms to one-sixth of the economy is an undertaking that makes building a space station look like a day at the beach. The real challenge and opportunity lies ahead of both of these technology pathways. In fact, this revolution comes about when bio-tech and info-tech morph into care management "tech." This part of the tech revolution will be important for two reasons. First it could make the greatest contribution to substituting technology for very expensive labor; but perhaps more importantly, care management technology becomes the hand maiden of moving care out of existing institutions and into many of the new consumer demanded arrangements suggested above.

The final trend is workforce: not too many or too few, but organized and deployed in a radically different manner. When the four trends above begin to kick in they will inevitably re-shuffle the cards of today's health care deck. Those looking for new opportunities or less investment in the status quo will have the great natural advantage of being able to recognize the new paradigm before it arrives. Those looking to protect the status quo will turn to state-sponsored regulation, and wave the bloody shirt of "the patient" all the way to justify their desperation. We are already seeing such plays in efforts to protect traditional jobs and prevent new entrants in the competition to redesign or realign the way health care is done. Those parts of the care system - professions practices, institutions and systems - which move quickly to the realization that they can leverage real value by releasing the core capabilities inherent in many of their professional workers, will position themselves to move ahead of the competition as they outperform them in price, quality, safety and consumer satisfaction. Understanding this opportunity and empowering professional colleagues to make such adjustments will be the core of effective leadership in the coming years.

Nothing new here…except the challenge of realizing a newly configured system in the trends that face us now.

(1) Greg Behrendt and Liz Tucillio, He's Just Not That Into You: The no-excuses guide to understanding guys. Simon & Schuster, New York: 2004.

(2) Center for the Health Professions, California physicians: Practice and perceptions. UCSF Center for the Health Professions: San Francisco, CA: 2002. 

(3) Steve Lohr. Is Kaiser the Future of American Health Care? New York Times, 10/31/04 Section 3, 1,4.