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Payer_Mix.jpgA long time ago (the mid-90’s), there was a television series titled Highlander. It was a sci-fi action series whose main character, Duncan MacLeod, hailed from a race of immortals. The opening voice-over would end with the proclamation, “There can be only one!” You see, these immortals sought each other out until it was the “last man standing.” Duncan was a force for good that battled other immortals of darkness. Each episode featured an epic battle that ended with Duncan annihilating his immortal foe, whose power transferred to Duncan.

An honest look at today’s healthcare economic conundrum leads to the inconvenient conclusion that there is not enough money in the pipeline for all of today’s players to survive. Sure, there are things that can be done to prolong the problem, such as pay for value instead of volume and other variations of risk sharing; but all of these are only shadows of what it will take to overcome the problem. Similarly, mergers and consolidation can be good things, and we are seeing a lot of activity in this area, both in the insurance and provider spaces. But, nearly all of the consolidation has been horizontal. Horizontal consolidation will not be sufficient to solve the multi-trillion dollar deficits in healthcare. Among other things, massive vertical integration will be required to bring healthcare into a sustainable position.   

As you take inventory of the current healthcare transaction lifecycle, you will find three key players, the three P’s: Patient, Payer and Provider. The comfortable answer is that you must have all three—and while that may satisfy your Common Core math proponents, it won’t result in a solvent healthcare system. 

I contend that the elimination of the insurance carrier/managed care organization is the proverbial elimination of the middle man, allowing money to go directly to the delivery of patient care.  When, and only when, the provider steps into this role will healthcare innovation reach the radical level needed to bring the equation into balance. The current healthcare model forces providers to comply with edicts and mandates of managed care companies in order to get the claim paid. Absent the payment denial stick, providers are given fractional to no financial incentive to innovate, since nearly all of the financial benefit inures to the insurance company.

Proponents of the status quo may argue that shared savings accomplishes just such a thing. To those so inclined, I offer our current progressive tax system as a counterpoint. How motivational do you find it that the Internal Revenue Service allows you to keep a portion of your income you earned net of Uncle Sam’s take?

Shared savings, ACOs, bundles and the like are all helpful initiatives, but they are no match for the sheer magnitude of the problem. Not until the provider becomes the payer on a broad scale will the radical transformation necessary in healthcare delivery take place.  At last, “there can be only one!”

 

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THIS POST WAS WRITTEN BY Shane Hariel

Shane serves HORNE as a partner in healthcare services. Shane joined HORNE in 1991. As an experienced healthcare consultant, he has worked with hospitals and other institutional healthcare facilities on issues such as preparation of Medicare/Medicaid cost reports and reimbursement appeals, managed care pricing, certificate of need, feasibility studies and corporate compliance issues. He has been involved in assisting providers with obtaining and evaluating non-traditional financing alternatives.

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