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The Bear: Why Does Health Care Cost So Much? (Part 1)
The Cancer Care Business Exchange (CBEx) is a high-level, multistakeholder forum focusing on the business implications of the changing complexities in cancer care delivery and payment through conversations between those who have interest, influence, and impact in the field.
Two CBEx advisory board members, John Hennessy, MBA, and Michael Kolodziej, MD, have begun a video discussion series, Breaking Down Health Care, where they are using their expertise to dive into some nuances of the health care system and how it works in the US (Figure).
In this first part of a two-part conversation, they discuss some of the major stakeholders in health care and how these entities both contribute to high costs and can help control those costs for patients.
Below is an excerpt from the video, edited for clarity and brevity.
John Hennessy, MBA: Mike, we’ve covered the basics of the major payers, but all of them are trying to deal with the same problem: the cost of health care in the US. Can you tell us a little bit about the main differences between fee-for-service payment and alternative payment models like accountable or value-based care?
Michael Kolodziej, MD: Sure. We should go back a step and recognize that a lot of what we’ve talked about is how to provide access to health care. And providing access is half of the challenge that we face in health care; the other half is how do we deal with the cost of providing health care? And the idea of migrating from a fee-for-service model to an alternative payment model is to address this issue of cost.
It’s presuming that we've already solved the issue of access, and now we want to find a way to manage cost. And what I’ve tried to do is address four contributors to cost. Now, those four areas are hospitals, the health insurance companies, the pharmaceutical industry, and then doctors themselves.
John, you and I, we go to the same meetings. And when we go to those meetings, there are certain villains that are just traditionally trotted out there for public ridicule. And those primarily are the insurance companies and the hospitals. Often because the pharmaceutical companies have a heavy presence at the meetings that we go to, they get a little bit less of a tarring and feathering. And physicians, of course, are never responsible for any of the cost problems, ever.
So, I thought, in the spirit of fairness, we should talk about all four of them. That’s how this whole issue of alternative payment models is sort of the overarching way that we’re going to try to fix the cost problem. But we need to get a little bit more into the weeds with each of these individual contributors.
Hennessy: You make a really good point that depending on the meeting you go to, there’s always a punching bag somewhere in the room. You just have to figure out what label’s been put on it at a particular point in time.
You mentioned the four groups that’s a lot of ground to cover. You mentioned access too, which I think is interesting. This all assumes you can actually get an appointment with a physician, and you can afford your deductible and co-pays. That you can actually get through the front door. […]
A couple of things I take from our conversation: one, is that we’ve written these buckets of hospitals, health insurers, pharmacy or pharmaceutical manufacturers, and physicians, and some of those are lines are blurring. The other thing I take from the conversation is, there’s an old game theory called the Prisoner’s Dilemma, where theoretically we all cooperate and we can control costs and make this affordable, but each individual party has incentives to sort of maximize their own return. And it seems like we somehow see that behavior amongst these different players.
Dr Kolodziej: Yeah, there’s another one that I like, which is the Tragedy of the Commons. We’ve got this public grass, and everybody has their livestock, and for everything to work out at the end of the day, we have to share that grass. None of these parties really want to share the grass. They all think they’re innocent, but to some extent, greater or lesser, they’re all guilty, and things are going to have to change if we're going to approach the cost problem.
Click here to watch the full video.
