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The Impact of Single Payer Healthcare on Health IT Investment

by Kyle Salem, Ph.D. on Oct 17, 2017

How quickly things change. From one vote away from the so-called “skinny” repeal of the Affordable Care Act to a proposed revolution of the current healthcare system, healthcare providers are getting whiplash right about now.

Senator Bernie Sanders has brought the single payer healthcare system to the forefront of public discourse with his proposed Medicare for All Act. Seemingly every publication across the internet and the country has provided their own insights on the proposal and what it would mean for healthcare. 

For healthcare providers, it’s important to realize that we’re still a long way from potentially having a single payer system. Democrats have control of neither the House, the Senate nor the White House, which makes the idea of single payer healthcare legislation becoming the law of the land a fantasy at this point. And even if all such branches were aligned in the future, the political and economic reality of such a proposal could still imperil its chances of survival.

Still, the mere fact that single payer healthcare has finally drawn this kind of highly visible support at the federal level is something that all healthcare providers need to reckon with. A policy that would have seemed like political poison to Senators and Congresspersons even a few years ago has entered the mainstream, and politicians aren’t shying away from it, likely due to public opinion surrounding the matter. In a New York Times op ed, Senator Sanders cites a poll finding that three out of five Americans would support Medicare coverage for all citizens.

So even if single payer healthcare is years down the road, if it passes at all, it could have a significant impact on how we approach investment in Health IT (HIT).  

My goal here is not to address the role or impact of the Electronic Health Record (EHR).  That’s here to stay.  In fact, some of the recent work to streamline the sharing of information across EHR platforms in an additional step in the right direction.  Yes, we still have to figure out how to find the relevant information in the ever-growing list of encounters available in the EHR, and we still have to find ways to make a patient’s data truly their own and accessible by all of their providers.  But I will comment below on other strategic HIT targets and how we might view their importance. 

There are a few things we can infer based off the information available.

Health-IT.jpeg

A Continued Focus on Value-Based Care

Single payer healthcare, implemented as “Medicare for All,” has some significant issues.  Let’s start with the fact that Medicare isn’t a solvent, long-term program today. As a result, we can’t simply scale the existing program and expect all to be well.

Instead, the program will have to continue to drive toward outcomes-based or value-based payment with a focus on providing the best care at the lowest cost.  We will still need to focus on prevention, elimination of care variation, management of chronic conditions, addressing end-of-life costs, and community-based care and social determinants of health.  It’s become apparent that our traditional fee-for-service model does not and cannot address these topics.  The financial model that will work remains a value-based structure with providers taking significant risk.

Since the push toward outcomes-driven payment remains in force, then, organizations will still need to improve care coordination across the continuum. Organizations must establish a robust infrastructure that supports real-time communication and collaboration between all members of a patient’s care team to ensure individuals receive appropriate, timely and proactive care while avoiding duplicative and unnecessary therapies.

Given increased flexibility, organizations could consider exactly who the right entities are to have in their patient population’s wellness pathways and how they can bring those people to the table to discuss care. An organization will need to look at its high-risk populations and focus on identifying the resources in those areas specific to their needs. This will not only benefit healthcare organizations because they will be able to leverage customized care coordination solutions to better manage population health, but it will also help patients—offering them an easier way to navigate their care and interact with necessary providers.

Billing and Coding Made Simple

While a single payer system may have its detractors, it’s hard to argue against the idea that the administrative end of hospitals and clinics could be immediately streamlined. While there will always be controversies arising from coding and the back and forth that arises when an insurer asks for information to be resubmitted, this hassle would in theory be reduced dramatically under a single payer system.  As a result, the total spend and reliance on revenue cycle systems could potentially be lessened.  But that’s not the end of the story.

Rather than dealing with a patchwork assembly of insurance companies that are all haggling for different prices and figuring out what’s covered and what’s not, institutions would deal with a single entity. Prices would be set and a high degree of visibility would be brought to the billing and coding process.

Some physicians, no doubt, bristle over the thought that the government would ultimately be responsible for setting the price structure of care. How that will work is a serious conversation that absolutely needs to be had if we’re to ensure a fair pricing model while still leaving wiggle room for hospitals and clinics to provide an exceptional level of care. History would suggest this will be incredibly difficult when Medicare today pays less than the true cost of care to providers.  If hospitals are still required to use private insurance to “pad” margins or even to just get to breakeven, much of this expected simplification could be lost.  Even more complex would be the need to accurately track the distribution of capitated or episodic payment structures that include secondary risk at the community provider level in partnership with the health system.  While single payer suggests a simpler revenue cycle solution, I’m not sure the realities of the industry would allow that to materialize. 

The Innovation Conundrum

One of the biggest arguments against the single payer system is that the United States will lose its position as a leader in research and innovation in the healthcare sector.

In a price-fixed world, is there incentive to invest in research and development if additional revenue isn’t the expected outcome? It’s hard to say. In theory, government grants and research opportunities would remain untouched by a single payer system, as universities will continue to exist and our nation’s brightest thinkers will continue to receive funding for their work from private entities. Still, hospitals are deeply concerned that, with the government setting prices, they simply won’t make as much money, creating a personnel and infrastructure issue.

Many would think that this issue is really about drug and device development, but there are significant impacts on HIT.  What about data analytics?  Or systems to simplify the way providers interact with a patient’s records?  These go beyond the simple infrastructure to manage care. It will be hard to manage the balance between taking dollars out of the industry while maintaining the incentive and capital to fund future development.

All of this is speculative, to be sure, but it points to the broader issues that will only reveal themselves with the benefit of time.  I’ve only scratched the surface, as there are many other Health IT areas to address from this perspective and many of the impacts can only be reasoned with a lot more detail, but to think that the current Health IT direction will continue unchanged in a single payer world is dangerous. 

Stay Tuned

We’re a long way away from single payer healthcare. The political landscape at the moment simply isn’t realistic for the system to pass into law anytime soon. 

But it’s not that shocking of an idea to think that this will change two, fours, ten years from now. Self-driving cars are happening soon, we’re slowly but steadily making our way to Mars, and an idea that seemed even more absurd (America with a single payer system!) has inched closer to reality as well.

Healthcare providers need to prepare for this potential eventuality, and they need to understand what it means for their Health IT strategy.

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Meet the Author

Kyle Salem earned his doctorate in biomedical engineering from Case Western Reserve University and has completed the Kellogg Management Institute at the Kellogg School of Management at Northwestern University. Kyle worked for Siemens Medical Solutions MRI Research & Development division, serving as the primary scientist supporting its second 3 Tesla MRI scanner in the U.S. He also managed U.S. R&D Collaborations for MRI for two years. In 2005, Kyle joined Cassling Diagnostic Imaging, where he held a number of roles from strategic sales executive through vice president of Corporate Strategy and Development. It was during this time that he learned about the considerable challenges of managing health care, and was able to focus on how industry could strengthen community health care by lowering cost and increasing quality and efficiency. Kyle is passionate about the future model of care coordination, payment reform and new technologies in health-care delivery.

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