The Customer Revolution in Healthcare: Delivering Kinder, Smarter, and More Affordable Care for All

December 4, 2019

Using data analytics to drive value-based care

During his 28-year career in investment banking, Dave Johnson managed over $30 billion in healthcare revenue bonds and led significant strategic advisory engagements for health systems. Today, he serves as Founder and CEO for 4sight Health, an advisory company working at the intersection of healthcare strategy, economics, innovation, and capital formation. Johnson stopped by Strata Decision Technology’s offices in Chicago to share his thoughts surrounding today’s customer revolution in healthcare—and what providers need to do to become part of it.

“Status quo” healthcare and productivity

Today, the status quo of American healthcare often involves over-treatment, overpricing, and fragmentation. Instead, Johnson argues, revolutionary healthcare—and the care we need—involves the right care at the right time, right place, and right price.

Since 2000, the ratio of average cost of a U.S. family’s health insurance policy to median household income has more than doubled. As part of their 2019 Employer Health Benefits Survey, the Kaiser Family Foundation reported that the average premium for family coverage has increased 22% over the last five years and 54% over the last decade. Over time, America’s insurance policies have only grown more expensive for its families and patients.

The way to revolution

To overcome this status quo, Johnson suggests that three force multipliers will lead to the revolution we need in healthcare.

1) Empowered buyers. Payers and providers working together to handle the insurgence of new, value-based payment models will advance the revolution, creating a healthcare industry focused on value. In the marketplace of the future, demand-driven change will lead to significant results.

2) Liberated data. With usable data, companies can begin to take control and demand value from the system. “Just think of the predictive power, to be able to harness that information,” says Johnson. He suggests that data in the right form—and provided to the right user at the right time—can have incredible results.

3) Pro-market regulations. “When businesses get big, they don’t want to compete anymore,” says Johnson. “They would prefer to use size and leverage to limit competition.” As healthcare continues to grow, so does waste and inefficiency. The system today lacks regulations that would promote market-based value and innovation.

Focus on cost and experience

“The instinct of health systems is to go to revenue cycle instead of addressing cost,” says Johnson. As payer mixes are changing, the introduction of low-cost service alternatives and new kinds of competitors are changing how patients pick their care. As a result, the imperative to reduce cost is growing.

Historically, healthcare companies have made the most revenue by controlling every aspect of the care journey. However, with new outputs, new care systems and a focus on preventative care, healthcare providers are shifting their coverage to services at which they can truly excel.

To establish a foothold in the market, healthcare systems must emphasize their brand, their price, and their customer experience. “We are at or near the end of the industry’s ability to force high-cost, inefficient care on people,” says Johnson.

The future of healthcare

Today, healthcare providers want to be “all things to all people,” Johnson suggests. In an effort to provide generalized care across the continuum, providers are missing out on an opportunity to provide the highest value care in certain areas or specialties.

Hospitals are adopting new, disruptive care delivery models, causing providers to need to shift their complex care offerings to more customer-focused, value-driven selections. In the future, this means creating a distinction between national and regional referral centers, as well as enhanced primary care, retail chains, and virtual care platforms. According to Johnson, the future of healthcare will be asset-light, customer-focused, digital by design, and intensely focused on value.

Healthcare’s new math

Johnson suggests that to truly deliver kinder, smarter, and more affordable care, providers must abandon the “old math.” For a long time, healthcare providers in the U.S. have viewed revenues as flexible and expenses as unknown, with margins reliant on admissions. Today, new payment models make that kind of thinking obsolete. Healthcare delivery systems must view revenues as largely fixed, via bundles and capitation. Johnson says that managing expenses will become essential—with a real focus on creating value.

So, what actions can providers take in anticipation of new payment models and customer expectations? Johnson says it’s a new game and providers need to adapt.

“Einstein says, when you’re in a new game, learn the new rules,” concludes Johnson. For providers, that means moving forward with an eye on outcomes, customer experience, and overall quality of care—to help advance healthcare toward a true customer revolution.

To learn more about how Strata Decision Technology helps healthcare providers to better plan, analyze, and perform, visit our website.

About the speaker: Founder and CEO of 4sight Health, Dave Johnson has made his career as a known authority on healthcare’s pro-market transformation. He is a prolific writer on change in healthcare and the author-in-residence at MATTER, a Chicago-based healthcare incubator. Johnson published his critically acclaimed book Market vs. Medicine: America’s Epic Fight for Better, Affordable Healthcare in 2016. Three years later, he also published The Customer Revolution in Healthcare: Delivering Smarter, Kinder, Affordable Care for All.