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Private Sector Innovation Driving Healthcare Transformations

Laura Joszt
An event hosted by the American Enterprise Institute highlighted companies in the private sector that are working on novel ways to transform healthcare and bring better value to patients.
Although the United States offers world-class healthcare, that care is often wasteful. While the government is trying to address the problem through the use of incentives to providers for higher-value care, the healthcare sector could benefit more from the type of entrepreneurship exhibited in other industries, according to speakers at an event hosted by the American Enterprise Institute (AEI) that explored the ability of the private sector to transform the healthcare sector.

From the consumer perspective, “the system is, essentially, maddening,” said James C. Capretta, resident fellow and Milton Friedman Chair at AEI. He highlighted the complex and opaque nature of insurance, the lack of price transparency, the endless and redundant paperwork, and the fragmented systems of care that can actually be harmful to patients’ care.

The American healthcare system largely operates as it did 2 or 3 decades ago, he added. While the information technology revolution has transformed other American industries, it hasn’t really touched the health sector.

The speakers at the AEI event represented companies in the private sector that are working on novel ways to bring better value to patients.

First was Mario Schlosser, the CEO and cofounder of Oscar Health, a consumer-focused, technology-based health insurer. He believes in a consumer-driven market and that the insurance company is well positioned to enable that.

“One version of the healthcare system in the future would have to be to give individuals more choice as to what kind of networks they want to buy, what kind of all-in healthcare experience they really want to buy and pay for,” Schlosser said.

The problem is the current tools available are too blunt, and there needs to be more leeway to create better benefit designs, he said. Oscar looked at its relatively healthy 40- to 50-year-olds and observed that those with a low deductible had little reason to search for alternative sites of care. They could just go to the urgent care clinic if they needed care. But once the deductible increased and patients faced a greater out-of-pocket cost, they started to look at ways to access lower-cost care. As the deductible increased, a patient’s use of telemedicine also increased.

While the increased use of telemedicine was a good result of higher deductibles, Oscar also found that patients with a higher deductible were also more likely to put off a minor surgery that they might need.

Schlosser said there needs to be more freedom—within reason—to play around with benefit design.

“We have to think harder about the blunt tool of the deductible and see what predeductible benefits we can load into plans,” he said. For example, some services and care could be covered until $1000, then patients face an out-of-pocket cost for a bit before they are covered again. “These are all things we are thinking about experimenting with but run, at times, into regulatory issues. So, we don’t have complete control of our plan designs.”

Following Schlosser, Hill Ferguson, CEO of Doctor on Demand, further explained how telemedicine can be used to reduce costs and improve access to care. He outlined how the current physician shortages—which are only expected to get worse—will cause massive problems. Already, the average time to see a physician is 18 days. On top of that, the office hours are typically 9 am to 5 pm, Monday through Friday.

The lack of convenience around primary care is causing a trend of patients moving away from having a primary care physician (PCP). Almost 30% of all American adults don’t have a PCP, and there are big differences by generation. Close to half of millennials don’t have a PCP, Ferguson said.

Doctor on Demand is trying to solve those challenges. It has taken the 18-day wait time and reduced it to 4 minutes. Instead of typical office hours, patients can get access to a PCP or a psychiatrist 24 hours a day, 7 days a week, 365 days a year. Plus, the cost of a visit is just $50 compared with the average $150 for a traditional PCP visit.

One of the health plans Doctors on Demand works with monitored the quality of care for 2 years and found the company had a lower antibiotic rate compared with the traditional office (38.9% vs 40.9%, respectively) and a similar 14-day readmission rate after an emergency department (ED) visit (1.6% vs 1.4%).

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