Fixing the health-care system means fixing the misaligned incentives that currently drive costs ever higher with little regard to quality. Currently, when providers and hospitals offer what most of us would consider higher-quality care—encouraging primary care, chronic disease management, and preventive measures to help us avoid costly hospital stays, for example—they end up earning less than they would if they simply allowed us to get sick. In other words, the health-care system was organized long ago to treat illness, not maintain wellness. Today, the result is that cost-saving innovations are often hindered and we have all become victims of a system that constantly favors the status quo over initiatives that could provide more affordable, quality care.
However, some health systems are able to bypass this senseless predicament. By acting as both insurers and providers of care, integrated health systems have managed to bridge the punishing chasm between the financing and delivery of care. Rather than penalizing innovation, integrated systems have a great interest in fostering ideas that deliver better care at a lower cost. As a result, they are often the first to adopt innovations that eventually transform the rest of the health-care system. It’s no coincidence that such integrated health systems as Kaiser Permanente, Geisinger Health System, and HealthPartners are among the nation’s top performers in both quality and cost.
But Americans shouldn’t have to wait for an entirely new health-care system to be built when innovation is already taking place within the health-care system. We should encourage the development of additional integrated health systems so that we all can access their more affordable avenues to quality care.
Successful disruptive innovations in health care will provide more care at less cost than we can currently imagine. Many of today’s great, integrated systems were once disruptive innovators but they now provide more for less only by present standards. In turn, their current business models and cost structures make it very difficult for them to significantly increase their care while simultaneously lowering their costs. They are the cream of a not-very-effective crop.
Transformational innovations are more likely to come from outside and under these systems. For example, innovative employer/provider partnerships, coupled with organizations that already manage complex disease in simpler, more holistic ways (e.g., home care and hospice), are more likely to dramatically increase care at lower cost.
You don’t have to be brand-new to lead a transformation. Data from health-care and other industries clearly show that disruptive business models and methods strategically developed inside of existing systems can increase quality and affordability. When existing systems replicate and accelerate those innovations, they transform their industries. However, current integrated health-care organizations are overly focused on trying harder to reproduce prevailing structures and methods. That keeps them from developing the disruptive innovations that will transform care.
Whether they arise from outside or inside current organizations, successful disruptive business models will follow a predictable path. They will break down the barriers to getting patients exactly what they need at continually lower cost. They will also create a unique competitive advantage. Leadership will leverage that advantage to opportunistically and relentlessly improve and expand. That’s how we will transform health care.
Please send us your ideas for new Debate Room topics. If you're an academic, association officer, or other industry expert and would like to write a Debate Room essay, send us a query. Questions? See the