The Changing Landscape of U.S. Healthcare: Navigating Challenges and Seizing Opportunities

Ben H.

Ben H.

Apr 26, 20243 min read

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The Changing Landscape of U.S. Healthcare: Navigating Challenges and Seizing Opportunities

Introduction:

The U.S. healthcare system has undergone a seismic shift in recent years, presenting significant hurdles for providers while payors reap the benefits of a "flywheel effect." In the pre-2008 era, commercial insurance shouldered the majority of risks and protected patients from high out-of-pocket costs. However, with the rise of companies like UnitedHealth Group, the dynamics have changed. By leveraging scaled assets and combining health care services with medical spend/medical loss ratios, UnitedHealth has created a new paradigm that favors its own physicians and care delivery sites, leaving other providers struggling. This "good problem" for UnitedHealth has led to a flywheel effect, resulting in impressive profits and further challenges for hospitals and providers.

Understanding the Payor's Strategic Approach:

To navigate these challenges successfully, it is crucial to comprehend the strategic and operational moves made by payors like UnitedHealth. The company's enrollment in taxpayer-supported government businesses, such as Medicaid and Medicare Advantage, has grown significantly. Additionally, UnitedHealth's Optum division, which includes physician practices and outpatient facilities, has experienced remarkable revenue growth. This growth has allowed the company to avoid a substantial increase in its medical loss ratio. It is imperative for providers to grasp these trends and prepare for the potential impact they may have on their operations.

The Complexities and Tensions:

The tensions between health systems, physician groups, and other providers with payors' business models have never been greater. This trend presents a multitude of complex challenges that demand a proactive approach. While not every contract negotiation needs to become a problem or a public issue, it is essential to stay informed about payors' strategies and be prepared for the evolving landscape. The next few years are likely to be a wild ride for providers, and staying ahead of the game is crucial.

The New InterWell Health: Transforming Value-Based Kidney Care:

In the midst of these challenges, there are also unique opportunities for providers to transform the healthcare landscape. The merger between Fresenius Health Partners, InterWell Health, and Cricket Health has created an independent entity under the name InterWell Health. This merger aims to improve kidney care through value-based approaches, innovative technology, and strong physician leadership. With a network of over 1,600 nephrologists, this new entity has already demonstrated significant reductions in hospitalizations, readmissions, and cost savings for payor partners. By leveraging Cricket Health's machine learning and predictive analytics capabilities, InterWell Health aims to enhance patient engagement and enable earlier interventions.

Actionable Advice for Providers:

  • 1. Stay Informed: Constantly monitor and understand the strategic moves made by payors in your region. This knowledge will help you anticipate potential challenges and identify areas for collaboration or differentiation.
  • 2. Explore Value-Based Care: Embrace value-based care models that focus on improving patient outcomes while reducing costs. Collaborate with other providers, payors, and technology partners to develop innovative solutions and demonstrate your commitment to value-based care.
  • 3. Advocate for Fair Contracts: In contract negotiations with payors, prioritize fair reimbursement rates that reflect the value of your services. Build strong relationships with payors based on mutual trust and understanding, ensuring that both parties benefit from a sustainable partnership.

Conclusion:

The changing landscape of U.S. healthcare presents both challenges and opportunities for providers. By understanding the strategies employed by payors like UnitedHealth and staying ahead of the curve, providers can navigate the complexities and protect their interests. Additionally, seizing opportunities to transform care delivery, such as the formation of InterWell Health, can lead to improved patient outcomes and sustainable growth. By following these actionable advice, providers can position themselves for success in the evolving healthcare landscape.

Resource:

  1. "The seismic shift in U.S. health care imposes big hurdles for providers as payors benefit from “flywheel effect”", https://wendellpotter.substack.com/p/the-seismic-shift-in-us-health-care?utm_source=substack&publication_id=255152&post_id=136497904&utm_medium=email&utm_content=share&triggerShare=true&isFreemail=true (Glasp)
  2. "The New InterWell Health – A Unique Opportunity to Transform Value Based Kidney Care", https://fmcna.com/insights/articles/new-interwell-health/ (Glasp)

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