In the past three decades, the U.S. healthcare industry has evolved to resemble a poorly regulated market, where financial incentives are set to default to the most expensive treatment option possible. Through the Affordable Care Act (ACA, ObamaCare) President Obama compromised with the medical industry to pass a bill that aimed to cover all Americans; the compromise entailed a complete lack of cost control and treatment accountability for patients. As a result, the United States health care system is the most expensive in the world, but consistently underperforms on most dimensions of performance when compared to other countries. Worse of all, it is bankrupting our country at a rapid pace.
The United States now spends $3.3 Trillion per year on its healthcare system under the Affordable Care Act. In comparison, the U.S. spends $660 billion per year on our military (the largest and most advanced military in the world; this budget is also bigger than the next 8 countries’ budgets combined), and $230 billion per year on our education system. Even when the cost is calculated per capita, the U.S. spends at least twice as much as Canada, and three times as much as Italy. Worse, the Commonwealth Fund’s report on international health system efficiency, ranked the United States last of 11 developed nations, on quality, access, efficiency and equity of care. The current healthcare solutions, administration and financing, are dysfunctional to say the least. Most urgently, this atrocious healthcare system is funded without end by the U.S. government, under the Affordable Care Act. The $3.3 Trillion per year makes up 16.5% of the U.S. total debt of $20 Trillion.
National health spending is projected to increase from 18 percent of GDP to about 25 percent by 2037. The root of the ridiculous high costs of healthcare lay within Obamacare’s faulty incentives. Insurance companies pay their executives as a percentage of premiums. Thus, the more they pay for their insured, the higher their salaries. If doctors charge hundreds of thousands of dollars for simple procedures (as it is now happening more often), insurance companies usually have no problems paying for it. Doctors know this; thus, it is not rare to find three or four doctors billing the same patient as if they each did a procedure, when in fact, most of them just walked by and said hello. These instances are documented, as they happen all the time. While Obamacare was hailed as a victory for the consumers, it truly is a payday for healthcare professionals. Universal coverage under Obamacare does not mean anyone in the U.S. can be treated. It means anyone in the U.S. can see a doctor and be billed for it, whether they are healed or not. As a result, the U.S. is becoming sick and broke. Obviously, this demands urgent, decisive action. While President Trump is fighting to repeal Obamacare with the persistence of a honeybadger, the private sector must be ready to provide new, innovative healthcare delivery models.
- Repeal Obamacare ASAP First, the Trump administration must do everything and anything to repeal Obamacare as soon as possible. Shifting federal spending to private individuals, employers and states doesn’t solve the healthcare problem, but spending our way into bankruptcy is not the solution, and should not even be an option. The first step to lowering the costs of healthcare is to stop paying for it indiscriminately. In an industry where prices rise to whatever the market (i.e. the government and insurance companies) will pay, it is counterproductive to write blank checks to healthcare providers. This is why our average annual healthcare spend per capita is triple that of other OECD countries.
- Make Healthcare Competitive Again Second, the Trump administration must roll back regulations and mandates, and adjust laws that allow healthcare to become a competitive market. Such a market would adhere to the concept of “value based purchasing,” which states that providers only get paid if they fix the problem. This means hospitals and doctors cannot bill simply because they applied a procedure, whether it was successful or not; the patient must be healed. Value based purchasing dictates that providers take responsibility for the patients’ health. Also, this new, competitive market would naturally favor healthcare providers who achieve triple aim: lower costs, improve quality, and improve patient satisfaction. Instead of the government setting prices for health care commodities, providers need to compete to offer the lowest price.Regarding physicians, the Trump administration must counter restrictive state laws to allow nonphysician providers (i.e. advanced-practice nurses) to practice to the full extent of their training. This would expand the workforce supply, increase competition, and lower prices.
- Adopt Blockchain Technologies Lastly, the Trump Administration needs to make it a priority to adopt blockchain technologies, which will allow the private sector to accelerate their use of blockchain technology. Since the private healthcare industry works so closely with government institutions, one cannot fundamentally evolve without the other side making some fundamental changes as well. It takes two to Tango.
While the Trump administration is fighting to repeal the catastrophically expensive Obamacare, the private sector must take ownership and deliver bold, innovative, and profitable solutions. Healthcare entrepreneurs must focus their efforts and capital on 1). inventing new healthcare delivery models, and 2). adopting blockchain technology.
- Create New Healthcare Delivery Models: Specifically, we need solutions that revolutionize the large institutions, such as hospitals. It currently costs $1,200/day in fixed costs to keep a hospital bed available (regardless of whether there is a patient in it or not). Hospital bills make up 40-50% of the yearly $3.3T spent; extremely inefficient. The solution is not found in inventing models that reduce the cost by 10%, but rather by inventing brand-new healthcare delivery systems, such as ambulatory surgical centers (ASCs) and home-based micro-hospital units. For example, ASCs provide cost-effective surgeries in a convenient environment that is less stressful than hospitals, while home-based micro-hospital units utilize the most recent advances in technology (telehealth, wearables, sensors and systems) to reinvent the way patients are treated, in a more efficient and cost-effective way: in their own homes. The U.S. healthcare industry will depend almost entirely on capable entrepreneurs willing to reinvent these ancient, costly, inefficient care delivery practices.
- Digitization of Healthcare and Adoption of Blockchain Technology The single biggest innovation coming to the healthcare industry is the adoption of blockchain technology, as it is the best solution available to streamline all healthcare data, processes and infrastructure. Blockchain is the great equalizer, because it can absorb information from hundreds of types of software and programs lurking in the healthcare industry, and organize it in a decentralized, nationally/worldly distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way. Hundreds of systems into one system.The competitive advantage blockchain offers to any healthcare institution that adopts it early will slash through the administrative and operating costs. Issues of billing, coding, collections, coordination, etc., will begin to disappear from the industry, as a nationally distributed ledger will accurately and permanently verify and track all data as it is created. No more reconciliations, duplicate data entries, and endless confusion.Lastly, the adoption of blockchain technology in the healthcare industry will revolutionize the outcomes for patients as well. In the past two decades, digital technology fully transformed most aspects of our lives, such as communication, banking, entertainment, shopping, etc. Healthcare is the exception.Most technology investments in healthcare did not translate into better outcomes for patients. For example, in the past few years, the U.S. government invested more than $30B to digitize hospitals and doctors’ work. The result? Doctors and staff now spend the majority of their time behind computers, frustratingly managing data, instead of having more time for their patients. An Ipsos Public Affairs survey recently found that most doctors (83%) are spread so thin that they aren’t able to spend enough time with their patients. Endless paperwork, inconsistent software, unavailable data, etc., is keeping doctors, providers and staff focused on bureaucracy rather than delivering care to patients. The digitization of healthcare (from paper records to electronic health records) and subsequent adoption of the blockchain technology will truly improve the cost, quality and patient satisfaction.In conclusion, President Trump must continue to fight to repeal Obamacare. He is doing so not because he hates people, as the media will have you believe, but because this horrific policy is bankrupting our country, while offering a mediocre excuse for healthcare. Costs are out of control, and no entity is responsible for healing patients. It’s a bad deal, plain and simple. The Trump administration must also be ready to assist and match the private sector in adopting blockchain technologies as quickly as possible. Healthcare entrepreneurs must employ the latest advances in technology, including blockchain, to reinvent healthcare delivery models.