By Matt Fisher, General Counsel, Carium
Twitter: @matt_r_fisher
Twitter: @cariumcares
Host of Healthcare de Jure – #HCdeJure
Costs in healthcare are a frequent topic of discussion, with the focus of that discussion often going to the fact that costs keep rising. However, what is meant by healthcare costs? Once that is defined, how can healthcare costs be addressed in a way that is not currently being met? It should be obvious that there are no ready or easy answers to the second question. The first question takes effort and consideration of a number of interconnected factors, but it is possible. Before diving in, the genesis for thinking about these issues was a recent recording for Healthcare de Jure that I did with Steve Lefar. The show with Steve won’t begin airing on Healthcare NOW Radio for a little bit of time, but be sure to look out for a great conversation focused on healthcare finance.
Defining Healthcare Costs to Deliver Care
Cost in healthcare is composed of a number of factors and can also be approached from a number of perspectives. A lot of the focus is on the delivery of healthcare services though as that influences costs from other perspectives, such as how much an individual needs to pay when they go into a healthcare facility. The following breakdown will then focus on a high-level description of what goes into determining the cost of delivering healthcare services.
The cost of delivery for a healthcare service can be broken into two primary components: goods and personnel. The good component is the easier one to assess because it can be tracked on a per item basis. It is relatively easy to figure out how much each item used in the delivery of a particular service costs (that admittedly ignores the complexity introduced when rebate programs or other discounts exist). For example, an invoice or bill of goods can hopefully show the price of gauze, bandages, or other similar items used in the course of patient care.
The harder component to track and quantify is the personnel cost incurred when a service is provided. Using a surgical procedure as an example, it is necessary to consider who was present at any point throughout the procedure, the specific individuals since different people will likely have different levels of compensation, and the amount of time spent by each individual in the procedure among other factors. Each of those elements takes time to locate and then account for in building the overall cost. That would be for just one example, which would then need to be extended to many other services as well to establish the cost for every service. It is a daunting task.
Healthcare Cost Beyond Care Delivery
The brief discussion of cost above only considers the costs of delivering services within the walls of a healthcare facility or other locations where direct care can be provided. However, healthcare is affected by many factors beyond just what may be considered or discussed during a visit to a physician. For example, if an individual has asthma or another respiratory condition, then poor living conditions, lack of air conditioning depending on the climate, inability to clean, or a number of other factors that may be the result of a patient having insufficient funds to pay for necessary services or being stuck in a situation that cannot be resolved alone. Taking another step, the inability to pay for needed items could also cause the patient to forego or delay obtaining healthcare services. When those factors get figured in, the delay in care or skipping it altogether can then exacerbate a condition that becomes worse and more costly when care becomes unavoidable.
The big picture way to look at those costs are social determinants of health (SDOH), which is a topic filled with a whole host of its own rabbit holes to pursue. SDOH goes beyond the parameters of what may traditionally be thought of as healthcare costs, but can societal factors really be separated out? If healthcare is advancing to a place of whole person, proactive care, then it will be essential to look at the full spectrum of costs that are interconnected.
How to Address Healthcare Costs
Coming up with a simple way to address healthcare costs can go to the extreme of just throwing out the entire current system and starting from scratch to build a system that does focus on a person’s whole life. Practically, that scenario will not occur. No one will be able to fight off all of the entrenched interests to achieve that. Completely ripping apart the system would also likely create immediate harms that are not acceptable because a system cannot be replaced overnight in the real world. There is no reset button that magically makes a change instantaneous.
If the system cannot be replaced wholesale, then what can be done? As the discussion around healthcare costs outside of a healthcare facility began to tackle, it begins by looking at cost outside the walls of a hospital or other healthcare facility. It is necessary to look at the broader community and all of the little facets of daily life that impact every individual’s health. That means housing, education, and transportation as a few immediate items from a very long list. It is the recognition that healthcare is part of a larger social ecosystem that is all interconnected.
If the ecosystem concept is acknowledged, then similar to other ecosystems, the interconnected components must all be considered. Giving attention to only one factor may give the appearance of making a difference, but then the weight of the factors that were not addressed will quickly overtake the one change. Using the comparison to ecosystems in nature though, fixes will not be quick, easy, or apparent. Instead, it will take a coordinated effort and a long-term view of potential interventions to foster necessary improvements and systemic changes that will really begin to shift the picture on healthcare costs.
Next Steps
The next phase will be one of difficult, but needed decisions. As suggested, there are no easy fixes to ongoing increases in healthcare costs. It is also essential to look beyond just the immediate costs of delivering particular types of healthcare costs. Considering the broader circumstances impacting individuals will help advance the ball more and fits into the aim of making healthcare more proactive.
All of those suggestions come with hard choices and no immediate fixes. The question is whether the healthcare industry and all connect can take those hard steps in order to make the deeper, societal impact.
This article was originally published on The Pulse blog and is republished here with permission.