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One ‘Buzzword’ at a Time

The US Healthcare System Briefly Explained

Written by Catherine Schuster Bruce · Thursday 19th May 2016

When I first arrived in the US, I would often find myself in healthcare-related discussions when, all of a sudden, ‘Affordable Care Act’ would appear at the forefront of conversation.

I would smile and reply:

‘Obama Care?’

To which, I would usually receive a nod of approval and the discussion would continue.

‘Obama Care’ seemed to me, a ‘buzzword’: ‘a word or phrase that is fashionable at a particular time or in a particular context'.

However, despite being an extremely useful survival tactic in intellectual conversation, I quickly realised my misguided naivety.

Obama Care is much more than a ‘buzzword’.

Otherwise known as the ‘Patient Protection and Affordable Care Act’, Obama Care was a change in federal legislation that marked the beginning of a transformation within the American Healthcare system from a ‘Fee-For-Service’ towards a ‘Pay-For Performance’ model.

There has since been a seismic shift with respect to how healthcare in America is funded, structured and delivered, and this shift has opened the door for innovation, including for the likes of health technology.

In brief, prior to Obama Care, the ‘Fee-For-Service’ model meant that Providers (healthcare professionals and hospitals) ‘billed’ for each service that they provided to patients.

A useful analogy is the experience of visiting a restaurant; patients were charged for each individual item that they ordered. Provided that the patient was insured, their insurance company would pick up the bill.

Since providers knew that whatever they charged, they would be paid, and insured patients never paid the cost directly, healthcare costs rocketed…

From a patient’s perspective, which option would you choose if you were taken to a Michelin-style restaurant and not responsible for the bill?

If you were a provider, which dish would you promote if you knew any cost would be covered?

…. In the ‘Fee-For-Service’ model, there is no incentive to reduce cost or improve quality.

Obama Care rises to this challenge with the ultimate aim of universal insurance for all, whether this be employer-funded or through the government/state. It also saw the introduction of ‘Accountable Care Organisations’, a group of providers that come together to offer bundled services so that instead of paying per individual service, the insurance companies negotiate fixed prices for all care required for an ‘at risk’ patient group during one year. Perhaps similar to a fixed menu in a restaurant, three courses will always cost £9.95 …

The key point with this is that if a provider doesn’t spend all the ‘£9.95’, they can keep a portion the excess.

However, since all restaurants now offer '3 courses at £9.95', the only way restaurants can compete is based on the quality of the food they serve. Similarly, providers are now incentivised to improve efficiency in the delivery of healthcare and are penalised for poor outcomes.

I see that this is where the potential for health technology in the US lies. Although, currently, healthcare professionals are not reimbursed or paid directly for technological interventions, incentives to integrate technology into healthcare delivery exist. 

For example, technology can provide the infrastructure to improve remote monitoring of patients and increase medication adherence. In turn, this will lead to improved efficiency and decreased cost, which will mean more money left for the provider to put in their pocket. Furthermore, analytics of the data collected from technological devices can be used to identify areas of risk so that interventions can be targeted at specific groups of patients who are typically expensive to manage.

These are just two examples- there is no denying the potential that has yet to be fully unleashed.

Urban Dictionary provides some alternative definitions of ‘buzzword’:

  • ‘Trendy words and terms used by clueless corporate fatcats’.
  • ‘A term or phrase that sounds good, but mean nothing’.
  • ‘A seemingly intelligent word that dumb people use to sound smart’.

Definition 3, ‘a seemingly intelligent word that dumb people use to sound smart’- sounds familiar.

Thank you to Kamal Jethwani for your insights.

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