Lining Up Incentives in Healthcare

The solution to our woes of high cost and poor quality

I have worked in the employer-sponsored health benefit industry for over 30 years, advising employers on how to offer attractive and competitive health benefits to their employees while trying to manage the ever-increasing cost. My work has led me deep into the boardrooms of healthcare provider systems, health insurance carriers (incorrectly called “payers”), and across the table from benefit decision makers for employers (who are the real payers of healthcare).

I have found that most professionals in healthcare are good people. Whether they work for a carrier, a provider or another stakeholder in healthcare, most people want to do the right thing every day.

Healthcare Economics

The answer is found in healthcare economics. We have a system in the United States that is rife with misaligned incentives. There are many other stakeholders in healthcare, which is another part of the problem, and the vast majority of individuals who represent these stakeholders are well-meaning. However, they are part of a “system” (in quotes because of the silotic nature of the industry) that is not well organized around value.

Value can be summed up as the Triple Aim:

1) Lower healthcare expenditures,
2) Improved patient experience,
3) Improved health of populations.

What if all the incentives were lined up in the same direction?

The Expense

In America, healthcare costs are the leading cause of personal bankruptcy and healthcare quality and access scores are lower than most industrialized nations. Wages are mostly flat because healthcare increases gobble up pay increases.

I am nonetheless optimistic because of the promise of value-based care, which seeks to realign incentives in such a way that the buyers (employers and employees) and sellers (providers) of healthcare win. This transformation will take time but some early success stories are starting to emerge. Employers are ready for disruption and we are now entering a new era, The Employer-Driven Healthcare Economy. This new economy will be characterized by employers who foster mutual objectives among shareholders, based on the triple aim – all delivered through value-based care. Will you join me in creating this new economy?

I hope so. Here’s to a bold new era in healthcare!

Eric Parmenter, CLU, ChFC, RHU, REBC, CEBS, SPHR, MBA

National Leader of Value-Based Care

Collective Health

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