A Few Men in a Room Determine Healthcare Value for All

Perhaps you saw the news that 20+ different organizations are forming The Health Care Transformation Task Force (most of the members are giant hospital systems).

From the Task Force member statements, this powerful group wants to transform US healthcare to “value-based” care and payment.

So let me get this straight: a group of men in a room (I am assuming most of the members will be represented by men, probably over the age of 50 as well) are going to decide what healthcare “value” means for everyone in America? (I am also assuming that all of the representatives are very smart and well-intentioned).

Which leads me to emphatically ask: what other industry functions this way?

Do Apple, Samsung and Microsoft get together and define “value-based” technology?  Do Ford, BMW and Toyota meet and define “value-based” automobiles?

No!

In fact, in most industries, if competing parties meet to discuss payment and pricing they will be prosecuted for illegal collusion.

In most industries, customers/people determine value, not a group of middle-aged men in a room.  Outside of healthcare, value is determined by unique customer wants, needs and tastes, and expressed through purchasing habits.

If you asked people on the street to define value, I believe most would define value as “the most for the least.”  Think Costco or Amazon.

But is that what our giant hospital systems really want to provide: the most for the least?

Again…

No!

It is safe to assume that the members of this Task Force will not be asking people on the street for their definition of value.  Instead, this Task Force will most likely maneuver behind the guise of “best practices” in order to keep extracting 20% of our nation’s economy.  They will continue to run their giant hospital systems and be what Warren Buffet calls “the tapeworm of the economy”.  After all, “how many businesses do you know that want to cut their revenue in half? That’s why the healthcare system won’t change the healthcare system.” (Rick Scott, Governor of Florida and former healthcare executive)

Cynically, we know how it will end: The Task Force members will all agree on a definition of “value” (one that will largely benefit themselves), they will receive a lot of media attention, and they will continue on as normal.

They will transform US healthcare to “value-based”.  Yes, value based on what they say it is.  And we already know what value means to them: large, vertically integrated hospital systems similar to John D. Rockefeller’s Standard Oil.

In fact, the Task Force said “initial priorities include improving the Accountable Care Organization (ACO) model.”  It is clear that the Task Force members want to continue their giant hospital systems, and even want to grow larger by becoming “Accountable Care Organizations.”

There has to be a better way.

I wish the members of this Task Force would learn from other industries where there is genuine recognition that different people value different things at different times and in different situations.

Other industries determine true customer needs and individual companies innovate to meet them.  Companies compete, not collude.

For example, a person might go to Walmart because she values low prices.  That same Walmart customer might go to Whole Foods for a wider selection of organic products.  Then, she might travel over to Target for the latest trendy designer collaboration at a reasonable price (e.g. Lilly Pulitzer, Missoni, etc.)

The true healthcare innovators will not be giant, vertically integrated ACOs that try to be all things to all people.  Instead, they will seek to differentiate based on unique customer values.  Some great examples of healthcare companies that are already doing this are Qliance and Crossover Health which focus solely on delivering excellent primary care, or The Surgery Center of Oklahoma which focuses on providing surgeries as efficiently and cost-effectively as possible.  None of these organizations are members of the Task Force.

These focused, value-adding disruptors do not need to form a task force to define value.  They seek to understand customer needs and meet the value defined by the customer.  These innovators are taking real risk, competing and delivering.  Some of them might even fail along the way.

The point is: value needs to be determined through strong competition to meet unique customer needs.

Unfortunately, in our hyper-regulated healthcare industry where our government is encouraging monopoly power, this Task Force is more of the same-ole stuff.

If you had the chance, what would you say to the men in that room?

Tom Valenti is Founding Partner of Forthright Health (ForthrightHealth.com)  You can follow him here: @tjvalenti