It’s no newsflash to say that healthcare in the U.S. is broken, the “tapeworm” on the U.S. economy, as Warren Buffet calls it. From patients to politicians, there are constant calls to lower the cost of healthcare. Some of the biggest economic successes of our day—Berkshire Hathaway, Amazon and J.P. Morgan Chase—teamed up to form the ill-fated healthcare start-up, Haven, but even they weren’t able to break through to a solution. Like me, perhaps you find yourself wondering: Why can’t anyone seem to figure this out?

Part of the problem is that many of the major players trying to solve the problem have a conflict of interest because they have holdings in healthcare companies that they want to see grow financially. Berkshire Hathaway holds a large position in DaVita Dialysis. Jeff Bezos purchased Pill Pack and has created an online pharmacy through Amazon. Amazon’s Clinic is designed with 24 different symptom constellations to guide individuals to Amazon’s recommendations. These online patients can fill out a survey and pay a fee to get a prescription delivered to their door. Most of these companies don’t have any real interest in being providers; they just want a cut of the ever-growing healthcare revenues. Relying on big companies to come through with big innovations is not the solution to lower healthcare costs.

Tug of war

The only way to solve the problem of healthcare costs is to educate, empower, activate, and engage patients. Providers and public health programs need to give patients the information they need about their own health and how to care for themselves, but patients must also be educated about the real costs of healthcare. While it is beneficial to patients to have an employer who provides health insurance for them and their families (allowing them to pay only a co-pay or co-insurance percentage for care) this often keeps the patient from having a complete understanding of what different types of care cost. Patients need to understand the difference in actual cost between, for example, a visit to the emergency room versus a trip to their primary care provider because the choices of the individual contribute to the increase or decrease in the costs of healthcare overall.

When one considers U.S. healthcare spend, while corporations pay the most for healthcare provided through employer-sponsored benefit plans, the government is the second largest spender (and, depending on the age of the patient, sometimes the biggest). It’s as though there’s this tug of war over the patient between those who pay for care (e.g. government and corporations offering employee benefits) and those on the other end of the rope (e.g. the actual providers of services, health systems management, and commercial payors). There’s a symbiotic relationship between payors, health systems, and providers. They have a shared business goal: to increase revenue, drive more utilization, and increase the number of services provided. It’s a team effort that serves to drive costs higher, while corporations and government are trying to pull the rope in the other direction to decrease costs and improve quality.

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Author: Keith HovanKeith Hovan is a highly experienced senior healthcare executive with multidecade clinical and administrative leadership experience across community, teaching, and academic medical center settings. He has demonstrated expertise in system-level operations, strategic planning, business development, physician relations, and medical practice development.