A few months ago, I began talking with our employees about the future of health care. I start these talks with a statistic: In 2011, a family of four spent $19,000 a year on health care. With no change, experts say that number will approach $42,000 by 2021. No one believes this is sustainable.
What’s more concerning is that America isn’t getting its money’s worth. We don’t live longer or better than people in developed countries with lower health care spending. As Dr. Gregg Meyer, executive vice president for population health at Dartmouth-Hitchcock, said in a recent talk with SVHC’s donors, “America has reached what economists call a point of diminishing returns.” We spend more and more for little-to-no gain.
Our country has responded with health reforms targeting payments. Today, most health care providers are paid for each service they provide. This system is partly to blame for ballooning health care costs. Payment reforms will reduce payments and create payment incentives for care that promotes long-term health. As we transform how we pay for care, we also must transform how we provide care. Neither solution will work by itself.
“Transform” really is the right word for what’s needed. We must transform our care system to focus on keeping people well. It won’t be easy to make these changes while keeping the safety net of emergency and hospital care intact. By partnering with Dartmouth-Hitchcock this summer, SVHC took the first steps toward transformation. Dartmouth-Hitchcock is a national leader in redesigning health care and already is involved in health reform. But a partnership alone is not enough.
For SVHC to succeed, our health system must rise to several challenges. First, we must become more efficient. In the coming years, we expect payments from private insurance to drop to Medicare levels, which are below our costs. That makes reducing expenses an imperative. I recently challenged our management team to reduce our expenses by $4 million to $5 million in the coming year. That’s a first step. To survive with payments at Medicare levels, we will need to reduce our expenses by 15% to 20% over the next five to six years.
We also must embrace value-driven care. Value-driven care focuses on getting patients well and keeping them there. It doesn’t mean denying or rationing care. It means providing the care patients need in the lowest-cost setting, whether that’s a hospital, a nursing home, medical practices, or the patient’s own home.
To create a value-driven system, we must invest in improving the connections between caregivers. Keeping people healthier will require sharing information among medical practices, hospitals, rehab facilities, and home care providers. Instead of isolated instances of care, caregivers will formulate care plans that cross the boundaries of these settings.
High-quality care is also a key part of the equation. Even as we reduce expenses, we are striving to raise satisfaction and quality scores to the top 5% nationwide.
Transforming an industry is never easy. We will need help from organizations and leaders in our community, and we will need to consider new partnerships. This work will lead to changes in the jobs people do within health care. And yes, it will lead to fewer hospital jobs, even as we add jobs in other health care settings.
No matter how unsettling or difficult these changes may be, we must begin them now. We cannot wait for falling payments or government regulation to force change upon us. Together, we must create a sustainable health system for the future, one that is anchored in our communities to provide them outstanding care and great value.
Thomas A. Dee, CEO
Southern Vermont Healthcare