September 20, 2018

Addressing economic disparity while growing membership: Lowering cost is essential

By Eric B. Larson, MD, MPH, Kaiser Permanente Washington Health Research Institute executive director, and Kaiser Permanente Washington vice president for research and health care innovation 

Kaiser Permanente Washington Health Research Institute (KPWHRI) is located in an office tower next to I-5 where we have views of South Lake Union, downtown Seattle, and the neighborhoods of Queen Anne and Capitol Hill. 

We can also see how our city is changing. Take that cluster of tents two blocks north, for instance—people living just a few feet from the express lane on-ramp. Contrast this to construction cranes amid shiny new condos and office buildings to the west. It’s all evidence of our town’s flourishing economy—and its growing disparities in income. 

So I was glad to read that Kaiser Permanente recently committed $200 million to address the issue of homelessness in the communities we serve. “Housing stability is a key factor in a person's overall health and well-being, and addressing those issues more broadly can have a positive impact on health outcomes,” Kaiser Permanente CEO Bernard Tyson recently wrote in Modern Healthcare.  

But we also need to ask ourselves: How can we effectively tackle the perpetually rising costs of care and increasing insurance premiums that result? Evidence shows that lack of affordable health care can bankrupt individuals. When people with no or little health insurance get sick, bills can pile up fast, leaving no money for the mortgage or rent. Many then fall into homelessness, making it even more difficult to recover financially and physically.

A uniquely American story—that doesn’t have to be this way 

On a population-wide level, such downward spirals affect everybody. Those with no access to regular, affordable health care may avoid treatment until they need expensive rescue care. Providers cover the higher costs, pass them along to insurers, who then raise premiums, making coverage still less affordable—especially for those on the lower rung. Indeed, Harvard economist David Cutler, PhD, has written convincingly that excessive health care costs are a key driver of increasing economic and health disparities in the United States. 

This vicious cycle is not a new story, but among developed nations, it is a uniquely American one. Countries with universal access pay less than Americans do for health care while getting better overall outcomes. Passage of the Affordable Care Act (ACA) in 2010 provided hope as the number of uninsured Americans fell from 44 million to 28 million. But the ACA failed to tackle the problem of excessive costs and especially prices. And now, with lawmakers chipping away at ACA provisions, the number of uninsured is rising again. 

Meanwhile, many large American employers, tired of rising costs, have lost patience. Rather than waiting for the government and insurance companies to fix the problem, companies such as Comcast, Walmart, and Amazon are creating their own plans to better control the cost of their employees’ health care. And according to recent reports in the New York Times and elsewhere, many are having success. Their work involves disciplined application of strategies that integrated delivery systems like Kaiser Permanente proved effective years ago. Examples include:

·      driving down prices from outside providers, drug companies, and vendors;

·      helping patients navigate coverage and care options; and

·      empowering them to make intelligent choices that reduce costs while improving health.   

Hearing that employers who self-insure are copying our moves can be disconcerting. (Didn’t we write the book on this?) And yet, such stories buoy my confidence that Kaiser Permanente can still capitalize on such ideas—yet do so more broadly. We have the power to bring better care and more affordable coverage to ever expanding populations in our communities. We must show how people can get access to high-quality, affordable care, regardless of their employment status, income, or age. To achieve this, we must avoid unsustainable increases in premiums and out-of-pocket costs by focusing on affordability.  

Let’s work for measurable improvements

So how do we advance our progress toward more affordable care? As the saying goes, “You can’t improve what you can’t measure.” So rather than focusing solely on membership growth, increasing revenues, and improving member experience, we must have a laser focus on affordability. Indeed, we must make premium and cost reduction our most important performance metric. Successfully navigating the pathway to affordability is a key tactic for our growth and our efforts to achieve greater market share and impact. 

With larger market share, we’ll be in a better position to leverage our relationships with external providers and vendors, further reducing costs. This would be a different kind of spiral altogether—one that leads to more lives well covered and healthier communities. 

The key, of course, is finding ways to care for more people using the same or fewer resources and paying lower prices than we currently do. Such cost reduction must be done well and carefully so that we continue to meet our members’ needs and provide the best possible health outcomes.  

Some think we can save costs by “working smarter”—for example, serving members’ needs more efficiently via digital technologies. Too often, though, adding services only increases costs without improving health outcomes or member experience. Many wonder if investing more in primary care can reduce downstream costs. I believe it can. Researchers from KPWHRI’s MacColl Center for Health Care Innovation have been studying this question and aim to find out.  

I also believe we need to carefully root out medical overuse—that is, to provide patients with all the care they truly need and none of the care that they do not. This approach requires discovering what works and what doesn’t—and then changing protocols to stop doing the things that don’t produce better health outcomes. As a recent New York Times article describes, this is easier said than done. But teams at KPWHRI have been working with providers at Kaiser Permanente Washington and elsewhere on innovative ways to reduce so-called “low-value care.”

One example is the “Taking Action on Overuse” project our MacColl Center is conducting with funds from the Robert Wood Johnson Foundation. Another is our recent experience working with Kaiser Permanente Washington’s providers to de-implement a one-step approach to screening for gestational diabetes. In this example as a learning health system, our providers and researchers demonstrated that more is not always better, less is sometimes best, and systems can indeed reverse course to better meet patients’ needs.

In addition, our Learning Health System Program is helping our organization to build new skills and infrastructure for continuing measurable progress toward providing better, more affordable care for our members. For example, the Learning Health System Program is supporting the development of innovative new clinics in Seattle’s Ballard and South Lake Union neighborhoods. It’s also working on new ways to use predictive analytics to efficiently target interventions in ways that best benefit individual members. Through our research institute, we’re sharing our discoveries with others nationwide. 

Kaiser Permanente Washington’s collective effort to reduce the cost of care while growing enrollment requires steady commitment and discipline. I believe that in the long run, it will be well worth the journey—especially if we can produce premiums that are substantially less than others in our market so that increasingly more people from all corners of our community can receive high-quality coverage and health care.