Med Journal August 2020 | Page 6

special article by Amir Mian, MD, MBA Department of Pediatric Oncology, UAMS, Little Rock, Ark. Market Forces and Evolving US Health Care System: Economics and Winds of Change The health care industry in the U.S. is undergoing significant transformation. To an extent, this is a response to macroeconomic and resulting market forces. Despite being the highest spender on health care ($3.7 trillion in 2018), the U.S. lags behind most developed countries in key quality clinical outcomes. 1-3 Unfortunately, politicization during the last several decades and overzealous, competing special interest groups have stalled legislation. This has resulted in our failure to develop long-term comprehensive health care policies that address unique demographic population needs and respond to current market forces. Despite legislative inertia, many intrinsic and extrinsic macroeconomic market forces in this capital driven economy are impacting growth and affecting the direction of the health care industry. Collectively, these forces will play a pivotal role in transforming health care as we know it today. The traditional Fee-For-Service (FFS) reimbursement model is evolving towards Pay-For-Performance (PFP). This model, which over time had encouraged overutilization and, to an extent, contributed to total health care cost, is responding to market needs. The simultaneous shortage of primary care providers and a lack of meaningful financial incentives for added emphasis on preventative care is also leading the transition towards PFP model. The absence of incentives to strive towards uniformly accepted, meaningful quality outcomes and a minimal recognition of adverse long-term impacts of social determinants of health (including adverse childhood experiences) are thought to contribute towards low health care equity in the U.S. To an extent, the culture that lacks adequate emphasis on patient accountability also contributes to enormous chronic disease burden. Unfortunately, overtime, this aspect has added to a significantly higher burden of chronic diseases within specific population segments and increased the total cost. 1 It is hoped that soon, market-driven changes in reimbursement model, incentivized awareness, and added emphasis on population health will drive this transition from FFS to PFP model. To cut costs while retaining their market share, hospitals are merging and consolidating. Horizontal consolidations have led to the evolution of health care systems. In addition, the traditional clinical practice model is in decline and evolving from solo or small physician groups towards either contractors or employees of health care systems. This is a fundamental change in operating model, relieving physicians from administrative burden of running practices and dealing with complex regulations. To continue to control their supply chain and create competitive advantage, various stakeholders in health care (e.g., hospitals, pharmacies, and bio-medical/ drug manufacturing) are also exploring vertical consolidations. For example, the pharmaceutical chain CVS is strategically evolving and targeting the retail market segment by expanding into delivery of primary- and urgent-care needs at the retail level (Minute Clinics); in addition, groups of select hospital systems are cautiously expanding into drug manufacturing (e.g., Civica) to ensure the supply of uninterrupted generic drugs at low cost and the decreased overall cost of delivery of clinical care. Patient consumerism is a powerful, intrinsic market force that is changing expectations and demanding added value with a positive health care experience. Today’s patients are well connected on social media and equipped with knowledge; as such, they are now active partners with their physicians in making health care decisions. The active consumerism that other service industries experienced during the last 15-20 years has now reached health care – something providers and payers cannot ignore. Patients today demand high-quality care, price transparency, and comparable outcomes. In a choice-driven, competitive market, we find that clinical outcomes, patient experience, and satisfaction are pivotal for every practice. To a significant extent, this active consumerism is driven by easy access to data and advances in information technology. On the health care delivery side, sophisticated analytics, generation of Big Data, and improvements in learning algorithms is leading to adoption of artificial intelligence and machine learning. It is expected that this will not only enhance care and delivery processes, but also improve overall safety, improve efficiency in health care system, and augment physicians at the bed side. Other than uniformly adopting electronic medical records (EMR), compared to other industries, medicine and health care in general has significantly lagged in adopting technological advances, especially in information technology. With active consumerism and transformative technological advances, these market forces have also paved the way to increased accountability and price transparency. The pharmaceutical industry is being scrutinized for fair drug pricing, and hospitals are expected to be transparent with medical billing. The retail cost of drugs is very high in the U.S. and, when combined with increased demand and high utilization, this factor significantly adds up towards an enormous per capita health care cost ($11,212 in 2018) that is almost double than most comparable developed economies. These inherent market needs and resultant forces offer unique opportunities for entrepreneurs to experiment with technological advances and offer unique products and creative services. For example, for their combined 1.2 million employees, Amazon, Berkshire Heathway, and JP Morgan have joined to form a health care consortium that is poised to be an impactful player and a market disruptor. The resultant enterprise, Heaven, aims to create a health care system that is efficient and value-based and that delivers quality outcomes at a fraction of the current cost. The biggest economy in the world, the U.S. spends almost 18% of its gross domestic prod- 30 • The Journal of the Arkansas Medical Society www.ArkMed.org