The U.S. healthcare system spends twice the average of other OECD nations, yet has lower health outcomes and a higher infant mortality rate, highlighting the need to shift focus from acute care to prevention.
Shifting towards value-based capitation in the healthcare system, where providers are incentivized to keep people healthy, can lead to greater efficiency, cost savings, and a shift towards preventive care.
Deep dives
The High Cost and Poor Outcomes of the U.S. Healthcare System
The U.S. healthcare system is a major drain on the country's economy, spending close to 19% of GDP, twice the average compared to other OECD nations. Despite the high spending, the U.S. has lower health outcomes and a higher infant mortality rate than other developed countries. The system primarily focuses on acute care rather than prevention, resulting in a cycle of spending more on fixing health problems rather than investing in early childhood, children, families, and communities to reduce the disease burden. Additionally, the U.S. accounts for about 4% of the global population but uses nearly 50% of the world's medical prescriptions due to a culture that believes medication can fix any problem and limited regulations on pharmaceutical prices and direct-to-consumer advertising.
The Need for Value-Based Care and Reform
The focus of the healthcare system should shift from fee-for-service reimbursement, which promotes volume-based care, to value-based capitation. This involves implementing a fixed budget linked to quality and outcome metrics, where providers are incentivized to keep people healthy rather than just treating illnesses. By embracing this approach, the healthcare system can become more efficient and effective, reducing waste and overpricing. It also enables a shift towards a more preventive care model and allocates resources to primary prevention efforts rather than predominantly acute care. By making these fundamental reforms, significant improvements in health outcomes and cost savings can be achieved.
Addressing the Social Determinants of Health
Investing in the social determinants of health is crucial for improving population health and reducing healthcare costs. Economic insecurity, poverty, and racism are major drivers of health problems, making it essential to ensure access to healthy food, affordable housing, safe neighborhoods, and adequate childcare. By focusing on prenatal and early childhood interventions, such as nutrition and reducing toxic stress, the long-term health burden can be significantly reduced, resulting in substantial cost savings across various sectors. Prioritizing these investments requires a longer-term perspective, but the potential benefits for individuals, communities, and the economy are significant.
The Importance of Collaboration and Innovation
Reforming the healthcare system requires collaboration and innovation at the local and regional levels, as the current national political landscape may hinder significant progress. States like Oregon have showcased successful models such as Coordinated Care Organizations that operate within fixed budgets, emphasize community health, and have demonstrated cost savings while ensuring quality outcome metrics are met. Initiating similar pilots in other states and communities, with a focus on value-based care and the social determinants of health, can pave the way for broader reform. It is crucial to recognize that change comes from collective effort and to engage in the conversation, advocacy, and support for innovative approaches that prioritize health outcomes and create sustainable healthcare systems.
On this episode, former Governor of Oregon and ER Doctor John Kitzhaber joins Nate to discuss the shortcomings of the medical system in the United States. With health outcomes below average compared to other developed nations and healthcare spending at nearly 20% of GDP, creating medical systems that are less costly while also keeping people healthier is critical to the well-being of the country and its citizens. Dr. Kitzhaber’s hands-on experience working in medicine and systemic perspective as a policymaker gives him a unique perspective on healthcare resource allocation, the effectiveness of medicine, and the real world effects of how we incentivize medical care. Can we extend our time horizons by making long-term investments in the most effective preventative care? How do we take care of more people with fewer resources available? Most of all, can we come together to think critically about how we can create a system that prioritizes holistic health, based in community and accessible to everyone?
About John Kitzhaber
John Kitzhaber has more than 40 years of experience in health care and health policy in both public and private sectors. He practiced as an emergency room physician for 15 years; served 14 years in the Oregon Legislature, and served three terms as Governor of the State of Oregon.
Kitzhaber is the author of the groundbreaking Oregon Health Plan, through which hundreds of thousands of low- and moderate-income Oregon families gain access to health care. During his third term as Governor, Kitzhaber was the chief architect of Oregon’s Coordinated Care Organizations, the first effort in the country created on a statewide basis to meet the Triple Aim—better health, better quality, lower cost—with a focus on community and population health.