Private Sector, not Public Policy, Holds the Key to Healthcare Reform — Really?…

2017.11.15 Helmrath

Christopher Helmrath, MBA

“The Private Sector, not Public Policy, Holds the Key to Better Healthcare” featuring Christopher Helmrath MBA turned out to be as much an infomercial for his investment firm as a discussion of healthcare reform in America. I do not dispute Mr. Helmrath’s investment tip that healthcare is a “good bet.” And I do not dispute that “business as usual” needs to change, given soaring, unsustainable cost of U.S. healthcare with lackluster results.

But I do dispute that savvy investing and commercial sector innovation alone will fix U.S. healthcare, as he claimed.

Central Pennsylvania Business Journal hosted his live-stream presentation on November 14, 2017. Mr. Helmrath is a former professor at Johns Hopkins Carey Business School and Loyola University Maryland Sellinger School of Business. He currently manages his own investment firm, SC&H Capital.

Mr. Helmrath despaired over political paralysis in Washington, and expressed confidence instead in innovations and developments in the commercial healthcare sector that he expects to improve outcomes and restrain costs.

Again, I do not dispute Mr. Helmrath’s investment tip that healthcare is a “good bet.”

U.S. Healthcare System Cannot Fix Itself

But I do dispute that the U.S. healthcare system can fix itself from the inside, as he claimed. And here are several of Mr. Helmrath’s specific claims that I also dispute:

  1. He claimed that obesity is a principal cost-driver for U.S. healthcare. Commercial health systems might be able to innovate incentives for Americans to adopt healthier lifestyles, and thereby bring down cost significantly

– A 2012 non-profit Bipartisan Policy Committee report, which Mr. Helmrath himself cited, lists multiple other factors with more influence than obesity, available at the Bipartisan Policy Center’s “What Is Driving U.S. Health Care Spending? – America’s Unsustainable Health Care Cost Growth”

– vlogbrothers: Why are American healthcare costs so high?  This YouTube video gives an entertaining explanation – incidentally, very well researched – that since U.S. healthcare is fragmented into a myriad of entrepreneurial enterprises, it fails to exert the state monopoly power that other OECD countries use to leverage lower prices from healthcare providers and suppliers.  This is by far the biggest cause of high healthcare costs in the U.S.

– My take on cost drivers it is found at “Why Is U.S. Healthcare So Expensive?”

  1. He claimed that technological innovation will lower costs

– See PBS News Hour interview with Elisabeth Rosenthal, an MD-journalist-author. She demonstrates that U.S. medicine is hard-wired to adopt the most expensive technology, not the most efficient or effective.

– There are few definitive confirmatory studies on cost saving from tele-health or self-management technology, and several studies that disprove cost-containment as a general effect across the board, for example one study showing no benefit for glucose self-monitoring at Young LA JAMA Internal Med 2017 (July 1); 177:920.

  1. He claimed that aligning incentives will lower costs.  Actually, I do not dispute this claim. However, I do believe that “value-based alternative payment” systems will likely have their effects only indirectly through Rube-Goldberg complex engineering and economic incentives. And early data from demonstration programs have not shown uniformly reduced costs; see Valerie A. Lewis, Ph.D., Elliott S. Fisher, M.D., M.P.H., and Carrie H. Colla, Ph.D., Explaining Sluggish Savings under Accountable Care, N Engl J Med 2017; 377:1809-1811

 

My conclusions

Commercial sector innovations, including those championed by Mr. Helmrath, should be pursued, with caveats:

  • don’t believe claims before they have been proven in real-life demonstration trials
  • commercial sector innovation and public policy need not be mutually exclusive for restraining healthcare costs and reforming the system – both commercial and public sector initiatives are in order.

 

My Counter-Claim

With philosophers Menzel and Sabin/Daniels and others, I claim is that external constraints will have the most effect on restraining cost escalation, short of consolidating healthcare under a single payer. One such external approach, adopted in 1994 in Oregon, successfully reined in Medicaid spending. More discussion is at “The Big Fix for U.S. Healthcare.”

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