We have seen time and time again a continued over-arching description of U.S. healthcare as an out of control industry whose costs continue to rise significantly faster than the U.S. economy. An industry in crisis that needs immediate and dramatic restructuring.
One of our core principles at Scale is to question assumptions, no matter how large or small. So here we are, raising a question to the broader community for discussion – are we working off the right assumptions or do we need a refreshed, more nuanced approach?
When you look at the data, U.S. healthcare has gone through periods of high inflation and periods of more contained inflation. What’s interesting to note is that over the past 60 years, U.S. healthcare consumption expenditure per capita has never grown more slowly than it has during the current decade, in which the growth rate has been nearly in-line with U.S. GDP growth per capita. If we were comparing speeds, then we could say that U.S. healthcare today is growing approximately 3x slower than it was during the 1970s. That’s quite a slowdown for an industry as large and complex as healthcare, and for an industry that is constantly accused of being totally “out of control” or “broken.”
Yes, it’s true that at 17.9% of GDP, we still spend more on healthcare than other countries and that healthcare expenditure as a share of GDP continues to rise, albeit at its lowest rate in recent history. And, those that continue to attack healthcare argue recent declines in healthcare expenditure growth rates will soon dissipate as the baby boom generation transitions to a “higher usage” retired demographic. To this point, CMS recently reported its prediction of a renewed acceleration in annual health care cost increases.
But, we remain cautiously optimistic here, too. Increased demand is only half the story. Changes in patient behavior born of access to better information and the recognition that patient payment responsibilities have increased, along with changes in delivery methods, more accountable health care organizations that rely on data, and increased investment in operations infrastructure, performance transparency and results to drive better outcomes – these things do matter. They matter in every other industry, why shouldn’t they ultimately matter in ours? The business of healthcare can be a force for positive change.
All of this is not to say that there isn’t plenty of room for improvement; the list of what can still be materially improved is long and clearly a source of much political and social interest. I guess, the point we are trying to make is on something so large, multi-faceted and complex, can we try to stay away from binary opinions – Working / Not Working?
Perhaps we need to take a step back and ask the question, is what we think we know about U.S. healthcare still accurate today? Or, is the industry changing so rapidly before our eyes that renewed and deeper analysis to distill away the noise and separate what’s truly working from what’s truly not working is required?
We don’t profess to have all of the answers on this complex topic. We just thought it might be worth raising the question given that we are busy everyday working with physicians, managers and investors who are actually bending the cost curve while they take ever better care of patients. Lots more to do, but it seems like some things at least are getting done and getting better.
We are here to help continue the progress and to engage in a deeper discussion.
For further reading and additional data points for consideration, please refer to this recent publication by Peterson-Kaiser.