Former HHS official says U.S. should look to Starbucks for innovative care models

While new models of care have emerged, none are easily replicable. That’s challenging in an industry where spending is uncertain but providers and policymakers can look to the most expensive patients as an opportunity to drive innovation.  
By Jack McCarthy
07:04 AM
HHS Starbucks care models

Using Starbucks as an example of a new form of business that essentially reshaped an industry Sherry Glied, Dean of NYU Robert F. Wagner Graduate School of Public Service, said a modern patient-centered system replete with lower costs is going to require innovative new care models.

“Better models of care, whether integrated delivery systems, hospitals, or clinics, do surface,” Glied wrote in Health Affairs. “But so far they have largely eluded systematic replication.”

Unlike Starbucks, which boasts more than 24,000 stores in 70 countries on its corporate website, the successful models of care face what Glied called the fundamental roadblock that is the distribution of healthcare spending.

“Spending in most sectors is governed by the 80:20 rule — 20 percent of customers account for 80 percent of expenditures. Accordingly, most businesses are organized to focus on that key 20 percent,” wrote Glied, who formerly served as Health and Human Services Assistant Secretary for Planning and Evaluation. “The 80:20 rule holds true in health care as well, but it’s amplified by the 25:1 rule — just 1 percent of health care customers account for (about) 25 percent of expenditures.”

That reality, however, does present a big opportunity for healthcare providers and payers to identify that 1 percent and ideally predict which patients will cost the most and then, in turn, engage those people to help drive the costs of treating them downward.

“Despite decades of effort in the refinement of anti-selection mechanisms, there is still a bigger payoff to investing money and management attention in strategies to identify and avoid high-need cases or to do better coding of diagnoses in risk-adjustment systems than to managing care,” Glied wrote.

Not that it will be easy. Frequent-flyer patients are complex and often need individualized attention. And Glied noted that they are often loyal to doctors or caregivers – which makes it less likely that they’ll turn to emerging care models.

Glied proposed two directions policymakers should pursue: so-called high-powered incentives including pre-payment or capitation and innovations that soften frictions that inhibit consumers from shopping around for care.

Example: Turning the meaningful use EHR incentive program’s requirement that doctors give patients their medical records from an opt-in to an opt-out approach would effectively give consumers the ability to take those records to any number of healthcare providers.

“Organizational reinvention rarely works from the top down,” Glied explained. “In a more innovative health system, new organizations would emerge and compete with one another, with some succeeding and others failing. To make the process just a little more dynamic, healthcare policymakers should ensure that the rules of the healthcare system support the emergence of new forms from the bottom up.”

New models that perhaps resmemble Starbucks — only for healthcare. 

Correction: An earlier version of this story identified Sherry Glied as Health and Human Services Assistant Secretary for Planning and Evaluation. She is no longer with HHS. The error is corrrected above. 

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