By tying payments more aggressively to patient outcomes rather than to services rendered, the US health-care system could deliver substantial savings over the next decade.
As divisive as the debate has been, there is a clear consensus across political parties and health-care stakeholders that if the United States is to address its unsustainable health-care costs, it must change the way it pays hospitals, physicians, and other providers. The country needs to move away from fee-for-service reimbursement, which rewards providers for tasks performed, and toward a method of payment that compensates them for successfully addressing patients’ healthcare needs. These approaches are often referred to collectively as “outcomes-based payment.”
Although the US health-care industry has in the past decade undertaken many useful experiments with outcomes-based payment, it has largely failed to make the transition at a significant scale. The challenges have been substantial, including the industry’s sheer size and complexity, the comfort incumbents have with the existing payment models, technical barriers that have made it difficult to ensure fairness, and the risk of unfavorable unintended consequences.
That said, the preconditions for transformative change are much better now than at any point in recent history. McKinsey’s broad experience in the health-care industry indicates that, with stronger leadership, bolder initiatives, and more collaboration between public and private payers, the US health-care industry could aggressively transition to outcomes-based payment over the next three to five years. We estimate that such a move could save consumers, employers, and taxpayers more than $1 trillion over the next decade while improving the delivery of care.
Continue reading the full story via McKinsey & Company here: Claiming the $1 trillion prize in US health care