8 Potential Steps to Curbing Healthcare Costs

There are a handful of physicians, authors, and speakers that I regularly follow to ensure I keep a pulse on the latest news in the healthcare industry. One of those influencers, Dr. Robert Pearl, frequently produces insightful content via Forbes, Harvard Business Review (HBR), and his own podcast called Fixing Healthcare. If the name doesn’t immediately ring a bell, you may have heard of, or read his 2017 book, “Mistreated: Why We Think We’re Getting Good Healthcare – and Why We’re Usually Wrong,” and you may recognize his name from when he was the CEO of The Permanente Medical Group. Connecting this specifically to population health, Dr. Pearl co-wrote a recent HBR article with Philip Madvig titled, “Managing the Most Expensive Patients.” The premise of the article focuses on how the sickest 5% of America’s population accounts for about half of overall healthcare spend, and also how implementing programs to improve quality and access to care hasn’t exactly brought the price tag down.

Dr. Pearl isn’t the first person to make this observation. Another article, published by the Associated Press, recently pointed out that programs implemented to curb hospital overutilization didn’t do any better than a comparison group of patients who weren’t in a specific program in Camden, New Jersey.

While Kaiser Permanente’s root cause is slightly different than that of the New Jersey study (which suffered more from Social Determinants of Health-related issues), the common thread between the two is that it really only takes two words to create a salve for what we lovingly refer to as “frequent fliers” (defined as those with 4+ ER visits in a 12 month period): PRIMARY CARE.

This isn’t new news. The healthcare industry has been touting the value of primary care for a while now. A good relationship with your PCP and some reforms with regards to prescription drug costs (good luck with that) would do Yeomans work in curbing the cost of American healthcare. Now, I’m going to bounce back-and-forth between these two stories to make a point.

CAMDEN, NEW JERSEY

In New Jersey, the patients who were helped the most were the ones who were seen by a provider within a week of leaving the hospital. Salient Healthcare has been promoting Transition Care Management visits to its clients since Day 1 to prevent hospital readmissions. In fact, my colleague, Maria Nikol, has already written on the topic for our company blog.

KAISER PERMANENTE

Tossing it back to KP, they pushed forward in supporting their Primary Care physicians with treating patients who had manageable chronic diseases. The end result was that they were out in front of problems before health issues deteriorated to the point that fewer patients even joined the ranks of the 5% “frequent fliers.” KP uses an HMO structure that they refer to as “Leveraged Primary Care,” which for all intents and purposes, is one of the birthplaces of Patient-Centered Medical Homes, and eventually what gave way to today’s Accountable Care Organizations. All of these are different variations of managed care.

At this point, some of you are saying, “Yeah but HMOs were huge in the 1980s and 1990s, and they didn’t work.” That’s not entirely true. They actually did work, but Dr. Eric Bricker says it best here, “There were tons of rules. You had a gatekeeper PCP, they controlled your referrals 100%…” Costs went down, quality went up, but basically everyone just wanted to do whatever they wanted to do (I can assure you that “Dr. Google” is not helping with this either).

SO NOW WHAT?

Now to wrap this up in a nice little bow because nobody likes to be left hanging a la “The Sopranos.” The HBR article hypes up capitated reimbursement, but there’s a lot more that has to happen.

  1. Educate, or re-educate, the general population about the value of Primary Care such that the PCP becomes a true cornerstone of American healthcare, allowing for better-managed care. This allows physicians to get out in front of potential health problems.
  2. Get more medical students to pursue Primary Care so we don’t already exacerbate the shortage we’re currently facing. Cutting down the cost of medical school will certainly help with this. Kudos to you NYU. Long-term this will cut down some of the wait times and improve access to care, as will technology such as telehealth.
  3. Focus on Transition Care Management to curb hospital readmissions.
  4. Continue to progress regarding issues with Social Determinants of Health.
  5. Involve dietitians as part of a well-rounded community-based care plan.
  6. Continue to fight to reduce the current cost of prescription medications (this may take the most time because of the players and politics involved) and educate the general public about why it’s okay to use generics.
  7. Increase reimbursements to providers a la Medicare Advantage to ween everyone off the sweet incentive of Fee-For-Service.
  8. Accept that this will take time. A New Year’s resolution of losing 20 pounds takes one person several months. Imagine an entire country trying to “shed” billions of dollars in costs. Change doesn’t happen overnight.

As a country, we’re not just changing healthcare. We’re driving behavior change. Heck, it took over 200 years for us to stop using mercury as a medical treatment. My eight steps are an oversimplification, but if we keep heading in that direction, I see no reason why we can’t cut into at least one-third of the 5%. That’s no small feat. Oh, and if you’re curious as to whether the aforementioned Tony Soprano lived at the end of that video clip, I guess it depends on whether or not he’s been seeing his PCP lately.


Special thanks to Dr. Pearl and Dr. Bricker. Your insights give me hope and energy to do what I do every day.

Ryan Mackman

About the Author


Ryan Mackman, MBA, MHA - Business Consultant

Ryan Mackman has been an ACO business consultant team member with Salient since March 2018. In this role, he acts as a solution trainer, marketing and sales consultant, as well as Value Based Payment strategist. His skillset helps augment Salient’s efforts at the ACO and physician practice level. Prior to joining Salient, Mr. Mackman spent four years as the Business Administrator and Project Manager for Premier Family Health, a Level 3 Patient Centered Medical Home near West Palm Beach, FL. Mr. Mackman holds a Master’s in Business Administration and a Master’s in Health Administration from Florida Atlantic University. He received his Bachelor’s degree from the University of Florida. He currently holds a Six Sigma Green Belt Certification and is a member of the American College of Healthcare Executives.

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