How to Stimulate Competition and Innovation

May 8, 2018

Dan Tasset is the Vice Chairman of NueHealth Holdings, the CEO of NueHealth Performance, and the Chairman of Nueterra Capital. His blog posts offer his experienced and innovative views on healthcare, healthcare reform, and related topics.

This is a combination of some de-regulation along with policy changes to promote the way healthcare is paid for, mostly referred to as payment reform.

Most out-moded scope-of-practice limits need to be re-evaluated. This is not only true with limits on nurse practitioners and physician assistants but many other provider categories as well. The result of this has already been shown in numerous studies. For example, almost 90% of visits to retail clinics involve simple care, resulting in 30% to 40% less cost than traditional physician offices while maintaining patient satisfaction. It is well understood that much of the current restrictive regulatory environment exists at state level. However, the federal government through the whatever funding mechanism is adopted for the state high risk pools has significant leverage over states to encourage them to modernize regulations to increase the supply of medical services, promote lower costs services and stimulate competition.

Similarly, outdated restrictions on site-of-service for surgical and other procedures results in hundreds of billions of dollars unnecessarily spent annually. Regulators can lead this effort by aggressively expanding the Medicare approved list for lower-cost sites of service. Innovation in healthcare, which includes technology as well as advanced clinical techniques and care pathways, has paved the way for more efficient, lower cost and higher quality models of delivery. However, outdated regulations are preventing the proliferation of this innovation.

Licensing boards should institute reciprocal national licensing for doctors or make other regulatory changes to help telemedicine proliferate across the country.

Medical school graduation numbers have been stagnant for almost 40 years. There is an expected shortage of over 100,000 physicians by 2025, with almost two-thirds being specialists. It’s apparent that medical societies are artificially restricting competition by imposing protectionist residency limits.

Archaic state Certificate-of-Need (“CON”) laws impede competition and raise prices. They require healthcare providers to get permission from the state to add technology or expand services in the state. Studies have shown that even in the fee-for-service payment environment, state CON laws result in lower value and higher cost to the consumer. Under payment reform and in the value-based care environment, these protectionist anti-competitive laws make no sense whatso­ever. It’s no secret that the state CON laws are largely supported by the American Hospital Association and the Federation of American Hospitals because they prevent competition from new, innovative, higher value participants in the healthcare delivery space. Any legislation that is passed in Congress to help subsidize state high-risk pools through block grants or otherwise should require the elimination of the anti-competitive state CON laws.

A congressional committee needs to be established to study all departments and branches of government to uncover inconsistencies in policies that stifle competition and innovation. For example, while innovators are working to reduce medical spend through clinical and technological advances that lower or eliminate hospital length of stay, Centers for Medicare and Medicaid Services (“CMS”) is threatening to revoke Medicare hospital designations because they do not meet the definition of a hospital. That outdated definition says, “the majority of patients must require overnight stay.” The unintended consequence of that regulatory body stifles innovation. Examples similar to this are numerous.

Congress must lead the way in payment reform. Value-based care must be the norm, not the exception. The first step to true value-based care is the proliferation of prospective bundled payment. This is significantly different from the retrospective bundles payment initiated by CMS, which looks more like a shared savings arrangement and it certainly did not come with any warranty requirement. CMS must take a more aggressive approach in adopting quicker implementation goals, as well as expand the opportunity for others to convene the payment model.