Among the various things I do, I work about half time for a large health care organization (HCO) in Minnesota called Allina Health. Currently Allina is the largest HCO in Minnesota, but it is likely to become the second largest due to continuing consolidation in HCOs. HealthPartners and Park Nicollet, two other HCOs in Minnesota desire to merge, and it does not appear that there will be any barriers from either the MN Attorney General or federal agencies. So it is likely to proceed, which would produce a larger HCO than Allina. Consolidation in health care is almost a torrent right now. It's happening very rapidly. In the Twin Cities area in Minnesota, there are almost no independent primary care practices; they've all been purchased by large HCOs. The health plans like Blue Cross/Blue Shield and HealthPartners are working very closely with the large HCOs to create products that maximize value to the consumer. So the future of health care is one dominated by a few large HCOs that dominate a market. Unfortunately, this is all to familier. Witness the consolidation in airlines and in cable television, internet and wireless services.
But there are important changes in perspective that will drive a much more pronounced and determined effort to deal with behavioral health issues, including both mental health and addiction. The most important of these is the movement from fee for service to capitated approaches. In fee for service, a clinician is paid a specific amount for providing a service, such as a primary care visit or an addiction counseling session. This rewards providing more services for fewer people, and it drives up costs without regard to quality or outcomes. Increasingly, health plans are moving towards a different model where the HCO is accountable for outcomes, not just whether the service was delivered. In a capitation model, a HCO is given a single fee for treating someone with a given diagnosis. It is up to the HCO to figure out how to do this efficiently and effectively.
This is a good thing. Here's an example. Someone with an addiction goes to a time-limited, intensive rehab program, which is the current standard of care. Let's say that this intensive outpatient program costs $2400. Someone else who was able to produce equivalent outcomes for $1800 would be attractive to a health plan, not to mention someone paying out of pocket. Similarly, a $15,000 or $20,000 residential treatment program would go out of business if it could not produce substantially better outcomes than someone providing office-based treatment for a third of that amount. I think this is quite possible to do, since there is no demonstrated benefit to residential treatment. There is room here for innovation, for modernizing our approach to addiction treatment. It's time for addiction treatment providers to take responsibility for the outcomes of their treatment. It's time to end the idea that treatment failures are the patient's fault. In the future, this isn't going to fly. One of my goals is to make sure this happens. We can generate better outcomes at much less cost.
What if, instead of being paid $30,000 for a residential treatment lasting 28 days regardless of whether that actually produced a good outcome, HCOs were only paid for treatment that worked? What if payment was based on outcomes rather than the treatment provided? I can tell you, that would change the addiction treatment world in a heartbeat. Give patients that same treatment over and over even though it's already proved ineffective? No way! Give everybody the same treatment whether they need it or whether it's been shown to improve outcomes? Forget about it? Changes in how payment is made for services will force change in the treatment delivered. And it's about time.
What's the silver lining? We can lead the way. Many of the very high utilizers of health care have addiction and mental health problems. We have to figure out ways to improve their care and outcomes. That's our challenge and our opportunity.