Claiming the $1 trillion prize in US health care

June 14, 2014

Summary: Claiming the $ 1 trillion prize in US health care

The outcomes-based method of payment as a means to save money in the health care system.
To address the high cost unsustainability of the US health care industry, politicians are calling for a move towards a performance based outcome method of payment for doctors, hospitals and health care providers (service providers).  This is to take the place of the current fee-for-service model of payment, and is predicted to save the health system more than one trillion dollars over the next ten years.
It is expected that this outcomes-based model will provide greater focus on individual patient outcomes, as opposed to separate episodes of care that do not support overall goals for the patient’s treatment.  This would see service providers working together with patients during treatment, giving greater weight to using best practice in all circumstances, in order to achieve the patient’s outcome.  This would lead to a cut in the unnecessary medical costs and treatment currently seen in the fee-for-service approach.
To implement such a model, the industry needs:
•    An understanding by the payer and patients of their roles in meeting treatment needs
•    A large scale of practice implementation to allow for its impact to be experienced across the entire industry
•    A focus on Episodes of Care to encourage efficiency in identifying patient needs and providing treatment at the lowest cost across all service providers.
•    A greater collaboration and communication between Payers and Service Providers to implement standards and synchronise implementation of outcomes-based payment with all local providers.
This process is set to reduce existing waste of services in the health system. A range of institutional and local leaders will be required to work together in order to achieve this goal and outcome, which has the potential to free up money and services in the health care system.

Source: Latkovic  2013, Claiming the $1 trillion prize in US health care, McKinsey & Company, <>.

Posted in Blog by Douglas Fahlbusch