Dear Rep. Price,
The incoming administration is already determined to repeal and replace the Affordable Care Act (ACA). While overhauling the ACA might require some urgency, the new administration inherits several other key issues in healthcare that will demand a comprehensive set of policies and measures. With annual national healthcare expenditures fast approaching 20% of the US GDP, healthcare is already a matter of national security.
We must develop new approaches to address new diseases, including the rapid growth of behavior-driven chronic diseases like the opioid epidemic. We must address growing financial pressure on consumers due to rising drug prices and out-of-pocket health expenses. We must better guide and manage government’s major health initiatives such as the Precision Medicine Initiative (PMI). You now have the power to give these issues the attention they desperately need—while also keeping affordability on top of your mind.
Properly addressing these issues certainly will require decades of efforts over several administrations, but we are in need of focus and strategy anchored around innovations in care processes and business models. State-of-the-art technology alone cannot reduce cost—we need new processes that simplify and make existing methods less expensive. Your leadership will be needed to deliver high-quality, low-cost healthcare to consumers
1. Obamacare or not—healthcare must lead with affordability
The ACA’s original intention was to make healthcare affordable for every American and the country as a whole. In reality, the law has brought the country closer to universal healthcare, but it has not curbed the country’s $3 trillion of spending on healthcare expenses—growing at more than $200 billion each year. With or without the ACA, America’s strategic priorities in healthcare need to address affordability. In order to achieve this, we need more innovations that will reverse healthcare’s current appetite for more expenses. In his seminal work, The Innovator’s Prescription, Clayton Christensen of the Harvard Business School has defined such innovations to be disruptive. Disruptive innovations can simplify healthcare’s complex processes and make them affordable. Disruptive innovations also deliver low-cost alternatives for many of the established products and services as well as more efficient processes.
It is reported that nearly 50% of total hospital costs are estimated to be overhead related. Such significant share of overheads implies that hospitals are attempting to solve all of the health problems for all people, but doing so is inefficient and costly. Only new business models that are either separated by types of problems or types of patients can reduce such overhead. For example, paving a pathway for retail clinics and specialized care centers to take on the growing burdens of general and community hospitals will help to relieve these costs.
2. Focus on precision medicine, not personalized medicine
Making medicine more precise, or rules-based, may be the single most effective remedy to exploding healthcare costs. A treatment is precise when we understand the root cause of the disease. Strep throat, for instance, can be diagnosed and treated precisely because we know it is caused by Streptococcal bacteria.
Unfortunately, the Precision Medicine Initiative (PMI) created under the Obama administration and housed within the National Institute of Health makes a grave error in its mischaracterization of the term, and instead allocates resources to personalized medicine. Precisely defined diseases are not uniquely personal. While being patient-centered is certainly a noble and important endeavor, the PMI is overly focused on symptoms of disease, not causes. This is like spending millions of dollars to develop the world’s best throat lozenges instead of working to pinpoint the Streptococcal throat bacteria.
Standardization also leads to significant cost reduction in medicine. For example, developing precise diagnostics for chronic diseases could substantially improve early detection, which lowers costs of treatment. We recommend that you refocus the direction of the PMI from personalized medicine to rules-based medicine based on precise understanding of the root causes and precise diagnostics of the disease. Directing the NIH funding to drive research on finding root causes of major diseases such as Alzheimer’s, cancer, diabetes, and neurological disorders might be an important small step for the country that could repay a hundredfold in the future.
3. Target chronic diseases, especially opioid abuse and behavioral disorders
While we must strive to find solutions for all diseases, some diseases are more expensive than others. Chronic illnesses have become the biggest threat to achieving affordability in healthcare—and they must be your team’s primary concern. Often under-diagnosed and left untreated, chronic diseases can be detrimental to the economy and the healthcare system. The traditional healthcare system is ill-equipped to manage the chronic disease population, and low-cost alternatives such as retail clinics and targeted programs around specific diseases could be superior options.
Effectively combating behavior-driven diseases such as Type 2 diabetes, obesity, and certain cancers requires early diagnostics and interventions. We also need a comprehensive and low-cost plan to address mental and neurological and behavioral disorders. The opioid epidemic is on everyone’s radar, but no reasonable solution exists at the moment. Relying on the current network of already over-extended and expensive healthcare facilities will not only be ineffective, but also extremely costly. Alternative care channels and solutions need a chance to demonstrate their effectiveness and be recognized as viable alternatives. Your office must coordinate the research community and industry participants to foster innovation.
4. Protect consumers from soaring prices through disruptive innovations
Although recent examples of explosive price escalations of drugs such as Daraprim and EpiPen have grabbed the public’s attention, they only illustrate a small part of a bigger problem. A large number of drugs on the market are ineffective but still extremely expensive—rather than curing the disease they simply treat the symptoms. High reimbursements for these drugs have led to rapid price hikes for more effective drugs. Instead of repeating past mistakes, you need to focus your energy on supporting the development of low-cost disruptive innovations that will serve as affordable alternatives to existing solutions. The current FDA approval and reimbursement processes will need to be re-evaluated and amended. Innovative alternatives must be able to enter the market more freely, and reimbursement should be based on products’ long-term evidence of effectiveness in clinical data.
Along the same vein, disruptive business models can play a role in delivering products and services that empower individuals to live healthier lives. Because so many chronic illnesses are behavior related, health-related innovations, wearable monitors or apps are powerful tool to drive down costs for the consumer and the healthcare system at large. As Secretary of Health, we ask you to shape policies that incentivize consumers to adopt health-related innovations from non-healthcare industries such as consumer products, technology and personal service sectors. Such a push will lead to a new wave of disruptive innovations that will lower the financial burden on consumers while contributing to healthier behaviors.
We hope that you and the rest of the Department of Health and Human Services embrace disruptive solutions to address many of the daunting topics on the table. Innovations we advocate are more about new methods and approaches than new gadgets and technologies. Your tenure can take an important step towards transforming our healthcare system by prioritizing innovations that make affordability a reality.
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