Bridging the Great Divide Between Healthcare and Business: Part 1

It’s no secret there’s a wide chasm between healthcare and business, and even more so, between clinical medicine and healthcare administration. You’ve likely heard cautionary tales of providers who “went to the dark side” and chose administrative positions over clinical medicine, and there’s certainly no love lost between the two.

We have clinical providers of systems who want to give good patient care, and we have system administrators tasked with developing self-sustaining business that offers a quality product (i.e. healthcare) that consumers want and need.

East is East and West is West, and never the twain shall meet.

Much could be said about the origin of the divide, but essentially it boils down to the false economy developed by fee-for-service and third party payers with deep pockets. This system created extreme wealth but didn’t function like a real-world business. And the lack of normal economic boundaries caused costs to spill over into our population with devastating effects.

The goal here is not to focus on how bad off we are, but to shed some light on how we ended up here and what can be done to bridge the divide and move together toward the Triple Aim. In the following posts of this series, we’ll take a look at what’s needed from providers and administrators to begin the bridge-building process.

Where we are now

Before the ACA, business and the government (as well as the uninsured, in some cases) absorbed the majority of the high costs of healthcare. Now much of the financial dysfunction has shifted to healthcare consumers, making our general population acutely aware of the problem.

This article and other similar stories about life after the ACA further reinforce the gravity of the situation. The issue isn’t just a matter of who pays for healthcare; the problem is that healthcare is simply too expensive for everyone involved in the equation.

Cost creates a huge barrier for healthcare consumers to accessible, quality care, even if they have insurance under the ACA. The ACA made insurance affordable for some, but many still can’t afford healthcare in its current state due to high copays and deductibles.

A brief history lesson

It’s fair to say the dysfunctional relationship between healthcare administrators and providers is a disaster that has been decades in the making. Every system across the U.S. is struggling, but no one really wants to deal with the root of the problem.

Up through the 1980s, virtually no practice was owned by a hospital system. It was so easy to make a living as a doctor in those days that medical schools offered little, if any, business training for practitioners.

When HMOs came on the scene in the early 1990s, private practices became far less viable. Physicians began selling their private practices to hospital systems and became employees of those systems.

The problem is that because doctors weren’t well versed in business, they brought poor habits (and a reluctance to change them) into the more controlled environment of hospital systems. As a result, we started seeing the ramifications of the myths they (and by extension, patients) had come to accept about the care delivery process:

7 Care Delivery Myths

  1. If a provider produces quality clinical care, his or her business is guaranteed to survive.

  2. The patient’s expectations should control the visit in order for the provider to meet the patient’s needs.

  3. Quality care demands a lot of time.

  4. A good provider shouldn’t pay attention to time.

  5. If it’s not expensive, it’s probably not quality care.

  6. Socializing with patients is just as important as clinical effort.

  7. If a provider is unable to see a patient, another provider (who doesn’t know the patient) can deliver the same quality of care.

This kind of mentality isolated business and clinical care and put them at odds with each other. It justified providers’ rejection of business norms—like efficiency, competition, and innovation—because they believed this kind of care was what a good provider should provide. But in reality, it came at a tremendous cost to their patients and posed significant problems for administrators.

There’s no such thing as a free lunch

In part to curb this kind of thinking, HMOs and Medicare began trying to establish some kind of connection between the level of clinical care and the cost of care for that level. This was the environment in which the “blank check” payment structure was created. Patients could go to as many providers as many times as they wanted and get any test they wanted—and a third party payer would cover everything. But because of the blank check, the healthcare industry never had much motivation to limit care in order to produce health or fix the lack of normal business parameters.

Fee-for-service and third party payers helped us survive the environment of the chasm for a while. But these factors, along with the continuing poor business practices of many providers, created an economic catastrophe for government, businesses and healthcare consumers. It’s also what ultimately led to our large uninsured and underinsured population.

Bridge construction ahead

There’s more discussion to come on this topic. We’ll look at other aspects of the issue—and practical steps to move us toward resolution—in following posts in the coming weeks.

The important point to realize is that we have to acknowledge the divide between administrators and providers. The problem is evident; now we have to fix it in order to achieve sustainable business and accessible, quality care.

To bridge the gap, we have to protect what’s critical for good clinical care while also protecting what’s critical for business to thrive. And both sides must be involved to bring about a truly successful solution that will bridge their two worlds.

Check out the second post in this series for a look at how providers can help bridge the gap by recognizing the poor business practices we often bring into the exam room.


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