What We Must Do to Lower Healthcare Costs for Seniors: The Other Side of 'Total Cost'

Joel Theisen, BSN, RN


May 18, 2022

Companies strive for disruption to pioneer new ground and advance performance. You know the adage: "Disrupt and you will be saved." Except in this case, we don't need saving. We need a shift in awareness and accountability. The cost of healthcare is skyrocketing. Simultaneously, the experience for those we serve, as well as those who serve, is worsening.

Though the big business of healthcare controls resource allocation, it's really seniors and those who serve them who should have more influence over how they can partner for the right options at the right time. However, our current system is often too narrow.

The historical healthcare model for seniors has primarily focused on fixing new medical problems or exacerbations in reactive and myopic ways. This is not intended, but it's the way our traditional reimbursement model has rewarded our siloed health systems.

This "quick fix" perspective leads to most new innovations, primarily fueled and funded by private equity. They focus on "point solutions" that can be highly monetized by solving one problem at a time. This approach often fragments and falls short of recognizing the whole person.

Instead of solving a symptom or disease, we need to look at the root causes and broaden the lens to deliver long-term, sustainable, and cost-effective healthcare in our communities.

This siloed approach also has many hidden out-of-pocket costs for consumers that go unrecognized and unmeasured. These unintended consequences of our acute, reactive system should be measured and coupled together if we are going to fully understand the global impact we have in delivering healthcare.

I've developed a formula to describe this: The TOTAL-total Cost of Care (T-tCOC) is everything a person spends within their medical insurance coverage, plus all out-of-pocket dollars that they must use to live life on their terms, wherever they call home. Copays, long-term care, medical equipment, mental health, senior housing, medications, lost wages, and more add trillions to the massive $4.1 trillion that we attribute to the existing total cost of care.

We have to protect and serve not only medical and physical health but also the financial health of those who trust us. We must understand the T-tCOC when making critical decisions that may have out-of-pocket consequences and plan thoughtful treatment. One startling fact that needs more unpacking and awareness for clinicians is that over 50% of American bankruptcy occurs because of health crises.

Seizing Opportunity in the Shift From Volume to Value

The shift from volume (fee-for-service) to value (value-based care) pushes us into a new realm of possibility to deliver a complete solution for all — payers, health systems, clinicians, and most importantly, the people who we serve.

Payment innovation has given us greater insight into how we can look at both sides of the wallet — insurance and out-of-pocket expenses — to deploy services and treatments more holistically and influence long-term outcomes that ultimately lead to lower costs and better experiences.

It also prompts us to rethink the team and the framework we use for addressing the full spectrum of social and medical drivers that affect seniors' well-being. We've found that we need a complete team, including geriatric medicine experts who know how to serve an aging population, trusted advisors for coordination of services with a single point of contact, in-home options to bring healthcare home, and elements of well-being to bridge and cover social determinants of health, all working together with the rest of the provider network to give people access to more while saving money.

When we seize that opportunity and apply payment innovation using the T-tCOC lens, we empower clinicians to deliver care in partnership with their clients while operating at the top of their license. That impact will have lasting significance.

Seizing the value-based opportunity enables us to flip the model from "sick care" to a complete health experience that creates more choice, trust, and cost savings; uses the system for the right resources at the right time; and extends into the home and community.

With Opportunity Comes Risk

In a value-based world, everything is about risk: Can we really lower costs and improve experience? That is our goal.

T-tCOC is less about being disruptive or the next best innovation. We believe that it's about being held accountable to those for whom we took an oath to serve.

The progress in health should be driven by metrics for accountability in using funds to help people afford the health and life experience they want. When we address the T-tCOC, we're able to use payment reform for the right services at the right time and combat overutilization, which is just as dangerous as underutilization.

Seizing opportunity is risky if T-tCOC isn't taken into consideration. But by choosing risk, we gain greater freedom and control to broaden the lens; move the needle on the total cost; and serve all seniors regardless of income, disease, or living situation. In my opinion, that's a win-win-win for all. It's an opportunity and a risk we all should be willing to be accountable for and bet everything on.

Joel Theisen is a registered nurse and the founder and CEO of Lifespark, a privately held senior health company headquartered in St. Louis Park, MN. Connect with him on Twitter: @Lifespark_CEO

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