What Is The Current Healthcare Paradigm?


The word paradigm is defined as, “a framework containing the basic assumptions, ways of thinking, and methodology that are commonly accepted by members of a specific community.”

In the healthcare field the paradigm for many years now has been based on a triad.

The first of the three parts of the triad are the doctors. They do the one-on-one work of seeing patients, diagnosing them, instituting a treatment plan, and following up with them.

The second of the three parts of this triad are the patients. Patients in this healthcare paradigm make their appointments, show up at the appropriate time, receive the diagnosis and treatment plan, and then are expected to be compliant.

And the last member of this triad are the payers. These may be insurance companies or the government through Medicare and Medicaid services.

That paradigm began in 1929 in conjunction with the Great Depression.

A group of school teachers in Dallas, TX joined forces with Baylor University Hospital to “prepay” for their healthcare. They paid 50 cents per teacher, per month. In return the teachers were guaranteed that if their health required it, they could spend up to 21 days in the hospital at no additional cost.

That plan provided sustainable and consistent income for the hospital during the tough economic times of the Great Depression as well as peace of mind for the teachers, should they get sick.

This healthcare model is thought to be the first modern commercial hospital insurance plan.

That plan evolved into the organization known as Blue Cross.

Blue Cross included patients and hospitals but not doctors.

Doctors refused to participate. They did not believe the Blue Cross organization represented their interests. They were worried Blue Cross would adversely impact their ability to charge reasonable fees for their services.

So, the doctors formed their own association.

It was called Blue Shield.

The concept behind Blue Shield was to preemptively organize around primary care so that the Blue Cross hospital model couldn’t impose itself on family physicians.

The doctors were concerned about the discussions some politicians were having advocating for universal healthcare.

Doctors decided it was better to organize into their own association rather than risk the hospital-backed Blue Cross model or the US government doing it for them.

So, Blue Shield was founded by doctors in 1939.

Then, in the 1940’s the Kaiser Permanente Health Plan was founded in California.

In 1943, the War Labor Board decreed that benefits such as health insurance that employers provided for their employees would not count as wages.

Many employers across the country then began offering health insurance plans to employees.

The late 1940’s through the 1950’s was a period of extreme growth for health insurance companies.

In 1940, only about 9% of the US population had some form of health insurance.

However, by 1960, it was estimated that 68% of the US population had some form of private health insurance.

Then, the issue of healthcare for seniors needed to be addressed. Employer-based insurance plans didn’t help those who were retired.

So, in 1965 President Lyndon B. Johnson signed Medicare into law. Medicaid also began then to help low-income elderly and disabled.

Interestingly, Medicare has various parts in large measure to appease the competing interests of those involved at its inception.

Medicare Part A appeased the Blue Cross crowd of hospitals wanting to protect their territory.

And Medicare Part B appeased the Blue Shield crowd of doctors wanting to be sure they weren’t cut out of the process.

There have been other aspects of this system over the years including HMOs, PPOs, POS plans, and most recently, the Affordable Care Act.

So, that is a quick review of how we arrived at the current state of our healthcare system.

That is how the current paradigm and payer system evolved over time.

Since the government couldn’t afford the rapidly rising costs of healthcare coverage, they began to dictate what they would pay for office visits and procedures.

The net effect was that the payers basically said physicians could charge whatever they wanted, but the payers would only pay a certain amount of what they deemed the allowable charge.

And over time the reimbursements to doctors continued to decrease.

There were actual decreases. Then, there were periods where rates were kept stagnant while inflation continued. The net result still was a reduction in reimbursement.

For a number of years, doctors were not too worried about Medicare reimbursements. In the first place, many doctor’s practices were made up of less than 25% Medicare patients. And, the insurance reimbursements more than made up for whatever decrease there was from Medicare.

Over time, that all changed. Medicare became a much larger percentage of doctor’s practices. And insurance companies began lowering their reimbursements also.

In addition, insurance companies began insisting on contracts with physicians that tied their reimbursement rates to Medicare. If Medicare reimbursements decreased, so did the insurance reimbursements.

The only options physicians had was to refuse the contract. But then, they would no longer be a provider on that insurance companies’ provider network. Therefore, they would lose those patients.

To combat these lower reimbursements, doctors began seeing more patients in shorter time frames and doing more procedures in their scheduled procedure blocks.

That way, they could maintain the income to which they had become accustomed.

However, there were adverse ramifications of these tactics.

The first was that patients were being given much less time with the doctor. That led to patient frustrations and poorer quality of care.

Secondly, since doctors were doing twice the work for the same pay, they became frustrated at not being valued for their work nor for their risks.

Many doctors suffered from burnout.

Others just chose to quit healthcare.

With doctors quitting and with fewer students choosing to become doctors, today there is an increasing shortage of physicians.

Essentially, the current healthcare paradigm is no longer working and hasn't been for some time.

Patients are unhappy.

Providers are unhappy.

It is not sustainable.

So, what can you do?

Some have opted out of insurance and Medicare and have made the transition to the Direct Patient Care model.

And although that works for some, it will probably not work for all physicians.

The bottom line is you can’t individually change the healthcare system.

And, with so many competing interests from hospitals, out-patient facilities, insurance companies, Medicare (the government), patients, and physicians, there is no one reform that will be acceptable to all parties.

In addition, although physicians are indispensable and irreplaceable in this paradigm, they have never organized into a large enough group to effect the changes they desire.

So, what is needed is not reform.

Doctors need a new paradigm!

The September, 2024 issue of the Healthcare Practice Secrets Journal discusses these issues and reveals the new paradigm.

Here is the link for the journal:

https://www.rtrpracticeadvisors/healthcare-practice-secrets-journal
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