Trust in the U.S. health system is eroding. It’s systemic. No sector is immune. Every stakeholder is impacted. And it’s conducive to opportunities for disruptors.
Since 2005, more than 500 studies have been published in academic journals about trust in healthcare systems: two-thirds of these focus on the U.S. health system due to its unique pluralistic payment models and high costs relative to others.
This literature is consistent: Public trust in the U.S. system is lower than the trust of constituents of many developed health systems in the world like Switzerland, France, the UK, Canada and others. In our system, consumers trust doctors, nurses and pharmacists more than hospitals, insurers and drug companies but all have slipped in recent years. The literature also correlates higher levels of trust with better communication with clinicians, higher adherence to treatment recommendations, better outcomes and higher overall satisfaction. They also show significant variability in trust in the U.S.: minority and lower income populations are less trustful than others.
Gallup has polled the public’s trust in American institutions since 1977. In 2017, those indicating they have a “great deal” or “quite a lot” of trust in our medical system were 37% vs. 27% who said “very little” or “none at all”: down almost every year from a high of 74% in ’77.
Studies for the period 2015-2017 funded by the Robert Wood Johnson Foundation found 68% of U.S. consumers think insurance companies are mostly interested in making money, 40% think that of hospitals, and 25% feel the same about physicians.
And last month, Revive Health released its 2017 Trust Index, based on ratings of an institution’s Fairness, Reliability and Honesty. On a scale of 0 to 100, the index for physicians was 79.3, virtually unchanged since 2015, but trust in hospitals (74.2) and insurers (69.8) had slipped. And when asked ““If you were a politician, like a US Senator, would you vote for or against a proposal to provide Medicare for all US citizens?” 63% supported Medicare for all vs. 16% and 21% who didn’t know—further indication of a trust gap.
Policy wonks, health service researchers, economists and academics recognize the public’s trust in the system is slipping. Some attribute it to expanded media coverage about bad actors and corporate profits. Some think it’s the result of transparency vis a vis report cards and competition that draws attention to flaws and errors. And a growing number blame social media where information cannot be controlled. But none take issue with the systemic erosion of trust and confidence in our system across every sector.
The result: healthcare is a soft target for disruptors. Consider:
The healthcare industry is big, profitable and there’s plenty of room for improvement. Healthcare profits (annual EBITDA growth) from 2012-2016 were double those of the Top 1000 non-healthcare public companies: 4.6% vs.2.2% (Capital IQ). Profits for the period were $516 billion: 54% of these in the drug and device sectors which account for only 15% of total spending. Industry experts estimate at least $500 billion of the industry’s annual spend is unnecessary, wasted or unit prices that many think consider gauging. The erosion of trust noted above coupled with the profitability of the industry captures the attention of disruptors: increased costs, price sensitivity and heightened visibility via media coverage and social media provide fertile opportunity for outsiders to enter the fray. The U.S. healthcare industry is a soft target for disruptors: Amazon, Uber, Lyft, Ally, Zappos, Netflix, Tesla, Airbnb, and scores of mega-companies have redefined industries where conditions like ours are ripe. Four characteristics seem common to these disruptors: a persistent focus on enhancing consumer value, leading-edge applications of technologies that streamline operations and their lower operating costs, obsessive use of analytics to capture data that measures what matters most, and management of consumer trust. They deploy their capital to build better mousetraps and establish their digital footprints so trust and responsiveness are maximized. Disruptors understand there are no secrets. They know trust is ephemeral: a brand built over decades can be decimated in a day through the likes of Glassdoor and Alignable or leaks to inquisitive journalists. So, disruptors build trust through steady performance and well-constructed messaging.
The disruptors are risk-takers. Innovation among the incumbents in healthcare is prone to incrementalism. The healthcare system operates around sectarian boundaries that are codified by state and federal regulations that protect sectarianism, encroachment by outsiders and institutionalize risk avoidance. Physicians decide how all caregivers practice. Hospitals must be certified before receiving Medicare and Medicaid funds. Insurers look to state departments of insurance for permissions and the federal government for rules of access. Drug and device makers need approvals from the FDA for market access and states for retail presence and so on. It’s a system that’s worked reasonably well for incumbents but perhaps that’s the issue. It is more about protecting its stakeholders than delivering exceptional value to consumers—and that’s the root of its growing distrust. Disruptors of other industries play by different rules. They do not seek regulatory permissions nor the blessings of incumbents as they plow new ground. They play to win, make bold moves, and constantly look over their shoulders to make sure they maintain an innovative, disruptive edge. CVS, Walgreens, Rite Aid et al did not seek permission from local physicians and hospitals to set up retail clinics nor will they need it to integrate insurance, care management and a full suite of primary care, health and wellbeing services in communities. UnitedHealth Group has reborn itself as Optum, offering a portfolio of domestic and global products and services. And others see similar opportunities in healthcare. They seek to disrupt healthcare because the public’s trust has been fractured and the value gap has widened.
So, how should incumbents respond?
Restoring trust must be taken seriously. The CEO must lead the way. Aristotle observed there are three ways to build trust as people think about an idea, organization or individual: ethos, logos and pathos. In our organizations, we do a good job with our facts and data (logos) and call attention to the purposeful work we do in saving lives (pathos), but unless a strong leader is engaged, trust erodes as feelings pass (pathos) and data is forgotten (logos). Trust in our organizations cannot be restored unless our CEO’s address it head-on.
Communicating effectively is imperative. The full suite of traditional and digital tools must be leveraged to maintain trust with our trading partners and customers. Communication is not an after-thought: it requires forethought, budgeting and effort. And, the tendency to believe our own publicity, pretend social media can be controlled, the reputations of our bad actors disguised and toxic cultures hidden is delusional.
Incumbents must plan for disruptors. In each of our sectors, they’re here to stay. They’ll be part of the healthcare landscape for decades to come.
As structured, we’re an industry defined by our sectors first, then our tax status (not for profit, public or investor owned) and then our products and programs. Each is unique; each aspires to a greater good; and all have lost the public’s trust. That’s why disruptors see healthcare as a huge opportunity.
Trust in America’s institutions—government, organized religion, media, banking and others– has slipped. Trust in our healthcare system is no exception. Despite our professions otherwise, there’s plenty of money in the system though it’s not allocated appropriately. Combined with our growing trust deficit, we’re ripe for disruption.
P.S. A must read article in the current issue of Health Affairs: “Government As Innovation Catalyst: Lessons From The Early Center For Medicare And Medicaid Innovation Models” Rocco J. Perla, Hoangmai Pham,Richard Gilfillan, Donald M. Berwick et al. It provides an objective assessment of the status of five payment and delivery innovation programs initiated by the Center for Medicare and Medicaid Innovation (Section 3021 Affordable Care Act) including the Pioneer and Advance Payment Accountable Care Organization (ACO) initiatives, the Bundled Payments for Care Improvement initiative, the Comprehensive Primary Care Initiative, the Partnership for Patients initiative, and the Health Care Innovation Awards.