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American healthcare is highly inefficient. Across a variety of long-term health and treatment outcomes and patient safety metrics, the U.S. has lower performance compared with countries of similar economic status, despite spending more money per capita than its peers. In 2022, the U.S. spent an estimated $12,555 per person on healthcare — the highest among Organization for Economic Co-operation and Development’s (OECD) countries and nearly double the average for wealthy OECD countries (excluding the U.S.). With U.S. national health expenditures expected to outpace average GDP growth between 2022 and 2031, there is an urgent need for new approaches to reduce healthcare costs, while improving health outcomes. In other words, American healthcare must become much more efficient without compromising the quality of care.
One of the biggest challenges to achieving these two critical goals in the United States is the deep-rooted reliance on healthcare’s existing fragmented, fee-for-service (FFS) model, and the business model it created and sustains. Everything from the clinical model to the tech stack utilized by providers was developed with FFS incentives in mind. The FFS system incentivizes greater utilization of expensive resources leading to ever-increasing escalating costs. These high costs do not necessarily translate into better patient outcomes. The system generates high volumes of tests, procedures, hospital admissions, etc., yet the focus is not always on prevention and incentivizing stakeholders closest to the patient to generate “value”, the balance of good patient outcomes at lower total cost of care.