The Incentives in Healthcare Are Wrong

Day 5 of 10 leading up to the 10-year anniversary of the CareMessage product.

Healthcare. Healthcare. Healthcare. Where to even start?

The history of healthcare in the United States is long and complicated. Today, I want to reflect on the biggest change happening today, specifically, what falls under the umbrella of “value-based care”. Value-based care promises to move healthcare organizations from a fee-for-service model that incentivizes them to provide unnecessary, costly care, to one where the goal is to keep patients healthy. Great in theory, but not yet the solution. Different segments of the healthcare ecosystem have started to shift to figure out what this model will look like, and for the world we operate in, I will focus on the safety net.

What is the safety net? It’s healthcare organizations serving people in poverty or those who are barely hanging on. It’s Free and Charitable Clinics that see anyone without health insurance at no cost. It’s Federally Qualified Health Centers that see anyone regardless of health insurance status or ability to pay, where patients can pay on a sliding fee scale based on income and other factors. It is Tribal Health Organizations that are providing much-needed services to our tribal communities in rural and urban areas. I continue to be in awe of the work safety net organizations do to provide more than healthcare services.

You’ve never seen innovation until you have set foot inside organizations like Community Volunteers in Medicine in West Chester, Pennsylvania, an incredible operation offering free medical, dental, and support services to low-income communities. Visit the Stigler Health and Wellness Center team in rural Oklahoma, who retrofitted an old Walmart to offer Pharmacy, Vision, Dental, Behavioral Health, and Primary Care all under one roof so patients who drive for an hour to get there have a one-stop shop. They understand their patients and what they need.

The United States has roughly 90 million people at or below 200% of the Federal Poverty Level, which in 2023 equates to a family of four surviving on less than $60,000 per year or $5,000 per month. Now, let’s overlay potential monthly health insurance premiums which can vary greatly by state but are currently around $340-470 per person. This equates to roughly 27-38% of someone’s salary before withholdings. What happens with rent, food, transportation, utility bills, clothing, diapers, etc? You get the point. This system is not sustainable. (And this is without accounting for the estimated 11 million who are undocumented and cannot purchase any health insurance on the marketplace even if they can afford it.)

Our clinics often call patients in this cycle the “working poor”: people who have to work 2 to 3 jobs to make ends meet. When faced with the challenge of paying for health insurance or your basic immediate needs, it’s not hard to figure out what comes first. If one is lucky enough to live in a state that expanded Medicaid, then that might have been a potential lifeline. However, the recent changes in Medicaid redetermination estimate that 8-24 million people will lose healthcare coverage, and a large portion of these patients are seen by the nearly 1,400 Federally Qualified Health Centers nationwide.

How is it that in one of the wealthiest countries in the world, we spend the most per patient and have some of the worst outcomes? Value-based care aims to be the solution to this. It makes some sense, to tie financial incentives with outcomes and hope for the best, but do we have this much trust in a system that lets Black women die in childbirth at a higher rate than any other developed nation?

As someone who has been working with Federally Qualified Health Centers for almost ten years, I am a believer in the Community Health Center approach. They see better outcomes at a lower cost than other parts of the system. However, as states and the federal government play around with the “how” of value-based care payments, they are putting the entire safety net at risk.

New entrants into healthcare are seeing what part of this new value-based pie they can take with minimal effort. Oftentimes, these are for-profit or venture-backed companies looking to make money by taking on some risk, and they have the funding to weather any storm. For an FQHC who cannot turn anyone away, this means that Medicaid and Medicare patients who previously drove a large part of their primary care revenue are being courted to leave, with those FQHCs left with the uninsured. 

While these for-profit organizations play around with these patients to see how much profit they can squeeze out, they may create a permanent void in the local ecosystem. Local FQHCs will shut down if they are not able to maintain their operations. Today, FQHCs can experiment with value-based contracts but they still rely heavily on fee-for-service for their general operations.

Is this truly a possible future? I’d say the news this week of Walgreens shutting down 60 VillageMD sites in “unprofitable” markets is a cautionary tale of what is to come if we do not protect our safety-net clinics. Combined with being at the whim of political wars and uncertain federal funding, FQHCs fundamentally need a different funding model that allows them to continue their work.

Our country needs a new approach to healthcare. Although value-based care is a great promise, the current incentives are having an unexpected ripple effect with an impact beyond what was imagined. We must protect all elements of our healthcare safety net and the way we fund the organizations that have been proven to make healthcare accessible to our most vulnerable patients.