Here's how companies can fundamentally change how we pay for healthcare

Farzad Mostashari
Dr. Farzad Mostashari, CEO, Aledade

Tom Sandner for Insider

  • Employers and insurers can reward preventive healthcare instead of expensive hospital visits. 
  • Called value-based care, the model requires changes in incentives, Aledade's Farzad Mostashari said.
  • Mostashari also shared ways tech companies can work with governments.
  • This article is from Insider's "Transforming Business" event, presented by Alight, on December 9, 2021.

Today's healthcare system — employers and insurers and the way they pay doctors — largely rewards them for expensive hospital treatments and not enough for preventing them. 

That's the chief challenge Aledade CEO Farzad Mostashari, one of Insider's healthcare transformers, faces as he aims to change the way we pay for healthcare.

But as he said during an Insider panel, there are steps businesses and insurers can take to make that transition easier, including by paying healthcare benefits advisors more for promoting what's known as "value-based care": payment that rewards higher-quality and lower-cost treatment. 

The benefits advisors, consultants, and third party administrators who pitch businesses on health plans coverage "are not paid the right way," Mostashari said. "They have no incentive to prevent strokes," he said, adding, "we have to demand more. We have to say we actually want these kinds of value-based, accountable care payment models." 

Shifting what's profitable

When insurers and employers simply reimburse providers for expensive procedures, it becomes more profitable for them to de-emphasize preventive care, Mostashari said. 

In that model, he said, "nobody makes a profit preventing strokes."

"You're not going to have a lot of investment in things we know we can do to prevent strokes, like controlling people's blood pressure," he added.

Under a value-based care arrangement, however, employers and insurers can encourage doctors to keep costs low and then split the savings with them, he said. Mostashari's software company Aledade works with clinics across the country to help them adopt those types of payment models.

"If the primary care practices and others caring for these patients deliver lower trend than everybody else, we should reward them because it's good for my employees, it's good for me, and it's good for the broader society," he said.

Working with regulators for faster adoption

Mostashari — who also led the federal government's top health IT office under President Barack Obama before leaving to found Aledade — said health companies with new approaches could do a better job working with regulators to ensure their products are adopted faster. 

"I think it is a really really compelling case to be made for businesses to be involved and engaged in federal and other regulatory processes," he said. "Government has a lot of rules and laws that require it to seek input, and I think all too often private sector participants don't engage."

But regulators need companies' input to craft more effective policy, he said. "You should have people that read those proposed rules or engage in associations or other collective groups that can provide that feedback. But also don't be afraid to directly reach out."

And it doesn't necessarily mean hiring a lobbyist — businesses don't often realize they can simply comment on proposed rules or speak to government officials directly, he added. But it's in their best interests to consider how their goals align with policymakers'. 

"If what you're saying just helps you, and actually doesn't help the country, then don't bother going in and making that case, because they've probably heard it all before."

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Source: travel

Here's how companies can fundamentally change how we pay for healthcare