By Rondy Jennings, managing director of the not-for-profit healthcare group at Goldman Sachs & Co and a founding member of the Black Directors Health Equity Agenda.
Health equity has taken years to move from the drawing board to the waiting room, but the pandemic has revealed the daunting scale and fierce urgency of moving to value-based care. Consider the cost of disparate access to care as borne in COVID’s severity among Black adults.
In cases where we know the patient’s race, the rate of COVID-19 related hospitalization for Blacks has proven to be 2.5 times that of whites. If that holds true for all cases, racial disparity has accounted for 350,000 extra Black coronavirus patients through 2021. Conservatively assuming a hospital charge of $20,000 for each patient, that translates to about $7 billion. Even that substantial cost does not reflect the implications of tens of thousands of needless deaths in the Black community.
What would it take to eliminate this disparity, and many others that could change the lives of Black populations? Clearly, a more equitable healthcare system would improve outcomes across the board by reducing the impact of infectious diseases, premature birth and chronic conditions such as hypertension and diabetes. But to get Black health outcomes in line with the population as a whole, we must examine the obstacles that stand in the way and the lasting changes a shift to a value-based system will produce in health equity.
Driving to the Center of Health Equity
First, let’s turn to the scale of the healthcare ecosystem. U.S. healthcare spending grew in 2020 to $4.1 trillion or $12,530 per person. As a share of the nation’s Gross Domestic Product, health spending accounted for 19.7%—one dollar in five. This ecosystem labors under entrenched business models that predate digital technology, data analytics and the internet. In 2020 overall, spending on hospital care reached $1.3 trillion; physician and clinical services, $809.5 billion; prescription drugs, $348.4 billion; and home health care, $123.7 billion.
High-tech entrepreneurs have been very nimble in finding opportunities at the margins. While they can’t tackle the whole ecosystem, they can go after various pieces of it and still create an incredibly successful company without addressing the ripple effects outside their domain. If we think of healthcare as a battleship fleet in desperate need of overhaul, think of the tech disruptors as repairing the hull one weld at a time, oblivious to the condition above deck. Where is the central thrust to overhaul the healthcare system as a whole in a way that creates health equity?
Fortunately, the imperative for change is gaining momentum. The Centers for Medicare and Medicaid services, for example, is developing promising, value-based innovation models that reward care for underserved populations. They revolve around taking care of people not only on an episodic basis—as with hospitalization or chemotherapy—but also over time. Costs are lowered because the focus is proactive and preventative. Value-based care is not driven by a person’s quality of insurance. It offers a financial incentive to provide preventive care, which addresses social determinants of health, as well as exposure to personal risks.