Council News

June 6, 2014

Health care industry facing ‘barbarians at the gate’

Health care industry facing ‘barbarians at the gate’
by Shelley DuBois | The Tennessean | Jun 06, 2014

June 6, 2014

The old guard in health care must now face barbarians at the gate, said Uwe Reinhardt, speaking at a Nashville Health Care Council event with his old friend and former student Dr. Bill Frist.

Historically, health care has been a fortress, said Reinhardt, a lauded economics professor at Princeton. That fortress established a system where people shopped for health care like a crowd of blindfolded people, shoved into Macy’s, instructed to buy a shirt and then billed for whatever they grabbed six months later.

But the barbarians – also known as young, tech-savvy people with good ideas – will no longer stand for that system.

To crystallize one fundamental economic change, Reinhardt said, health care companies will shift more and more of the focus of their businesses onto the top line. “You’re not going to get reimbursed, you’re going to get paid.”

That’s a one-word difference, but a fresh economic paradigm that could cut clutter in the system. Companies will have to work with money they make, instead of money they’re theoretically owed.

The country is actually full of people raring to solve those types of problems, according to Reinhardt.

“You meet a lot of entrepreneurs who dream,” he said. “Unique people like that who think about the process, who may have worked in health care and found something really idiotic going on and say, ‘I could develop some software or something that could eliminate this waste.’ I think this will simply spring out of the ground.”

The waste, he said, is a good place for entrepreneurs to start. Young people could spend the next 10 years or more discovering ways to chip at the roughly $700 billion worth of wasteful spending in the health care field. For example, every hospital has a ton of billing clerks, he said, but paying for care shouldn’t be so difficult that it demands a hoard of middlemen who never touch a patient.

As for the Affordable Care Act, Reinhardt admitted it’s messy. In particular, the employer mandate to offer insurance or face a fine doesn’t sit well with him.

But many of the changes that the ACA spotlights have been on the horizon for a while. “It’s easy to blame everything on Obamacare, but realistically there are lots of other dynamics going on,” Frist said.

“I’m very optimistic,” Reinhardt added. “Sometimes you need something like the recession we had to get a two-by-four in the face to wake up.”​

Reach Shelley DuBois at 615-259-8241 and on Twitter at @shelleydubois

Back to News

Purpose Statement

We exist to strengthen and elevate Nashville as the Healthcare City.

View Purpose