A new analysis points to troubling trends in the U.S. healthcare market as costs continue to rise but health outcomes are declining.
In the U.S., national health expenditures increased from $2.8 trillion in 2012 to $4.5 trillion in 2022, despite relatively little change in demand or utilization, and are projected to grow to $7.7 trillion by 2032.
This comes as more people in the U.S. are insured, as a result of the Affordable Care Act (ACA). The number of uninsured has decreased from 48.6 million in 2010 to 28 million in 2020. Consumers also have more care options than ever before, with virtual care companies, retailers and urgent care companies all offering convenience at lower prices.
But, there is little else to show for the continuously increasing amount of money invested in the U.S. healthcare system, contends Sanjula Jain, Ph.D., Trilliant Health's chief research officer. As a health economist, Jain studies healthcare through the lens of demand, supply and yield.
"The inputs of the U.S. healthcare system, as measured by cost, exceed the outputs, as measured by the actual value or benefits received by Americans," Jain said in an interview with Fierce Healthcare.
The average life expectancy for Americans is only negligibly higher than it was in 2000 and is almost four years lower than other OECD countries. Americans have higher rates of obesity and diabetes and more behavioral health conditions than ever before. Mandated reporting of quality measures has failed to reduce mortality, with 30-day hospital mortality rates rising sharply since 2021, even when excluding patients with a primary or secondary COVID-19 diagnosis, according to data in Trilliant Health's "2024 Trends Shaping the Health Economy" report.
"Whether it's the amount of money we're investing into the system or innovation or even some of the policies that we have put forth, whether it's value-based care, or some of the ways you think about M&A or drug policies, basically, the data says all the things that we're trying to put into the U.S. healthcare system aren't actually working. It's either driving costs up, it is deteriorating health status," Jain said. "Where is the actual value for the dollars that we're putting in?"
Jain says the trends outlined in Trilliant Health's analysis should serve as a "wake-up call" to the healthcare industry to focus on "value for money." Industry executives should view this data as a warning about public health but also as a business imperative, she noted. Going forward, healthcare stakeholders who focus on value optimization will have a competitive advantage, she contends.
"The call to action this year is that we, as a healthcare industry and all stakeholders, whether you're an employer or payer, life sciences company or provider, we all have to stop extracting value from the healthcare system in a way that maximizes profits and start focusing on, 'How do we deliver value for money and optimize the value that we're creating for the ultimate payer of the healthcare system, which is the employer who's really underwriting the whole system," Jain said ."We're at this breaking point in terms of how much we're spending. The cost curve is going up but we don't really have anything to show for it."
The analysis is based on proprietary Trilliant Health datasets and analytic models that measure various dimensions of demand, supply and yield across the health economy. The company leveraged its national all-payer medical and pharmacy claims database. The Trilliant Health Provider Directory was used to study the supply of 2.9 million physicians, allied health providers and healthcare facilities across the country.
Trilliant Health's dense 164-page report outlines eight macro trends influencing the healthcare industry including healthcare costs and health status trends, healthcare utilization, value-based care policies, technology innovation, the impact of GLP-1s and artificial intelligence.
"We as a country need to take a hard look at ourselves and realize that a lot of things are not working, whether that's policy, whether that's innovation or that's public health infrastructure. I think we're at a tipping point. And at some point the system, I would argue, it's already breaking, but it's going to break," Jain cautioned. "There's only a finite number of resources that we can spend on this healthcare system, so that you have to start dealing with rationing care and more wait times."
She added, "Every stakeholder, whether it's a new startup or a more established player, has to fundamentally change the way that they have been doing things for the next decade. And the central question has to be, 'How do I deliver more value to my customer, whoever that is, which is different than, how do I maximize the amount of revenue?' It's going to be the organizations that really get ahead of this and say, 'This is how I'm going to deliver more value, even if it means I have to trade off on some near-term revenue.' Those will be the organizations that I think ultimately survive going forward."
Here is a break-down of some of the macro trends identified in the report and Jain's hot takes on key issues:
Value-based care policies are failing
Since its establishment by the Affordable Care Act in 2010, CMMI has tested numerous value-based care models, including ACOs, disease-specific models, episode-based models and prescription drug models. These initiatives have involved over 314,000 providers and served more than 41.5 million Medicare and Medicaid beneficiaries.
Jain contends that Trilliant Health's analysis shows that there has been limited reductions in spending or improvements in quality.
As of 2022, only 24.5% of U.S. healthcare payments flowed through value-based payment models. CMMI models, intended to generate savings, are projected to increase Medicare spending by $9.4 billion by 2026. Simultaneously, the share of hospitals penalized for not meeting readmission quality standards has remained around 50% since the program's inception in 2012.
"We've been doing value-based care for over a decade, and the data would suggest that it isn't actually moving the needle on the cost curve, spending curve, or quality outcomes," Jain said. "With value-based care, they have predetermined the amount of money that's going to be rewarded, so that pool is set, and that is just being reallocated across different players. It's not actually reaching the ultimate patient or consumer that realizes those savings to actually reduce the total spending."
She also contends that it is expensive for providers to comply and participate in quality reporting.
One academic medical center spent over $5.5 million annually to track 162 measures, according to Trilliant Health.
"Every individual hospital spends millions of dollars to get their reporting infrastructures in place, yet the spending curve is just up and to the right. Patients are still complaining about the unaffordability of healthcare, and we're not seeing any improvement in health outcomes at scale," she said. "My call to action here is we should really zoom out and take a hard look as a country and say it's not deriving the value and the intent of the program we have. Are there other mechanisms and solutions we could try that would be more effective in bending the cost curve."
The healthcare system is disproportionately expensive as outcomes worsen
Despite spending nearly 2X more on healthcare than peer countries, U.S. healthcare utilization has remained largely unchanged, while it has increased by 7.0% in peer countries since 2000. At the same time, U.S. health outcomes are worse than in peer countries, which may be exacerbated by having fewer primary care physicians per 1,000 population, according to Trilliant Health's analysis.
Health status for U.S. patients continues to decline, especially for younger individuals. Mortality remains higher than pre-pandemic, with the largest increase in the 18-44 age group, with a 13.9% rise for females and a 20.3% rise for males, the report finds.
From 2020 to 2050, the percentage of U.S. adults with chronic conditions is projected to increase by 12.4 percentage points.
Early onset cancers are rising, with higher volumes of patients ages 45 and younger for breast (+6.6%), colon (+10.0%), kidney (+2.1%) and uterine (+16.0%) cancers from Q4 2018 to Q4 2023.
"For the first time in our history, and I mean that we've been looking at this longitudinally, both in terms of mortality and morbidity, we are seeing younger Americans have a higher proportion of that," Jain said. "I'm talking 30-year-olds are presenting more with cancer, and not just having cancer but its early stage and it's more severe. Morbidity is one thing, but the fact that more and more younger Americans are just dying, and this excludes COVID-19. This is not a COVID effect anymore. This is just something has fundamentally changed in our disease burden."
The impact of rising GLP-1 usage
While metformin has consistently been the most common medication for managing type 2 diabetes, GLP-1s rose from the eighth most common drug regimen in 2018 to the second most common in 2023.
The average number of diabetes drugs per patient increased from 1.58 in 2018 to 1.65 in 2023. GLP-1s increased from comprising 4.4% of type 2 diabetes drugs prescribed in Q1 2018 to 19.8% of type 2 diabetes drugs by Q4 2023, the report says.
"If I'm a physician, I have X number of medication tools available to me to treat diabetes patients and I have now more options. More is not necessarily better or high value. And so the question becomes, if GLP-1s are one of the most commonly prescribed, did that replace another therapeutic in the treatment regimen, or is it additive? So, what share of patients are getting prescribed Metformin and a GLP-1 versus previously there were prescribed just Metformin or did they stop taking Metformin?," Jain said.
"The typical type 2 diabetes patient is taking more medications today than they were previously. The question is, what is the incremental value gain for taking more drugs? There's a clinical piece of this as far as clinical effectiveness. But is it worth it? Are those clinical outcomes worth the additional cost of more drugs per patient? It's an economic equation of, yes, there's a lot of positive to these drugs in terms of clinical outcomes, but is that enough to outweigh the significant costs for the just individual drug of GLP-1s and also the aggregate costs of the entire treatment regimen," Jain said. "Basically, that means treating diabetes patients has become more expensive."
She added that evidence is still unclear if these treatment regimens are reducing the prevalence of diabetes, enabling better diabetes management or reducing total downstream costs?
The rise of new therapies also is impacting the downstream demand for services. In the year following GLP-1 initiation, the proportion of patients with a GI-related diagnosis increased by one percentage point and the proportion of patients taking a GI-related medication increased by 3.7 percentage points, according to Trilliant Health's report. This underscores the importance of holistically weighing the potential benefits and harms of new drugs and their downstream impact on the use of additional services and/or drugs.
GLP-1s as a clinical intervention also could potentially replace bariatric surgeries, affecting provider revenues, the Trilliant Health report notes.
Physicians still moving cautiously with AI
Since 2018, multiple AI CPT codes have been introduced. Despite the availability of these codes, utilization is infrequent and concentrated among cardiac conditions such as coronary artery disease, ECG cardiac dysfunction and coronary atherosclerosis, the report finds.
Patient volumes for all AI CPT codes over a five-year span, between 2018 and 2023, was just 201,728 patients.
"What that tells me is even when we have the incentive in place for a handful of these codes, they're not being widely used. It's almost a flashback to three years ago when we were talking about telehealth. I think it's a similar parallel. If there's little utilization today, what does that mean going forward? What is the expected rate of change? If we're at 200,000 today, over a five-year span, it's hard to see that going from 200,000 to 200 million over the next five years," Jain said.
"I think there should be more healthy skepticism around where are the opportunities for AI? Are the AI CPT codes not being used because physicians don't want to use it or is that that patients don't want it? Is it a combination of the two? We have to think about the clinical utility or value of these modalities," she added.
She contends there may be limited utility for this AI CPT codes for diagnostic use cases or care delivery. "We should really tread with caution when it comes to investing in the clinical AI use cases in terms of betting big," she noted.
Telehealth market continues to evolve
Between 2002 and 2016, the number of telehealth providers surged by nearly 700%, with an average of 24 new entrants each year. Growth has continued since 2017, though at a slower pace.
Recent developments have signaled a turning point for the industry, such as unfavorable earnings reports from Teladoc and Amwell and decisions by Optum and Walmart to end their virtual care services.
Virtual care for behavioral health has grown steadily, a trend not seen in other clinical areas. Compared to Q1 2020, the share of telehealth for behavioral health reasons increased from 42% to 72.3% in Q4 2023.
Going forward, providers, payers and virtual care companies need to weigh the difference between patient preference for telehealth versus clinical utility, Jain noted.
"You see a lot of survey data and anecdotes from patients and caregiving families saying they would prefer to do oncology follow-up visits virtually. It's more convenient. But an oncologist needs to check the patient's vitals. They need to physically assess the patient in some way. So, it would make sense that we're not seeing high volumes of oncology follow-up visits virtually because it's not necessarily the highest-value medical care that can be rendered, which is at odds with what patients think they want or need," she said.
Along with behavioral health, tele-ICU programs are another example of high clinical utility, particularly in rural areas or for hospitals with staff shortages, Jain said.
"The theme of value really runs throughout all these trends to say, when we think about where we invest, or what we do in the system, or what works and what doesn't, who is that creating value for and from what perspective? I think when you start looking at things from that lens, you realize there's a lot of discrepancies. I would argue the higher order value is ultimately health outcomes," she said. "It's important to look at value for money in terms of are we improving our health status relative to the dollars invested? But there's so many different factors to consider, such as convenience and safety."
According to Trilliant Health's analysis, low-cost care settings can offer the best value, including in some cases telehealth.