Health Care’s Third Wave


Change and American health care have become synonymous. “Change” can be exciting and life-altering when it refers to the innovative new therapies and treatments that improve or extend life, many of those originating in the United States. Change, though, can be a tremendous source of anxiety for families concerned with the affordability of care and stability in their health care coverage choices. It is the tension between these two definitions of change that the United States has struggled to solve over the past three decades.

As we have all witnessed, the health care marketplace has gone through two successive waves of change over the past 30 years, with the third wave now upon us.  The first wave was managed care, which sought to rein in cost and quality relative to “unmanaged care.” But while managed care made some gains, it still proved to be unsustainable in its constraint of choice and its focus on financing “sick care” rather than on optimization of health.

The second wave of “reforms” saw companies like Cigna evolve – or change – from “insurance” to a health services focus, with more engagement and support for the individual and partnerships with health care providers and pharmaceutical manufacturers predicated on the health outcomes achieved rather than the volume of services provided.  The second wave has seen the health care industry as a whole work together to improve health, lower health risks and improve the cost structure of the employer-sponsored market, which has in turn subsidized the entire system.

In that environment, Cigna has been able to deliver the best medical cost trend over the past five years – below 3 percent in 2017 or half that of the industry. So why risk disrupting a winning formula by acquiring the pharmacy services company Express Scripts?  Because the system still isn’t sustainable and maintaining the status quo of rising costs means you are effectively moving backwards.

The numbers are clear.  Despite our best efforts, health spending continues to increase and is projected to rise 5.5 percent annually over the next decade. In 2026, health spending is projected to comprise nearly 20 percent of the U.S. economy [1], and while the U.S. spends more on health per capita than all other OECD countries, life expectancy is increasing at a slower pace than in all but eight of those 34 countries [2]. Over the next decade, the Centers for Medicare and Medicaid Services (CMS) projects that spending for retail prescription drugs will be the fastest growing health care category – rising an average of 6.3 percent per year, due to higher drug prices and increased utilization of specialty drugs.  This constricts economic growth, forces employers to choose between providing benefits or creating jobs, and ultimately is borne by American families.

A third wave of health care change is needed.  It starts with a very big goal, and seeks to achieve that goal by delivering the personalized experience that consumers have come to expect in every other walk of life and desperately need from their health care.

The goal is a number that has long been considered unobtainable.  We believe that it’s not only possible, but required to deliver a sustainable medical cost trend that looks more like the consumer price index (CPI).  To meet this goal, Cigna is preparing to achieve CPI-level medical cost inflation by 2021, which should deliver $50 billion of value per year, versus uncoordinated care. The marketplace cannot continue to tolerate an overall medical inflation rate that is two, three or four times CPI.  We believe American families should be able to think of health care in the same way they think about all other aspects of their cost of living and quality of life.

Achieving a medical cost trend at CPI requires us to go beyond the traditional approaches to affordability.  Driving down unit costs in adversarial industry relationships will not get us to CPI. Neither will approach designed for the average person when we know that the average person does not exist – every individual has unique health concerns, needs, and expectations. The third wave is about finally aligning the industry with the individual so that consumers live the healthiest life possible and have the support they need to make good decisions about their health and health care.

A health care experience aligned to the individual has a few critical attributes that were largely absent from the prior waves of change.

Personalization. Innovation in medicine has produced drugs for some of the most complex and rare conditions, many of which impact smaller patient populations. Consumers are pushing for a comparable, more personalized approach to their overall care. They deserve and can have benefits and health care access (or networks) designed to match their specific needs. This is only possible if the system is aligned and centered on delivering better outcomes for the individual, instead of the masses.

Alignment. Wading through the current health care system requires making sense of many uncoordinated touch points including, but not limited to, episodic interactions with a doctor, a pharmacist, and an insurer. We need more connections, not more dissonance. When all participants in the health care ecosystem are on the same page and working toward the same goal – improving an individual’s health – it becomes significantly easier to deliver tailored care that fits a person’s unique needs.

Transparency with this Personalization and Alignment.  Individuals can navigate the health care system and their care journey with confidence. Instead of spending time trying to become experts on insurance policies or deciphering medical terms, they want a more user-friendly experience. They want to understand their options, know the associated costs, and to see clearly how each option is likely to impact them based on their unique situation. A better aligned and integrated system lends itself to the greater transparency and usability that patients seek.

Insights. Consumers have come to expect data and insights to play a major role in all of their buying decisions, great and small.  Yet health care decisions frequently have no information behind them, leading to surprise bills and even poor health outcomes.  Individuals need the best information and insights if they are going to make the best medical and financial decisions. In a time of predictive analytics, machine learning, and artificial intelligence, we should be able to predict, anticipate and avoid many health challenges while coordinating the best quality, high value, personalized care when needed.

The power of this approach comes to life with the example of Sarah, a 30-year-old woman suffering from Crohn’s Disease and depression.  An aligned and integrated experience for Sarah that keeps her chronic diseases in check and prevents them from escalating to a painful and expensive acute care situation includes behavioral health services, in-home specialty drug administration and integration of behavioral health data with medical and pharmacy data to develop a holistic care plan.

Getting Sarah the right care, at the right time, in the right place, not only eliminates health crises and makes it easy for her to take care of herself, but also eliminates costly care that is avoidable by keeping her as healthy as possible.  This approach to coordinated health care requires a shift in how many have traditionally approached “health care,” but addressing the whole person’s needs in a coordinated and personalized way is the path to a sustainable system.

Achieving a sustainable health care system requires us to embrace and enable individual health and well-being, expand and enable value-based (versus volume-based) health care relationships, and embrace the full power of technology and data. This will allow us to expand access (e.g. digital care), the advance predictability of risk and health challenges, and advance coordination for maximum care and quality of life. By combining capabilities and expertise, we can deliver a more coordinated model of care and better alignment of key elements of the care continuum, all centered around the individual. With greater coordination and access to medical, behavior, pharmacy and specialty pharmacy data, we can deliver deeper, more integrated offerings that help consumers achieve their best health.

We can’t stand still as costs continue to rise and people struggle with affordability and the stability of coverage choices.  Instead, let’s join together in taking a proactive approach to consumer health and delivering personalized health care experiences. This is an exciting time to be leading a health service company. This is the third wave of health care.

David M. Cordani, is the President & CEO of Cigna Corporation


[1] https://www.reuters.com/article/us-usa-health care-spending/u-s-health care-spending-to-climb-5-3-percent-in-2018-agency-idUSKCN1FY2ZD

[2] http://www.oecd.org/unitedstates/Health-at-a-Glance-2013-Press-Release-USA.pdf

10 replies »

  1. Very well written. Good read. The third wave of healthcare change is needed to give patients the quality care they need. Enabling value-based care will help us achieve a sustainable health care system.

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  3. You’re trying to hold quicksilver in your hand. None of this is going to work in today’s America, where 93 year old parents are dropped off by their overindulged and spoiled 67 year old baby boomer children to the nearest hospital for cleaning them up in their incontinent diaper and speed up SNF (nursing home) placement. And the family of 7 illegals from Honduras shows up with TB in your ER. We’re going to have to have tough discussions on who gets what kind of medical care, who pays for it, and the needed vaporization of government regulation stifling creative solutions such as cash pay, house calls, drug price negotiation with states or Medicare contractors, etc. none of which has materialized in my 25 years of medicine. How can we force “more connections” when people are working 2-3 jobs and pop into the nearest Urgent Care on Friday night because it burns when they pee? That’s the America I’m seeing in my office. Incidentally I keep receiving Pharmacy Coordination letters from Dr Jon Maesner PharmD at Cigna urging me to consider the Cigna way to stream psychoactive drugs for a specific patient we’ll call Ms. X WHO IS NOT IN MY PRACTICE AND WHEN I CALLED CIGNA TO NOTIFY OF THE INCORRECT MAILINGS THE REP TOLD ME (after 30 maddening minutes of ping pong to this bureaucracy or that within Cigna) THIS PATIENT WAS NOT ENROLLED WITH CIGNA ANY MORE!!! There are many doctors with my name in this fair land, and the Pharmacy Dept just dashed off the letter to first name in the alphabetical list, failing to reference the NPI or prescriber state license in any documentation. This free floating, erroneous, incorrect data that is then hurled at the physician, me, is one micrometer of my day. All your coaches, assistants, techs, etc can do what they want and not be fired because they don’t have a malpractice binder over their heads. So I’m correcting your failures, and I’m a doctor, and I’m not supposed to do that. I could have just tossed this in the shredder and moved in. And it’s not even for a patient of mine or for a drug I ever prescribe. I did it because I care and I want to stop this avalanche of letters from Cigna, which BTW I do not participate with because you have the worst bureaucracy and the worst payment structure, and your protocol is to DENY CARE and PROMOTE DIVIDENDS. Data has to be flawless, corrected and updated, and people have to do their jobs. That’s medicine when it works. It’s the amorphous “healthcare” that poses problems, we have “sick care” in our nation and we have a greedy, dying and decrepit society that is increasingly DELIBERATELY not wanting to engage.

  4. I think this post was a cleverly disguised defense of the ExpressScripts deal. . .

  5. An INSTITUTION may be defined as “…the rules that humans use to organize all forms of repetitive and structured interactions including within families, neighborhoods, markets, firms, sports leagues, churches, private associations, and governments, at all scales. Individuals interacting within rule-structured situations face choices regarding the actions and strategies they may take, leading to consequences for themselves and for others. The opportunities and constraints individuals face in any particular situation, the information they obtain or are excluded from, and how they reason about the situation are all affected by the rules or absence of rules that structure the situation. If the individuals who are crafting and modifying the rules do not understand how a particular combination of rules affects the actions and outcomes in a particular ecological or cultural environment, rule changes may produce unexpected and, at times, disastrous results.” Elinor Ostrom, UNDERSTANDING INSTITUTIONAL DIVERSITY, Princeton University Press, 2005.

    To understand the implications of her last two words, read it again 2 or 3 times.

  6. I think you underestimate the risk that lots of people who live paycheck to paycheck either won’t pay at all or will take a very long time to pay.

    By the way, in France providers are allowed to charge more than the official government payment rate but they must be absolutely transparent about how much they charge and expect to be paid before services are rendered.

    In the U.S., you can learn the full list price (sometimes) which is usually materially higher than what providers routinely accept from Medicare and private payers as full payment. The system makes no sense to me except that the government requires providers to bill everyone the same amount which means the full list price. Maybe that law or regulation should be changed so providers can just bill at the contract rate and disclose it ahead of time to patients who inquire. It’s time to put an end to the confidentiality agreements that currently preclude doing that.

  7. Claims flow from providers to the insurers and money flows back from insurers to the providers. Try, somewhere, as an experiment, sending money back to the patient and cause him to 1.learn what charges are 2. learn about the world of discounts 3. argue with the provider if the service was not worth the money he was sent by the insurer 4. try withholding some of the indemnity money from the provider if unsatisfied 5. find that trust will develop so that providers will trust the patient will pay him and patients will trust that service will not be denied if he doesn’t pay the provider the full amount.

  8. For perspective, the disruptive processes that underlie our nation’s HEALTH are driven by sociodemographic problems (40%), personal behavior (30%), healthcare (20%), and genetic (10%). We best look to the Blue Zones for significant improvements in the cost and quality problems embedded within our nation’s health spending, community by community.
    In the meantime, our nation’s healthcare reform ignores the highly co-dependent relationships existing between the payors for health care and the large institutions that offer this health care, especially when connected with Complex Healthcare Needs. As in any intense institutional codependency, the relationship interferes with the ability of both institutions to exercise AUTONOMY when honoring their corporate responsibilities to their constituencies.

    Driven by the underlying erosion of our nation’s Social Cohesion, I respectfully recommend that Doctor Cordani volunteer for just one day on his community’s “homelessness out-reach team” as a basis to revise his view of healthcare reform. Better yet, come to Omaha, and I’ll join you on my community’s team.

    Paul Nelson, M.D.