JUST ANOTHER COMMODITY:

Four trends are driving the shift: an ongoing movement toward value-based payments; improved health care data analytics; innovations in medical science; and increasing demand from consumers for greater convenience and value.

Although health care costs have been growing more slowly than they once did, the U.S. still spends far too much, and there's great variation across the country in both prices (especially for employer-sponsored insurance) and utilization (especially for Medicare). Fee-for-service payment is a major reason spending is so high and varies so much from region to region. The shift toward value-based payments -- including bundled payments and accountable care organizations -- is a necessary though not complete solution.

The arrival of Alex Azar as secretary of Health and Human Services has offered hope that Medicare, which has sufficient presence in every local market to change how providers behave, will resume pushing toward these models, and a recent McKinsey analysis highlights their potential. To thrive under value-based payments, companies will need to reduce unwarranted variation across providers and sites of care and keep costs reasonable.

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