What does health equity mean?

The Biden Administration has brought a focus on “health equity,” or fairness in access and quality of care. The appeal to fairness is often made on moral grounds, challenging the nation to live up to its egalitarian ideals.

While I subscribe to this view as a human being, I subscribe to it equally as a businessperson, based on another definition for the word “equity.”

We evaluate corporations by examining balance sheets and income statements. Central to the balance sheet, “equity” represents the value of a company’s assets and serves as one of the best measures to assess the economic health of an enterprise.

The income statement focuses on short-term measurements of profit and loss—on spending versus revenue in the current period. For generations, U.S. health care policy has focused on health care spending in this sense of operating expenses on the income statement. We have measured our success with hoped-for reductions in year-over-year spending.

This short-term focus is exacerbated by our tendency to ricochet between Republican and Democratic administrations every four or eight years. Each party strives to show that its approach can lower spending faster and more effectively, without addressing the difference between short-term “expense” spending and long-term “investment” spending.

During CMS’s December 8 Health Equity Roundtable, we heard from half a dozen passionate advocates for the chronically underserved. Across this diverse group, most from the non-profit and public sectors, there was a consistent call to apply long-term investment thinking to health care reform.

Carrie Cochran-McClain, MPA, chief policy officer at the National Rural Healing Association, said: “It may take years, maybe even a decade, before you really start to see the kind of change you want to see, especially in the cost savings arena…how you’re calculating savings and success of a model may be short-sighted...models really need to have kind of a front-end investment and the need for delayed downside risk.”

Business leaders like myself also realize that the balance sheet and the income statement need to work together to create long-term sustainable success. Not all projects will be profitable in the near term, and important innovations take time at the expense level to generate value at the asset level.

In this area, health systems should take a cue from the business sector. Karthik Sivashanker, MD, MPH, vice president of equitable health systems & innovation at the American Medical Association, put it this way: “Look further out than a year because it may take many years to actually assess the savings.”

From experience, I know many businesses also understand that not every project can be staffed identically. A major health care corporation may invest in resources to become efficient in a new payment model in three years. For the same project, a non-profit organization may need more resources and time. However, they will often offer unique access to communities that represent the best opportunities for large-scale critical improvement over the long term.

Veronica Mallet, MD, president and CEO of MMC Ventures, Inc. put it this way: “There are several obstacles to safety net providers entering into the value-based pay space... primary is the capital needed to respond to the increased staffing, training and data required to respond to the needs of most of the programs.”

When applied to national health care strategy, I often see the message of these leaders ignored at our peril—as reflected in the unmistakable facts of our national life. How much suicide, substance abuse, mental illness, gun violence, anti-scientific misinformation, and intergenerational transfer of poverty must we witness before we realize that our national balance sheet is crumbling at the base? We cannot simply buy our way out of this problem with more spending. Instead, we must begin to evaluate the second meaning of the word “equity.”

This means applying a balance sheet mentality to health care policy. The well-documented impact of good pediatric care 20 years hence should not merely be a feel-good argument—it should be part of a rigorous, long-term portfolio analysis aiming to build the strongest national balance sheet to pass on to these children.

One powerful opportunity lies in using prospective health status assessment, a clinical strategy supported financially by the risk adjustment of clinician compensation. Future-focused patient examinations—wellness visits—can identify chronic disease risks, thereby resulting in great patient outcomes and great societal savings. But these savings often take several years to materialize.

CMS should promote adopting such risk assessments in Medicare and Medicaid. It should also incentivize mitigation of the health risks identified—recognizing some of the future value today for savings that will be realized later. This would require CMS to identify the risk factors that present the best opportunity for mitigation, to incentivize those evidence-based interventions, and even to recognize non-traditional resources as part of such interventions. For example, a community PCP could be rewarded for referring a morbidly obese teen to a novel behavioral health program that might not have traditionally been funded.

As a side benefit, adopting such risk adjustment in traditional Medicare, supported by audits that ensure doctors are treating the high-risk factors they are coding, would also help punish those who do HCC coding simply for revenue rather than to help patients.

As a nation, we are divided on the role of private enterprise in health care along a wide spectrum, from those who say, “privatize and deregulate” to those who want health care “government-run.” But in my opinion, the overwhelming majority of Americans want some form of public-private infrastructure. Surely few would oppose the application of core business principles to the management of our most important industry.

The U.S. is the only advanced nation in which the national health care debate centers on whether universal access to care is a right or a privilege, and whether health care spending is a net cost to society or a net investment.

An increasingly healthy population is the most important asset we can pass on to the next generation—a population that is more productive, optimistic, committed to its own health, and to the future of its children. As Dr. Mallett said: “CMS should recognize the fact that the safety net providers are an investment. And do just that: invest.”

Taking it a step further, I believe we need to recognize future health as a kind of financial equity to ensure the fair access that is usually meant when we say, “health equity.”

This article was originally published by sister publication Medical Economics.