Medical costs are climbing at a rate much higher than most sectors of the economy. This trend has a serious effect on the U.S. economy—businesses find it difficult to provide medical coverage to their employees, much less offer them raises. U.S. businesses must work even harder to compete in the world market.

Our economy faces a fast-growing burden to pay for the medical care that's provided to all working people, retirees, and those who aren't working. This economic reality is a wake-up call for our medical community that fundamental changes are necessary. We must bend the medical cost trend down or our economy will continue to struggle and slip in stature.

In my opinion, a transformation will include three major shifts: First, medical practices will integrate into health-care systems; second, reimbursement methods will shift from paying for the volume of services given to paying for the value of services; and third, health-care systems will become more transparent about their performance in terms of their costs, quality, and service for patients.

The Spokane area already is experiencing the integration of independent medical practices and health-care systems into larger, multifaceted, and complex organizations. Integrated health-care systems will provide a broad range of services to care for patients across the continuum—from primary and specialty care to emergency/hospital care and beyond. Providers practicing within these systems will encounter more standardized care and work flows. This will be an adjustment for all health professionals.

Right now, most health-care services are paid for on a fee-for-service (FFS) basis. The industry's standard, FFS pays regardless of whether the service actually provides a beneficial outcome. Our nation's reimbursement model must change so that physicians are reimbursed for care that delivers direct value and quality outcomes.

Today our FFS model pays even when there are patient complications that arise from care that is inappropriate, redundant, or missed. In the future, consolidated health-care systems will be paid on an episode of care, case rate, or even capitated care basis. Redundant or inappropriate care shouldn't bring more revenue. Instead, payers will provide more revenue to the health systems that show better outcomes for their patients or deliver care that's well organized to prevent or manage chronic disease. Care that doesn't add value will become an expense on the organization's balance sheet.

In the past, health-care systems managed some of their medical service lines as profit centers. In the future, it's possible that all service lines will be measured as cost centers. To be compensated properly, health-care systems will re organize in new ways to make sure they provide the right care at the right time, by the right person to the right outcome.

Also in the future, health-care systems will advertise their performance based on their cost and quality of care and their service to patients. Each system will define its value to purchasers and payers very clearly. Purchasers—whether they are businesses, government employers, trusts, or individuals and families deciding which system to go with— will want to know the cost, quality scores, and service experiences for each health-care system.

The patient will have a benefit plan that puts more out-of-pocket burden on them through deductibles and coinsurance fees. Therefore, they'll be seriously interested in knowing how much services cost in a given setting. This consumerist approach will force health-care providers of all types to be very transparent. As the large organizations strive to improve their public scorecards, they will manage the performance of their providers more attentively and with greater visibility inside their organization.

Integration, pay for value, and transparency of performance have the potential to dramatically improve the care and service we all receive as patients—while also keeping a lid on rising health care costs. These emerging transformations will require new kinds of health-care organizations with strong management skills.

Everyone in this transformed world of health-care delivery and finance will see their roles evolve. Health professionals can expect to pay much more attention to performance measurement, reporting, and management. Continuous performance improvement will be the new culture. If the transformation is successful, our society will enjoy healthier people and a healthier economy. It begins with a community of medical providers willing and ready to lead the way.