What a tiny Pacific island can teach America about healthcare
by Rick Berman · The Washington TimesOPINION:
In June, the Justice Department charged 295 individuals — out of 455 total defendants — with $518 million in false or improper Medicaid claims. This is just the beginning of a program to root out fraud.
We also need system reforms to remove perverse incentives for fraud. I have written about healthcare going back to “Hillary care,” Obamacare and a variety of less ambitious attempts at reform. They all ignored this issue.
Recently, I heard of a remarkable healthcare reform idea implemented in a small Pacific island nation: Blow the system up and start over.
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Naoero (formerly Nauru) is the world’s smallest island nation with a democratically elected parliament. For decades, the healthcare delivery system there was, by its own leaders’ acknowledgment, an “enigma.” The one hospital on the island was mistrusted. When people got really sick, they went to India, Australia or Thailand for treatment.
In a single year, Naoero — with only 12,000 people — spent more than $25 million on overseas medical referrals. That is an extraordinary sum for such a small nation. This year, it is $2 million so far.
In a case of serendipity, Naoero President David Adeang was at a meeting in Dubai when he met Roy Shaposhnik, chairman of a unique logistics firm, Global Mission Support Services, with a track record of working with international clients. Over several months, the two men forged a long-term partnership to replace a failing healthcare system.
Their contract was refreshingly blunt: Performance metrics would govern payment, and money would be paid in arrears for contracted results.
They upgraded housing and restaurant services to attract a rotating staff of recruited doctors and other professionals. The number of doctors on staff increased from 12 to 41. The number of trained nurses went from 21 to 76. They replaced or repaired diagnostic equipment. They established a new dental clinic.
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Their story provides a lesson for policymakers grappling with Medicaid reform. The key in the deal was a 10-year contract with GMSS fronting the first $3 million to begin the transformation.
I have spoken with Mr. Shaposhnik and the regional World Health Organization representatives familiar with and supportive of the radical improvements.
Here are additional comparisons based on these conversations and the president’s progress report to parliament. In its first year:
The new healthcare partnership delivered more than 1,000 surgeries, up from 150. The mortality rate for children younger than 5 was reduced by 52%. Neonatal mortality dropped 63%. More than 156 eye procedures were performed, which appear to have the nation on track to arrest preventable blindness.
The list goes on. The WHO representatives suggested that other Pacific region governments follow the model established by Mr. Adeang and his private sector partner.
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What made this possible? A government that agreed to pay for outcomes. Fraud thrives in systems where no one focuses on performance or integrity.
I am not suggesting that this tiny island’s healthcare model can be copied and pasted into American states. The scale, legal environment and clinical complexity are vastly different. Yet some principles are portable, and they cut against the complacency exposed by news of Medicaid fraud.
Naoero attracted an unusual partner — which Mr. Shaposhnik noted earned an “excellent” grade from the Defense Department for its logistics support in Operation Epic Fury — to invest and perform before payment. States with far greater resources can design contracts that tie significant portions of reimbursement to verified outcomes: reductions in avoidable hospitalizations, improved chronic disease control, timely preventive screenings and clean audit trails.
“Pay in arrears” need not be literal everywhere, but the spirit — risk-sharing and post-performance payment — should guide reform where artificial intelligence could flag anomalies in billing, identify cross-checks between claims and documented encounters, and detect outlier patterns.
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In Naoero, ministers began using the island’s hospital. They became part of the feedback loop, and the president repeatedly signaled public support for reform. Conversely, our governors and legislative leaders distance themselves from Medicaid’s operational failures, treating fraud revelations as embarrassments to be managed rather than symptoms to be cured (Hello, Minnesota Gov. Tim Walz).
Medicaid fraud headlines should be more than just another scandal in a program that keeps paying for promises instead of proof. A country that once exported phosphate is now exporting an idea: that even the smallest government can refuse to settle for “good enough” in pursuit of a functioning healthcare system.
• Rick Berman is the president of RBB Strategies.