Dennis D. Keefe

Realign health care system

By Dennis D. Keefe
February 18, 2010

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With the president and Congress still searching for ways to forge a health care reform bill, here’s hoping that a broader conversation can begin on realigning the system to focus on improved clinical outcomes and greater efficiencies.

Instead of merely tinkering with a broken system, we need a new business plan that will support an improved clinical model and end the current unsustainable cycle.

Massachusetts is fortunate to have a world-class health care delivery system. Recent attempts to reform the system have been met with success, and polls indicate most people believe health care access has been greatly improved. But a powerful triumvirate made up of physicians, hospitals, and insurers remains the foundation on which our health care delivery and payment system is based. Consumers and other purchasers of health care are largely left out of the debate - except they ultimately bear the price as costs skyrocket with each participant pursuing higher and higher revenues in our fee-for-service system.

Physicians’ income generally depends on the number of patient visits and the volume of tests and procedures they generate. Hospitals chase more patient admissions and expanding use of expensive specialty services and the latest technologies. The pursuit of highly qualified doctors and nurses creates a shortage of health care workers and requires increasing salaries, creating the need for higher revenues to support the burgeoning costs. It is a needless medical arms race that isn’t providing value to patients.

Meanwhile, insurers, including Medicare and Medicaid, carry most of the financial risk, while trying to restrain growth by imposing stringent managed care requirements so their costs are covered by the premiums they collect.

Add Big Pharma to the mix, with its neverending pursuit of higher profits, and we have a four-headed hydra, fueling a system that will ultimately wreck the economy. In essence, and ironically, the American health care system is producing exactly the results one would expect given all these inherent and powerful financial incentives.

How do we fix this? The starting point would be to live within the revenue streams that are available today to sustain and improve the health care system for the future. Extra dollars should be spent only where clear and quantifiable value and results can be assured.

Consumers and patients have to be at the table in this redesign effort. It must focus on proper diet and nutrition, healthier lifestyles, prevention, wellness, and general avoidance of disease rather than its acute treatment.

Payment systems and incentives must be aligned to reward these behaviors. Physician scorecards would be based on more accurate and meaningful measures of health outcomes, patients’ adoption of healthy lifestyles, as well as appropriate utilization of resources.

Global budgeting and capping expenditures per patient each year are means to this end, as is the patient-centered medical home, a concept to provide comprehensive primary care through partnerships among patients, their doctors, and their families. Instead of relying on urgent visits to emergency departments, patients would keep regular communication with a primary care physician, or team, and design medication plans with the goal of reducing not increasing them over time.

Accountable Care Organizations show promise in this area. They could include a hospital, primary care physicians, specialists, and other medical professionals who would coordinate care for their shared patients within a fixed budget. Because members would be held jointly accountable for this care, they would share in any cost savings that stem from the quality gains.

But for them to work, insurance companies must rethink their role as insurers of last resort. With much of the financial risk being shifted to providers in these models, insurers would no longer need the level of financial reserves they now carry. They could help finance and support the transition from the current business model to this future vision. Some are starting to do this.

The successful long-term shift of the entire health care system in this direction requires all participants to collaborate in a way that constantly supports this radical change. Government could serve as the facilitator in creating this new business model.

Everyone, most of all patients and consumers, will benefit.

Dennis D. Keefe is chief executive of the Cambridge Health Alliance.

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