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Health System Reform: What Works and What Doesn’t

Posted by John McDonough  October 17, 2012 11:05 PM

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For folks who pay attention to fixing the U.S. medical care system, it's got to be a confusing time. So many developments trending is so many directions. How does one make sense of it, and what does it all mean? Let's dive in for a bit.

First, an important shift in how we pay for health care in the U.S. began this month as the federal government started financially penalizing hospitals with excessively high rates of hospital readmissions and hospital acquired infections for Medicare patients. New Jersey is a state with among the highest proportion of hospitals facing these penalties, and here's a story about how hospitals there are addressing the challenge.

This shift is important. We are moving beyond fee-for-service by which we pay providers for how much they do. We are also moving beyond "pay for performance" where we reward providers for doing process steps such as screenings and other tests. We are moving, slowly and surely, toward "paying for outcomes," a potentially game-changing stage if the current efforts aimed at readmissions and infections are seen as just the first steps.

Some have complaints and reservations about this new process, and these deserve serious consideration. Some question how much will really be saved. These are legit concerns. At the core of the approach, though, is a basic stance -- with all the waste and inefficiency in U.S. health care, we need to stop paying for things that harm patients.

Second, as mentioned already, "paying for performance," one of the last decade's bright ideas, is wearing out its welcome. A new Robert Wood Johnson report on pay for performance demonstrations reports that:

"...participants in a large Medicare demonstration project produced improved quality for most beneficiaries, but only modest reductions in spending. Another study cited in the paper shows that institutions participating in a large hospital-based demonstration project initially showed promising improvements in quality compared to a control group, but there were no significant differences in performance after five years."

And, in a new Health Affairs blog post, researchers Steffie Woolhandler, Dan Ariely, and David Himmelstein write that:

"... while Medicare and many private insurers are charging ahead with pay-for-performance (P4P), researchers have been unable to show that it benefits patients. Findings from the new field of behavioral economics may explain these negative results. They challenge the traditional economic view that monetary reward is either the only motivator or is simply additive to intrinsic motivators such as purpose or altruism. Studies have shown that monetary rewards can undermine motivation and worsen performance on cognitively complex and intrinsically rewarding work, suggesting that P4P may backfire."

One of the biggest hopes of health reform in general and the Affordable Care Act (aka ObamaCare) in particular -- is that we can achieve a sustainable and affordable health system by reforming and improving the quality and efficiency of medical care delivery. It's a good sentiment and impossible to argue with the intent. But after about 20+ years of trying, it is still hard to find compelling evidence that this is a realistic path to meaningful affordability and efficiency.

Third, meanwhile, we have some unexpected good news today on the population health front. A new report in the Journal of the American Medical Association, using national health data, reports that the cholesterol levels of Americans have dropped on average by about ten points, surpassing the Healthy People 2010 goal of national levels below 200 mg/dL. And, happily, the drops were as good for Americans not on statins as they were for Americans on statins. 

What accounts for this unexpected and most welcome progress? The researchers are not sure, though they suspect the major drop -- by about 60% -- in trans-fats from most parts of the U.S. diet is a part of the explanation.

I don't believe we should give up on reforming the delivery system, and moving aggressively on paying for outcomes makes more sense to me than any other course in this sphere. But I hope the JAMA authors or others try to quantify the national savings from the 10 point drop in cholesterol levels over the past decade.

If there is gold to be found in health system reform, the gold is to be found in primary prevention, wellness, and public health.

This blog is not written or edited by or the Boston Globe.
The author is solely responsible for the content.

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About the author

John E. McDonough is a professor of practice at the Harvard School of Public Health. He is the author of the book “Inside National Health Reform”, published in 2011 by More »


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