Responses to the Kaiser Foundation/HRET report on slowing growth of insurance premiums and adoption of CDHPs ranges from cautious optimism to strong warnings for the future:
Our community has reinvented cost-containment strategies and is deploying a new generation of tools and techniques to stretch health care dollars and mitigate the burden of rising medical costs. Health insurance plans' tiered prescription drug formularies, cutting-edge disease management and prevention programs, and important investments in health information technology are helping consumers get the care they need while taking unnecessary costs out of the system. While clear progress is being made, much more needs to be done.--Karen Ignagni, President and CEO, America's Health Insurance Plans We're in a period of continued moderation...but nobody should be celebrating too wildly.--Drew Altman, President and CEO, Henry J. Kaiser Family Foundation“Health care premiums aren't rising as quickly,” San Francisco Chronicle, Sept 27. 2006 It's worth observing that this survey comes out on the heels of the census report showing that we added 1.3 million people to the ranks of the uninsured in 2005…. The long-term trend is very clear, and it's the slow unraveling of coverage in the employment-based system, especially among smaller employers."--Drew Altman, President and CEO, Henry J. Kaiser Family Foundation"Health-care premiums up 7.7%," Associated Press, Sept. 27 Pointing out that only four percent of Americans have so far signed up for high-deductible insurance plans linked to health savings accounts (the Bush Administration's and market enthusiasts "cure" for skyrocketing health care costs), Altman repeatedly said that talk about "consumer-driven health care is way out in front of the action in the marketplace." Based on my own experience, I think that's going to change -- and fast. I predict uptake of these plans, especially among the well-off and relatively healthy upper middle class will take off in the next few years. Moreover, many low- and moderate-income people will be forced into these plans. Look at Wal-Mart's announcement yesterday that it would start offering a high-deductible plan with just an $11 monthly premium come January. What does it cover? Not the first $1,000 of routine doctor costs, not the first $1,000 of hospital bills, and not the first $300 of pharmacy costs. Some plan, especially for folks on tight budgets. What will be this week, honey? Take the kids for their shots or groceries?--Merrill Goozner Director, Integrity in Science Project at the Center for Science in the Public Interest."Insurance Scams," Huffington Post, Sept. 28 About 8,500,000 workers were offered a choice of an HDHP/SO and another form of coverage, and only 1,620,000 chose HDHP/SO, while some 1,080,000 were mandated to enroll in HDHP/SO. In has been acceptable to mandate that Medicaid patients must enroll in managed care plans. Now it appears that employers can eliminate choice of plans and mandate enrollment in HDHP/SO coverage. Is it not surprising that some patient advocates worry that traditional Medicare will be eliminated and Medicare recipients will be given the choice of Medicare Advantage HMO-like plans or HDHP/SO plans?--Bradford Kirkman-Liff, Professor of Health Policy and Biotechnology, W. P. Carey School of Business, Arizona State University“Enrollment Choice for High-Deductible Health Plans with Savings Options,” letter to Health Affairs
Our community has reinvented cost-containment strategies and is deploying a new generation of tools and techniques to stretch health care dollars and mitigate the burden of rising medical costs. Health insurance plans' tiered prescription drug formularies, cutting-edge disease management and prevention programs, and important investments in health information technology are helping consumers get the care they need while taking unnecessary costs out of the system. While clear progress is being made, much more needs to be done.--Karen Ignagni, President and CEO, America's Health Insurance Plans
We're in a period of continued moderation...but nobody should be celebrating too wildly.--Drew Altman, President and CEO, Henry J. Kaiser Family Foundation“Health care premiums aren't rising as quickly,” San Francisco Chronicle, Sept 27. 2006
It's worth observing that this survey comes out on the heels of the census report showing that we added 1.3 million people to the ranks of the uninsured in 2005…. The long-term trend is very clear, and it's the slow unraveling of coverage in the employment-based system, especially among smaller employers."--Drew Altman, President and CEO, Henry J. Kaiser Family Foundation"Health-care premiums up 7.7%," Associated Press, Sept. 27
Pointing out that only four percent of Americans have so far signed up for high-deductible insurance plans linked to health savings accounts (the Bush Administration's and market enthusiasts "cure" for skyrocketing health care costs), Altman repeatedly said that talk about "consumer-driven health care is way out in front of the action in the marketplace." Based on my own experience, I think that's going to change -- and fast. I predict uptake of these plans, especially among the well-off and relatively healthy upper middle class will take off in the next few years. Moreover, many low- and moderate-income people will be forced into these plans. Look at Wal-Mart's announcement yesterday that it would start offering a high-deductible plan with just an $11 monthly premium come January. What does it cover? Not the first $1,000 of routine doctor costs, not the first $1,000 of hospital bills, and not the first $300 of pharmacy costs. Some plan, especially for folks on tight budgets. What will be this week, honey? Take the kids for their shots or groceries?--Merrill Goozner Director, Integrity in Science Project at the Center for Science in the Public Interest."Insurance Scams," Huffington Post, Sept. 28
About 8,500,000 workers were offered a choice of an HDHP/SO and another form of coverage, and only 1,620,000 chose HDHP/SO, while some 1,080,000 were mandated to enroll in HDHP/SO. In has been acceptable to mandate that Medicaid patients must enroll in managed care plans. Now it appears that employers can eliminate choice of plans and mandate enrollment in HDHP/SO coverage. Is it not surprising that some patient advocates worry that traditional Medicare will be eliminated and Medicare recipients will be given the choice of Medicare Advantage HMO-like plans or HDHP/SO plans?--Bradford Kirkman-Liff, Professor of Health Policy and Biotechnology, W. P. Carey School of Business, Arizona State University“Enrollment Choice for High-Deductible Health Plans with Savings Options,” letter to Health Affairs
Scott MacStravic, PhD
I still vividly remember daily exposure to the “Make Love, Not War” mottoes of the 60s, even though I had been born too soon to join in the movement (having been in the army 1958-61 and married in 1963). On the other hand, making war has seen renewed popularity, with “wars” on poverty, drugs, terrorism, etc. accompanying actual military adventures.
War has become close to the normal situation for stakeholders in our ineptly named “healthcare system”, which is really a sickness care non-system, with participants more often at cross purposes than fighting a common enemy. Conflicts of interest seem far more common than cooperative or collaborative efforts among stakeholders.
Articles reflecting severe conflicts regularly appear. United Healthcare is suing HCA over “hardball negotiating tactics” and “anti-competitive behavior” in Denver. [C. Sisk “United HealthCare Sues HCA Over Tactics” Tennessean.com Sep 19, 2006.] Policyholders in California are suing insurers over being dropped from coverage. [L. Girion “Dropped by Insurers When Costs Rise” BaltimoreSun.com Sep 17, 2006.] Over-attentive families question physicians and nurses about their patients’ care. [D. Shaywitz “Overattentive Families May Be Underrated” New York Times Sep 19, 2006 (www.nytimes.com)]
Providers fight with each other over turf, from specialists arguing over who should perform procedures to hospitals fighting with ambulatory surgery centers. [“Ill. Surgery Center Accuse Hospital of Intimidation” www.ModernHealthcare.com Sep 18, 2006] Nurses strike against their hospital employers. [“N.J. University Hospital Nurses End Monthlong Strike” www.ModernHealthcare.com Sep 18, 2006]
But there is at least one domain in healthcare where “love” is both possible and sensible, unlike the sickness care domain where conflict seems inevitable. It is in proactive health management (PHM), encompassing the full range of efforts designed to reduce the incidence and prevalence of disease and injury, and to manage chronic conditions in order to reduce crises, complications and worsening thereof. In this domain, current adversaries could and should become collaborators rather than combatants.Payers can get behind PHM, since it can significantly reduce the sickness care costs of insurers, and even more significantly reduce the overall labor costs of employers. Consumers can join in, since they benefit in a wide variety of ways from being healthier and avoiding sickness, though they may object to how much work they might have to do in the process. Providers are at least rhetorically committed to the health of their patients and communities, with primary physicians increasingly showing interest in promoting health vs. merely treating sickness.
With the exception of providers whose revenue is wholly or chiefly dependent on reactive sickness care, just about everyone can join in a “lovefest” based on improving the nation’s health – in fact the world’s health, since the conflicts present in the US exist in most other countries as well. And even providers can count on a continued, if perhaps not quite as large or growing as fast level of demand for reactive sickness care, since it will take years to feel the full effects of proactive health, even if it becomes widely adopted.
Primary physicians, and many specialists already engaged in management of chronic diseases can easily combine proactive health with reactive sickness care, and hospitals are already combining at least disease management and modest wellness efforts with their sickness care programs. Most physicians in solo or small practices would need the support of hospitals to engage successfully in a full range of proactive health, particularly disease management efforts. Reducing the rate of increase in sickness care demand and costs is probably the only way that the country will be able to afford paying enough for both to enable providers to maintain the quality of their sickness care.
It may take what has often been deemed a “paradigm shift”, a “tipping point” and “disruptive innovation” for providers to move, either gradually or totally toward proactive health care, but it is a move likely to be welcomed and supported by all other stakeholders. It is something that demonstrates more “love” for patients, since they would be far better off not becoming sick in the first place. And it may be the only way that providers can survive while delivering high-quality “healthcare” in the long run.
Scott MacStravic, Ph.D.
In my last position as Vice President for Strategy and Marketing at a multi-hospital system I enjoyed a pay-for-performance bonus, based on the extent to which my division achieved budgeted performance. This included both controlling costs and achieving promised revenue impacts on the system as a whole, since we were responsible for not only traditional marketing but relationships with payers.
For most of the years I held this position, I was able to include four of my key professionals, out of a staff of twelve, in addition to my own participation in this bonus system, and we all enjoyed significant annual additions to our salaries on a regular basis. But toward the end of my tenure there, the four were dropped from the system, presumably because our large proportional participation was dramatically greater than for all other divisions, and it reduced the bonus pool available for executives.
The fact that executives typically award themselves the lion’s share of all credit and compensation for the organization’s performance has been a long established and often criticized practice. We may be in the era of evidence-based management, but there is no evidence that I know of showing that executives or senior managers are the sole reasons that organizations succeed, nor that bonuses are what attract and keep such valuable individuals on the job.
This tradition was recently criticized in a newspaper article, noting that the bonuses awarded by the Centers for Disease Control and Prevention had recently begun receiving the lion’s share of bonus awards, amounting to almost $150,000 to the Center’s COO and $85,000 to his deputy. While members of the officials in the director’s office had previously received rare and small bonuses, in 2005, they garnered over half a million dollars in bonuses. [G. Harris “Inner Circle Taking More of C.D.C. Bonuses” New York Times Sep 17, 2006 (www.nytimes.com)]
One would assume that the scientist and key professionals as well as direct managers had something to do with the benefits that CDC delivers to the public, yet they are leaving in droves, since the re-organization prompted by its director. Apparently, the scientifically unsupported notion that senior executives make by far the greatest, if not the only difference in the performance of organizations is accepted by all – senior executives at least. And they have the power to decide.
It would make an interesting scientific challenge to actually study the relative differences that people in specific positions within organizations, including health care and government organizations, make to overall performance. Most workers, I suspect, would say that they do their best work in spite of what executives issue in the way of memos or expound at annual meetings.
Many charismatic executives undoubtedly have energized and led their organizations to new heights, and their employees usually recognize and revere such people. But absent scientific evidence on the relative worth of ordinary employees, supervisors and managers to organizational performance, the practice of awarding the lion’s share of credit and compensation to executives remains one mainly attributable to the power of such people, not necessarily their worth.
Kevin C. (Casey) NolanManaging Director, Navigant Consulting, Inc.
For many years, retailers sought to serve the mass market, figuring that was where the greatest opportunities, sales, and revenues were. Their stores were fairly similar, if not almost identical, regardless of whether they were in Tallahassee or Tacoma. Just think back to the Sears, Montgomery Ward, J.C. Penny, or McDonald’s stores you frequented 20 years or so ago. In the years since, retailers have become more sophisticated at customer analysis and they have learned there is no mass market. Retailers know that segmentation and targeting are the keys to profitable growth. Retailers are working hard to customize their stores and offerings to meet the needs of the unique customer base in whatever area the store is located in. A recent article in the Wall Street Journal described how the giant of all retailers—Wal-Mart—is adapting its stores and moving away from the “cookie cutter” / highly standardized model it has employed.
In contrast to the emphasis on targeting and segmentation employed by retailers, most healthcare organizations still design and deliver their services using a “one-size-fits-all” approach. And while there is real value in standardizing the protocols and pathways of care, healthcare providers need to strive to avoid “homogenizing” the human element of delivering healthcare. There is a concept that many retailers have adopted that at first blush seems oxymoronic, but is actually a way to personalize interactions with individual customers—and increase customer loyalty. This concept is called “mass customization” and was profiled in an article in a Fortune magazine in December 2004. Companies as varied as Brooks Brothers, Lands’ End, Nike, Mars Candy and USPS have employed the mass customization concept to boost customer connections—and profitability.
I believe the application of this concept, in conjunction with a concerted movement toward evidenced based medicine, would significantly enhance the quality of care, the patient experience, and the financial performance of healthcare in the United States. As the old retail saying goes, “the riches are in the niches.”
Robert FrombergEditor-in-Chief, HFMA
Scattered reports are emerging about Sicko, Michael Moore's forthcoming film about the U.S. healthcare system. Moore showed excerpts from the work in progress recently at the Toronto Film Festival. Moore says the film will be a comedy about the uninsured.
With Moore, you always assume there will be a prominent villain, and from what I can gather, pharmaceutical companies and HMOs are the likely candidates, more than providers. However, Moore says that the film "will not be necessarily what you think it's going to be," hinting he will explore underlying causes of the health system's problems.
That may be true, but it's hard to imagine that Moore won't be taking some shots at people and institutions. I hope that the healthcare industry's response will not be too defensive. As painful as the film may be for those who work in health care, it will likely create some momentum in the discussion of a vitally important issue. I hope the industry's reaction is not to start with no, pointing out inaccuracy or unfairness, but to say, yes, the system is indeed broken, we're glad this film puts more attention on the problems, and here are the steps that need to be taken to bring about change.
On the other side of the publicity-about-health-care coin, prominent sports writer Peter Gammons, who suffered a brain aneurysm in June, is back at work, and his first piece is an eloquent thank-you note to the healthcare profession. In an era of scrutiny and criticism, it's always nice to read words of appreciation.
While “labeling” or naming ideas, products and services is more often a marketing challenge, it applies equally to management efforts. What we call new initiatives, significant changes, strategies, etc. can greatly influence both how we go about them, and how they are perceived as well as responded to by those who are affected by them. And there are widely divergent approaches to the labeling of management initiatives.
Customer Relationship Management
CRM, for example, focuses on managing the organization’s relationships with customers; that is clear from the label. But the ways that these relationships are managed, the “hands-on” elements that are changed, directed, monitored, etc. may be any mix of ingredients--information about customers, communications with customers, interactions with customers, etc. And within just these three ingredients are a wide range of specific applications that may or may not be included under the general CRM label.
Perhaps most important to how CRM efforts are carried out, and to how well they are accepted and implemented by staff, as well as appreciated by customers, is what the purpose, or end result of CRM is supposed to be. In the vast majority of current CRM initiatives, the success measures used to judge its worth and calculate its ROI are financial results – increased revenue and profits for the firm.
But this often means that CRM, in practice, often harms, even ends customer relationships, when customers react and respond negatively to initiatives that increase profits for the firm. Automated phone systems are a classic example, where firms dramatically reduce their costs of interacting and communicating with customers, while customers are angered over the dramatic increase such systems create in the time it takes to interact with the firm, and may reduce purchase or switch to another source.
Patient Care Management
PCM includes an equally wide range of dimensions. It may focus on the care that patients get between admission and discharge, often called “utilization” or “care” management. Or it may extend to pre-admission and post-discharge follow-up, and be called “case” management. It may focus on the service, rather than clinical elements of patient experience, and be called “patient experience management”. Or it may include lengthy episodes of care and even months or years of “disease” management”.
The ingredients for any of these PCM may include the medications orders that physicians write, focusing on CPOE systems, for example, or on physician and nurse adherence to HEDIS, EBM, or pay-for-performance bonus standards and guidelines. They may relate to the time that patients wait in ERs, or between visits by staff while waiting or during inpatient stays.
Similarly, the purpose for PCM may be to improve overall patient care quality or safety, reduce costs, increase patient satisfaction/loyalty, improve revenue or profitability. Unless the intended results are included explicitly somewhere in the labels for or descriptions of management efforts, they may be misunderstood and misapplied by staff or patients, and fall well short of achieving their intended results.
Proactive Health Management
This is even more clear in proactive health efforts, because of the even wider than normal range of dimensions, ingredients and purposes that may be involved. PHM may focus on wellness and fitness promotion, on disease/injury risk behaviors or conditions, or on already existing diseases, disorders, dysfunctions or syndromes. It may focus on any or a number of specific examples in one or more of these categories. It may involve traditional medical, complementary/alternative, or integrated approaches to these, relying on physicians, nurses, coaches, trainers, counselors, or a wide range of other practitioners in the process.
But perhaps most important, PHM may be aimed at a wide range of outcomes, for both provider and patient. Providers may invest in PHM for “community-benefit” PR, tax-exemption or mission fulfillment reasons. They may pursue PHM as a revenue and profit generating business. They may plan, manage and implement PHM efforts based primarily on the benefits they deliver to patients’ health and life quality.
Whatever the “official” label for PHM, as well as other management efforts, they should be described for all concerned so as to include all the ingredients and intentions included. As healthcare providers seek greater “transparency” in their operations, being open, clear and complete about their intentions and approaches with respect to CRM, PCM and PHM is surely one of the more important applications for honesty and integrity. And it can make the difference between staff grudgingly and passive-aggressively pretending to implement such initiatives, and enthusiastic commitment to them.
A friend of mine recently returned from Switzerland, where he spent a couple of weeks and dropped off his son, who would be working there for a year. He told me he learned one thing from his time in Switzerland. “The people there have a very strong work ethic,” he said. “But they don’t run around with their hair on fire the way we do. When they’re not working, they are truly not working. They actually relax.”
This conversation popped into my mind twice recently. The first time, I was flipping through a book on leadership that an acquaintance of mine recently published. I paused at an appendix in the book that presented a tool for developing yourself as a leader. The tool asks you to identify development goals, steps to achieve those goals, and due dates. A great idea, I thought, but what leader has the time even to make this plan?
The second time, I was reading the cover story for the October issue of hfm magazine, which identifies several ways to accelerate your achievement of competency in hospital pricing. The accelerators include choosing the right starting point, establishing a common pricing formula, and creating a pricing toolkit. The article makes clear that creating rational prices is a broad initiative that requires a well-conceived plan--in short, something that requires time for thoughtful consideration.
Whether your goal is to improve your organization, improve yourself, or just relax, a certain type of time is necessary--time when your hair is not on fire, time when you are not worrying about the next time your hair will be on fire, time to allow your mind to explore issues in a nonlinear fashion, time to allow your mind to wander. Anyone who writes an article published in HFMA's magazine or newsletters, anyone who presents an HFMA seminar, anyone who posts on HFMA Views has found this type of time.
My goal here is not to add to the literature about the dangers of Americans addicted to their cell phones and Blackberries. It’s tempting, but it’s a story you’ve all heard. There is nothing I can say that will suddenly make it less imperative to return a call or check e-mail.
However, I can say this: Even if your hair is on fire today, even if you can’t quite find the time for that sort of perfect calm my friend witnessed in Switzerland, others found that time. And they chose to share the results with you through HFMA. So thanks to those experts for sharing the insights gained from the moments they seized for quiet contemplation. Those insights provide a remarkable jump-start for HFMA members as they pursue their most important goal: serving their communities.
Sandra J. Wolfskill, FHFMAPresident and Founder, Wolfskill & Associates, Inc. Consumer-directed health care will change relationships and operations throughout the hospital. Collecting from patients will require process changes, staff training, and possibly personnel changes in finance, patient access, medical records, and other administrative areas. New demands for quality data will require changes in nursing, quality assurance, and other clinical processes to bolster quality improvement and outcomes reporting. New competitors and financial incentives will affect historical referral patterns and physician loyalties.
Effectively responding to these challenges will be a real test of leadership. It will require building consensus and coordinating efforts across the entire range of organizational stakeholders.
Creating a CDHC steering committee or leadership team is a good place to start. Consider including the following on the committee:
The CEO. As the one manager with authority across the entire organization, the CEO must be involved in such an important change initiative. In most organizations, only the CEO can unquestionably command the range of resources required. The CEO’s involvement also underlines the importance of the project to the organization.
The CFO. Because consumer-directed care has such a profound and direct impact on the organization’s finances, the CFO is often the natural choice to lead the initiative. At the very least, the CFO must be intimately involved in orchestrating financial market analyses, strategic pricing initiatives, and revenue cycle operational changes.
The COO or another operations representative. Operating functions, such as medical records, quality improvement, and service line management, must be integrated with financial operations, contracting strategy, and marketing to meet market service and data demands.
Marketing. Market planning and analysis will take on new importance as new competitors enter the marketplace.
Nursing and clinical staff. Nurses are the backbone of hospital services, and their active support will be needed to develop new service lines and improve quality.
Medical staff. Physicians will face even more pocketbook pressure to go into competition or join you in ventures ranging from high-end surgery and diagnostics to urgent care.
Board members. Board finance committee members often are the first involved in setting new billing and collection policies, but other board members may also be needed to build community support for restructuring services. Board members are also handy to have on your side for raising capital for new data systems, joint ventures, and other investments.
Involving all these constituencies from the start of your planning for consumer-directed care gives you an opportunity to educate--and to listen. Often, the best ideas come from those closest to the patient.
This piece is from the "Something to Consider" section of HFMA's new publication Consumer-Directed Health Care, which contains tips, strategies, and news about this new model of health care.
Richard L. Clarke, DHA, FHFMAPresident and CEO, HFMA
In June 2006, HFMA released Consumerism in Health Care, the latest report from the PATIENT FRIENDLY BILLING® project. For the most part, the reaction by healthcare leaders has been very positive. The actions taken in response to the report’s recommendations, however, appear to be developing very slowly.
As I talk to healthcare leaders, especially CEOs and CFOs, an obvious barrier to adopting the recommendations relates to the “law of unintended consequences.” For example, when attempting to rationalize pricing philosophies, what unintended negative impact will adjusting prices have on insurance contracts, Medicare payments, and overall profitability? Another issue is whether the “juice is worth the squeeze.” That is, does the public really care about pricing (especially for inpatient hospital services) because most insurance policies cover a majority of the cost of services, and one episode of care normally will consume all of the patient’s deductible. In fact, one insurance executive recently told an HFMA audience that price transparency – publicly posting prices – may lead to price increases because cost is often equated to quality. So it’s no wonder that healthcare leaders are skeptical.
But in next month’s hfm magazine cover story, Michael Nugent argues that lack of attention to pricing rationality has cost hospitals and some group practices market share to ambulatory centers and specialty providers. And I believe this pricing issue and the lack of transparency have reduced the level of trust by communities in their hospitals and medical practices. This lack of trust reduces the special standing that providers have in the community, which often results in challenges from the press, advocacy groups, labor unions, and government policy makers.
As Joe Fifer, FHFMA, CPA, HFMA’s Chairman, notes, courage in leadership is needed to deal with these issues. Healthcare financial leaders have a key role in shifting the mind-set of the leadership team in their organizations. Financial leaders must make the case that embracing consumerism – that is engaging consumers in their health and medical decisions - is a critical financial strategy. Building trust through rational pricing, price transparency and other recommendations from the Patient Friendly Billing project reduces threats to market share, tax exemption, charitable giving, union organizing activities, etc. And building trust can enhance the community’s engagement with the organization, thus enhancing revenue. These areas fall within the domain of the financial leader.
HFMA will continue to develop information, tools, and solutions that enable the financial leader to make a difference. Examples include the Patient Friendly Billing project noted above as well as articles such as the ones in hfm. With these resources, the only thing holding us back is the courage to make a difference.
The compelling discussion of our country’s “bang for the buck” from medical care, recently published in the New England Journal of Medicine, concluded that we are getting a good bargain. On average, we spent $19,900 on medical care for each extra year of life expectancy gained in the last four decades of the 20th century. I have never seen anyone argue persuasively that an extra year of life is not worth that much.
On the other hand, the average hides some less persuasive cost figures. During the 1990s, the average cost had risen to $36,300 per added year of life. And for seniors 65+, each added year of life cost $145,000, often due to futile end-of-life care due to medicine’s persistent focus on diagnosis and cure vs. treating end of life as an inevitable and manageable life experience.
But the conclusion is not the right one in the first place, because it judged the current medical and hospital care system as it is, not against any other ways to spend the same money it costs us to maintain it. The real question should be: how does the return on investment that we have been getting with the current medical/hospital care system compare to what we might have gained had we invested in a more concerted and coordinated effort to reduce the need for medical care in the first place.
The entire system, including not merely hospitals and physicians providing care, but the employers, insurers and government agencies who pay for it, as well as the three hundred million patients who pay for it have myopically focused on reactive sickness care, rather than balancing their investments with proactive health care. This short-term and narrow focus has put the system in the status of handling crises continuously, without seeking to alter their causes and frequency.
In the 21st century where we are now, a lot of the system’s stakeholders have begun asking questions about causes, and investing in proactive efforts to reduce the incidence and prevalence of disease, now growing dramatically. Commercial insurers have somewhat logically been myopic, since they keep their members too short a time to gain long-term returns, but have at least worked on managing chronic diseases better, to reduce the crises, complications and worsening thereof.
Government agencies, primarily Medicare and Medicaid, have begun to look at disease management, and even disease risk reduction, as with paying for smoking cessation, for example. Employers have recently caught on to the dramatic reductions in labor costs they can achieve through empowering their employees and even dependents to become or remain healthier. Even some consumers have started to look at investments of their own Health Savings Accounts into proactive health in order to avoid reactive sickness expenses.
Perhaps most surprising is the fact that growing numbers of physicians and hospitals are engaging in proactive health efforts, even though these, by definition, reduce reactive sickness care revenue. Many start by using proactive health programs to reduce their own labor costs and cope better with labor shortages. But many are finding that, if they select the right customers, the right methods, right costs, and right payment schemes, they can make money at it as well.
If we only focus on whether or not our current investments in reactive sickness care are paying off, we can probably conclude that they still do for many decades to come. But unless and until we recognize the competing option of investing now in proactive health in order to get the same or better returns in the long run, we will never achieve the full potential of our illogically labeled “healthcare” system.
Following are some published comments from health policy experts about the recent study by David Culter in the New England Journal of Medicine concluding that Americans get reasonable value from the money spent on medical care.
[I]f we compare our rate of increase [in healthcare spending] to other nations, it cost U.S. businesses and consumers 1.19 percentage points of increased economic output for every year of additional longevity over the past 40 years. It cost most other countries about half that. Improved and therefore more expensive health care has been responsible for some of the increase in longevity of the past 40 years. Half--Cutler's estimate--seems reasonable. But studies like his can only serve to distract attention from the fact that our fractured and inefficient health care system, plagued by high administrative overhead, delivers worse outcomes than most other advanced industrial nations despite imposing far higher costs. Where are the NEJM stodies that explain that? --Merrill Goozner, Director, the Integrity in Science Project at the Center for Science in the Public Interest, excerpted from "Paying for an Aston-Martin, Getting a Ford," Huffington Post, 9/3/06. The United States is very bad in value for dollar, in terms of the health-care dollar.... The reason why we're spending so much isn't that we're getting more services.... The reason is we're paying much higher prices for the same services that other countries get. --Gerard Anderson, Director of the Center for Hospital Finance and Management, Johns Hopkins University's Bloomberg School of Public Health, quoted in "Study Finds Health Care Good Value Despite Costs," Washington Post, 8/31/06. It really doesn't tell you whether we are spending too much on what doesn't matter and too little on what does. --Harlan Krumholz, Yale University, quoted in the Associated Press story "Americans may get medical money's worth," 8/31/06. The growth in medical spending is unsustainable over time--both in terms of absolute dollars and the benefit it yields. --Steven Findlay, Consumers Union, quoted in the Associated Press story "Americans may get medical money's worth," 8/31/06.
[I]f we compare our rate of increase [in healthcare spending] to other nations, it cost U.S. businesses and consumers 1.19 percentage points of increased economic output for every year of additional longevity over the past 40 years. It cost most other countries about half that.
Improved and therefore more expensive health care has been responsible for some of the increase in longevity of the past 40 years. Half--Cutler's estimate--seems reasonable. But studies like his can only serve to distract attention from the fact that our fractured and inefficient health care system, plagued by high administrative overhead, delivers worse outcomes than most other advanced industrial nations despite imposing far higher costs.
Where are the NEJM stodies that explain that?
--Merrill Goozner, Director, the Integrity in Science Project at the Center for Science in the Public Interest, excerpted from "Paying for an Aston-Martin, Getting a Ford," Huffington Post, 9/3/06.
The United States is very bad in value for dollar, in terms of the health-care dollar.... The reason why we're spending so much isn't that we're getting more services.... The reason is we're paying much higher prices for the same services that other countries get.
--Gerard Anderson, Director of the Center for Hospital Finance and Management, Johns Hopkins University's Bloomberg School of Public Health, quoted in "Study Finds Health Care Good Value Despite Costs," Washington Post, 8/31/06.
It really doesn't tell you whether we are spending too much on what doesn't matter and too little on what does.
--Harlan Krumholz, Yale University, quoted in the Associated Press story "Americans may get medical money's worth," 8/31/06.
The growth in medical spending is unsustainable over time--both in terms of absolute dollars and the benefit it yields.
--Steven Findlay, Consumers Union, quoted in the Associated Press story "Americans may get medical money's worth," 8/31/06.
Gail R. Wilensky, PhDSenior Fellow, Project HOPE
In August, during a stop in Minnesota, President Bush “went public” about transparency--urging that better information be made available to the public about the costs and quality of health care. The president then signed an executive order requiring four federal agencies to compile information about the price of care and the quality of care they receive and to make that information available to the public and to each other. The four agencies are the Department of Health and Human Services, the Department of Defense, the Department of Veterans Affairs, and the Federal Employees Health Benefits Program.
These agencies are directed, where possible, to complete four actions:
The executive order also specified that these actions should not incur additional costs to the federal government--a point that may not please those private-sector providers that continue to look to the federal government to pay for such efforts.
This event represents an important next step in the administration’s campaign to increase transparency in health care. Earlier in 2006, the president participated in a panel discussion at HHS, which had been arranged to promote the availability of information on price and quality. Increased availability of information along with the expanded use of consumer-directed healthcare plans have become a centerpiece of the administration’s strategy to use market forces to moderate spending on health care....
Most providers support the concept of transparency in principle--somewhat less in practice. They worry that the data will be inaccurate or misinterpreted. And although there are skeptics who think providers would just as soon not have this information readily available, there are legitimate issues of concern. One is the appropriate unit of cost. For example, it is not physician fees per se that reflect the total cost of care; rather, it is the costs associated with the entire medical episode that are most relevant, even though patients and insurers may be more interested in the component information, including physician fees. Shifting the focus to episode-of-illness costs may take time as these measurements are just beginning to be used.
It also is important to provide information on quality and outcomes as well as on price, however defined. Quality and outcome measures also need to be adjusted for patients’ severity of illness. Measurements in these areas are even less well-developed than cost measurement, but many groups are hard at work to rectify this problem.
The problems with cost/quality measurement and reporting will improve over time as long as interest in making such information available continues. The question that remains is whether purchasers--be they health plans or patients--will use the information. Health plans are already indicating a real interest, as a strategy to both moderate spending and improve patient safety. Patients have appeared less interested, but with the growth of consumer-directed health plans and health savings accounts, it is likely that their interest will soon increase substantially.
[This piece is an excerpt from Dr. Wilensky's Eye on Washington column, which will appear in the October issue of hfm magazine.]
