Here is a summary of my take-aways from a couple of recent discussions on health care cost control — one at the Kennedy School and one sponsored by the Brandeis Health Policy Forum. Feedback appreciated.
There is a broad consensus, including leading health care executives, that health care costs are too high and growing too fast and that they are compromising other priorities — from corporate capital investment to public education. At the Brandeis forum, even Gary Gottleib, the CEO of Partners Health Care, seemed to have found religion on this issue. This was theme emphasized in the Globe piece on the Brandeis event.
There also seems to be a lot of consensus that to control costs, we need to get away from fragmented, fee-for-service medicine and that by so doing, we can also improve quality and patient satisfaction. As long as doctors and hospitals make their money by doing procedures, they will have an incentive to overprovide. As long as care is organizationally fragmented, it will be hard to improve quality and reduce waste.
These aren’t new ideas — Health Maintenance Organizations (HMO’s), creatures of the 80s and 90s, were a first attempt in this direction. HMO’s employ physicians and might include a hospital or might contract with hospitals. They contract with employers to meet the health care needs of a population for a fixed price. In an HMO, it is the responsibility of the primary care physician to manage care by specialists and hospitals.
HMO’s failed to gain wide market share for a combination of reasons. Small providers — e.g., individual physicians or physician group practices — felt they were being asked to assume too much risk: They could lose a lot of money if they happened to end with some very sick patients. Even larger providers like hospitals often lacked the information to adequately assess the risks they were taking. Perhaps most importantly, patients felt that they were giving up too much freedom of choice. Managed care, more generally, involves insurer pre-approval of care decisions — very frustrating for both physicians and patients.
The new buzz idea, enshrined as a pilot option in the national health care reform bill, is the Accountable Care Organization. Think HMO with better technology, an emphasis on quality, and some lessons learned about management. At the Brandeis forum, most of the speakers offered hope, based on the experience of their own organizations, that doctors and hospitals could come together and organize health care networks. Instead of sharing risk, physicians might have the opportunity to share in savings from a baseline expected cost. For an informative video on ACO’s — and some skeptical comments — see the New England Journal of Medicine, at this link.
In the ACO model, physicians maintain their autonomy, but function within a care-giving team. In the team, they would be encouraged to work at “the top of license” — leaving routine care to others. Freed from the mundane, they can spend more time with each patient diagnosing complex conditions and working with patients to develop care plans that meet their individual needs. Good conversations with patients help patients and physicians make better decisions about care — often patients will choose less care if fully informed of what the care will and won’t do for them.
The ACO is also intended to reduce clinicians’ paperwork load. The extended care team (nurses, social workers, community health workers, office assistants) do more of the care management: making sure patients fill their prescriptions, scheduling follow up appointments, coordinating multiple appointments, helping patients with diet and exercise plans, making sure specialists who treat the patient know about all of the patient’s conditions, test results, etc.
Better information technology helps physicians understand the cost implications of their decisions. Integration may be more virtual (by technology) than physical (putting people in the same building).
At the Kennnedy School Forum, Jonathan Kingsdale — with decades of experience in the insurance industry — took a more pessimistic view of the possibility of controlling health care costs generally. In his view, high health care costs go back to chronic diseases and end-of-life health care episodes. Chronic diseases spring from irremediable human frailty (it’s just hard for people to make healthy choices) and when push comes to shove at the end of life, most people just want to keep living. But at the Brandeis forum, I came away with more hope — the practitioners there seemed to offer credible approaches to improving quality and lowering cost. Perhaps, Kingsdale’s experience reflects the difficulty of driving costs down by exerting external payor pressure — integrated health care networks may be able to develop structures that foster a positive cost/quality culture.
It isn’t crystal clear that major state legislation is needed. It may be entirely within the powers of the executive branch to collaborate with federal Medicare and Medicaid administrators to expand ACO experiments in Massachusetts. It is important that the major health care payors move together in this direction so that emerging ACO’s don’t have to deal with too many different payment regimes. But Medicare, Medicaid, the Group Insurance Commission together with Blue Cross (which is already moving towards ACO’s) account for more than half the market so if they move, the rest of the market will move.
It may be that some legislation may be necessary to clarify the authorization for the executive branch agencies to move toward payment arrangements that support ACO’s. But my working belief is that legislation fully defining those payment systems or defining how ACO’s should organize is as likely to be harmful as helpful. I am also skeptical of state leadership in information system coordination — at the Brandeis forum, I got the strong sense that insurers and proivders are doing pretty well at solving interface problems to give physicians the data they need. Controlling costs will involve using hospitals less and the legislature is likely to retard progress in the name of protecting weak hospitals; the one priority we do need to attend to is the protection of safety net hospitals and care providers. At the Brandeis Forum, titled “Achieving Accountable Care in Massachusetts”, protection of the safety net was the only positive legislative prescription that came out in three hours of excellent discussion about how to make ACO’s work.
Certainly, Medicare and Medicaid and GIC as well as private payors are going to continue to exert increasingly heavy cost-control pressure, given the growing elderly population and the tight finances of government. Perhaps these pressures combined with new organizational models and technology will suffice to bend the curve. The Patrick administration has already shown its willingness to push cost-control aggressively by limiting insurer rate increases.