Dr. Atul Gawande (The Cost Conundrum, New Yorker Magazine, June 1st 2009) and New York Times (Editorial “Doctors and the Cost of Care”, June 14th 2009) provide very insightful, critical, and constructive commentary on what is potentially wrong with the US health care system. Primary reasons allude to overutilization that has created waste with questionable quality and impact.In other words we have not had very good bang for the buck.
Dr. Gawande well known for his insightful essay’s and books on quality of health care points out through vivid testimonial accounts that there are vast discrepancies in health care costs within the US, even after taking into account differences such as severity of illness. Some of these discrepancies have been known for over the past decade. For example the work of Professor Don Berwick and colleagues is seminal. The Institute for Healthcare Improvement (IHI), since 1991 has highlighted how inefficiencies in health care cost billions of dollars and thousands of lives each year in the United States.
Looking closely at Dr. Gwande’s article there are several subtle hints that are made that point fingers towards the advent of ‘profit centers’ and ‘maximizing revenue’ practices for artificially driving up health care costs. These buzz words allude to how the ‘business’ of health care has created the ‘high cost’ and questionable quality of health care service. We need to ‘avoid looking at fragment quantity driven systems.”
Dr. Gwande further suggests that potential answers to the existing problem are to “reward doctors and hospitals if they band together to form Grand Junction-like accountable-care organizations, in which doctors collaborate to increase prevention and the quality of care, while discouraging overtreatment, under treatment, and sheer profiteering. Under one approach, insurers—whether public or private—would allow clinicians who formed such organizations and met quality goals to keep half the savings they generate.”
As compelling as this analysis is, these recommendations assume that a) maximizing revenues produces an inefficient health care system and b) large hospitals and physician groups will naturally induce incentives and goals to provide high quality health care while reducing costs.
While these are important assumptions, there are some other assumptions and questions worth highlighting.
1) While there is plenty of evidence that an unregulated fee for service system produces over utilization of health care resources, there is also evidence that maximizing revenues and promoting competition provides strong incentive to reduce overall operating costs.
In the US health care system the consumer (patient) does not typically assume the full cost of service. Thus the insurer (typically the government and ultimately the tax payer) may assume the brunt of these costs and while the patient may not be any worse off (though there is an alarming rate of medical errors, that could be caused by over utilization of services), we have a system that has differences in utilization of health care resources for questionable/debatable return. What is needed as Dr. Gwande suggests is cost effectiveness and delivery consortiums that will support national, state, and local level evaluations, best practice identification, and as needed operations research to examine cost, quality, and effectiveness of health services and procedures.
However, how much power the outputs will have over reducing health costs is to be seen. Ultimately unless there is a pay for performance/pay for quality incentives created for multiple stakeholders (patients, insurers, and doctors) these studies will have little influence on reducing overall costs in the US health care system.
2) Is there strong evidence to suggest that non-for profit health care systems reduce costs and promote higher quality any better than a for-profit model?
Currently, many of the higher cost and cutting edge technologies and procedures that are introduced into our system have originations from non-profit systems. The results of controlled clinical trials are typically written up in the most prestigious scientific journals and have influence on driving health care practice for millions of Americans. Concentrating the power of providing health care services into non-profit organizations and local communities to self regulate quality is not the full answer. Monopolies or oligopolies can drive up costs regardless of for profit or non-for profit structures. Thus, laws in various states have long safe guarded against collusion and price fixing.
To assume that physician or hospital groups will entirely focus on quality and reduce costs when faced with limited local market competition is not an entirely plausible outcome. This sort of self regulated market place has failed in the past. Just look at the recent wreckage of the financial sector to see the latest evidence of what relying heavily on self regulation can do. There needs to be a cost effectiveness and quality improvement mechanism that can positively influences what services are paid for based upon evidence/outcome.
3) What defines ‘high quality service?’
Quality to this day means many things to many people. Thus, there still is much debate regarding how to standardize quality for specific procedures. There needs to be more effort to establish minimum ‘quality’ standards for specific procedures. This may include mortality, morbidity, length of stay, quality of life, and patient satisfaction statistics. A significant challenge is that the large gap in knowledge and often paternalistic nature between the physician and patient. If a patient is facing a life threatening or terminal illness, how many families would argue with the doctor for less service and procedures?
4) Dr. Gwande’s article states no one teaches you how to think about money in medical school or residency? What about student debt?
There are estimates that the average debit of students upon completion of undergraduate college and medial school is over 200,000 USD. Having personally taught courses at Harvard Medical School the past 10 years, many students are shaped by the type of practice they go into because of the debt they are saddled with or the sincere desire to work with the most cutting edge and often expensive technological advances to save lives.
5) While utilization disparities are inherent in our system, a related factor is the impact of expensive medical technologies that drive up health care costs.
Without a strategic look at investment in health care technologies and services that promote preventive home based services and introduce lower cost devices and personalized medicines, the system will continue to spiral upwards.
6) Leadership, quantitative analyses to establish organizational control systems, quality of service, and maximizing customer satisfaction are tenets of good business practice.
These certainly can lend value to help improve quality and reduce unnecessary costs. Let us not forget that a significant problem that contributed to the high cost of health care has been the government’s reimbursement to providers that has used the fee for service model of service delivery. A former Professor of mine, William Kissick from the Leonard Davis Institute at the Wharton School used to compare this system to giving a credit card to your teenage son or daughter hitting puberty and saying spend as much as you want and do not worry about the tab. Essentially, we had supported the system with unlimited rocket fuel, without thinking much about the price of the ride.
7) Most physicians in general will do as much as they can to benefit their patients.
The majority of doctors want to do no harm, yet provide maximum service. Isn’t that the type of doctor we all want if we are sick? Who wants to hear, “you have a 10% chance of survival, there is an experimental therapy available, but sorry scientific studies have proven it is not very cost effective.” The fact that for-profit and non-for profit entities have learned to leverage the system to maximize revenues based upon these inherent principles of personal self interest to live as long and healthy life as possible should not surprise anyone. These principles have led to the discovery and usage of some of our most promising therapies.
8) Who speaks for the uninsured?
Our country has over 40 million unisured, over half are estimated to be children. Will reducing overutilization of services support coverage to the uninsured without shifting the incentives to do so? The answer is no. One way forward will be to form a public and private partnership to pool clients and provide basic health services as well as a reasonable safety net for those unemployed and looking for work.
Personal Reflection - Strengthening Health Systems
In Tanzania, I have had the privilege of working with the public and private sectors to develop strategic recommendations on how to improve patient care for infectious (HIV/AIDS, TB, and Malaria) and non-communicable diseases such as diabetes and heart disease. What is required to complete this activity is a detailed analysis of the entire health care value chain. This involves an understanding of factors and stakeholders that influence supply of demand health services that impact delivery.
Supply factors include; cost of medical education, clinician decision making, medical technologies, and public private partnerships, demand includes; patient driven demand, financing, as well as societal values and context for expecting health services. A common flaw in trying to assess a health system is isolating specific components without taking into account the entire value chain. Thus while overutilization of services make compelling news stories, these are symptoms of a more complex value change and production process that needs a closer examination.
The rising cost of health care has been an issue for over 40 years, especially since the establishment of Medicaid in 1965. The problems are not new. These include the introduction of live saving yet expensive medical technologies, limited cost effectiveness data for services/technologies/procedures, a focus on illness and not wellness/prevention, and inconsistencies as well as misalignments between the demand (patients), payment (insurers), and supply (physicians) for health service delivery.
What is required is a national, yet decentralized office for health care quality/delivery improvement tasked to develop a series of pilot initiatives that examine current best practices and support new practice models across the value chain. These would include both short term and longer term evaluations. We cannot afford to wait ten years for longitudinal results before taking action. Some evaluations could also be performed using simulations and forecasting models that use existing evidence for specific components of the health care value chain. S
Evaluations might include 1) bulk purchasing of primary care services for the uninsured to reduce overutilization of emergency room visits, 2) opinion survey’s regarding affects of reducing the cost of medical education on young MD decision making, 3) providing quality reports directly to consumers to help make difficult decisions regarding expensive/low yield procedures, 4) create research and development incentives for low cost diagnostic technologies to replace high cost/high margin services, 5) reimbursement models that use pay for quality report cards. These can all be evaluated to determine areas for savings in costs and while either maintaining or possibly improving health services.
Asante Sana Dr. Gawande for your insight and commentary.
