Now Viewing: Health Care Costs

When it Comes to Health Care, We’ve Been Living in the Land of Oz for Too Long

Sep 6, 2013, 4:30 PM, Posted by Tara Oakman

Cost Report April 2013

“Pay no attention to the man behind the curtain! The Great and Powerful Oz has spoken!” 

In some ways, our health care system has traditionally functioned much like the fantastic land of Oz depicted in one of my favorite movies.  Consumers and purchasers are expected to be passive consumers, doing what they are told and paying whatever price is levied based on a high degree of trust and limited information. This model seems increasingly ridiculous. We now face an urgent need to improve the quality and efficiency of our health care system.

But to do that, we need information, a lot of information. Health professionals, purchasers, consumers—basically anyone who comes in contact with health care—need timely, accurate, comprehensive information on cost and quality if they are to make smart decisions. Without such information, not even a wizard could do the trick. But right now, such information is usually unavailable, or, when it is accessible, too often indecipherable. In fact, the Institute of Medicine estimates that $105 billion is wasted every year in the U.S. because of a lack of competition and excessive price variations in health care, and a lack of information on the price of health care services plays a large role in this waste.

View full post

Carrots, Sticks, or Something Else? Motivating Doctors to Transform Health Care

Aug 14, 2013, 2:14 PM, Posted by Susan Dentzer

Craig Sammit Craig Sammit, MD, president and CEO of Dean Health System, and Holly Humphrey, MD, dean for Medical Education at the University of Chicago Pritzker School of Medicine

An old joke has it that the doctor’s pen is the costliest technology in medicine, since money typically flows where physicians’ prescriptions and other orders decide that it should go. As a result, influencing these decisions is key to achieving the Triple Aim of better health and health care at lower cost.

But what’s more likely to influence doctors: external factors, such as bonuses for improving the quality of care, or internal factors, such as appealing to their sense of altruism or satisfaction with their work?  In other words, carrots, sticks, or something altogether different—what Daniel H. Pink, author of Drive, calls “our innate human need to direct our own lives, to learn and create new things, and to do better by ourselves and our world”?

View full post

New Role for Health Care Providers: ‘Hot-Spotting’ Unhealthy Communities?

Jun 28, 2013, 9:21 AM, Posted by Susan Dentzer

In his now legendary approach to urban medicine, physician and Robert Wood Johnson Foundation grantee Jeffrey Brenner, MD, pioneered the technique of hot spotting—making block-by-block maps of Camden, N.J., examining residents’ hospital costs and identifying the handful of patients who cycled in and out of those institutions and racked up stratospheric medical bills.

What if America’s hospitals and health systems used similar techniques to identify the nation’s poorest and least healthy communities—and then teamed up with local community development organizations to set them on a path to better health?

David Fleming, a physician who directs Seattle’s public health department, made that pitch recently to members of the Foundation’s Commission to Build a Healthier America. National health reform, he said at the panel’s June 19 Washington meeting, affords an opportunity to nudge health care providers to reach outside their facilities to hot spot areas in need of health improvement. “The solutions to health in this country lie beyond the walls of the clinic and in our communities,” Fleming argued.

View full post

This Year’s Health Care Transformation Oscar Goes To…

Jun 17, 2013, 3:55 PM, Posted by Michael Painter

A doctor reviews information with a patient.

For an actor—let’s call her Jennifer for discussion purposes—who suddenly has a big award-winning breakthrough—there is nothing sudden about her success.  Jennifer’s accolades come to her not by accident but rather after years of below-the-radar hard work, striving and struggle.  That same principle applies to seeming sudden success in other fields—say, health care.  In fact, today let’s go crazy and salute some breakthrough health care actors.  Health care is transforming before our very eyes. 

Hang onto your hats, because it’s changing from one predominantly focused on churning out more services and procedures to one relentlessly driving the right care at the right time at the best price. 

That’s not happening all by itself. That slowly accelerating transformation could seem sudden—or spontaneous.  It might seem like it’s happening effortlessly—almost by magic.  Nothing, of course, could be further from the truth.  Trust me— there is a bunch of struggling, starving transformation artists who have been working years for this moment—like the great people at the Consumer-Purchaser Disclosure Project.

View full post

Low-Cost, High-Quality Health Care: Not Made in the USA?

Jun 13, 2013, 3:22 PM, Posted by Susan Dentzer

Susan Dentzer

Imagine that you’re a heart patient. You go to the hospital for open heart surgery and recover successfully. As you leave for home, you’re handed a bill for the surgery and hospital stay—for $800.

In the high-priced world of U.S. health care, where charges for such procedures typically run into the six figures, that price is practically unthinkable. That’s why the idea of $800 heart surgery comes all the way from India—and why the largest nonprofit health and hospital system in the U.S.,  Ascension Health, wants to figure out how it might be replicated within its walls.

Americans are accustomed to thinking that the best ideas are hatched here and then exported abroad. But in health care, it’s clear that we have plenty to learn from other countries,  especially from efforts to provide care in low-resource settings, such as in much of Africa, Asia and Latin America. 

View full post

Sorting Out the Meaning of Hospital Pricing Disparities

May 21, 2013, 12:57 PM, Posted by Susan Dentzer

Susan Dentzer Susan Dentzer: Toward a Healthier America

What does U.S. health care have in common with an exotic international bazaar? The prices at either one are almost never posted, whether for a heart bypass operation or an antique rug. And the final price will almost certainly have little to do with the seller’s opening bid.

The nature of the U.S. medical bazaar was laid out earlier this month when the Centers for Medicare and Medicaid Services (CMS) released the prices billed to Medicare by more than 3,300 hospitals for 100 of the most common conditions or procedures. Not only was there wide variation in what hospitals charged, but there was also considerable variation in what Medicare actually paid—even though  hospital payment rates have been set prospectively, based on nearly 800 so-called diagnosis related groups (DRGs) for 30 years.

View full post

Susan Dentzer: Toward a Healthy America

May 9, 2013, 4:38 PM, Posted by Susan Dentzer

Susan Dentzer Susan Dentzer

Many of the nation’s health economists are reviewing recent history to figure out what factors, besides the weak economy, might have caused health spending to slow over the past few years.  That’s a useful exercise, of course, but it’s even more crucial that we be hyper alert to the rocky health spending ahead—particularly as millions of Americans prepare to gain health coverage under the Affordable Care Act.

Towards that end, the Robert Wood Johnson Foundation recently teamed with several other nonprofits to fund four major analyses on health costs. The resulting reports, listed below, offer strategies for achieving a sustainable rate of growth of health spending, up to a trillion dollars’ worth of federal savings over a decade, and major improvements in the care provided to Americans.

In an era characterized by a lack of national consensus on so many pressing issues, these reports have a surprising amount in common. Each calls for even greater acceleration of the move away from fee-for-service payments to health providers, and toward payments pegged to improved health outcomes.  Almost all the reports propose major changes in Medicare and Medicaid, as well as extending payment and reforms to the privately reimbursed segments of the health care system.

Four reports do not a national groundswell make, but they could do provide the rationale for federal legislation, regulations and private sector system transformation that could further constrain health spending while improving care.

Medicare. Most of the reports envision fixing aspects of the traditional Medicare and Medicare Advantage programs, while simultaneously engaging in far broader reforms.

For example, the National Commission report proposes jettisoning Medicare’s troubled physician payment formula, asserting that it “has not worked in practice and shows no prospect of ever working.”  The Bipartisan Policy Center proposes replacing the formula with episode-based or case-based payments tied to quality measures, again breaking the longstanding link to fee-for-service, while The Partnership for Sustainable Health Care report calls for gearing Medicare payments for new treatments to their effectiveness relative to other treatment options already available.

As for the people those programs cover, both the Bending the Curve and Bipartisan Policy Center reports propose a new benefit structure for the traditional Medicare program that would better protect patients from catastrophic costs while imposing a combined $500 deductible for hospital and physician services.  Higher income Medicare beneficiaries would pay higher premiums. And to encourage more appropriate use of care, there would be no more “first-dollar” coverage available in Medigap supplemental insurance – only coverage with a deductible of at least $250, and a limit on covering no more than half of an enrollee’s Medicare copayments or coinsurance.

New Care Systems. More important, the reports recommend that all of Medicare transition to a dramatically new system of care provision and payment.  The Bipartisan Policy Center uses the terminology “Medicare Networks; Bending the Curve calls it “Medicare Comprehensive Care,” and says it would build heavily on emerging accountable care organizations. Providers would be paid capitated rates for assigned patients, and would have to meet a set of quality and performance measures to receive full payment.  These payments would grow over time no faster than the overall economy.   Within five years, Medicare beneficiaries could be encouraged to join these organizations through incentives, such as reductions in Medicare premiums and copayments.

Tax and Antitrust. The reports also agree on a need to cap the federal tax exclusion for employer-provided health insurance.  Taxing individuals on any employer contributions to fund the most expensive health would both raise revenue and curb some of the inducement for greater consumption of health care. What’s more, the reports argue that federal antitrust enforcement should block hospital consolidations that simply give the institutions greater power to raise prices, but encourage such mergers if it results in integrated delivery systems that take on financial risk for delivering inferior quality or excessive costs.

Medical Liability. This favorite issue of physicians is also addressed, with several of the reports recommending major changes in medical liability that would sway doctors away from providing excessive care meant to prevent lawsuits.  One recommendation is for so-called “safe harbor” protections for clinicians who effectively practice recognized standards of care, and call for replacing tort claims with a new system that would directly compensate injured patients.

Of course, if effectuating any of these changes were easy, it would already have happened. Enacting any of these proposals will run up hard against defenders of the status quo. But change begins with a groundswell of agreement around what is possible and desirable.  These reports provide an important starting point for the next round of serious health care reforms.