Bringing Change to Health Care and Saving Money

As I write this the Obama Administration has just appointed a new Secretary of Health and Human Services. Last week I heard someone ask how we could possibly go forward with extensive economic reform without knowing how health care reform would inform the President’s policies. The commentator needn’t have worried. Even without a person in the HHS position, the scenario for health care reform was already in place.

In terms of policy leadership, the driver of this change is and will be the Director of the Office of Management and Budget (OMB), Peter Orszag. The former Director of the Congressional Budget Office (CBO), Mr. Orszag has clearly articulated over the past two years just how critical health care issues are to the federal budget and the overall US economy. The basic drill goes like this. After about 2020, the rest of the federal budget, including Social Security, will remain relatively flat, even as the population ages. But health care costs through Medicare and Medicaid will continue to grow at an increasingly unsustainable level, reaching the nearly unimaginable proportion of about 20% of GDP by 2082.

Growth in the cost of care is being driven by what CBO and now OMB call “Excess Cost Growth.” This type of growth is an amalgam of the price of health care, technology, and demand. Central to the concept of Excess Cost Growth is the reality that the return to the American public for health care expenditures is of little real value. Nor does it provide high levels of consumer satisfaction. In recent testimony by Douglas lmendorf, Mr. Orszag’s successor, he concluded that, “(t)he available evidence also suggests that a substantial share of spending on health care contributes little if anything to the overall health of the nation, but finding ways to reduce such spending without also affecting services that improve health will be difficult.” Difficult indeed, because underlying this policy position are the ideas that we will not save much by bringing everyone into the system, that pure market principals cannot work, and that leaving health care reform to incumbents in the current system will do nothing, except perhaps move us faster toward perdition.

What we need is a set of policies and practices to reinvent health care in the US. There is some very good news here. Over the past few months you may have had occasion to wonder how we will pay for the economic stimulus package, business bailouts, and tax cuts that that are included in the President’s economic plan. The answer is a more rational health care system. Locked up in our profligate health care expenditures is a potential savings of $650 to $750 billion. That is to say, were we to provide health care at the level of the MOST expensive system in Europe, then the level of ANNUAL savings we would realize is $650 to $750 billion.

Developing a more rational health care system will not be easy work. Health care in the US, at about $2.3 trillion, is the sixth largest economic undertaking on the face of the globe. And the potential savings are not in a bag conveniently marked excess expenditures. They are hidden in the costs of new equipment and technologies, professional fees, lab tests, prescriptions, and the millions of actions large and small that take place daily in the production of health care services.

Of course, one way to reduce the price of care would be to have everyone in health care take a 10%pay cut, though we should exempt everyone making less than $50,000 and have a sliding scale for the rest. My back of the envelope math shows that this would save about $100 billion. My intuition is that it is about as likely to occur as those bankers are likely to give back the bonuses they received for their banner performances during the housing bubble.

In any case, I don’t think we should attempt across the board pay decreases. What we need to do is think critically and creatively about the ways we organize and deliver services, from primary care clinics and practices, to the in-patient setting, to community-based management of disease, to prescription delivery, to the provision of basic dental health services, to the care we provide at the beginning and end of life. Each of these modes of delivery is built upon a practice model for the organization and delivery of a unit of health care. Changing our existing practice models is key to realigning our arrangements for care and producing different outcomes, whether we are concerned about clinical outcomes, costs, or consumer and provider satisfaction.

A practice model is just a framework for a process to create something. It is a tool or a paradigm and to some degree should be easy to change to produce a desired set of outcomes. But current practice models tend to be informed by so many tangential concerns, issues, and interests that it is difficult to clearly see how we might alter them in order to improve health. This is because the interests of the incumbents in health care are well served by existing arrangements for structuring, delivering, and financing health care. Should we change any part of these arrangements, we will disrupt the status quo which offers a bounty of benefits to all that are a part of the current models of care. To develop a strategy for building new models, we need a careful examination of what informs the old models.

First and foremost is the traditional pathway. What has gone before has great power to stave off any innovation. The traditional pathway may not have an evidence base. It may even run contrary to evidence that supports a pathway with better outcomes. But providers and consumers will cling to this way of organizing care, because they are comfortable in the old ways.

There is considerable attention paid to the legal structures or practice acts which surround these models of care. What is the scope of practice for a nurse practitioner? How might pharmacy technicians play a different role in the delivery of prescriptions? In what ways might an advanced practice dental hygienist organize care so that a population might be served differently? These are the types of questions that are driven by a focus on the legal limitations on practice. These limitations are important, but not as confining as we might think. Practice acts vary considerably from state to state for many professions and occupations in health care. The differences between them produce wide variations in the ways in which care is organized. Even within a state, there may be such latitude in many practice acts that other factors come in to play to create variation in structure and outcome.

These other factors are important, because they provide latitude to change practice without having to necessarily alter the practice acts themselves. What gets paid fordetermines in large measure what gets done. After almost two decades of quality research we know what works and what doesn’t. We need to start paying only for what does. If individuals want things that don’t have an evidence base and they can pay for them, then more power to them. Eric Hoffer, the American social philosopher, once wrote that, "(y)ou can never get enough of what you don't really need." Nothing is perhaps truer of US health care. We don’t really know the value of what we consume or if we should consume it at all, yet paying little or nothing for it, we rush to consume more and more. We need some help with this and reconfigured practice models across the continuum of care would help produce these improvements.

Technology and how it is used both determines the current practice model as well as shapes and even drives the adoption of new models. There is much hope for the power of the electronic health record to change current practice models. But most technologies fit themselves to existing patterns of work if there is not an investment in efforts to reengineer the basic processes that are involved. 

The preferences of consumers and their willingness and ability to pay also shape the practice model. From primary care in Target to hip replacement in Costa Rica, consumers are beginning to take more responsibility for their care, where it is received, who provides it, who pays, and other aspects of the consumer experience of health care. This new role for the consumer is also leading some to take more responsibility for their health, including seeking resources to assist them in this change.

Location plays a role in practice model creation and limitations. For some time now, we have witnessed different models of practice emerge from settings that are distant from mainstream practice. Rural settings and the military provide terrific laboratories to see what new models of practice might produce. Nursing homes and elder care communities may be geographically near the mainstream, but the relative lack of attention and resources they receive makes them, and other alternative practice sites, also serve as great laboratories.

Perhaps the most powerful limitation or spur to innovation in practice models lies with the psychology of the professional prerogative. If the leaders of a profession understand its practice as being purely at their discretion, then there will need to be draconian changes external to the profession to bring about change. However, if the leaders understand that professional practice is a public trust and that innovation and change is an essential component of that trust, then they will be more welcoming to the need for transition and take comfort in the movement forward.

The remaking of the current health care practice models, including chronic disease management, primary care, oral health care, delivery of pharmaceuticals, beginning of life and end of life care, covers much of what needs to be done to recapture the currently wasted expenditures on health care. As I mentioned earlier, none of this will be very easy or quick.  But it does play to some of the great American cultural strengths of innovation, entrepreneurship, creativity, and a willingness to be revolutionary when times demand it. I’ll close this month with another quote from Eric Hoffer. This one reminds us that these dire times might paradoxically be just what we need: “It still holds true that man is most uniquely human when he turns obstacles into opportunities.”