Medicare, Providers, and Population Health: Collective Care and Individual Care

For the first time in its history, Medicare will soon track spending on millions of individual beneficiaries, reward hospitals that hold down costs and penalize those whose patients prove most expensive.

The administration plans to establish “Medicare spending per beneficiary” as a new measure of hospital performance, just like the mortality rate for heart attack patients and the infection rate for surgery patients.

Hospitals could be held accountable not only for the cost of the care they provide, but also for the cost of services performed by doctors and other health care providers in the 90 days after a Medicare patient leaves the hospital.

Robert Pear, “Medicare Plan for Payments Irks Hospitals,“May 31, 2001, New York Times

May 31, 2010 - Why would hospitals be upset that Medicare is tracking spending for each hospitalized Medicare beneficiary?

In calculating Medicare spending, the Obama administration wants to count costs not only generated during a hospital stay, the three days before that stay, and 90 days after, including the costs for those 20% of Medicare patients that are readmitted.

The new Medicare initiative, known euphemistically as “value-based purchasing,” is intended to get hospitals, in concert with doctors and other health care organizations, to act as one entity, thus coordinating care, improving over-all outcomes, and reducing health system fragmentation.

For want of better term, I call this “collective care” as opposed to “individual care.” The idea is that various health care providers, acting together, can improve “population health,“ another buzzword very much in vogue.

Presumably this approach, carried out through new approaches, like accountable care organizations (ACOs), will reduce fragmentation in the system and make hospitals and physicians “accountable” for outcomes, partly by exposing hospitals and affiliated physicians to financial risks.

There is one huge problem, however, hospitals and doctors may have little or no control over services provided after a patient’s discharge. In many cases in the present system, hospitals and associated physicians may not know precisely what happens after discharge - the myriad of organizations and individual providers that care for discharged patients. The hope is that "integrated" health organizations would resolve this fragmentation.

Furthermore, neither the hospital nor physicians can completely control the discharged patient’s behavior or anticipate and prevent complications in elderly, often terminal, patients who may out of the reach of either the hospital or doctors.

Yet the Accountable Care Act expects hospitals and doctors to assume full responsibility for the general and post-discharge health of groups of patients, not individuals.

It is unrealistic to hold all hospitals and physicians accountable for the care, expenses, and complications of large groups, i.e.,"populations," chronically ill, often fragile individuals, three days before admission, during the course of the hospitalization, and three months after their discharge from the hospital. Doctors care for the needs of known individual patients, not the statistic outcomes of unseen persons.