Friday, December 12, 2008

Costs - A Paradigm Shift to a Lower Cost, More Efffective, Affordable, Reliable, Predictable, and Commonsensical Health System?

A Report on the Department of Health and Human Services December 10, Washington, D.C., and Conference “The Innovation Imperative: Aligning Payment Incentives and Reforms to Encourage Health Innovation”

By Richard L. Reece, MD. Sometime Speaker, Occasional Commentator.
And Editor-in-Chief, Physician Practice Options (

Just do it.

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On December 10, 56 national innovators, policymakers, and Health and Human Services (HHS) officials and managers, met at the Madison Hotel in Washington, D.C., to explore innovative ways to save Medicare and Medicaid and the U.S. health system from bankruptcy. The forum focused on ground level innovation, rather than national reform. I know. I was there as a designated innovator. HHS, with the Lewin Group’s help, staged the conference.

Opening Remarks

In opening remarks, Benjamin Sasse, PhD, HHS’s Assistant Secretary for Planning and Evaluation of Health Policy, commented that in Medicare’s last midyear review, experts projected Medicare may go bankrupt by 2015 or so, meaning CMS(Center for Medicare and Medicaid Systems) wouldn’t have money to pay hospitals and doctors. The time has come, Sasse said, to deal with economic and political realities and to honestly exchange views of what innovations are needed and can be done.

Next Six Hours

For the next six hours, presenters, questioners, and participants batted back and forth about what innovative steps might save the system.

Everyone will have a view of what took place, and I will share mine – a veteran physician’s watcher’s take, previously expressed in my book Innovation-Driven Health Care: 34 Key Concepts for Transformation (Jones and Bartlett, 2007) and in 680 subsequent blogs,

A word of warning. I am a physician cheerleader for liberating the right doctors to do the right thing for patients, which is not always the right thing for hospitals, health plans, payers, or politicians.


1. Keynote Address - Jason Hwang, MD, MBA, Executive Director of Healthcare Innosight Institute and co-author of The Innovator’s Prescription: a Disruptive Solution for Health Care (McGraw-Hill, 2008). Hwang gave no overarching disruptive solution, instead choosing to present pros and cons of various business models.

2. Alternative Practice Solutions – William Sage, MD, JD, Vice Provost for Health Affairs, U. of Texas, and Rushhika Fernandopulle, M.D, M.P.P. Founder of Renaissance Health. Sage spoke of retail clinics and noted 50% of Americans live within 5 miles of Walmarts, while Fernandopulle told of how his primary-care based organization had developed low-cost care solutions dealing with Boeing Corp, Atlantic City companies, and Houston janitors.

3. Innovations in Management of Chronic Disease – Ariel Linden, DrPH, MS, President, Linden Consulting Troop, Chad Boult, MD, PPH, MBA, Geriatrician, and Professor Johns Hopkins, and John Goodman, PhD, President and CEO, National Center for Policy Analysis. Linden said disease management doesn’t always work well in the real world; Boult stressed how cuts for the chronically ill with multiple illnesses can be cut by 11% with a structured approach with active nurse guidance; and Goodman spoke of the effectiveness of market forces in cutting costs and improving care.

4. Ideal Meets the Real in Healthcare – Incentives and Uncertainties in Medical Practice Design, Michael Millenson, President, Health Care Advisor, Gordon Moore, MD, And Ideal Medical Practice Movement. Millenson warned and warmed of the negative consequence of the information revolution; Moore said solo doctors with IT help make a positive difference in patients’ lives.

My Conclusions

And here’s what I concluded (others will feel differently) from presenters” remarks.

• We have a genuine cost crisis in the U.S.; it’s pushing Medicare towards insolvency, bankrupting states, and threatening U.S. global business competitiveness.

• The crisis is psychological as well as financial, with feelings that surely we can do better; that current solutions are structurally misguided for patients and providers, and those taking patients’ convenience and affordability more into account is a must.

• The U.S. health system is undergoing profound structural changes with more hospital physician employment, more hospitalist care, more access of patients to information on Internet web sites, more decentralized and even globalized care, more migration to home care , more telemedicine and remote care monitoring, and more care by non-physician professionals.

• A new openness and pragmatism exists towards small and free market solutions – retail clinics; concierge practices; consumer-driven care with HSAs and high deductible health plans; cash-for-care rather than prepaid care; innovative delivery systems aimed at self-funded employers which cover 100 million Americans. In effect, more cost-savings and effective more efficient care can often best be achieved through small scale and solo practices rather than through large integrated multispecialty groups or hospital-based systems.

• A growing and widespread recognition that primary care shortages are a huge. Monumental problem attributable to inequitable reimbursements and negative life style and lack of respect, and that a primary care-based system produces lower costs, more patient satisfaction, better results and outcomes. One consequence of the emergence of the medical home as a coordinating, comprehensive balm for fragmented care

• A mounting sense that universal EMR adoption by physician is unlikely, that its importance as the Holy Grail as an information source for physician compliance and patient instruction is overstated and overrated , but that selective use of EMRs in retail clinics, worksite clinics, innovative delivery systems, and competing physician systems is essential and desirable for quality and value comparisons.

• A consensus that bottom-up innovations by entrepreneurial primary care physicians who are closer to patients and who skillfully use IT are a powerful force for good and compassionate care; and that top-down mandates about pay for performance, compliance with quality indicators, and hospital-physician integration, e.g. bundled billing and phasing out of fee-for-service, may not work well in the real world.

• The practical reality that nurse practitioners and other physician extenders following a more structured approach and with power to treat and engage patients directly in their homes will be absolutely necessary if we are to effectively manage chronic disease in the elderly and other underserved populations.

• Growing evidence that mandated protocols, health risk appraisals, and wellness and health promotional programs at the worksite do not fundamentally change employees or patient behaviors.

• The dawning realization that corporate America, large and small businesses alike, are ready and willing to follow the lead of innovative MD/MBAs and other knowledge workers with deep knowledge of medical , academic, and corporate cultures, to skirt the usual managed care model and other third parties, and to introduce more pragmatic and more innovative delivery approaches to save money and produce healthier workers.

• Recognition that hospitals, specialists, and expanded prepaid insurance are driving costs and may be part of the problem rather than the solution for a cost efficient and health effective system.; and that big institutions and organizations are rewarded for innovations at the expense and ignoring of innovators on the ground.

• Finally, an emerging consensus that we know how to reduce costs and improve care and have shown it can be done through more primary care physicians with higher pay, more active participation of nurses, more market competition by doctors and hospitals, more innovative delivery systems – retail clinics, pay for direct care instead of third party prepaid care, more focus on keeping people out of hospitals and away from unnecessary care by specialists. But the questions are: can we alter the tyranny of the status quo; do we have the political will to do what needs to be done, and why don’t we just go ahead and do it?
One thing that struck me about the presentations and sideline conversations was the lack of talk on any political ideology or single political “fix” for a Pied Piper system, i.e. universal coverage, that would simultaneously cut costs, improve care, or achieve compassion.

I close with this verse on the Washington, D.C, Health Care Merry-Go-Round.

Round and round, faster and faster, she goes,
Where she stops nobody really knows,
But it’s likely to stop at a new paradigm.
The U.S. can no longer afford another dime.
For this time around,
No more money will be found.
For health from high above,
When push comes to shove


elements said...

Dr Reece,

I enjoy your blog. I am a Family Practice physician. I see by your bio that your are a pathologist and therefore more likely than not to lack the experience of interacting with 30 to 35 people a day in a primary care setting. This is not meant to be a snarky comment, rather, an observation.
One ingredient that is missing from everyone's assertions is the behavior of the patients. In the aggregate, they do not follow the direction of their physician. They are more responsible for the current state of affairs than any other factor. They don't take their medicine, they continue to smoke, not exercise, over eat and generally abuse themselves. Patients are not ever held to account for the meaningless litigation they participate in and the subsequently expensive defensive practice of medicine that arises from it. Patient surrender to the practice of intrusting their care to people who are not even phyiscian trained and paying them a physician's fee. Would they get on a plane flown by the Pilot Assistant?
Competition is the only remedy to this problem.. Patients should be allowed to choose good care from bad, a doctor from someone who is not a doctor etc. Physicians who provide good care and educate their patients to temper their natural tendecies to inertia and apathy will have happier practices. Physicians should also refuse to continue to enable patients who abuse themselves.


Richard L. Reece, MD said...

You're right.I am a pathologist, and I have no experience seeing 30-35 patients a day. But I agree much of problem today are patients themselves. Changing patient behavior is a profoundly difficult problem. You don't change old habits in a day, which is one big reasons P4P will fail. But it is politically incorrect to blame patients for any shortfalls in the system.