Wednesday, April 20, 2011

Book Review: Health Care Will Not Reform Itself

April 20, 2011 - Today I received a copy of George Halvorson’s book Health Care Will Not Reform Itself (CRC Press, 2009). Halvorson is CEO of Kaiser Permanente, the largest not-for-profit health plan and system in America – with eight and a half million members, 160,000 employees , 14,600 physicians, 35 medical centers, 431 medical offices, and $42 billion in annual revenues with $1.3 billion in net income.

Kaiser has pioneered use of electronic medical records and computer connectivity between patients and caregivers. Kaiser has invested $4 billion to computerize medical information for members and patients.

Halvorson’s major thesis in his book is that we have the largest and most costly medical non-system in the world. And for the wrong reasons. Our non-system is piece-meal, functions largely on a fee-for-service basis, costs $2.5 trillion a year to maintain, has 18,000 individual codes, and regrettably no billing codes for better outcomes, cures, data collection, measuring improvement, or for connecting its members.

The consequence of this chaotic system, says Halvorson, is an unlinked, inconsistent, often crazily incented, volume-based array of profit-making business entities. This situation suits most health care businesses, hospitals, and doctors just fine, for individual participants enjoy continual growth and wide profit margins, who do as they please and usually profit from their mistakes.

Everything, it seems, is changing, but the status quo, and present health reform efforts are likely to be futile. To use Halvorson’s words, the system will not reform itself.

What we need, claims Halvorson, is the double mandate, a system operative in European countries like Austria, the Netherlands, and Switzerland, which have systems in which private companies, not government, provide all coverage. Those countries use a double mandate – Mandate One; Everybody MUST buy coverage; Mandate Two: Every private plan MUST sell coverage to anyone who applies.

In other words, the ideal system has universal coverage with everyone in the risk pool.

Halvorsan’s 157 page book is more complicated than just implementing a double mandate. To make such a system work, we need other things as well:

• a culture of health to minimize obesity and diabetes,

• an agenda of continual health improvement ,

.a national forum for cost reduction,

• complete data on care cost drivers,

.a national commission on health care costs,

• a national interoperative electronic system connecting everybody,all the time, real time,

• packages of care rather than pieces of care,

• teams of caregivers rather than individual caregivers,

• virtual care even in remote locations, and continuity and accountability.

Thi is easier said than done, of course, given our fragmented system with incentives to keep things the same and to make more money while doing it.

Halvorson has an obsession with computerization. On last page of his book, he asserts, ”If we computerize care record keeping appropriately, we could have a database that turns 250 million Americans into a huge, ongoing, data-rich clinical trial. We could and should become a nationwide culture of medical excellence, medical efficiency, and continuous medical improvement.”

“Could, should.” These two words pretty much summarize Halvorson’s belief about the need for a systematic approach to care. We could do it, and we should do it. He has put these beliefs into action at Kaiser.

He says one huge obstacle to health reform is loss of revenue for providing better, more efficient care.

For me, a key sentence in his book is:

“That potential loss of revenue from improving care is a harsh reality that American economists and policy gurus need to understand if we really want to reform health care delivery in this country. A few large systems in America – like the Geisinger System, the Mayo Clinics, Virginia Mason, Intermountain Healthcare, Health Partners, Group Health Cooperative of Seattle, and Kaiser Permanente caregivers – are doing important work how health care can be improved with systematic re-engineering. “

“Those efforts are works of ethical commitment, not economic self-interest, and the caregivers involved typically end up with fewer billable events, less revenues, and no economic reward for their efforts. In fact, economic penalties are the usual outcome for most health systems.”

That is why getting from here to there, to systematic health reform, from profitable individual practice to collective non-profit practice , in Halvorson’s view, will be so difficult.

To me, this is an idealistic but unrealistic vision of what health reform will require in America, given that care is delivered in 5000 hospitals and by 500,000 physicians in independent practices, but it is a vision worth pondering. Halvorson’s arguments for reform are logical, but self-interests tend to be pathological and politics psychological.

Finally a word about Halvorson’s writing style. Before becoming a health care executive, Halvorson was a journalist. It shows.

• He writes in short paragraphs with short sentences with short words in short chapters,

• inserts frequent subheadings, bar graphs, and charts.

• Repeatedly stresses his main points – provide the right care at the right time at the right place, have goals, back your care with data, address the big problems, i.e, chronic disease.

• Provide care more cheaply, consistently, safely.

• Strives to be analytical rather than political or partisan.

He fails on the last point. This is a devastating critique of our present system – its incentives, its methods, and its results – compared to other nations.

Tweet: In Health Care Will Not Reform Itself book, Kaiser CEO says -universal coverage and universal acceptance by health plans –lowers cost.


HaynesBE said...

Thank you for this review. Sounds like Halvorson (like all proponents of government command and control solutions) conveniently forgets the difference between the market and government: voluntary interactions and coercion.

Freedom is messy, inconsistent and chaotic. He should continue to offer the best alternate he can in the free market. Kaiser does have a good product--so he should just let the market work and the best system(s!) will come out on top.


Richard L. Reece, MD said...

Halvorson is not advocating strictly government reform, but managerial reform carried out by private markets. But you are right. It is coercion from above rather than freedom from below.

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