Early in May, the Obama administration’s health reform initiative received a major boost — or at least a public relations coup — when representatives of six major healthcare system stakeholder organizations convened at the White House and promised to work to deliver $1.7 trillion in healthcare cost reductions over the next 10 years.
And while the announcement was met with some justifiable skepticism (there were, after all, no specifics offered for how the savings would be achieved), it was undeniably remarkable that the heads of the Advanced Medical Technology Assn. (AdvaMed), America’s Health Insurance Plans, the American Hospital Assn., the American Medical Assn., the Pharmaceutical Research and Manufacturers Assn. (PhRMA), and the Service Employees Industrial Union were all on the same podium and apparently the same page as the reform-minded President. The degree to which they were there out of a commitment to real reform, as opposed to an effort to keep a seat at the table in order to limit their jeopardy, was at the time an open question.
On June 1, the six organizations began to put some meat on the bare bones of their cost-cutting promises in a joint submission of their individual proposals for achieving the promised healthcare savings (get it here). In doing so, they kept a commitment made May 11 to get back to the President with specifics by the beginning of June. Whether those specifics will satisfy the skeptics, however, remains an open question. The proposals cover ground that is already well-established as central to Obama’s program: Administrative efficiency driven by standardization and automation of information flows, elimination of medical errors, coordination of care and control of overutilization, management of chronic diseases, health education and disease prevention and comparative effectiveness research to inform clinical decision making.
It’s all perfectly reasonable and high-minded, but no one is stepping up to make meaningful sacrifices. Perhaps we can improve healthcare system performance and control healthcare costs without adversely impacting any key stakeholders; reading these proposals you’d certainly think that is true. But one needs to wonder whether there isn’t some substantial “magical thinking” at work here.
AdvaMed’s program commitments on behalf of the medical technology industry exemplify the tone of the entire document. Not one of those commitments, for example, addresses a direct impact on the device industry itself. After all, devices represent only about 6 percent of heath expenditures, so there is little to be gained by squeezing the sector. And devices or diagnostics can find new markets by enabling efficiencies as well as by expanding the therapeutic arsenal. The device sector, in other words, can afford to be agnostic on the critical choices that healthcare reform forces us to make.
AdvaMed does call for:
• Broad structural changes in the reimbursement and delivery system designed to encourage equality and efficiency;
• A substantially expanded federally supported comparative effectiveness research effort as embodied in the Baucus-Conrad bill (PDF);
• Establishment of payment systems that reward providers for the quality and efficiency of care provided;
• And an expanded national commitment to health promotion and disease prevention and to fundamentally restructuring our health care system to provide improved management and treatment of chronic disease.
The language here is radical — “broad structural changes,” “substantially expanded Federal … effort,” “fundamentally restructuring our health care system” — but the details remain non-existent. Does AdvaMed support a public alternative to private insurance offerings? How would the organization propose to fund expansion of coverage for long-term care of the chronic disease population? The big questions remain unanswered and the specifics remain elusive.
To be fair, AdvaMed’s principled support for major system changes is a choice, not a necessity. And the choice does lead to the possibility of significant disruption in the patterns of business as usual. The fact that AdvaMed is not actively calling for restraint in the reform effort is itself meaningful. And the organization goes on to propose some more concrete initiatives.
It would, for example, work with the AMA’s Physician Consortium for Performance Improvement to develop quality metrics to help improve how device and diagnostic technologies contribute to the treatment and management of disease. It would also work to help reduce medical errors through a three-pronged strategy involving intensive education of member companies, a focus on device design to eliminate human factors as the cause of error and cooperative involvement with Joint Commission initiatives in the area.
These are not trivial activities; they would undoubtedly make a difference. AdvaMed is to be commended for devoting resources to these efforts. But there’s a vast gulf between the specific activities the device industry is committing to and the systemic values/goals it espouses in this document.
Is it real, or is it political posturing? Does it matter? The fact is that the device industry isn’t a root cause of healthcare system dysfunction and isn’t positioned to be a critical component in health system improvement. Device companies can develop technologies that respond to the demand for different functionalities and are doing so in impressive fashion; the medical technology sector is providing the tools that may facilitate meaningful change — but it won’t be the lead agent of change. Perhaps it is enough to be at the podium, lending support in principle.
PhRMA’s proposals — and the constraints of PhRMA’s role — are similar to AdvaMed’s. PhRMA juxtaposes commitment to large principles (e.g., quality metrics, broadened access, promotion of personalized medicine principles) with advocacy of perfectly reasonable but narrowly targeted specifics (e.g., clear and reasonable pathways for approval of biosimilars, better implementation of FDA’s critical path initiative, utilization of Part D data for quality studies). Notably, PhRMA joins AdvaMed in advocating on behalf of the Baucus-Conrad model for comparative effectiveness research. Apparently, this is a model — with its restrictions on direct utilization of research to dictate care protocols — with which industry can live.
The proposals from AHIP on behalf of the insurance industry give advocates of real reform much more hope, primarily because there is a real connection between the broad reform principles the organization espouses and the specific actions it advocates. Administrative simplification is at the heart of the insurance industry’s program: Standardization and automation of five key functions (claim submissions, eligibility determination, status tracking, payment and remittance); Web portals to allow physicians to interface with all insurers on a regional basis and patients to compare insurance offerings across companies; uniform national quality metric collection and reporting; initiatives to improve health literacy; and patient empowerment through personal health records.
The one great and consistent message to be gleaned from the industry proposals is that every significant healthcare system stakeholder group believes that real change is inevitable; there are no institutional advocates for the status quo, no feverish defenders of the functionality of the current system. There is a near perfect consensus among all who matter that quality is disappointing, access is unacceptably unequal, errors are too frequent, paperwork is too burdensome and costs are far too high.
Furthermore, there is no apparent fear that the political system will take a step too far — to a single payer system, for example. AdvaMed, PhRMA, AMA, AHA and AHIP can all join organized labor to get behind major healthcare reform because it is going to happen no matter what, because opposition is untenable and because the scenarios that frighten them are off the table.