In my last post, I argued that the policy alternatives under discussion in the Congressional healthcare reform political debate don’t really address the goals of quality improvement and cost control.
So why should we believe reform will actually produce the promised improvements? Why will quality get better? Where will the savings come from?
To me, the answer is clear: Reforming legislation is necessary, but in no way sufficient to produce either significant cost control or meaningful quality improvement. The legislation will need to be followed by major changes in the way health insurers and providers do business. The seeds of the needed change are contained in the reform proposals, but they’ll need to be carefully cultivated before they bear fruit.
1. Administrative cost reduction. Insurance claims submission and administration are a major excess cost in our current system. Providers and insurers employ buildings full of people who push forms and enter data — generating massive costs that don’t contribute in any meaningful way (the argument goes) to healthcare. That’s the fall-back position of single-payer system advocates — if there is only one payer, the process is greatly simplified; if the doctors are on salary and the hospitals are on fixed budgets, it’s simpler still; and if everyone is covered, you don’t need any paperwork at all!
Welcome to the Soviet medical system circa 1980, or the British National Health Service — bureaucratic nightmares with largely dissatisfied patient populations. We’re not going there and we should stop talking about it.
However, current proposals do promise significant reduction in administrative costs, from three sources:
Electronic health records maintained in a standardized and readily transferable format: EHRs remove a lot of paper from the system; if they’re standardized so that every insurer and provider can easily search/read/store every EHR, administrative costs associated with patient intake and discharge, transfers, claims processing, billing, etc., will be reduced. The need for duplicative services when patients change providers will also be reduced.
Standardized electronic billing forms and protocols: If every insurer requires exactly the same information and format on bills, the only insurer-specific variable for providers is where to send the bill. All billing departments will need to know is the unique identifier for each plan — the patients EHR. It all ought to happen automatically. One can easily imagine these systems eventually converging to a level of uniformity sufficient to allow for wholly automated billing.
Increasingly uniform insurer offerings: This reform — primarily intended to make it easier for consumers to understand and compare insurance offerings — will simplify administration for all of the participants in the healthcare transaction.
2. Consumer empowerment
A number of elements in current reform proposals will empower consumers in their interactions with the healthcare system. That’s a good thing for quality improvement and cost control:
EHRs make it easier for consumers to switch providers — no wait or cost to transfer medical records, etc.
A defined menu of different insurance offerings, common across insurers and explained in plain language, will help make for smarter consumers.
It will also change the nature of competition among insurers. There won’t be much to differentiate one insurer from another — except quality. If insurers must compete on the basis of quality outcomes, they’ll search for and find ways to promote quality outcomes. Dozens of insurers testing different competitive models for quality promotion is a vastly superior scenario to a single-payer system.
Readily accessible provider quality reports and audits will be another element in creating more informed healthcare consumers. That’s a more powerful motivation to improve quality and patient satisfaction than the relatively meager payment penalties of recent Medicare initiatives.
3. Clinical Practice rationalization
Healthcare’s business model in the United States is broken. We deliver too much care in the most inefficient sites, a startling proportion of the drugs and diagnostic procedures we prescribe are ineffective, we know far less than we should about the relative merits and appropriate selection of different treatments for the same conditions, and the incentives built into our payment systems promote overutilization and fail to promote quality.
Where things are the worst is where the greatest possibility for improvement lies. It’s also the place where current reform proposals are weakest. Nonetheless, they do start the process in a few vital areas:
Broadened (or, should we hope, universal?) health insurance coverage will move a lot of primary care delivery out of the Emergency Dept. (where it’s ridiculously expensesive and often too late to be effective) to the doctor’s offices, clinics and neighborhood health centers where it belongs.
Drug store clinics staffed by physician assistants or other practitioners and licensed to care for defined menus of “routine” conditions is a private sector initiative — enabled by state licensing agencies — that also moves the system towards more rational care delivery.
Comparative effectiveness research, almost certainly an increasingly important part of our future healthcare system, can provide the clinical data to help practitioners make better therapy choices and reduce the guesswork (and the irrational geographic practice differences) that characterize too much of our healthcare decision-making.
Tort reform — in the air but not central to the reform effort — would help rationalize service delivery and reduce unnecessary services by eliminating the need to practice “defensive medicine.”
I’m convinced that most available statistics understate the importance of this issue. Doctors don’t only practice defensively when the case in hand raises a red flag or poses a difficult question. Defensive prescribing and testing is ingrained in the culture of medical practice, something that benefits no-one and costs all.
The key here is not simply to limit the size of awards. Instead, we need a set of clearly articulated protections from malpractice actions for physicians and hospitals that conform to established and well-communicated standards, combined with strong and credible oversight of professional conduct by medical societies and state licensing boards. Doctors and hospitals should not be protected, and patients should have legal recourse, when there is real negligence and/or professional misconduct. But practitioners should not be at legal risk simply because things didn’t turn out well.
4. Pay for quality, not quantity. This is part of the reform discussion but almost wholly absent from concrete proposals before the Congress. It would be a major change in the organization of the business of healthcare — how doctors and hospitals are reimbursed, where care is delivered, by whom and with what degree of patient choice. We have models for how this might be accomplished, but only very poor roadmaps for how we move toward one or another of those models.
This year’s legislation is likely to provide the tools to enable the business model changes required to realize reformers’ goals. But it won’t close the deal.
The biggest task — realigning incentives to support quality and cost control — will require a lot more work. And that’s where the savings are.