Friday, April 30, 2010

The Coming Health Care Transformation (by David Cutler)

This is being republished from

Today is the first day of the 2010 ACPE (American College of Physician Executives) Annual CME Conference.

This morning's keynote was delivered by professor David Cutler (Harvard economics professor and senior health care advisor to President Barack Obama, Cutler was recently named one of the 30 people who could have a powerful impact on health care by Modern Healthcare magazine.).

His presentation this morning was titled, "The Coming Health Care Transformation." Professor Cutler spoke of reform and focused on how we can improve the value of care. There will be an unrelenting focus on value.  Affordability and accessibility are the keys to coverage and we've seen this in Massachusetts. However, the federal deficit in on a collision course with a vast growth occurring in health care expenses.

The challenges we now face include:
  • Insurance reform
  • Coverage expansion
  • Improving the value of care
How do we improve value? When we think of value, we must think of the clinical dimension along with the service dimension. The clinical dimension involves the cost-effectiveness of the care provided. Service quality still needs improvement. Patients are not satisfied with the service aspects due to: long wait times, inaccessibility to providers, etc.
Why do we have low clinical productivity? There is an overuse of administrative personnel. Physicians are spending too much time filling out forms and performing other clerical tasks. We're also seeing too many acute care episodes and medical errors. 

So, if we look at the underlying cause, we recognize poor organization in medical care. We need to focus on the care experience and we need to fundamentally change the organization of health care.

In the U.S., we have seen a huge productivity growth. We're doing more with less in other industries. However, in health care, we're spending more and we're getting less. If we look at productive industries, we see 3 things in common:

Appropriate Information:
Productive industries use IT an enormous amount. They have access to appropriate information. Healthcare has been lacking the IT component. Every productive industry uses information well.

Compensation Arrangements:
Move from pay-for-volume to pay-for-value. Will we see a transformation in the compensation system? Will we see a shift from volume to value?

Empowered Employees/Consumers:
Engage employees and consumers in continuous quality improvement. If we look at Kaiser, we see examples where the nurses are improving quality and efficiency in their own workplace.

In every industry where information has become a key commodity, firms have gotten bigger. We see this with WalMart, Target, Bank of America, etc.

Recent legislation changes Medicare compensation.
  • Bundled acute care payments: acute care plus post-acute care.
  • Bundled chronic care payments: chronic illness management. 
  • Performance-based payment
  • Integrating the care episode
If we compare how we manage our money vs. how we manage our health, what can we learn? The rich may go to concierge care while the poor may go to the local clinic. How about the moderate income level?

How do we achieve organizational change? Will the healthcare industry become more like other industries? We need to figure out how to:
  • Coordinate care
  • Streamline medical practice
  • Overhaul administrative processes
  • Ensure proper care combinations
  • Manage information
Click here for highlights from ACPE 2010.

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