Thursday, July 24, 2008

A tale of one city

Two illustrative stories about health care in today's Boston Globe, with stories by Kay Lazar and Jeff Krasner. While various interest groups squabble about the perceived zero-sum game of who is going to pay for the costs of the health care in Massachusetts, new entrants to the region find a way to gain market share in a small segment of the sector by delivering services at a lower cost.

The problem with the health care "marketplace" is that it is not a real market. There are so many intermediaries that the usual connection between buyer and seller that we see in other fields does not exist. Thus, the incentives for suppliers (doctors and hospitals) to engage in efficiency improvements and value enhancement are extremely slow to emerge. Also, the incentives for consumers to seek greater quality and lower costs likewise are very weak in this field. (This is aggravated, of course, by the lack of transparency about relative quality of providers.)

Then, we overlay on that the fact that government sponsored programs, Medicare and Medicaid and other state subsidized insurance plans, are ruled by administrative fiat and competing political agendas, and we see that over 40% of the delivery of health care is not subject to market influences at all. One result there is the focus on quick fixes that have headline value (not allowing payment for "never" events, for example) that only cover an infinitesimally small portion of the problem but do not address underlying structural problems. Another result is political battles focused on splitting the pie differently but not making the pie the right size or more tasty.

For those of us in academic medical centers, the result will be a gradual whittling away of financial support for the type of clinical care, research, and education for which we were created. We have already seen it on the research side, with cuts at NIH. I predict the next focus in Congress will be on Medicare funding for graduate medical education (residency training).

I have tried to make the point here and in my public appearances that unless academic medical centers prove their value to society as centers for quality and safety improvement and enhancement of operating efficiency in hospitals, the inevitable political response to our pleas will be, "What have you done for me lately? You are the highest cost portion of the health care system, and yet you display no leadership in modeling the kinds of changes we need for it to be sustainable over time."

Ditto, by the way, for the medical schools. When will the thoughtful deans of our medical schools take on the concept of introducing the science of care delivery as a major focus of the curriculum, so that their faculty and new generations of doctors come to believe that field to be as interesting as the study of disease, diagnosis, and therapies? The opportunity exists for leadership opportunities for those universities that pave the way in this arena.

Then, imagine hospitals and medical schools doing this together! As Arlo Guthrie suggests, "Friends, they may thinks it's a movement."

Absent that commitment, the health care agenda will be set by interest groups who will self-interestedly squabble over the distribution of the pie and/or seek commercial advantage by cream-skimming profitable sectors of the health delivery system. Political officials, meanwhile, will follow the votes in setting legislative and administrative agendas. The major institutions that are the crown jewels of the American medical system and were created solely to serve the public good will be, at best, participants in the squabble, and, at worst, passive observers whose assets and programs and influence are slowly but inevitably diminished.


Anonymous said...

Well said. Unfortunately, I am pessimistic about the entire system, not just academic centers.


Anonymous said...

Academic health science centers must take the lead in quality innovation, just as they have in biomedical innovation. Otherwise, they will fail in their core mission to improve health care, and lose public support.
Academic medicine has a complex mission- teach, generate new knowledge, garner NIH funding, enhance diversity in its ranks, etc. Understanding and improving the system itself, however, is the most important mission, because all the others depend on it.
Excelling in safety and quality will require a new breed of physician leaders.
My department requires each chief resident not only to do a "conventional" clinical or translational research project, but also a Lean/Six Sigma project, to improve some process in our hospital or office.
We also encourage these to be done in teams rather than alone, since teamwork is the most critical competency.

The Medical Quack said...

I posted a video that might be of interest here with Dr. Senator Coburn, a Physician- US Senator that might be of interest. He brings up some pretty good points relative to the politics of healthcare as he sees it. He's one of two doctors in Congress and also believes in transparency. It's not too often we have the opportunity to hear these folks speak out and it's good to see some embracing technology. He states the government is being run like it was in the 50s and states there's much that needs to change, and there are some forward thinking folks in government.

Chuck said...

Excellent post. I am in agreement that Academic Medical Centers must re-invent themselves or they will soon find themselves labeled obsolete. However, there is one important barrier that I think needs to be addressed for this to occur.

The research at Academic Centers is often driven by the practical constraint of need for research funding and publications. This results in promising new researchers with brave new ideas to bow to more traditional topics in order to ensure their academic survival. Even if we encourage medical students to focus on delivery-related issues, there are few avenues for support beyond medical school. I believe the NIH has to get behind this subject as it got behind biomedical research. The AHRQ and other agencies simply does not have the budget to support widespread funding.

O'Reilly said...

The BI is doing some interesting work in aimed at reducing the cost of health care delivered. Tell us about that.

Steve UK said...

Dear Paul

Again an amazing post. You may be interested that this agenda is being picked up in the UK.

The Department of Health has just funded 7 sites to study the process of care delivery...will keep you posted ...we have one in the South West Peninsular - Collaboration for Leadership in Applied Health Research & Care.

charlie said...

Paul - Very well said. I have almost nothing to add. Two more points(!)...
1) The other reason AMCs could get caught in federal cost-cutting cross-fire is their relatively small geographic distribution. Hitting GME or IME - which you mention in your post - would affect organizations in about 10 states, save a lot of money nationally, and leave 40 states or so alone. That's really appealing politically.
2) Most Medical Schools and AMCs think they're in the basic science/basic research business. The kind of applied research you're proposing (the study of health care delivery models, etc.) would be a big step away from their historical mission. I think that would be hard to do without some nudging (and maybe some funding) from the federal government for that type of research - which I'd be all for.

Anonymous said...

As someone familiar with medical education at both the medical school hospital (graduate) settings, I 'second' your prediction that Congress will next target GME support (Medicare funding) for cuts. Your point about the link between GME and medical student education is important: the accreditation agency for Graduate Medical Education (ACGME)requires training for physicians in "systems based practice" - as part of the 'science' of health care delivery. Medical schools have to find ways to integrate this into the undergraduate curriculum as well, as part of the larger continuum of medical education from medical school through residency and into practice years. I would love for Arlo Guthrie's hinted-at "movement" to become a reality!

Richard Wittrup said...

We had an effective market in the 1990s, known as Managed Care. Hospitals, doctors, and others were the sellers and insurance companies, acting on behalf of their subscribers, were the buyers. However, providers left the management of care to the insurance companies - known derisively as bean counters. That was unacceptable to the public. Managed care was largely abandoned and costs resumed their rise.

It will eventually return. The news articles to which you refer indicate as much. When that happens the providers that know how to manage care and are willing to do so will prosper.

Richard Wittrup

Tom Huber said...

Dear Paul--

Your blog site is a very good source for insite into the real 'goings on' in urban teaching hospitals and clinics--and the healthcare industry in general.

Having worked in all sizes and types of hospitals and clinics, I realize the difficulty the average healthcare consumer has in understanding the system and helping to teach one another and 'fix'--rather than just complain. As difficult as the transition might be, some form of 'universal single payor' system seems to be the only anwswer. And we're running out of time and $$.

The aging baby boomers and the current payment/reimbursement system are starting to bankrupt the dis-jointed self-serving healthcare system in place today. Healthcare is the one industry where competition doesn't seem to result in higher quality and lower cost.

But how do we get from here to there??

Tom Huber

Anonymous said...

I disagree with the comment that there is no incentive to engage in efficiency improvements because of the lack of a connection between buyer and seller. Regardless of where the money comes from all hospitals are interested in efficiency due to the tight margins. If you want to look at reasons why hospitals are slow to adopt tactics that other industries utilize than I would suggest that a key contributor is the outmoded concept of medical staff privileging and the hide bound traditions of hospitals and health care. No where is that more evident than in academic medical centers. And as far as interest groups setting the agenda, your right on target that academic medical centers rank right up there with all the other interest groups squabbling over the pie. I would like to beleive that people in those institutions still believe that they were created solely to serve the public good but I stopped beleiving in that and the Easter bunny a long time ago.
However, I do agree with the comment that there is little incentive for consumers to seek out and compare quality due to the intermediaries that are mentioned. Although, even though the government pays for 40% of healthcare that does not mean a total lack of market forces and influence. Last I looked every hospital and MD takes Medicare so patients do have choices, they just do not have a way to get the right information to make the choice so they rely on friends and family experiences.