Glen expanded on last night's themes, one of which was reducing variation in the clinical setting within a health care system. He presented the following chart about Geisinger's experience after reducing variation in cardiac surgery. Results that were already quite good improved dramatically.
The business case improved, too: Net revenue increased 3.8%; Direct costs decreased 5.1%; Contribution margin increased 11.3%; Total inpatient profit per case improved $2560. The insurance companies saw a reduction of 4.8% in cost per case of cardiac bypass surgery, amounting to a cost 28% to 36% less than that of other providers.
Geisinger has also focused on integrating care upstream to people in the primary care practices and beyond, into their homes. Glenn called this "concierge care for the sick, not the rich." Again, the results were impressive, in terms of reduced hospital admissions for people with congestive heart failure and other serious chronic conditions.
The program elements are: Partnership between primary care physicians and GHP that provides 360-degree, 24/7 continuum of care; “Embedded” nurses; Assured easy phone access; Follow-up calls post-discharge and post-ED visit; Telephonic monitoring/case management; Group visits/educational services; and personalized tools (e.g., chronic disease report cards.)
Paul and Roberta and Gene all offered thoughtful observations about the nature of the Massachusetts market and the concerns and hopes of the business community. I can't give them all here because I need to rush off to the poster session, but the universal point that struck home to me was Gene's:
The big opportunity that we have is our waste. We need to unlock the vault and tap into that resource.
Wow, very impressive work. I have heard that Geisinger does not really reap the financial reward of such care; its insurance companies do. Did Glen mention how Geisinger compensates for that?
ReplyDeleteMy only time at Geisinger was in 1972 when I was a little college student from nearby, doing a research project and they were kind enough to irradiate my mice for me. At the time they seemed to me to be a typical small town hospital in rural Danville, Pa. It's amazing how far they've come since then, especially away from any big city. It's a tribute to visionary leadership.
nonlocal
Having a single bottom line permits transfer payments between the insurance part of the business and the provider side.
ReplyDeleteAha, thanks. Either I or whomever I read was unaware that they have their own health plan.
ReplyDeleteps for readers, check out their website; it's pretty cool. Founded by a lady in 1915!
nonlocal
Inspiring, again.
ReplyDeleteCould I find out a bit more about GHS Phase 1, 2, 3?
Aside from what each is, I don't understand how "Phase 3 1/09" could be shown in Jan-Aug 06.
Sorry, you need to ask Glen. I'll send this along.
ReplyDeleteSince Geisinger is both a medical provider and an insurer, it is better able to either keep savings like this within its own organization or use them to drive market share through lower prices for insurance. Kaiser, with 8 million members, has the same advantage.
ReplyDeleteThere are two problematic issues, however. First, for organizations like this, it is not that easy to expand even contiguously, it is surprisingly difficult to duplicate the medical culture at new locations (ask Mayo about this), and it is virtually impossible to replicate the model in completely new geographies. That’s because you need a large critical mass of patients from day one, hospitals are extremely capital intensive businesses and would cost a huge amount of money to acquire while physician practices would need to be acquired as well. Kaiser some years ago tried to expand in the East by contracting but it just didn’t work.
Second, for traditional hospitals, improving quality and processes in ways that save money usually benefit payers and patients but not the hospital itself. Indeed, hospitals generally lose revenue as Virginia Mason can tell you from experience. A truly successful quality program might look something like the following: We’ve significantly reduced infection rates and surgical complication rates as well as readmission rates. Doctors are no longer referring patients for imaging and surgery who don’t need them. We’re providing far less futile care at the end of life while our palliative care program is very highly regarded. Since tort reform was implemented, defensive medicine is way down. Bottom line: our revenues declined 20% and we need to lay off 20% of our staff and close some of our facilities. How would the Board react to that presentation?
Even if a given hospital could offset the lost revenue with more patient throughput, the hospital sector overall would need to shrink materially if significant improvements in quality and cost-effectiveness were really achieved.
Your last point is true. As efficiency grows, there is less need for capacity, everything else being equal. This was acknowledged during the presentations. That is part of bending the curve.
ReplyDeleteDo you think this effect might be balanced somewhat by the aging of the boomers and the new business generated by the new health law? The latter may be a one-time phenomenon - e.g. masses of sick people without previous access to care require treatment to improve their health to the level of the general population.
ReplyDeleteThat said, to me there is no question that some Darwinian selection is going to be going on,
particularly if payment reform occurs as a result of some successful Medicare demo project. One wonders what is going on in the minds of hospital CEO's right now (except Paul, who has already made his quality/low cost aspirations public) as they consider the future. Partners' CEO was quoted as saying that at least they know what's coming ahead of time, so they can "manage against it." Hmmm.....
nonlocal
Barry Carol said: "Even if a given hospital could offset the lost revenue with more patient throughput, the hospital sector overall would need to shrink materially if significant improvements in quality and cost-effectiveness were really achieved."
ReplyDeleteThat should be the result if payers (insurers or government) find the most efficient providers and say to them and all the rest of the providers; "We are only going to pay as much as provides a fair return to the most efficient providers of quality care." Then the others can get on board or face serious loss of share. An employer or insurer might say to employees or insureds; "BIDMC provides high quality care at these prices and your co-pay there is $XXX. If you go to a place that costs more you must pay the difference."
Someone (big employer or Medicare or the Massachusetts program) must have the clout and the spine to make that kind of statement and make it stick. That should be a requirement for any government paid or subsidized program.
If they will do that, then the added coverage provided under the new health care bill can be paid for at moderate cost and the total health care system would not have to shrink.
I must be missing something or misinterpreting something.
ReplyDeleteWould it be bad news if we no longer needed hospitals, or if we needed far fewer of them?
Is it bad news that smallpox and polio are no longer the source of revenue that they once were?
(Yes, I know there are some managers who clearly seem to want more revenue no matter what. But I'm talking about us here, and what we here seem to be striving for.)
It would be good.
ReplyDeleteI don't think anyone would argue it would be good, in the long term. In the short term, I think there would be economic waste from existing overbuilding in the industry (see homebuilding), and it would cause a spike in the unemployment rate. Inefficiency causes higher staffing, even if a given hospital does not close.
ReplyDeleteTo me the critical question is - WHO closes. It better be the ones who cannot survive based on quality and value (defined as outcomes per dollar spent), and not the ones with market share-based lowest reimbursement rates as demonstrated in Mass!!
nonlocal
The reality is that the broad market won't change until there is pain among the providers. Look at what happens whenever there is economic stress. Enterprises find ways to do what they must with fewer people. Local governments lay off people and declare that services won't be affected.
ReplyDeleteI get nauseated whenever some politician says they are going to "create jobs". What they really mean is that they are going to raise taxes or borrow more money for some pet project, or force some new requirement on private enterprise that will increase the cost to everyone else.
Hospital boards will continue to order expansions until it becomes uneconomic or impossible to sustain with their market share. Those that provide the greatest value must drive the others out of business, or drive them to compete efficiently.
Economic stress is the fuel for creative destruction. Cheers to Paul Levy and BIDMC. Carry on! Make is so embarrassing to all of the payers that they will insist on receiving the same quality and cost control as is available BIDMC. Make it impossible for inefficient providers to survive if they don't change.
We should not shed tears if one of the uneconomic providers fails because they don't change; we should stand and cheer.
I am a Geisinger “baby” and began my nursing career at BI in Boston more than three decades ago. Rural vs Urban, these are two very different health care organizations,but facing similar challenges of affordable access and quality care. GHP is unique in that there is little competition to provide the breadth and quality of care in the many areas of PA. I agree that health care reform requires restructuring of care and innovation in models of delivery to meet the challenges of cost reduction, access and quality. As a nurse practitioner I am amazed that health care is still physician-centric. Restructuring care means not more of the same. High quality health care requires prevention and health promotion, coordinated care, teaching, follow-up and communication between providers. NPs are a terrific but underutilized resource who can help make this happen in both rural and urban settings.
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