Essays from Ernie's students - 3

Here's the third essay from Ernst Berndt's Sloan School class at MIT. This one is by Anna Capetanakis. Please offer your observations and grade in the comments section. There are three selected essays.

Implementing such a large and different payment system will be a challenge. Multiple ideas will have to be tested on a small scale to determine the best way to divide the funds. Below are a few ideas on how to approach this issue.

One main question is how to divide the patient budget across primary doctors, hospitals, specialists, and so on. I believe the answer entails both a technological and human aspect. The technological aspect is to analyze past data to determine the historical breakdown of treatment costs per ailment. Basing it off of data will make it difficult for the various stakeholders to refute. Once the breakdown is calculated, experts from more efficient systems (for example from the European countries) would assess where cuts could be made. These new adjusted ratios would act as general guidelines for how funds per patient should be divided amongst the various caretakers. It will be critical to make the process iterative so that as costs change, the allocation of funds shift accordingly.

Despite these general guidelines, it will be important that care be determined on a per-patient basis. To do this, the hospital organization should create a group of specialist physicians who have been trained on how to optimize the care of patients within budget constraints. These doctors will act like consultants to settle dispute, help primary care physicians adapt and make decisions, and decrease the risk associated with physicians making a decision.

In addition to this team of physician experts, it will also be critical to give all primary care physicians appropriate training on the new system. Which procedures are critical and which can be avoided? How do you communicate to your patient that his requested procedure is unnecessary? How do you solve conflicts among your patients’ caretakers? These doctors will need a support network and training to address these and other questions. These doctors have become accustomed to ordering tests rather than decide based on their intuition, so they will need support to make decisions. The group of experts will be invaluable to break the primary care physicians’ habits, increase their risk tolerance, and help them share some of the risk that comes with determining a patient’s critical procedures.

Another revolutionary but potentially very rewarding solution would be to completely revamp the hospital organization. Quite often we find in the business world that companies will piece together arcane IT systems rather than create one new, overarching system, resulting in a more inefficient, cumbersome, and expensive system than if the company had just started from scratch. With respect to hospitals, the hospital organization has evolved to support the fee-for-service system. Why not completely overhaul the system? Create a central database to track all patients. Change the relationships between departments in order to increase communication. For example, for common ailments like a heart attack, have a team of cardiac team (a radiologist, a cardiologist, etc) work together on the patient – essentially realign departments according to the payment scheme. It sounds farfetched, but why not try it? There would certainly be huge organizational resistance, but as we see in business, organizational change can be painful but it can pay off too.