Wednesday, February 20, 2013

At the Sloan School with Professor Berndt

It was a pleasure to join MIT Professor Ernst Berndt for his class "Economics of the Health Care Industries" at the Sloan School of Management.  Tonight's topic was "Managing Health Care Costs and Quality." This class has an unusually diverse group of students--undergraduates from MIT, Wellesley, and Tufts; MBA students; executive MBA students; and several people with MD and Ph.D. degrees.  Students who offered particularly thoughtful comments are pictured here.  Please hire them.  (The fellow in the bottom picture wanted to make it clear how to find him!)

Ernie started off with a marvelous exposition of many factors relating to health care costs.  This chart above on the concentration of health care expenses in the US was striking, showing that 5% of the population accounts for about 48% of the nation's costs.

My job was to provoke a bit of discomfort and debate, and I explored several topics with the students.  I started with the question of whether the fact that health care accounts for 17.9% of GDP was a problem.  If so, why?  Was it too high or too low?  If one looks at some of the OECD countries with lower percentages, is it an indication that they are more efficient or that they are spending too little?  If the US number was too high, which participants in the health care system should receive less?  How much less?

We then entered discussions about using payment rates as incentives for efficiency improvements.  Is the failure of many pay-for-performance programs to produce meaningful results a function of poor design or a disconnect with what motivates doctors and nurses and how they make decisions?

We discussed further whether accountable care organizations would be likely to succeed, a variant on Elliot Fisher's joking comment of whether they would be accountable, caring, and organized.

I left the group with descriptions of two approaches that have been demonstrated to be successful in offering higher quality, lower cost care:  Managed care programs for dual-eligible (Medicare and Medicaid) patients; and front-line driven process improvement in hospitals.


Barry Carol said...

The problem with quality, especially for hospital based care, is that it’s an easy word to pronounce and to spell but a difficult concept to define and measure.

In a recent essay, Princeton professor, Uwe Reinhardt, suggested measuring at least four different aspects of hospital based care and weighting each appropriately to arrive at a composite score akin to a college final exam with several sections. The four concepts he listed are:

Process – This means following evidence based guidelines and protocols where they exist.

Outcomes – These would have to be risk adjusted in some appropriate manner and would include minimizing preventable readmissions.

Patient Safety - This encompasses everything from minimizing infections and adverse drug interactions to consistent hand washing, using checklists, and timeouts in the OR. The latter three could alternatively be included in the process category.

Patient Satisfaction – This is an amorphous area that could encompass everything from a good outcome to the bedside manner of doctors and nurses to the quality of food and the availability of valet parking and flat screen televisions.

If a scoring method for each of these could be developed that providers found reasonable and acceptable, I would probably assign a 40% weight to outcomes, 25% each to process and patient safety and 10% to patient satisfaction.

Anonymous said...


Your comment points up the massive task ahead of us as we try to overhaul health care and, as part of that, define quality (the necessity for which in itself is not yet universally recognized). For every one of the 4 bullet points, I could think of several areas for discussion - isn't process so much more than following guidelines? What about a process for improving process? etc. Should readmissions be included in outcomes, given early evidence that lowering it does not ultimately improve outcomes? (that may change with time). etc. Are patient safety initiatives failing because they are currently bolted on to inadequate processes and if so, how should we redesign care to incorporate them? etc. Do we really want to include hotel-like amenities in measuring satisfaction with hospital care? etc.

Others would have a whole 'nother set of concerns, or even dispute these 4 as the points to be measured. How are we going to coalesce around an agreed-upon agenda? That to me is the first question.

nonlocal MD

Barry Carol said...

nonlocal --

As a patient, I would like to see the quality scores disaggregated. A score that reflected minimizing infections and other preventable harm would be useful information, at least to me, no matter what hospital based care I needed. The hospital-wide process score would also be of interest. I would be most interested, though, in the risk adjusted outcomes scores broken down by major surgical procedures, cancer care, etc. So, if a hospital is especially good at heart surgery but not as good at hip and knee replacements and heart surgery is what I need, I’m more interested in the specific outcome score than the overall composite score. I would put little or no value on patient satisfaction scores. I’m told that large numbers of people choose doctors based on the three A’s – affability, availability and, last and least, ability. If I need a major surgical procedure, I would be perfectly willing to tolerate some arrogance and less than stellar bedside manner if the surgeon is really good at surgery.