Wednesday, January 16, 2008

Four Big Trends Toward Better Health Care Cost and Quality

Brian Klepper joins us again today and calls attention to four key trends in the marketplace, all targeted on improving both the cost and quality of care.

Four Big Trends

by Brian Klepper

Several events and trends emerged over the last year that will reverberate throughout the health care marketplace in 2008 and going forward. While none of these dominated the trade press like some other issues--electronic and personal health records, RHIOs, the evolving labor shortage, pay-for-performance reimbursement--these manifestations of change are occurring in the marketplace as well as through policy, and are moving health care forward in fundamentally positive and far-reaching ways.

Health 2.0
The most significant, in terms of its capacity to change how health care works in the long-term, is the Health 2.0 movement, which Matthew Holt and Indu Sabaiya have played a central role in facilitating and explaining. In some ways, Health 2.0 is simply a continuation of what has come before: companies creating new value through information and connecting with customers over the Web. Health 2.0 takes this approach into every area of health care data, often driven by companies outside of or at the margins of health care, who have no financial stake in perpetuating inappropriateness and waste, and who see an opportunity to make money by rationalizing the system.

We've already seen big, established IT companies like Microsoft and Google announce some forays into this space, as well as a slew of startups, most of whom have staked out interesting niches. But there are other players who haven't made themselves known yet: health IT companies who are positioned to aggregate data and feed it back to their clients; companies who already have established health care data streams and have large repositories; analytics firms; organizations from financial services and other areas that see an opportunity to leverage their own data strengths and expand into health care; and established health care organizations that, as the competitive market intensifies in health care, will use their strength to enter the data space and use it to advantage.

In the process, the health care data will move beyond simple transparency--public availability of pricing and performance information, which is often inscrutable for many groups, especially consumers, and difficult to make sense of. The creation of easy-to-use data-driven decision assistance tools that can help consumers, clinicians, designers and purchasers of all kinds will change everything.

My bet is that business and the health care sector, more than consumers, will first fully take advantage of the offerings that will gradually come online, and use this new information to make better clinical decisions, better purchasing decisions and to understand their own performance relative to the market. Ultimately, as payment is tied to results, this information will constitute incentives for performance and disincentives for waste.

Consumer Checkbook v HHS
Last August 22, the consumer advocacy organization Consumers' Checkbook won a Freedom of Information lawsuit against the US Department of Health and Human Services, which demanded that CMS be required to release Medicare physician data for 4 states and DC. Interestingly, HHS had argued that physicians are entitled to a right of privacy, a particularly curious position, given the generally progressive stance on health care pricing/performance transparency that CMS has taken under this Administration's tenure and keeping in mind the fact that physicians paid by Medicare are vendors taking public dollars. On October 19th, HHS filed an appeal, indicating that they would fight to keep the data secret. The case is still unresolved. Even so, Checkbook has filed suit for the release of Medicare physician data in all other states.

As I noted in writing about this previously, the AMA's fingerprints seemed to be all over this, but I had no direct knowledge that this was so. Then, a December 10th American Medical News article reported, "The Association is pleased that HHS is taking its advice, said AMA Board of Trustees Chair Edward L. Langston, MD." I'll bet they are.

The Checkbook case is a watershed moment in physician transparency. Until now, despite all the calls from supposed "market-advocates" for informed consumerism in health care, the public has had no way to really tell how a doctor compares to his/her peers in terms of resource consumption or results. If the data were released so it could be evaluated, that information could become available and one important part of health care could begin to work like a competitive market. Whatever the outcome of this case, kudos to Consumers' Checkbook for taking the initiative and, in the process, betraying the lie of those who call for consumerism but want to hold back the information that are necessary to make markets work, all so they protect their advantages.

Stopping the Payments for Hospitals' Mistakes
August must have been a big month, because that was also when CMS threw down the gauntlet and announced that, starting October 1, 2008, it would no longer pay for preventable errors. Until this change, hospitals were paid for the mistake and for the care of rectifying it, a no-lose proposition.

As Medicare goes, so goes the commercial payers, so this is momentous. Come October, hospitals will be on the financial hook for making sure they get it right the first time, a significant change from the past and potentially damaging when they fail, especially for organizations that have had average margins nationally of only five percent.

In a sense, this event is less important than the important quality and safety work underway at health systems around the country. (For a wonderful 5 minute articulation of the value of these efforts, see this short interview with Gary Kaplan MD, the CEO of Seattle's Virginia Mason Health System, recorded in April 2007.) But for those who are not yet focused on getting quality under control, CMS' action constitutes a major incentive.

Moving Toward A National Center for Comparative Effectiveness and National EBM Guidelines
American medicine is gradually, grudgingly acknowledging that using evidence to identify best practice, and then applying that best practice, typically results in improved outcomes and reductions in variation. The refinement process is unending, of course, and the number of different clinical approaches that must be evaluated is vast.

In November 2006, economist and former HCFA Administrator Gail Wilensky published a Health Affairs paper that described the background and laid out the arguments for the establishment of a national agency that would sift available data to support better clinical decision-making. Another long-overdue idea that has private sector precedents in efforts like the Blue Cross and Blue Shield Association's Technology Evaluation Center (TEC), the concept of a national Comparative Effectiveness Center is beginning to finally get traction.

In September, when Senator Clinton released her proposed health plan, a Comparative Effectiveness Center was featured prominently as a key element of required change. And more recently, in December, the Congressional Budget Office published a paper called "Research on the Comparative Effectiveness of Medical Treatments," that argues for the value of a governmental role in identifying best practice, the need for tying identified best practice to financial incentives in the marketplace, and the difficulties of creating these changes in a policy environment so highly susceptible to private interest influence.

The Long View
One of the most difficult of life's realities is the time required to effect desperately needed change. Each of the trends I've described above will take years to get traction and actually change the ways that care manifests, but they're moving us in the right direction. Equally important, change is spreading to more areas and accelerating in health care, partially in response to the increasing pressure, but also simply because technology continues to enable approaches that the marketplace can leverage. To those of us consigned to take the long view, this is great news and important perspective while we're also focused on health care's persistent, moment-to-moment problems.
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