Managing the Healthcare Conversation: From Cut and Cost Reduction to Innovation, Cure and Better Health Outcomes at Lower Cost

We may have lost our way. It's discouraging when the political rhetoric dissolves into vacant promises and fear generating threats, verging on hysteria. Everyone wants what they think they have (it's always better than having less when you don't have an alternative vision of what's possible). But exactly what is it that we "have" when it comes to healthcare? We've come to the point as a society where increasing numbers of people have come to the conclusion that something is fundamentally wrong with our current model of healthcare delivery. While pockets of society have understood this for decades, the mainstream attention this point is receiving is a relatively recent development. In fact, over the last three years it's become increasingly front and center.

A recent report by the renowned Institute of Medicine (IOM), which made headlines last month in The New York Times (September 6, 2012), noted that the U.S. healthcare system squanders $750 billion annually in unneeded care, byzantine paperwork, fraud, and a wide range of medical errors. By my reckoning, the figure is closer to $500 billion annually, but I didn't include fraud and abuse. So, if we're conservative in the estimate, by fixing what's wrong on the delivery side of the equation, we'll have more than enough money to cover the uninsured. We may even have some left over to focus on some cures, which ultimately will improve productivity and lower costs for healthcare services. But do we have the will and the insight to take this on?

Some hope comes in the September 21, 2012, front and center coverage in the "Life & Culture" section of the Wall Street Journal. The Journal presents the unvarnished truth from Dr. Marty Makary, a surgeon at John's Hopkins and author of Unaccountable: What Hospitals Won't Tell You and How Transparency Can Revolutionize Health Care. Essentially, he lays out the argument that hospitals are largely unsafe places... a point many of us have also been making for years. Just why they're unsafe is outlined in my newly released book, Healthcare at a Turning Point: A Roadmap for Change. It's ironic that so little attention has been paid to the problem of safety in healthcare delivery and the role of oversight in protecting the public from harm.

With all of its flaws, the FDA does regulate drugs and devices... before they come to market and once they're in the market. On the other hand, the healthcare delivery side of the industry has long been self-regulated. The Joint Commission on the Accreditation of Healthcare Organizations has given its coveted seal of approval, even to those organizations with significant medication errors, hospital acquired infections, falls, and a variety of other so-called "never events" -- mistakes for which hospitals around the country have been paid to fix.

So the current focus on cutting Medicare spending as the solution to fixing an ailing business model in healthcare delivery -- without consideration for legitimate accountability and transparency for safety, relative cost, and optimal outcomes -- could well make the safety problem worse. But if this isn't a good idea, then ignoring it because it seems too intractable to solve is an even worse idea, and it gets in the way of an even greater goal... a focus on cures.

Jim Pinkerton and Paul Howard make excellent arguments in favor of a focus on cures as a long-term solution for reducing healthcare costs and improving health outcomes. Cutting Medicare spend won't solve the healthcare crisis. Our fundamental payment model is greatly flawed, and our current discipline regarding outcomes is poor. Reasoned discourse around this whole subject scares many of the electorate who don't trust politicians and are now being faced with questioning the very institutions and providers they entrust with their lives. Clearly, this isn't an argument that's easily embraced.

A more direct approach focused on investing in the development of cures would resonate a lot better with voters. Instead, voters hear threats that a staple of their future may go away... and this represents quite a scary proposition. Even if the concept of "premium support" will help reduce spend, and rationalize Medicare, the system is headed for trouble for future generations. Chronic disease and age-related illnesses will increasingly continue to overburden the healthcare system at the very time when drugs and devices allow greater longevity. When it comes down to it, it's all about better health outcomes at lower cost!

As a society we've been struggling with cost and value issues for decades and the fundamental payment structure in healthcare is at the end of its proverbial rope. As I describe in my book:

"Most hospitals have learned to manage financially with the discounted fee-for-service model that's been in place, but that's history. At this point hospitals face a payer mix in which government's share is increasing, while its reimbursement rate continues to shrink... The answer is "value based" payment... that links payment to outcomes. Traditional approaches to cost management are clearly not up to the job, and anyway, providers may not have a choice -- bundled payment may become a competitive requirement, and for most institutions, the decision to provide services in this way requires a paradigm change."

If it's not linked to outcomes, we can expect more quality problems, additional cost and long lines to receive needed care.

The basic payment model must be changed, and people need to understand what is possible today in getting to better value... staying the course isn't sustainable. Nowhere in either party's plan is there a clear statement on how to fix the payment model. While the Dems have their ACOs, these organizations merely add bureaucratic layers and complicate the problems (as I have mentioned in previous posts).

The challenge is that everyone knows that there's a problem, but no one wants to change their piece of the action. The current model generates wealth for many people, but we're not getting any healthier as a society. Someone needs to come along and say "this isn't working; we need real change." In fact, the Wyden-Ryan proposal (yes, that Ryan, currently Romney's VP candidate), came up with a bi-cameral, bi-partisan solution that wouldn't affect current Medicare recipients... but they do potentially impact future recipients.

The Republican plan (likely based on Wyden-Ryan) would allow seniors to choose their insurer, and if the coverage and care was not to their liking they could change it. But while this "premium support" might be a successful plan to reduce spending, costs will continue to rise. There remain serious issues regarding waste, cost, and safety that do need to be tackled today.

To be clear, PPACA also poses significant changes to Medicare that will impact current retirees. The only difference is that the Dems take a "back door" approach. By reducing payments to healthcare providers servicing seniors by $700 billion, they have managed to make it seem like Medicare cuts won't affect patients. This is a fallacy. The truth is that doctors will see fewer and fewer Medicare beneficiaries as doing so becomes unaffordable. So, while Medicare programs remain intact, the level of care (or ability to access it) will drop significantly.

Even so, the main issue here is that ultimately, the system will catch up with itself, and we will be right where we started. These cuts and changes (by both parties) are merely temporary measures to stave off the inevitable downfall of a safety net for our seniors and their families. Nowhere in either proposal do we see a way of improving health.

There is a real need to tackle what will be (and are) crippling human, social, and financial issues in our failure to seriously address chronic disease management and focus on the eradication of certain disorders, like Alzheimer's disease and cancer. The costs are going up for very good reasons. People are living longer. As they do, they acquire more diseases of aging. Some of these (like hypertension, lipid disorders, and chronic heart and lung diseases) are quite treatable, but some require expensive long-term therapies.

Our byzantine healthcare system, which has lacked any real focus on accountability and the consumer for years, has to be changed. When we fail to invest in diagnostic tests that might provide insight into which chemotherapy agent has a greater likelihood of working for a specific patient, as opposed to using the patient as a lab experiment (e.g. trying different agents in vivo that only have a 15% chance of working), we create harm and unnecessary cost.

Others have written about the horrendous expense often incurred in the last few months of life. Does this reflect the learning curve in treatments which will provide long term answers down the road? One disease may have a 15%, 5 year survival rate today, but maybe 75% in 10 years. But we appear to have a trial-and-error system of getting there.

The answer is more focus on curing these diseases. More money and innovation should go into both prevention and treatment. The FDA already has an accelerated approval process for cancer and AIDS drugs. But why not Alzheimer's or diabetes? If these diseases can be cured or properly held in check (better health outcomes) then the costs of American healthcare will surely decrease and productivity is likely to increase.

The American public isn't stupid, but the rhetoric coming from its leaders -- who are in a position to 'know' the facts - isn't providing clarity on the fundamental issues. Without that clarity, real solutions aren't possible. 'Obamacare' isn't the answer, but without posing a legitimate solution for improving health outcomes at lower cost (by way of changing the approach to payment and outcomes, and focusing on "cures"), the GOP is in danger to losing to the 'status quo'. When that happens, we all lose.

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Rhetoric and Reality—The Obamacare Evaluation Project: Cost
by Paul Howard, Yevgeniy Feyman, March 2013

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