Monday, February 16, 2009

The Network of the Future

Today, most people who are covered by a commercial health insurance plan get their care from some kind of a “network” established by the plan.  If they select a healthcare provider that’s included in the network, they pay less for care than if they select a provider outside the network.  But they generally pay the same price for care inside the network, no matter which provider they pick, even if that provider’s costs are higher than another’s. 

As a result, it’s up to the health plan to keep costs down by negotiating with providers about the price they will accept to be included in the network.  As in any negotiation, success depends heavily on the ability to walk away from a negotiation.  Small providers rarely feel that they can walk away no matter what a plan demands.  And that leads to pressures for small providers to consolidate or organize themselves to increase their negotiating power.

However, because most consumers like to have maximum choice of providers, health plans also seek to make their networks as broad as possible.  As a result, the plans’ ability to walk away from the negotiation is diminished, and consequently their ability to hold costs down through this method is also diminished.

This has led to a desire to make networks narrower, in order to create stronger negotiating pressure.  Indeed, there have been recommendations that Medicare should be authorized to estabish a network like a commercial plan and to extract even greater price concessions from providers for being included.

The phrase “we need to think outside the box” was invented for situations just like this.   As long as people perceive that the only way to organize healthcare is for payers to create networks of providers that consumers will use, it will be impossible to ever find a solution to the “broad access” vs. “cost control” tradeoff.

A completely different paradigm is needed, and fortunately, it’s already been tried and it works.  Let providers form networks, and let consumers choose between them based on cost and quality.  The Patient Choice system in Minnesota has done this — providers organize themselves into care systems (they don’t have to be formal integrated systems under a single corporate ownership).  The care systems define their prices for providing comprehensive care to consumers, and the consumers pay more if they use a higher-price system.   Consumers have complete freedom as to which care system they use – they’re not constrained to choose from a subset selected by the plan.  Consumers pay more if they use systems with lower value, but it’s not because the provider is in or out of a plan’s network, it’s because that provider is part of a system that has decided to charge more.  Importantly, care systems function more like true coordinated systems of care with a focus on managing cost and quality, whereas current “networks” are little more than lists of uncoordinated providers.   Providers organize themselves into systems to do a better job of managing costs and quality, rather than to increase their negotiating power with health plans.

It’s hard to imagine how Medicare would ever be able to establish a network in the way commercial health plans currently do.  But it’s not hard to imagine how Medicare could create a Patient Choice-style system.  It would simply ask Medicare providers to form networks/care systems and “bid” to provide Medicare services, i.e., define the price that they will charge for caring for beneficiaries.  Medicare wouldn’t select the winning bidder — the Medicare beneficiary would.  Lower-price networks/care systems with equivalent quality would get more Medicare beneficiaries as patients, which would encourage the providers in the other networks to become more efficient so they could lower their costs.  It’s worked in Minnesota with much smaller patient volume — imagine the impact if Medicare were to participate. 

It may sound radical, but it’s not all that different from the Medicare Advantage program, where beneficiaries choose a health plan based on its cost and quality, and the health plan then contracts with providers to deliver the care.  The Patient Choice model uses the existing fee-for-service structure for both billing and payment, which makes it easy for providers to participate.


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Friday, February 13, 2009

Which Comes First — EHR or Quality Improvement?

Many people seem to believe that the only thing standing between us and a completely transformed healthcare system that has higher quality and lower cost is the lack of Electronic Health Record (EHR) systems in every physician’s office. 

That’s a little like saying that the only reason the country is in a recession is that every American doesn’t have a Blackberry to improve their productivity.

There’s no question that many aspects of care coordination and quality improvement are very difficult for healthcare providers to deliver without appropriate health IT support.  It’s inefficient and impractical to flip through paper patient charts to find out which patients are due for an immunization or a diabetic checkup, when a simple query of an electronic database could provide the answer quickly and easily.  It’s inefficient and problematic for hospitals and primary care practices to be faxing each other admission and discharge information in order to coordinate care transitions when the information could be electronically transmitted and stored in a common electronic health record.

But merely having an EHR doesn’t guarantee that providers will, in fact, deliver better care to diabetics or more effectively coordinate hospital care and discharges.  The physician practice and/or hospital must still redesign the actual processes of care to achieve those goals.  The EHR can make that possible, or at least much easier, but only if the EHR is designed in a way that actually supports the improved care processes. 

And therein lies the rub — it’s hard for today’s EHR systems to be designed to support improved care processes, when the improved care processes don’t exist.  Indeed, it’s likely that, if anything, today’s EHRs will best match the way providers work today, rather than the way we want them to work in the future.

For example, most studies have found that the key computer support for improved management of chronic disease patients, preventive care, etc. is a patient registry.  Yet most commercial EHR systems do not have, or do not come with, a registry component.  Similarly, it’s not surprising that the only research showing an impact of EHRs on quality is from healthcare systems which developed EHRs in-house, since it’s more likely that an EHR will match care delivery processes if it’s developed in cooperation with the practitioners who will use it, rather than independently by an IT company.

Does that mean we should not be pushing aggressively for development and implementation of EHRs?  No, but it means that we shouldn’t be pushing for EHRs in isolation – they should be developed and implemented as integral parts of quality improvement initiatives, ideally at a regional level, rather than provider by provider.


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Sunday, January 25, 2009

Marrying the Medical Home and Hospital Readmissions

Demonstration projects are underway all across the country to improve the quality of primary care delivery by encouraging implementation of the “patient-centered medical home.”  The most common approach is to convince health insurance plans and/or other healthcare payers to increase their payments to a primary care practice if it meets certain standards, most commonly the medical home standards developed by the National Committee for Quality Assurance (NCQA). 

However, payers, and the purchasers they represent, are reluctant to pay more for medical home services without assurances that patient outcomes will be better and that costs will be saved elsewhere.   And since there is no guarantee that meeting the NCQA standards will result in either better outcomes or lower costs, payers want to hedge their bets by making the payments as low as possible.  But this creates a Catch-22:  if the payments are too low to allow the primary care practices to make the changes in care needed to improve patient outcomes, then all that will happen is that costs will go up, the medical home projects will be labeled failures, and the healthcare system will return to its ineffective status quo ante

Is there a way out of this dilemma?  The answer could lie in the policy discussions being held around the country about ways to reduce preventable hospital readmissions.  As noted in a previous post, many hospital readmissions aren’t directly the fault of the hospital.  The largest number of readmissions occurs among patients with chronic disease, and their frequent admissions to the hospital reflect gaps in the primary care they’re receiving — which is precisely the problem the medical home projects are trying to fix.   Studies have shown that with appropriate education and self-management support, hospital admission rates for chronic disease patients can be dramatically reduced, but today, payers don’t pay adequately or at all for those patient support services.

So on the one hand, we have a primary care improvement initiative without a clear outcome, and on the other hand, we have an outcome improvement goal without a clear strategy for achieving it.   Could a marriage of the two can address the weaknesses of each?  Absolutely:  Payers should pay primary care practices adequately to provide evidence-based medical-home services to chronic disease patients at risk of hospitalization, and those practices should agree to an explicit focus on reducing the rates of hospital admissions and readmissions among those patients.  The savings achieved by payers from reduced hospitalizations would more than offset the costs of the improved services, justifying funding those services at levels sufficient to achieve the desired results.


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