Partners HealthCare Weighs In On Health Care Costs
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Most observers of the Massachusetts health care marketplace would probably agree that the two most influential players in this space are Partners HealthCare System and Blue Cross/Blue Shield of Massachusetts. They are, respectively, the wealthiest and biggest health care delivery system and health insurance plan, and each can move the market in pretty much any direction they wish to.
Therefore, those of us who live in the Bay State always pay attention when the leaders of either of these organizations speak publicly on health care. Last week, some of the leaders of Partners HealthCare published an article in the New England Journal of Medicine on health care costs, and what might be done about them. The article was co-authored by Partners CEO Jim Mongan, PCHI CEO Tom Lee and MGPO Medical Director Tim Ferris (all MDs). PCHI is the community physicians’ arm of the Partners system, and the MGPO is the physicians’ association representing the physicians at Mass. General Hospital.
Their commentary is important for three reasons. First, they acknowledge that it’s probably not a good thing if health care costs continue to climb at two or three times the rate of inflation. While this might seem obvious to many people outside the health care industry, it’s unusual to have leaders from within the system come to this conclusion in such a public way.
Second, they do a nice job of compiling a comprehensive overview of various proposals that have been made over the past few years about how to contain costs, and offer brief - but precise - comments and observations about whether or not they might work. Not surprisingly, I don’t agree with all of their observations. They say, for example, that a single payor system would save a lot money but is not politically feasible, and therefore not worth further consideration. I would argue it’s simply a bad idea, and would rely on 40 years of watching Medicare as my primary case in point.
Finally, they propose a collection of items that they believe might have the best chance of reducing the rate of increase in health care spending - a list that at first glance appears doable and achievable. The list has five items on it. First, they suggest moving incrementally away from pure fee for service - which they acknowledge pays for volume, but not performance - to something that rewards adherence to evidence-based medicine as well as productivity. They indicate that some combination of Pay For Performance, Case Rates, and/or Risk Adjusted Capitation might get us from here to there. This has been policy work heaven for the past few years, but much easier said than done in the real world. But if Partners were to latch onto such an arrangement with the payors it does business with (like Harvard Pilgrim), that might encourage others to move in this direction as well.
Second, they advocate for the creation of some kind of federal Medical Effectiveness Review Board (something like the National Institute on Comparative Effectiveness in England) that would examine the relative value of new drugs, devices and procedures, and establish payment criteria for them, based on their anticipated clinical and cost/benefit performance. This is an idea that’s developing an increasing amount of traction - especially as health care has become more and more technologically sophisticated. I would amend their idea by suggesting that such an institute should probably review the performance we’re getting out of existing technology - and not limit their analysis to new stuff only.
Third, they call for a major investment in Electronic Medical Records, using payment incentives, publicly funded grant programs, and other mechanisms. I’m all for more EMRs, but I continue to believe that EMRs will only work if they’re paid for - at least in part - by the people who use them. If the technology’s free, it won’t get treated with the proper level of diligence and respect that it needs to be successful. And as I’ve said before on this site, there remains a fair amount of skepticism in the physician community about the relative value and utility of EMRs.
Fourth, they call for more standards on administrative processes, like claims processing and payment, to reduce administrative costs. Hard to argue with that, although I wonder about how much money could really be shaved out of the system on this one alone. I say that only because HIPAA, the federal legislation that was supposed to standardize administrative transactions, remains only mostly implemented, some ten years after it was enacted. That’s due, in large part, to the fact that organizing around a standard set of rules and processes requires a whole lot of change away from the status quo for many of the participants in the system that’s being standardized.
Fifth, they call for a focus on prevention, both because it’s the right thing to do - and over time, it could save money.
All in all, a pretty good list, and a pretty good place to start a conversation.
Several comments on this.
I agree with you that a government run single payer (Medicare for All) system is just a plain bad idea. While it would save some money on administrative costs, it probably wouldn’t save nearly as much as advocates think. To wit, of the approximately five million people nationwide who work in hospitals, very few of them have anything to do with billing or verifying coverage with insurers. Moreover, while the operator of a single payer system would not have to worry about making a profit, it wouldn’t have to worry about pleasing patients / customers or providers either because there would be nowhere else to go.
I was disappointed to see that neither Partners nor BCBSMA showed much interest in moving the needle on price and quality transparency or tiering of hospitals or doctors (including PCP’s) based on quality and cost, though they did at least mention P4P.
Regarding EMR, to the extent it could be successful in lowering costs by reducing duplicate testing and adverse drug interactions and making it easier to use decision support tools, the benefits of cost reduction would largely accrue to payers, not the doctors and hospitals who would have to implement and maintain the system. It would be helpful if insurers (including Medicare and Medicaid) could come up with an approach that offers doctors and hospitals a meaningful share of any savings from reduced utilization over and above potential bonuses from meeting or exceeding P4P performance criteria.
Finally, a highly regarded and wealthy hospital system like Partners would be an ideal candidate, I think, to provide leadership in bringing about complete bundled pricing for expensive surgeries including not just the hospital stay and the surgery itself but any physical therapy and follow-on care required for an appropriate time after the surgery. Such an approach would require much more cooperation between hospitals and doctors around how to divide up the bundled insurance reimbursement which would, presumably, be paid to the hospital. It would also require risk sharing agreements related to the cost of complications. Bundled pricing would enhance cost transparency, reduce administrative expenses related to billing, and put hospitals and doctors on the same team where they should have been all along.
If EHRs are so great, then where is the powerful evidence of all the outcomes they will improve? Because most of the studies I have seen indicate a marginal improvement from EHRs. The handwaving that EHRs are going to solve many problems appears largely unsupported by actual experience.
Personally, what EHRs gain me in terms of extra information they immediately lose 90% of in terms of extra wasted time and horrible cookie cutter documentation (yes, every patient will now have 20 pages of documentation from every health care encounter, the ultimate goal of American health care).
Barry - I’m with you all the way on most of your comments. And I continue to believe - as you do - that true transparency on cost and quality is the surest and fastest way to light a fire under everyone in health care. However, having spent the past 18 months serving on the MA Health Care Quality and Cost Council, I’m chastened by how slow this process can be - even when one is operating with a legislative mandate to do something good in this area.
I also share your view concerning the possibility tiered provider networks present to create a public debate about and improve performance. I would remind you, though, that many of us have watched this one end up in the political and legal la-la land over the past few years - as physicians, hospitals and politicians fight off many attempts by public and private payors to define performance and establish provider tiering as a viable operating model.
I also agree with your conceptual notion about bundled pricing - but like many of my colleagues in this business, have been bitten by the backlash in the provider community against capitation and financial risk - and wonder if we’ll ever get anywhere on that one. My guess would be that some providers will play on terms like this, but many - maybe most - won’t.
Random - there’s a fair amount of pretty solid evidence that Computerizes Physician Order Entry systems both improve quality, reduce errors, and reduce costs - for everyone. In fact, studies in MA have shown that providers get their money back on CPOE investments in two years. I’m less clear about the data on EMR’s, but have heard folks at Partners - and at other provider organizations that have EMR’s - speak glowingly about the positive impact they’ve had on physician knowledge at the point of care, and the quality/safety benefit that comes with that.
But as I’ve noted previously (check out my post on Bill Gates and health care), the physician community is definitely not of one mind on the relative value of this kind of thing, and until they - the users - decide EMRs are a good idea, take up rates will be uneven, to say the least.
Single payor a bad idea, given many, many years of
observing Medicare….
I do believe you on this one. But how do you convince a legislator who first hears this, and then hears a passionate advocate such as Rose Ann DeMoro? She’s head of a California nurses group, but seems to be a tireless speaker nationally, denouncing that “31% of our health care dollar that is handed over to the insurance companies.” I’ve read your painstaking explanations of how Medicare administration costs much more than 3%. But isn’t there a need, perhaps, for some simple, strong examples of where the waste of money actually is?