Cost sus­tain­abil­ity

If pay­ment re­form fails, tie spend­ing per ben­e­fi­ciary to GDP

Modern Healthcare - - OPINIONS / COMMENTARY - Dr. Manoj Jain and Dr. Bill Frist

We have done it. We have de­creased the in­crease in the cost of health­care. Let us ex­plain. For three decades (1980–2009), the cost of health­care has been in­creas­ing each year at an aver­age rate of 7.4%—dou­ble the rate of in­fla­tion. How­ever, over the past three years, the in­crease in health­care ex­pen­di­tures has re­mained at a low 3.1%.

Is this de­cline the des­per­ately needed bend in the health­care cost curve or just the im­pact of the de­pressed econ­omy?

Four lead­ing stud­ies point us in dif­fer­ent di­rec­tions. Last month’s Kaiser Fam­ily Foun­da­tion study de­duced that 77% of the de­cline was at­trib­ut­able to the eco­nomic down­turn and is likely tem­po­rary. A re­port by the Robert Wood John­son Foun­da­tion echoed th­ese con­clu­sions.

In con­trast, two ar­ti­cles in the May is­sue of Health Af­fairs point to struc­tural changes such as “less rapid de­vel­op­ment of imag­ing tech­nol­ogy and new phar­ma­ceu­ti­cals, in­creased pa­tient cost shar­ing and greater provider ef­fi­ciency” as ma­jor causes of the de­cline, sug­gest­ing that only 40% to 55% of the de­cline was be­cause of the eco­nomic down­turn.

The fi­nal an­swer is prob­a­bly some­where in be­tween, with about half of the de­crease re­al­ized by en­cour­ag­ing changes in the way health­care is de­liv­ered and the other half due sim­ply to the down­turn in our econ­omy. Re­gard­less, it is im­por­tant to rec­og­nize— and cel­e­brate—that the cost curve has bent with­out col­laps­ing our health­care sys­tem or be­ing prompted by dra­co­nian mea­sures in ra­tioning of health­care. More­over, the de­cline has not led to de­te­ri­o­ra­tion in our qual­ity mea­sures. In fact, they have im­proved.

Now, the $2.7 tril­lion ques­tion is, “How can we sus­tain this slower growth over the next decades?”

Un­de­ni­ably, dur­ing the past sev­eral years, the sin­gu­lar fo­cus of con­ver­sa­tion among pol­icy mak­ers has shifted from sim­ply more care and bet­ter qual­ity of care to bet­ter value in health­care, where value is de­fined as qual­ity over cost. The onset of value-based pur­chas­ing by Medi­care and higher co­pays and de­ductibles for pa­tients in em­ployer-based plans has helped in dis­sem­i­nat­ing this mes­sage to doc­tors and pa­tients.

At present when pa­tients get their bills, they do not know the dif­fer­ence be­tween health­care charges, ex­pen­di­tures and costs.

Yet if his­tory is any in­di­ca­tor, the cost of health­care will rise once again as our econ­omy strength­ens. So, last month the Bi­par­ti­san Pol­icy Cen­ter made 50 bold rec­om­men­da­tions on how to sus­tain the lower growth of health­care costs. Th­ese rec­om­men­da­tions are unique be­cause they fo­cus on im­prov­ing the en­tire sys­tem of care over a pro­longed pe­riod of time and break through the par­ti­san rhetoric sur­round­ing health­care re­form.

We want to high­light a few of the rec­om­men­da­tions that will im­pact providers— hos­pi­tals and doc­tors. The BPC en­cour­ages ad­vanc­ing ac­count­able care or­ga­ni­za­tions to a 2.0 ver­sion where the en­tire spec­trum of pa­tients’ needs would be cov­ered for a fixed pay­ment, and in do­ing so re­place the ir­ra­tional and out­dated sus­tain­able growth-rate for­mula for physi­cian re­im­burse­ment.

Also, the BPC pol­icy pa­per sug­gests chang­ing our present vol­un­tary bun­dle pay­ments pro­gram to the stan­dard method of pay­ments for cer­tain DRGs. The im­pact of such a change in the pay­ment sys­tem can be pro­found. When in the 1980’s Medi­care changed pay­ments to hos­pi­tals by DRG, length of stay and hos­pi­tal pay­ments de­clined.

If such mea­sures are not suc­cess­ful in re­strict­ing the cost of health­care, then a fall­back spend­ing limit or a “cap” would take ef­fect based on an­nual per ben­e­fi­ciary spend­ing growth to a tar­get of GDP.

To sus­tain th­ese re­duc­tions in cost, the avail­abil­ity of cur­rent cost data and trans­parency of such data are es­sen­tial. At present when pa­tients get their bills, they do not know the dif­fer­ence be­tween health­care charges, ex­pen­di­tures and costs. To bor­row an anal­ogy from car sales: the sticker price, the new owner’s price and the dealer’s in­voice price, re­spec­tively.

As for providers, physi­cians are of­ten un­aware whether an an­tibi­otic costs $150 or $15 when writ­ing the pre­scrip­tion or a doc­tor’s or­der in the hos­pi­tal chart.

Th­ese costs have real im­pact for Amer­i­cans. One RAND Corp. study found that if health­care costs had risen at the slower rate equal to the Con­sumer Price In­dex, an aver­age Amer­i­can fam­ily would have had an ad­di­tional $5,400 more to spend each year on ed­u­ca­tion, en­ter­tain­ment, food and cloth­ing over the past decade. But in­stead, the aver­age fam­ily has spent that money on health­care. With our health­care sys­tem at this cru­cial cross­roads, we need to take this op­por­tu­nity and stop the col­lat­eral dam­age.

A slower growth of health­care cost would mean less bur­den on the in­di­vid­ual fam­ily, free­ing that fam­ily to in­vest in and live a higher qual­ity of life. And for com­mu­ni­ties it would free bil­lions of dollars for ed­u­ca­tion, busi­nesses, job cre­ation and fu­ture in­no­va­tion.

The good news is that it can be done. And the blue­print for elim­i­nat­ing waste, low­er­ing the cost and max­i­miz­ing the value is ac­tively be­ing con­sid­ered by voices that rise above par­ti­san bick­er­ing.

Manoj Jain, left, is an in­fec­tious dis­ease spe­cial­ist in Mem­phis, Tenn. Bill Frist is a heart trans­plant sur­geon and for­mer U.S. Se­nate ma­jor­ity leader.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.