Care delivery innovations must be combined to reduce waste and boost value
There is much talk about the continued need for the healthcare system to eliminate waste, estimated to be about 30% of healthcare spending.
Waste is created primarily by those who provide care, but is reinforced by those who pay for it and by patients who either demand care that provides no value or fail to question provider treatment plans that provide little or no value.
If we are serious about eliminating waste, then a systematic approach is needed that addresses the three pillars of healthcare reform—coverage reform, payment reform and delivery-system reform.
All three must be considered in tandem as they co-evolve in complex ways in different communities across the country. For example, risk-based payment models like accountable care organizations are more likely to exist in states with their own insurance exchanges. Given the pressures to contain costs, they are also more likely to be associated with a greater prevalence of narrow or more “selective” provider networks generating a concern that they will lead to even greater fragmentation of care than now exists.
Some evidence is emerging from states such as California showing that health plans associated primarily with more integrated delivery systems generally have higher quality scores without using more resources than less-integrated models, such as the preferred provider organizations typically associated with narrow networks. Given such interplay among the three pillars of healthcare reform, how can waste be eliminated and greater value be created?
A partial answer lies in recognizing the need for innovation across all of those pillars. Lessons from behavioral economics can be used to design benefit packages that reward consumers for seeking early preventive care, and penalize them for seeking treatments for which there is little or no evidence of value. On the payment front, the CMS and the private sector are experimenting with a variety of approaches, including penalties for readmissions, bundled payments for selected conditions and various degrees of capitated payments and global budgets. While coverage and payment reform can provide the foundation for eliminating waste and creating greater value, the bulk of the work must be done by the delivery system.
The greatest opportunity to eliminate waste and create greater value is at the nexus of where physicians and other providers engage patients. This is the heart of clinical integration—defined as the extent to which the care provided is coordinated across conditions, visits, providers and settings over time. This process needs to be studied to root out waste, eliminate complexity in steps that do not add value, and identify the “value leakages” that occur particularly during the hand-off stage from one provider to another or from one setting to another.
There is a natural human tendency to look for simple solutions to problems. Healthcare is no different. The field abounds in innovations including new drugs and devices, health coaches, same-day scheduling systems and use of mobile devices. Healthcare innovation centers have sprung up around the country—many associated with leading integrated delivery systems—that are working on developing new approaches to delivering more cost-effective care. Too often, however, these are centered on a single one-off innovation to solve a problem that is not amenable to a single approach.
Complex problems require several interdependent innovations that reinforce each other, called “packaged innovations.” They must be developed and implemented as a package or group to achieve impact.
For example, a program designed to work with patients who have difficulty keeping their Type 2 diabetes under control might combine a diabetes nurse educator with patients having access to their electronic health record through a patient portal along with a receptionist who has a target list of patients for follow-up phone calls using a pre-populated disease registry. The package increases the chances for success compared with only hiring a diabetes nurse educator.
Our healthcare system will need to continuously innovate to incorporate desired new advances in biomedical technologies and fulfill the promise of precision medicine within the continuing pressure to restrain the growth in costs. This will require the use of high-octane packaged innovations that strike at the roots of waste and that facilitate evidence-based care provided through technology-enabled healthcare teams to create greater value for patients.
Interested in submitting a Guest Expert op-ed? View guidelines at modernhealthcare.com/op-ed. Send drafts to Assistant Managing Editor David May at email@example.com.
Stephen Shortell is a professor of health policy and management at the University of California at Berkeley, where he also directs the Center for Healthcare Organizational and Innovation Research.