Con­sol­i­da­tion with­out in­te­gra­tion won’t align in­cen­tives to im­prove qual­ity of care

Modern Healthcare - - COMMENT - By Joe Mott

The health­care land­scape is again be­ing re­shaped by con­sol­i­da­tions, with the prospect of more to come. The ques­tion is, will con­sol­i­da­tion trans­form the in­dus­try, giv­ing us a new busi­ness model that will de­liver higher-value re­sults?

Con­sol­i­da­tion may be a nec­es­sary con­di­tion, but it is cer­tainly not suf­fi­cient to drive the needed changes in the in­dus­try. The trans­for­ma­tion that is des­per­ately needed is a move to­ward more in­te­gra­tion of care de­liv­ery, in­volve­ment of pa­tients in their care, and align­ment of fi­nan­cial in­cen­tives.

Among no­table re­cent con­sol­i­da­tions are deals af­fect­ing health in­sur­ers: An­them’s an­nounced ac­qui­si­tion of Cigna and Aetna’s of­fer for Hu­mana. In ad­di­tion, Wal­greens Boots Al­liance has agreed to buy Rite Aid Corp., and CVS Health re­cently bought Tar­get Corp.’s phar­macy busi­ness. Th­ese re­align­ments could in­crease pres­sure on hos­pi­tal sys­tems to com­bine. To this point, all we’re talk­ing about is size and mar­ket power, none of which nec­es­sar­ily creates more value in the mar­ket.

Con­sol­i­da­tion may well in­crease ef­fi­cien­cies, stan­dard­iza­tion and bar­gain­ing lever­age, but whether or not it leads to in­te­gra­tion will, in the end, de­ter­mine its con­tri­bu­tion to health­care im­prove­ment. Only in­te­gra­tion en­ables the key com­po­nents of pay­ing for and pro­vid­ing care to work to­gether to­ward the shared goal of im­prove­ment.

That’s key when 30% or more of health­care in the U.S. is not in­di­cated by ev­i­dence and, there­fore, might be de­scribed as overtreat­ment. Sim­ply re­duc­ing the cost of that overtreat­ment misses the big­gest op­por­tu­nity for im­prove­ment. If we can cre­ate a health­care sys­tem that pro­vides all the care peo­ple need but none of the care they do not need, we will im­prove qual­ity and re­duce cost.

Why would any or­ga­ni­za­tion pro­vide care that’s not in­di­cated? First, there are not enough ev­i­dence-based stan­dards. Sec­ond, pa­tients are not suf­fi­ciently en­gaged in their care or the cost of it. Third, in a fee-for-ser­vice sys­tem, there is a mis­align­ment of fi­nan- cial in­cen­tives, with providers be­ing paid to test and treat—and be­ing paid more to do more of those things.

The need to trans­form those three con­di­tions has led In­ter­moun­tain Health­care to pursue what the sys­tem calls “shared ac­count­abil­ity.” This ini­tia­tive em­pha­sizes ev­i­dence-based care, pa­tient en­gage­ment and align­ment of com­pen­sa­tion with qual­ity of care. It re­quires sys­tems of providers and pa­tients to take re­spon­si­bil­ity for man­ag­ing health and well­ness.

This ini­tia­tive is fun­da­men­tal to ful­fill­ing our mis­sion of “help­ing peo­ple live the health­i­est lives pos­si­ble.” In­te­gra­tion is key to re­al­iz­ing it, thereby max­i­miz­ing pop­u­la­tion health.

There are sev­eral mod­els of in­te­gra­tion, which typ­i­cally com­bine the ef­forts of a health in­surer, a health­care fa­cil­ity or fa­cil­i­ties, and physi­cians. Some mod­els in­volve com­mon own­er­ship: In­ter­moun­tain, for ex­am­ple, is a not-for-profit health sys­tem with 22 hos­pi­tals, 185 clin­ics, about 1,400 em­ployed physi­cians and ad­vanced-prac­tice clin­i­cians, and a health in­sur­ance sub­sidiary called Selec­tHealth. Other mod­els are cre­ated con­trac­tu­ally through ne­go­ti­ated op­er­at­ing agree­ments and other col­lab­o­ra­tive ar­range­ments. And some com­bine the two: At In­ter­moun­tain, we pro­vide some in­te­grated ser­vices in Idaho through a con­trac­tual re­la­tion­ship. We also col­labo- rate with com­mu­nity clin­ics and other or­ga­ni­za­tions that serve cer­tain seg­ments of the pop­u­la­tion and play a role in the con­tin­uum of care.

In­te­gra­tion is de­fined more by the re­al­ity of com­bin­ing in­ter­ests than by own­er­ship. It is, there­fore, avail­able to all health­care providers, not only those struc­tured in a cer­tain way.

That’s good news, be­cause we won’t solve the big fi­nan­cial is­sues un­der­min­ing the value of the health­care sys­tem in Amer­ica un­til we truly trans­form how to de­liver bet­ter care. In fact, in our ex­pe­ri­ence, bet­ter care of­ten ends up be­ing less ex­pen­sive care.

Merg­ers and ac­qui­si­tions alone will not de­liver bet­ter care, al­though they can fa­cil­i­tate it. It’s eas­ier to com­ply with ev­i­dence-based stan­dards of care if ev­ery­one’s not an in­de­pen­dent ac­tor; it’s eas­ier to en­sure the prac­tice of high-qual­ity medicine in an or­ga­ni­za­tion with a shared phi­los­o­phy and the re­sources to sup­port its ap­pli­ca­tion.

Yet as or­ga­ni­za­tions grow and in­crease their lever­age, they can ei­ther be a force for im­prove­ment or an even larger ob­sta­cle to it. That’s why size alone—or con­sol­i­da­tion alone—is not the so­lu­tion. By the same to­ken, shared own­er­ship does not nec­es­sar­ily pro­duce bet­ter care.

Im­prove­ment comes from prop­erly align­ing in­cen­tives for ev­i­dence-based care by in­te­grat­ing the in­ter­ests of the in­surer, the hos­pi­tal and the physi­cian—and most im­por­tantly, the pa­tient. Only when they are each prop­erly re­warded for bet­ter care and bet­ter health will the qual­ity of our na­tion’s health­care be max­i­mized.

Joe Mott is vice pres­i­dent of pop­u­la­tion health at In­ter­moun­tain Health­care based in Salt Lake City.

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