The Other Vested Interest

In the week since I started this blog, I’ve already opined, not once but twice, on what the real substance of the health care debate should be. Still, after reading Atul Gawande’s New Yorker article on ballooning health care costs (I know I’m a bit late to the party, here) and Robert Pear’s New York Times article about Medicare’s new payment plan, I felt the need to pile on once again.

Gawande’s piece tells the first part of the story – health care costs and health care quality are not aligned:

Americans like to believe that, with most things, more is better. But research suggests that where medicine is concerned it may actually be worse. For example, Rochester, Minnesota, where the Mayo Clinic dominates the scene, has fantastically high levels of technological capability and quality, but its Medicare spending is in the lowest fifteen per cent of the country—$6,688 per enrollee in 2006, which is eight thousand dollars less than the figure for McAllen. Two economists working at Dartmouth, Katherine Baicker and Amitabh Chandra, found that the more money Medicare spent per person in a given state the lower that state’s quality ranking tended to be. In fact, the four states with the highest levels of spending—Louisiana, Texas, California, and Florida—were near the bottom of the national rankings on the quality of patient care.

Yes, you read that right. The more money spent per person the worse the quality of care tends to be.

To be clear, this relationship is not causal – that is, when doctors spend less care does not magically improve. But it turns out that hospitals that focus on doctor accountability, cross-functional collaboration and patient health, as opposed to profits, provide better care for less.

Of course, because every economic incentive opposes their existence, bastions of well-managed care like the Mayo Clinic are surprisingly difficult to create.

Though perhaps the ACA will make it a bit easier. As Pear reports:

The administration plans to establish “Medicare spending per beneficiary” as a new measure of hospital performance, just like the mortality rate for heart attack patients and the infection rate for surgery patients.

Hospitals could be held accountable not only for the cost of the care they provide, but also for the cost of services performed by doctors and other health care providers in the 90 days after a Medicare patient leaves the hospital.

This plan has drawn fire from hospitals, which say they have little control over services provided after a patient’s discharge — and, in many cases, do not even know about them. More generally, they are apprehensive about Medicare’s plans to reward and penalize hospitals based on untested measures of efficiency that include spending per beneficiary.

A major goal of the new health care law, often overlooked, is to improve “the quality and efficiency of health care” by linking payments to the performance of health care providers. The new Medicare initiative, known as value-based purchasing, will redistribute money among more than 3,100 hospitals. (My emphasis added.)

Hospital administrators are mad. But this is what health care reform needs to look like. Cost-cutting measures must be supply-side. We should be focusing on holding the hospital’s accountable for the totality of care, and rewarding those that do it well.

So, given all this, why is the health care debate so focused on tackling the big-bad insurance companies? Indeed, when is the last time you heard a representative seriously talk about doctor accountability? I think this is wrong. There is more to be gained (either by lowering costs, improving health, or both) by tackling the other vested interest – the health care providers themselves.

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