Reward good outcomes to reduce health care costs

The following editorial appeared in the Raleigh News & Observer on January 25, 2014.

The contentious debate on the implementation of the Affordable Care Act has focused on health care choice, cost, access and, most recently, the too-low percentage of younger enrollees needed to cover insurance costs. The fundamental need to fix the expensive, inefficient way health care is delivered also needs attention.

Offering millions of Americans the opportunity to access the current “health system” is certainly better than their having no coverage, but it further strains a flawed approach to care. There are three clear solutions to our care delivery problems, and fixing them will make the expansion of health insurance easier to pay for and far more valuable:

  • Care should be proactive and personalized with patients empowered to engage in their care.
  • Care should be coordinated over time between individuals and their health care providers.
  • Critically, reimbursement of care, which drives how care is delivered, must reward effective processes and outcomes rather than the number of procedures delivered.

Currently, health care is expensive and inefficient, in part, because treatment is focused on costly interventions – which are most amply rewarded by our fee-for-service reimbursement system – for often preventable chronic diseases. Care is largely uncoordinated and reactive to disease events and, even with health insurance, individuals are provided little support in navigating complex and uncoordinated services. The astounding increase in unnecessary emergency room use by new Medicaid enrollees in Oregon is but one example. Engaging patients in their care is essential to best outcomes, but it rarely occurs.

A Duke study provides a dramatic example of the perversity of our system. A program that combined preventative strategies, intense patient education and coordination of care for treatment of congestive heart failure greatly improved outcomes and decreased costs by almost 50 percent, but it proved unsustainable because of twisted reimbursement policies. Duke University Health System lost money as profitable hospital admissions were curtailed while unprofitable outpatient support services increased.

Fortunately, the need to change reimbursement to reward good outcomes has received national attention. Astoundingly, two-thirds of health care expenses go toward responding to the consequences of preventable chronic diseases, which have reached epidemic proportions. We can do better because chronic diseases develop over time, are predictable and are often preventable. Exciting new technologies show people what diseases they are susceptible to so they can receive individualized care to prevent or treat conditions most effectively.

As financial incentives help large care providers embrace coordinated care, there is reason to be optimistic. The State of Maryland has just announced bold changes in hospital reimbursement to reward good outcomes and to spur innovation. One major and influential institution, the Veterans Health Administration, has embraced a rational approach that will lead to personalized, proactive health care delivered in a coordinated and compassionate fashion because the VHA budget is aligned to reward best outcomes. Academic Medical Centers are recognizing the need to develop better models of care as evidenced by Duke’s new Institute for Health Innovation.

Improving the delivery of health care should be an overarching focus of the health care debate. Our nation is blessed with outstanding academic health care delivery systems that are capable of developing innovative models of care. Revamping reimbursement to reward good outcomes will spur creativity to develop more cost effective care, which will better enable the expansion of health care insurance.

Ralph Snyderman, M.D., is chancellor emeritus of Duke University and past president and CEO of Duke University Health System.

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