Is current low trend in health care cost growth due only to recession? Ken Kaufman suggests that 5 other factors may be contributing.

In a very interesting recent post to the Health Affairs blog, Ken Kaufman challenges the widely repeated assertion that the current low level of health care cost growth can be attributed to the recession.  After decades of double digit trend, the rate slowed in recent years down to a mere 3.9% in 2010.  The conventional wisdom is that recessions cause decreases in employment by employers offering good insurance and general recessionary belt-tightening includes reductions in utilization of discretionary health care services.

Kaufman noted that inpatient hospital utilization by Medicare patients dropped 8% from 2006 to 2010 — patients that are presumably retired and therefore not affected by recessionary unemployment.  He also noted that states with a larger drop in Medicare utilization were the ones with the smallest drop in employment rates, the opposite of what one would expect if the recession was the driver of the drop.  From these observations, Kaufman proposes that we should look for other factors at play.  He suggests an initial list of five other factors:

  1. As doctors move from entrepreneurial self-employment to employment by hospitals and large groups, they come under the influence of care protocols, disease management and other clinical programs that attempt to drive down avoidable utilization
  2. As hospitals’ revenue growth slowed, they changed from an “all things to all people” philosophy to a policy of eliminating unprofitable programs
  3. New “care models,” including new approaches to physician incentives and reimbursement, are starting to have an effect
  4. Dramatic shift from brand name to generic drugs
  5. Health care utilization may have reached the point of “diminishing marginal utility,” where people’s appetite for more is diminished and other alternatives for resource allocation are relatively more appealing than more health care

As we (hopefully) continue to recover from the recession, everyone expects health care trends to creep back upward.  But, perhaps they won’t creep all the way back up to the teens due to these forces keeping cost growth in check.

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Of 27 new ACOs named by CMS: 93% avoid downside risk, 82% avoid CMS loans, 33% use payer-based infrastructure, and average beneficiaries per physician is 106

Yesterday, CMS announced the first batch of 27 “normal” ACOs under its Medicare Shared Savings Program (MSSP).

I found five things interesting about the list:

  1. 93% were unwilling to accept downside risk.  In the original proposed rule for the MSSP, ACOs would have been forced to accept downside risk.  Presumably, CMS thought that “skin in the game” would be an important motivator for real transformative change, and they wanted to increase the chances that the federal government would be able to achieve a net cost reduction.  But, in response to fierce backlash from providers saying they did not want to accept downside risk, CMS relented and introduced an option allowing providers to avoid taking downside risk in exchange for a smaller upside reward.   When it came time to lay chips on the table, 93% took the safe bet.
  2. Only 18% requested up-front payment.  One of the complaints from the provider community during the design phase of the MSSP was that providers lacked access to the capital needed to create the infrastructure to successfully improve care processes and manage risk — things like healthcare information technology, analytics and care management.  In response, CMS offered an option where ACO applicants could receive some up-front payments that would be repaid out of subsequent rewards.  CMS was offering to finance the investment, but it would be a loan, not a grant.  Only 18% of the first batch of ACOs selected this option.  I suspect this was due to the same risk aversion that led them to accept smaller rewards to avoid downside risk.
  3. 33% used payer-based infrastructure.  If physician organizations are to remain locally-focused, it makes more sense to share infrastructure with others to achieve economies of scale, rather than taking on the cost of creating their own infrastructure.   As I described in a prior post, this can be accomplished through a franchise arrangement.  It can also be accomplished through a management services organization (MSO), as is commonly done by PPOs and medical groups in mature managed care markets.  Or, it can be done by partnering with payers who already have such infrastructure.  Any of these approaches could potentially work, but I’m least enthusiastic about using payers’ infrastructure.  Nevertheless, nine of the 27 new MSSP ACOs are organized as partnerships between local health care providers and Collaborative Health Systems (CHS), a division of Universal American, a publicly-traded for-profit health insurance company that offers a variety of plans including Medicare Advantage plans.  For these 9 ACOs, Collaborative Health Systems will provide a range of care coordination, analytics and reporting, technology and other administrative services.  This is a popular option not only because of the economies of scale, but also because it allows the providers to avoid having to take out a loan, either from CMS or from traditional sources of capital such as banks or the equity markets.
  4. 44% did not note the number of physicians in their press-release blurb.  I hate to read too much into such a factoid.  But, for ACOs to work, the physicians must really be involved.  What does it tell you if the organizers of an ACO, when drafting their little blurb for the CMS press release announcing their selection as one of the first batch of MSSP ACOs, did not think to state the number of physicians involved?
  5. Average beneficiaries per physician is 107.  Of the 13 ACOs that did think to include the number of physicians in their press release blurb, 4 of them had between 100 and 400 beneficiaries per physician, 7 of them had between 31 and 60 beneficiaries per physician, and 2 of them had less then 10 beneficiaries per physician.  If ACOs are to really work, they don’t just need infrastructure, they need “mind share.”  If 5% of your patients are involved in some new program, and if you have not agreed to any downside risk in terms of taking on debts or being on the hook for possible negative rewards, and if the rewards are relatively small even for that 5% of your patients, are you really going to be motivated to radically transform your care processes and change your habitual clinical decision-making practices?

Here’s this list, including the beneficiaries per physician calculations.

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Michigan physicians are more focused on medical homes and accountable care organizations and more optimistic about careers in medicine. Coincidence?

A recent article in Crains Detroit Business reported the results of a national physician survey conducted by The Doctors’ Company, a large malpractice insurer. According to the survey, 10% of physicians nationally report plans to convert their practice to a “medical home” model. But, that number was 27% for Michigan. Nationally, only 14% of physicians are interested in joining an accountable care organization (ACOs). But, in Michigan this number was 25%.

Why are Michigan doctors twice as interested in medical homes and accountable care?

Steven Newman, M.D., president of the Michigan State Medical Society, attributed it to the fact that Michigan physician organizations have been working on this for a long time. I was proud to see that he called out Blue Cross Blue Shield of Michigan as being one of the drivers. BCBSM’s Patient Centered Medical Home designation program has been going on for 4 years.  Its Physician Group Incentive Program (PGIP) has been going on for 8 years.   Its Collaborative Quality Intiatives (CQIs) have been going on for more than a decade.

Unfortunately, these things take time.  Fortunately, in Michigan, we started a long time ago.

My former boss, Tom Simmer, MD, CMO of BCBSM, has consistently emphasized the importance of using time as a lever of change.  And, he insisted on staying positive and respectful, focusing on building energy that can “catalyze” change by physicians and other health care professionals.  It seems to have paid off in terms of physician interest in medical home and accountable care transformation.  Although it is difficult to measure “energy,” a physician’s willingness to recommend a career in health care is as good a metric as any.  According to the physician survey, only 11% of physicians nationally would recommend a career in health care.  In Michigan, that number is 53%.  That’s huge.

We still have a lot more work to do before we can say that this long slog has resulted in substantial, measurable improvements in the overall quality of care, and overall reductions in per capita health care spending.  But, at least we have solid indicators that hearts and minds are optimistic and energized among those who will drive those improvements.

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People are recognizing that medical informatics is about people, not just installing software. But, unfortunately everyone is trying to find such people at the same time.

I have long criticized the “informatics,” “analytics” and “business intelligence” industries for over-emphasizing the value of installing analytic software or producing a pile of routine reports.  As described in a previous blog post, I have found such tools to add value only in the hands of talented, trained people with the ability to tell interesting, truthful, actionable stories, backed up by data.

This is an inconvenient truth for technology vendors and their investors, who prefer the exponential growth that can be achieved by developing some technology and licensing it quickly to a broad customer base, rather than the linear growth associated with finding and developing good people.  It is also worrisome for some IT professionals in health care institutions, who are often more comfortable with acquiring and maintaining a portfolio of software applications than dealing with the ambiguities of analytic talent and insight.

Since the development of an informatics talent base is a long slog, I always advise my clients to get started with it as quickly as possible.  However long it takes only gets longer if you haven’t started.

But, the process of building informatics talent is being made even more difficult by the fact that many health care organizations are trying to find such talent all at once.  Health care market changes and accumulating disappointment with the lack of value of canned reporting tools are making more and more organizations realize that they need to establish medical informatics as a core competency.

 

At the recent HIMSS ’12 meeting in Las Vegas, Price Waterhouse Coopers described the results of their survey of 600 organizations in the health care field, covered in an API article.  According to the survey, 70% of health insurers, 48% of hospitals, and 39% of pharmaceutical/life-sciences companies are planning to hire more medical informatics staff in the next two years.  Forty percent of respondents noted that lack of skilled informatics staff is a barrier to their efforts to develop a comprehensive informatics program.

Furthermore, it is important that new informatics staff be knowledgeable not only in technology and analytic methods, but also in health care.  For informatics to be incorporated into the care delivery process, medical informaticists must be able to effectively communicate and collaborate with physicians.  In fact, according to the PwC report, 50% of hospitals and physician respondents reported that misalignment of clinical and technology teams is a barrier to incorporating sophisticated analytics into clinicians’ everyday work.

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To resolve conflicts, re-frame polar positions as optimization between undesirable extremes. But, sometimes there is no way to win.

In politics and professional life, achieving success requires the ability to resolve conflicts.  I’ve noticed that conflicts often become entrenched because the opposing parties both simplify the conflict in black and white terms. They conceptualize their own interest as moving in one direction. And, they conceptualize their opponent as wanting to move in the opposite, wrong direction. As a result, the argument between the parties generates no light, only heat.  Each side only acknowledges the advantages of their direction and the disadvantages of the opposing direction. Neither side seeks to really understand and learn from the arguments offered by the other side.

When I’ve had the opportunity to mediate such conflicts, I almost always used the same strategies.

  • Step One.  I try to move both parties to some common ground, moving back to some basic statement that seemingly nobody could disagree with.  This generates a tiny bit of agreement momentum.
  • Step Two. Apply the momentum generated in step one to getting the parties to agree that, if you took each party’s position to an extreme, the result would be undesirable. The parties are inherently agreeing to re-conceptualize the disagreement from being a choice between polar opposite positions to an optimization problem. The idea is to choose an agreeable value on some spectrum between undesirable extremes.  If the parties make this leap, we are half way to sustainable agreement.
  • Step Three.  Get the parties to agree to avoid talking about the answer, and focus on reaching consensus on the factors and assumptions that influence the selection of the optimal answer.  Sometimes, this can be done subjectively, simply listing the factors.  Other times, it is worthwhile to get quantitative, working together on assumptions and calculations to estimate the magnitude and uncertainty of the outcomes at various points along the spectrum of alternative answers.  This quantitative approach has been described as the “explicit method,” and an example of applying it to resolve fierce disagreements about mammography guidelines is described in an earlier post.
  • Step Four.  Finally, ask the parties to apply their values to propose and explain an optimum answer, from their point of view.  In this step, the important point is to insist that the parties acknowledge that they are no longer arguing about facts or assumptions, since consensus has already been achieved on those.  If not, then go back to step three. The objective is to untangle and separate factual, logical, scientific debates from the discussion of differences in values.  If those remain tangled up, the parties inevitably resort to talking at each other, rather than engaging in productive dialog.
  • Step Five.  Try to achieve a compromise answer.  In my experience, if you’ve really completed steps 1-3, this ends up being fairly easy.
  • Step Six.  Work to sustain the compromise.  Celebrating the agreement, praising the participants for the difficult work of compromise, documenting the process and assumptions, and appealing to people to not disown their participation in the process are all part of this ongoing work.   Passive aggressiveness is the standard operating model in many settings, part of the culture of many organizations.  And, it is a very difficult habit to break.

Of course, in the routine work of mediating conflicts, I don’t really explicitly go through these six steps. This conflict resolution approach is in the back of my mind. They are really more like habits than steps.

Sometimes this approach works. Sometimes, it does not.  It can break at any step.

Notice that break downs in most of the steps are basically people issues. People won’t change their conceptualization. They are unwilling to make their assumptions explicit. They are unwilling to acknowledge differences in values. They are unwilling to compromise.

But, sometimes, the process breaks because of the nature of the issue being debated. Sometimes, conceptualizing the debate as an optimization problem between two undesirable extremes fails because there are really not good choices along the spectrum.

For example, when debating the design of a program or policy, I have often encountered a no-win trade-off between keeping it simple vs. addressing each party’s unique circumstances.  If I keep it too simple, people complain that it as a “hammer,” failing to deal with their circumstances.  If I add complexity to deal with all the circumstances, people complain that it is a maze or a contraption.  If I select some middle level of complexity, the complaints are even worse because the pain of complexity kicks in before the value of complexity is achieved.

I’ve seen this no-way-to-win scenario in my own work, in the design of information systems, wellness and care management protocols, practice guidelines and protocols, analytic models, organizational structures, governance processes, contractual terms, and provider incentive programs.  And, I’ve seen this scenario in many public policy debates, such as debates about tax policy, tariffs, banking regulations, immigration, education, and health care reform.  In cases when the extremes are more desirable than the middle ground, the only approach I can think of is to bundle multiple issues together so that one party wins some and the other party wins others, to facilitate compromise.

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CBO: Bundled payments for bypass surgery saved 10%, but pay-for-performance and gain-sharing was not effective in 3 Medicare demonstrations

Lyle Nelson from the Congressional Budget Office (CBO) has been busy.

Two weeks ago, I commented on the results of Nelson’s review of 6 Medicare Care Management demonstration projects over the last decade. At the same time that report was released, Nelson also released a companion report on the 4 “Value-based Payment” CMS demonstrations over the same period. The following is my adaptation of the main results table in this new CBO report.

The most influential of these demonstrations was the Physician Group Practice Demonstration (PGP).  The ten PGP participants included 2 faculty group practices within academic medical centers, 5 non-academic integrated delivery systems, one freestanding group practice, and one network consisting of 60 small practices.  All had experience with care management programs before the demonstration, and all implemented care management programs in the Medicare population for the demonstration.    These care management programs mostly consisted of nurses serving as care managers, focusing primarily on patient education and monitoring for patients with CHF or diabetes or meeting other “high risk” criteria.  Most implemented chronic disease registries for use by the care managers, in addition to using electronic medical records systems that were already in place or in the process of being implemented before the start of the demonstration.

Two of the ten PGP participants received bonuses in the first year, since the Medicare expenditures were more than 2% below the expected expense.  Four participants received bonuses in the second year, five in the third and fourth years, and four in the fifth year.  A formal evaluation of the program conducted after the first two years concluded that the overall effectiveness of the PGP across the ten participants was about 1% gross savings in year two, and even lower in year one.  Net savings, after counting the cost of the bonuses paid to some of the participants, was only 0.1% in year two.

The CBO report points out that even this meager 0.1% net savings might be an over-estimate, because PGP participants changed their diagnostic coding practices, making their populations appear to be sicker, and therefore making the risk-adjusted cost targets artificially high.  Such revenue maximization efforts have been job one in Medicare Advantage plans for years.  The PGP participants succeeded in lifting their risk scores by 8%, which was 3 percentage points higher than the increase in the comparison population.  And, the savings might have been further overestimated because all four of the PGP participants that achieved reward payments in year two already had slower than normal growth in Medicare expenditures before the PGP demonstration began.  All the other PGP participants that did not earn year 2 bonuses had pre-demonstration Medicare growth that was no different than the comparison population.

Despite these discouraging results, the PGP demonstration was nevertheless used as the main evidence base supporting the design of the Medicare Shared Savings Program, calling for the establishment of Accountable Care Organizations (ACOs).  It is also the main evidence base for the associated Pioneer ACO program, for which 32 participating provider organizations have recently been selected.

The Premier Hospital Quality Demonstration focused on 5 disease states and made bonus payments that amounted to only 0.25% of the total Medicare payments for those disease states.  That’s two orders of magnitude less than the size of incentive payments thought to substantially influence performance.  With such a tiny prize, it is not surprising that the quality improvements were assessed to have only a 1-5% incremental impact of process of care quality metrics during a period of time when such process of care metrics were improving nationally.  And, the CBO report concluded that the demonstration had no effect on Medicare expenditures for inpatient hospital care.  In fact, taking into consideration the reward payments, the demonstration led to an increase of costs by 0.3%.

The most successful of the demonstration projects was the Medicare Participating Heart Bypass Center Demonstration, which was used as a model for similar provisions in the health care reform law (PPACA).  In this program, the hospitals negotiated their bundled payments up front, ensuring that Medicare received savings compared to typical fee-for-service cases.  Overall, the program saved Medicare 10%.

So, where did the savings come from?

It’s possible that  they just came from good negotiating by CMS with hospitals that wanted to get out in front of what they saw was an inevitable trend toward bundled payment.  But, let’s assume that the hospitals really had a plan to reduce their costs in proportion to the negotiated decline in their revenue.

In interviews with leaders of the participating hospitals, the important changes in their approaches to patient management that were intended to reduce their costs included:

  1. Greater involvement by surgeons in postoperative care
  2. Earlier discharge of patients from the intensive care unit
  3. Greater standardization of surgical protocols and supplies
  4. Substitution of less expensive drugs for more costly ones, and
  5. Greater reliance on clinical nurse specialists for managing patients’ care in the hospital.

The participating hospitals substantially decreased their length of stay during the demonstration period, although length of stay for bypass surgery was dramatically decreasing nationally during that same time period.

However, probably more important than these process changes was the fact that all the participating hospitals created a physician reimbursement approach that established a fixed per case payment expected to cover all physician payments.  This amount was split in defined percentages among the four types of specialists involved in every bypass case — the thoracic surgeon, cardiologist, anesthesiologist, and radiologist.  Any payments to other specialists was essentially payed from this pool, reducing the payments to the four core specialties. Therefore, the hospitals created a strong incentive for the core specialties to limit referrals to other specialists.  This undoubtedly led to a reduction in utilization of those other specialists and the tests and procedures they generate.  Therefore, some of the savings probably came from reducing revenue to non-core specialists.

My conclusions

  1. Don’t bother with incentives unless they are large enough to change behavior.  A 0.1% reward can’t work.  Nor can a 1% reward.  Try 10-20%.
  2. Don’t create asymmetrical up-side only incentives.  They are far weaker in terms of motivating change.  And, they create a problem with paying out undeserved rewards for lucky good results.
  3. Negotiate the savings up front, rather than just creating a game from which savings might be achieved.
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CMS Announces 32 Pioneer ACOs, including 3 in Michigan

The Centers for Medicare and Medicaid Services (CMS) announced the final list of 32 health care provider organizations that are to participate in the “Pioneer ACO” program during 2012.

The Pioneer ACO program was intended to allow provider organizations that had experience and sophisticated population management and care coordination capabilities to get started under a gain-sharing arrangement for Medicare more quickly than the Medicare Shared Savings Program (MSSP).  Compared to the MSSP participants, these Pioneer ACOs will take on greater risk and will be eligible to receive higher gain-sharing payments. They will then have an opportunity to move more rapidly from a gain-sharing to a population-based full-risk capitation payment model in year three, as long as they successfully earned shared savings awards during the first two years.  They will then be allowed to continue through an optional fourth and fifth year. The Pioneer ACOs all commit to negotiating “outcomes-based” reimbursement arrangements with other payers by the end of the second year.

Of the 32 Pioneer ACOs, more than one third are physician organizations, with the remainder being integrated delivery systems or other structures that include both hospital facilities and physicians.

The majority of the Pioneer ACOs are concentrated in 5 states, with California predictably leading the pack with 6 Pioneers, followed by Maine, Michigan, Minnesota and Texas.

The three Michigan-based ACOs include:

  • Genesys PHO: a collaboration between Genesys Health System and 160 primary care physicians with 400 participating specialist physicians who deliver health care services in Genesee, Lapeer, Shiawassee, Tuscola and northern Oakland counties.
  • Michigan Pioneer ACO: To be managed by the Detroit Medical Center PHO, a partnership of The Detroit Medical Center and its 1100 physicians, who include employed and faculty physicians, but consisting mostly of private practice primary care physicians. The Detroit Medical Center is a large academically integrated system in metropolitan Detroit, owned by Vanguard Health Systems and serving as a teaching and research site for the Wayne State University School of Medicine.
  • The University of Michigan Health System, which includes the U-M Faculty Group Practice, part of the U-M Medical School, includes all of the nearly 1,600 U-M faculty physicians who care for patients at the three U-M hospitals and 40 U-M health centers. Although U of M’s ACO was categorized by CMS as an “integrated delivery system,” the Pioneer ACO will also include participation by IHA Health Services Corporation, an Ann Arbor-based group practice that is part of Trinity Healthcare with 175 physicians in 32 practices.

The full list of Pioneer ACOs follows:

CMS released a fact sheet with more details about the Pioneer ACO program.

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The Humunculus is a metaphor for Clinical Process Improvement Frameworks

During the last 20 years, we have experienced wave after wave of new frameworks for improving health care.  Each had its own terminology, ardently promoted and enforced by its zealous advocates.  Each had a lifecycle that began with a long incubation period, followed by a period of explosive growth in popularity and influence, rapidly leading to unrealistic expectations, followed by a period of decline during which the framework was declared to have been ineffective.  We’ve been through health maintenance, outcomes management, clinical effectiveness, managed care, disease management, chronic care, care management, practice guidelines, care maps, evidence-based medicine, quality functional deployment, continuous quality improvement, re-engineering, total quality management, and six sigma.  We’re still in the thick of lean, patient-centered care,  value-based benefits, pay-for-performance and accountable care.

Four things I’ve noticed about this lifecycle of health care improvement frameworks:

  1. They are formulated by conceptual thinkers, but then get taken-over by more tactically-oriented people.  The tactical folks often focus too much on the tools, terminology and associated rituals.  The framework always gets “simplified” to be more suitable for mass consumption.  For example, continuous quality improvement somehow morphed into being primarily about assigning a timekeeper during team meetings and communicating progress on a felt-backed “story board,” rather than finding people with systems-thinking talent and applying that talent to understand sources of variation in complex processes.
  2. During the early part of the growth phase, the advocates are always desperate for examples of success, and shower a great deal of attention on early projects that are described using the terminology of the framework and that appear to have succeeded.  The desperation usually leads advocates to lower their standards of evidence during this phase.  This leads to over-promising and unrealistic expectations.  It stimulates lots of superficial imitation by people interested in hopping on the bandwagon.  And, it plants the seeds for the eventual decline, when people determine that their inflated expectations were not met.
  3. The decline phase, when the framework is declared to be ineffective, seems to always happen before the framework was ever really implemented in the way envisioned by the original formulators during the incubation phase.
  4. All the frameworks are really just restatements of the same underlying concepts, but with different terminology and tools, and different emphasis.  In other words, they all have the same anatomy, but different parts of the anatomy are emphasized.

This last point reminds me of the “humunculus,” also called the “little man.” When I was in medical school in the late 1980s, we used heavy text books that generally did a bad job of teaching the information. One notable exception was clinical neuroanatomy. We used a small, paperback text book playfully entitled “Clinical Neuroanatomy Made Ridiculously Simple” by Stephen Goldberg, MD. It contained a collection of clever drawings designed to explain the structures and functions of the brain and spinal cord. Perhaps the most famous of the drawings was the humunculus.

Cross section of somatosensory cortex, showing mapping to sensory input sources

This drawing was adapted from earlier work by an innovative neurosurgeon named Wilder Penfield, who invented new surgical procedures for patients with epilepsy during the late 1930s.  During those procedures, he used electrodes to stimulate different points on the surface of the brain.  He drew diagrams similar to the drawing above showing that the surface of the brain contained a little man hanging upside down. The diagram shows that a disproportionate portion of the brain surface is dedicated to the sense of touch and muscle movements in certain parts of the body.  Lots of brain surface is dedicated to highly sensitive and nimble areas like the lips, tongue, hands and feet.  Very little brain surface is dedicated to the arms, legs and back.  Many anatomic illustrators have drawn the humunculus as a cartoon character showing how this disproportional emphasis on different parts of the body looks on the little man.

The Humunculus

The humunculus is a great teaching tool, making it easy to remember these aspects of clinical neuroanatomy.  But, I think the humunculus is also a useful metaphor for the distorted emphasis that various health care improvement frameworks have placed on various parts of the underlying anatomy of health care improvement.

Framework

Emphasis

Health maintenance Preventive services
Outcomes Management Measurement of function, patient experience and health status
Clinical Effectiveness Measurement of outcomes in real world settings, rather than laboratory controlled conditions
Managed Care Prospective review of appropriateness of referrals, procedures and expensive drugs, and retrospective review of cost of care
Disease Management Role of nurses in training patients to be more effective in self-management
Chronic Care Teamwork in primary care clinic and importance of organizational and community environment
Care Management Role of nurses in coordinating services delivered by different providers and in different settings
Practice Guidelines Consensus about which ambulatory services are appropriate in which situations
Care Maps Consensus about the sequence of inpatient services for different diagnoses
Evidence-based Medicine Weight of scientific evidence about efficacy of a service (without regard to cost)
Quality Functional Deployment Focus on the demands made by patients
Continuous quality improvement Small experiments to determine if incremental process changes are improvements
Re-engineering Designing new processes from scratch, rather than making incremental changes
Total Quality Management Importance of organizational culture and management processes
Six Sigma Focus on reducing frequency of defects
Lean Focus on eliminating non-value-adding process steps and reducing cycle time
Patient-centered care Focus on the needs of patients and the involvement of patients in their own care
Value-based Benefits Financial incentives to motivate patients to comply with recommended treatments that reduce overall cost
Pay-for-performance Financial incentives to motivate individual physicians to improve quality and reduce cost
Accountable care Financial incentives to motivate health care organizations to improve quality and reduce cost

Over the years, I have assimilated the concepts, terminology and tools from these various improvement frameworks into an approach that attempts to achieve balance, with each aspect of the framework shown without over-emphasis.

This framework puts the patient in the center, surrounded by the health care processes, which are surrounded by improvement processes.  It attempts to balance between focusing on care planning (the clinical decision-making regarding what services are needed) vs. focusing on care-delivery (the teamwork to execute the care plan and provide health care services to the patient).  It balances between measuring outcomes and measuring quality and cost performance.  It balances between implementing best practices through guidelines and protocols vs. improving practices through performance feedback and incentives. By avoiding a distorted over-emphasis on any one part of the anatomy, hopefully it can have greater lasting power than some of the more humunculus-like frameworks that have come and gone.   This framework is described more fully here.

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Health Care Heroes: Don Berwick, MD – Adapting industrial quality improvement principles to the improvement of health care processes

Last week, Don Berwick, MD, announced his resignation as Administrator of the Centers for Medicare and Medicaid Services (CMS).  Now is a good time to explain why Dr. Berwick is one of my all time health care heroes.

Don Berwick as one of the Notre Dame Four Horsemen on Ward's coffee mug

Apparently, I talk about Dr. Berwick a lot. A few years ago, I received one of my most treasured gifts from colleagues at Blue Cross Blue Shield of Michigan (BCBSM).  It was a coffee mug featuring the famous photograph of the Four Horsemen of Notre Dame, a reference to my undergraduate alma mater.  My colleagues replaced the faces of three of the horsemen with the faces of three of my health care heroes, Drs. Paul Ellwood (the person who coined the terms “health management organization” and “outcomes management”), David Eddy (the clearest thinker on the topics of clinical practice policies and the rational allocation of health care resources), and Don Berwick. The face of the forth horseman they replaced with my own face.  I considered it a great honor to be associated with my heroes, at least on a coffee mug.

My team at BCBSM had heard me repeatedly explain Dr. Berwick’s important contribution to adapting the quality improvement  principles that had been successfully used in manufacturing to the health care field.  Others had been involved in promoting “continuous quality improvement,” “statistical process control,” and “total quality management” in health care. Paul Batalden, Brent James, Eugene Nelson, and Jack Billi come to mind, to name but a few. But, in my opinion, it has always been Berwick that has been the most eloquent and persuasive. He connected the statistical tools emphasized by James with the front line worker involvement emphasized by Batalden. And, he was able to describe how these approaches applied to clinical decision-making as well as care delivery.

At the heart of Dr. Berwick’s contribution was teaching us all to distinguish between the “Theory of Bad Apples” and the “Theory of Continuous Improvement.”

According to the Theory of Bad Apples, errors come from “shoddy work” by people with deficient work performance.  Leaders who uphold this theory focus on inspection to identify such deficient performance, indicated by the undesirable tail in the distribution of provider performance as shown on the left side of the diagram above.  Then, such leaders focus on holding the bad performers “accountable” by applying disciplinary measures intended to motivate improvement in performance and by pursuing other interventions intended to re-mediate the bad performance.  In the health care context, the workers are physicians and the shoddy work is poor quality health care. According to Berwick, the predictable defensive response by the physicians who are targeted for such remedial attention includes three elements: (1) kill the messenger, (2) distort the data and (3) blame somebody else.

Berwick advocates instead for the Theory of Continuous Improvement.  The basic principles of this theory are

  • Systems Thinking: Think of work as a process or a system with inputs and outputs
  • Continual Improvement: Assume that the effort to improve processes is never-ending
  • Customer Focus: Focus on the outcomes that matter to customers
  • Involve the Workforce: Respect the knowledge that front-line workers have, and assume workers are intrinsically motivated to do good work and serve the customers
  • Learn from Data and Variation to understand the causes of good and bad outcomes
  • Learn from Action: Conduct small-scale experiments using the “Plan-Do-Study-Act” (PDSA) approach to learn which process changes are improvements
  • Key Role of Leaders: Create a culture that drives out fear, seeks truth, respects and inspires people, and continually strives for improvement

T-Shirt of "Berwickians" -- the staff of epidemiologists and biostatisticians at BCBSM

Berwick argued the point made by Dr. Deming:  if we  can reduce fear, people will not try to distort the data.  When learning is guided by accurate information and sound rules of inference, when suppliers of service remain in dialog with those that depend upon them, and “when the hearts and talents of workers are enlisted in the pursuit of better ways, the potential for improvement in quality in nearly boundless.”

I first was influenced by Dr. Berwick back in the 1980’s when he championed these ideas during his tenure at the Harvard Community Health Plan, and subsequently during the 1990’s when he led the National Demonstration Project on Quality Improvement in Health Care and the Institute for Healthcare Improvement.  His face was already on my coffee mug at the time he was nominated to lead CMS.  I was thrilled that someone from our community of people dedicated to clinical process improvement had been recognized and would be serving in a position of such influence.

The Irony of the Political Opposition to Berwick’s Role as CMS Administrator

Dr. Berwick’s candidacy as CMS Administrator faced stiff opposition from Republican leaders who were angry about anything connected to the health care reform law or, for that matter, the Obama administration itself.  The President made the decision to evade this opposition by making a recess appointment of Dr. Berwick.  But, such recess appointments have a limited lifespan.  As the deadline for making a formal, congressionally sanctioned appointment approached at the end of the 2011 legislative session, 42 Republican senators signed a letter reiterating their disapproval of Dr. Berwick as CMS Administrator.   The arguments against Dr. Berwick’s  candidacy, both at the time of his original nomination and again over the last few months, centered around comments that Dr. Berwick has made praising the British health care system.  They concluded from his comments that he was in favor of redistributing wealth to the poor and of rationing, the dreaded “R” word, the thing done by “death panels!”  He was, therefore both a bleeding heart and heartless at the same time.  Dr. Berwick denied these charges, but the opposition was unconvinced and unwilling to back down from a position of persistent opposition to anything connected to “Obamacare.”

The irony is that, of the heroes on my coffee mug, Dr. Berwick is not the one deserving of praise for having insight and bravery concerning the basic tenets of health economics. Instead, it was Dr. David Eddy’s mug that was on my coffee mug because he was brave enough to publish numerous papers in the Journal of the American Medical Association explaining why rationing was the right thing to do (e.g. this one and another one).  Eddy argued that creating evidence-based “practice policies” that rationally allocated health care resources using “explicit methods” was favorable to using implicit methods supported only by “global subjective judgement.”  What a radical thought!

Despite my great admiration for Dr. Berwick, he was the hero that disappointed me as a rationing denier.  In fact, in a 2009 paper published in Health Affairs entitled “What ‘Patient-Centered’ Should Mean: Confessions of an Extremist,” he eloquently argued that we should give any patient whatever they wanted, regardless of the cost and regardless of the evidence of effectiveness.  He discounted the role of the physician as a steward of resources.  I felt the argument was heartfelt and humanistic.  But, I felt it was a cop out.  How strange, then, that the Republican opposition hoisted him on the rationing petard.

Looking Forward to Berwick’s Next Journey

Although it is disappointing to me that Dr. Berwick will no longer be leading CMS, I am eager to see what he chooses to do next.  I’m sure he will continue to make a great contribution to our field.  Without all the administrative and political duties to clog up his day, perhaps we are about to witness a surge in his ongoing contributions to improving health care.

More information: See Health Affairs article and associated Health Affairs Blog Post praising Dr. Berwick.

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Primary care physicians acknowledge over-utilization and blame it on the lawyers.

Catching up on some reading, I came across this article in Medical News Today, describing the results of survey research conducted by Brenda E. Sirovich, MD, MS, and colleagues from the VA Outcomes Group (White River Junction, Vermont), and the Dartmouth Institute for Health Policy and Clinical Practice.   They surveyed primary care physicians and published their results in the Archives of internal Medicine.  They documented that primary care physicians acknowledge over-utilizationof services received by their patients.

Their #1 theory of causation?  “It’s because of malpractice lawyers!” That is not surprising to me, and is consistent with many conversations with both front line PCPs and leaders of primary care physician organizations.

However, I personally believe that this is really the #1 rationalization of the over-utilization.  I feel that there are two main causes:

  1. Low fee-for-service reimbursement, creating the need for many short visits each day to generate enough revenue to make a good living (i.e. the “hamster wheel”).  When visits need to be short, prescriptions and referrals are important to make the patient feel satisfied that their problem is really being addressed.
  2. Lack of effective clinical leadership or even peer interaction over the actual clinical decision-making (i.e. “care-planning”) done on a day-to-day basis by the vast majority of primary care physicians

Beyond the medical school and residency stage, physicians’ care planning occurs all alone, with no-one looking over their shoulder — at least no one with sufficient quantity and quality of information to make any real assessment of clinical decision-making.  Health plans have tried to do so with utilization management programs, but the poor quality of information and the relationship distance between the physician and the health plan are too great to generate much more than antipathy.

If you eliminated malpractice worries and paid primary care physicians a monthly per-capita fixed fee, would wasteful over-utilization go down without also providing deeper clinical leadership and peer review enabled by better care planning data?  Perhaps.  But I would worry that, in that scenario, physicians would still stick with their old habits of hitting the order & referral button out of habit to please the patients who have been habituated to think of “lots of orders and referrals” as good primary care.

The “mindfulness” thing in the invited commentary by Calvin Chou, MD, PhD, from the University of California, San Francisco, is a bit much — trying too hard to coin a term.  I’ve heard that presented before, and I categorized it with “stages of change,” “empowerment,” “self-actualization,” “motivational interviewing,” and “patient activation.”   I’m not saying that such popular psychological/sociological concepts have no merit.  I’m just a Mid-Westerner who starts with more conventional theories of behavior.

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