A Path for Progress for U.S. Health Care
MICHAEL APKON, MD, PHD, MBA PRESIDENT & CEO TUFTS MEDICAL CENTER
1 01 Foreword
Introduction: Where Are We 02 and Why?
Chapter 1: Ensure 11 “Universal Coverage”
Chapter 2: Redesign Payment 15 Models and Reduce Administrative Waste in Health Insurance
Chapter 3: Create Better Bridges Table of 23 across Health Care and Social Care 27 Chapter 4: Optimize Use Contents of Technology 31 Chapter 5: A Vision for the Future
Postscript: Transformation in the 37 Wake of a Global Pandemic 41 Acknowledgements
42 References Foreword
On January 21, 2020, the World Health Organization warned of a potential The pandemic with its economic and health care impact comes at a time global pandemic caused by a novel coronavirus, the SARS-Cov2 virus. of potential shift in the American political landscape with national elections Within weeks, the virus spread around the world leading to a pandemic just months away. The pandemic didn’t create the structure – the anatomy that five months later had infected more than seven million people and – of the U.S. health care system but it did stress the system in ways that killed more than 400 thousand. The impact of the virus has varied widely. help reveal the way the system functions – its physiology. If anything, Despite widespread American beliefs that the United States health care the pandemic has highlighted the universal susceptibility of people, the system is the most innovative and the most capable in the world, the U.S. is interconnectedness along the chain of health care providers, and the experiencing the highest number of infections and deaths – 115 thousand limitations of a market-based health care economy. deaths by June 11, 2020. Moreover, the economic impact of the measures intended to control the virus’ spread have led to levels of unemployment This manuscript was prepared prior to the pandemic but remains that, in the U.S., will lead to many people losing their health insurance and relevant. Although I reference the crisis in a limited way throughout, affordable access to health care. At the same time, we are beginning to see I do interpret the frameworks presented here through the lens of the the importance of access to health care as a public health measure with pandemic as a postscript. some people potentially spreading the virus further by not being able to be tested or not wanting to be tested for the virus. Differences in hospitalization A deeper understanding of our health care system and the inherent rates and risk of dying across people of different races are highlighting the tradeoffs in the current state or potential future states has never been more health care disparities that are features of U.S. health care. U.S. hospitals important as we recover from the pandemic and make our choices at the are facing an unprecedented financial crisis as they experience heightened ballot box. My hope is to provide perspective for the many people – policy costs in delivering care to people infected while at the same time losing makers and thoughtful voters – on the complex industry we depend on to revenue by needing to defer care for people with other conditions. At the keep us healthy so that we can collectively make wise choices about the same time that health insurance companies are reporting record profits, health care system we wish to create. government has had to take a much more active role in stabilizing the health care system through emergency funding measures, rapid changes in regulations, and more active coordination of the system.
1 INTRODUCTION: Where Are We and Why?
icture this. Your child is one month old. She is underweight, and at times P has bouts of coughing and episodes of diarrhea. Today you’ve just learned the diagnosis: cystic fibrosis, a life-limiting, incurable illness. As a parent you are devastated by what this means for your child, for her future. You are ready to do everything you can to make her life as long and healthy as possible. You’ll prioritize getting her to multiple appointments with pediatric specialists, respiratory therapists, and nutritionists. You’ll save or borrow money to pay for her medications and for special formula. You’ll do everything possible to make sure she gets the best medical care that exists. As a pediatrician and a parent, I understand. But here’s an unfortunate truth. If you live in Canada, your daughter will live ten years longer on average than if you live in the United States [Flume 2017] — despite the fact that we pay as much as four times more [Himmelstein 2020] for our health care than our Canadian neighbors.
As an American physician, I’ve spent the majority of my professional career as a health care executive working in the United States. Building on that foundation, I had the unique experience of working as an executive in other health care systems, serving for five years as the Chief Executive Officer at The Hospital for Sick Children (SickKids) in Toronto, before returning to the U.S. to become the CEO at Tufts Medical Center. I’ve also had the opportunity to serve as an international consultant working in Asia, the Middle East, South Africa and Europe. Although I’ve come to believe that there is no perfect health care system and that all systems are built around different trade-offs, I’ve become more aware of the many differences between the U.S. health care system and those of other developed countries and acutely aware of the effects our broken health care system has on patients and those who care for them. It’s clear that the U.S. health care system needs a major overhaul. And I’ve come to believe that we can create a health care system we all can depend on — without breaking the bank.
2 While we live in a time of the greatest Current State of Health Care in U.S. and most-rapidly progressing capability in preventing, diagnosing and treating disease More expensive than we can afford (% of Gross National Product (GNP)) that mankind has ever known, the U.S. health • 17.8% of Gross National Product (GNP) [Wharton 2017] care system is failing many of us. • Estimated to reach almost 20% by 2027 [Health Affairs] • More people skip care due to cost in U.S. [Comm Fund 2018]
It is more expensive than other countries, • Health care costs contribute to about 2/3 of U.S. household bankruptcies and seemingly, it is more expensive than we [Himmelstein 2019] can afford, eating up almost 18 percent of the gross national product (GNP) [Wharton 2017]. Some outcomes worsening Canada, by comparison, spends about 10 • Life expectancy dropped [NCHS 2017] percent of its GNP on health care. Despite the • Maternal mortality increasing [CDC 2018] high cost in the U.S., on average, our health • Infant mortality varies by state [CDC 2018] is worse on many measures — not better — than countries with a similar economic status. Substantial disparities in care and outcomes for different racial/ethnic Not only is average life expectancy in the groups [inequity] U.S. lower than other wealthy countries, it • Maternal mortality disparities by race [CDC 2018] has dropped in recent years [Kochanek 2017; • Morality and health behaviors vary by rural v. urban [UNC study] Papanicolas 2018]. Compared with 10 other countries with similar income, women in the Significant portion of health care dollars do not go to providing health care U.S. have the highest mortality rate related to • In the U.S. about 80 - 85% of insurance premiums go to health care pregnancy and childbirth, the highest rates services, medications, or equipment. Of that amount, a much higher fraction of cesarean sections, and are most likely to goes to administrative costs, return for investors and overhead compared to skip care because of the cost [Gunja 2018]. other countries. In addition, although the U.S. is known for innovation and technology advances, we are Innovative technology not yet implemented as fully as possible to increase access, not using technology to its fullest potential improve quality, and reduce cost to improve health by increasing access and • U.S. has higher global innovation index than Canada [Cornell 2019] quality or to reduce costs. • Prior to the recent COVID-19 pandemic, Canada had been using telemedicine more and has invested more heavily in data integration such as ehealth Ontario and ICES (Institute of Clinical Evaluative Sciences)
3 The Affordable Care Act (ACA), often referred to as “Obamacare,” increased access for millions of Americans through provisions such as expanding Medicaid and ensuring people with pre- existing conditions are insurable. However, Obamacare has been dismantled to the extent that it is not providing the full coverage originally intended and may no longer be economically viable [Goodnough 2018] as a result of the elimination of the individual mandate that required most people to have insurance. This is a watershed moment for health care in the U.S. as our nation considers options such as replacing the ACA with a different regulatory framework or extending the government-funded Medicare system to all. No alternative has been presented with sufficient detail to assess its potential to fix the complex issues we face.
While the debate over policy changes continues, health care costs continue to rise.
The increased costs restrict access to care and threaten the financial sustainability of some employers, while draining resources that could be used to address other important needs. The truth is that the current system is not meeting the goal of providing care that is safe, effective, patient-centered, timely, efficient, and equitable [IOM 2001] — and the associated costs are seriously thwarting the competitiveness of American companies [Burg 2014]. When these employers pass the additional costs on to employees, [Collins 2018] it can have a devastating effect on families’ health and economic stability. We currently have a cyclic system that drives higher costs, allows for disparities in access as well as outcomes, and features declining fractions of the health care dollar being spent on actual care delivery.
4 How did we get here? From my perspective, as a physician and organizational leader in the U.S. and in Canada, I see seven interrelated issues.
01. 02. 03. 04. We have created a payment system The complex systems of Our health care system fails at Many people in the U.S. lack access that incentivizes doing more and contracts that tie the benefits providing seamless coordination to health care services either spending more, even when less provided by employers to the of care. because they do not have insurance might be better. payments made on behalf of their or can’t afford their share of health employees to health care providers care costs. have created a considerable administrative bureaucracy.
05. 06. 07. Health care services are overused Consumers often have incomplete Many stakeholders are profiting in the U.S. information regarding which from the current system. doctors, facilities, and specific services are covered by their insurance plan or what those services cost.
5 We have created a payment system that incentivizes doing more and spending more, even when less might be better. Many physicians 01. and hospitals receive at least some, if not all, payments on a fee-for-service basis. For the 50 percent of Americans covered by private insurance, we rely on competition and negotiation between employers, payers, and providers to drive quality and manage costs. However, that competition between providers has largely been ineffective in lowering costs or improving quality. The current model creates perverse incentives to order more appointments, tests and procedures, has no ceiling on how much will be spent overall, and includes little incentive to rein in total costs [Mechanic 2014]. Moreover, the current system tends to drive prices for health care goods and services higher.
The administration of the complex systems of contracts that tie the benefits provided by employers to the payments made on behalf of 02. their employees to health care providers have created a considerable administrative bureaucracy. Much of this complexity is intended to minimize overutilization of services, a risk that flows from the payment system incentives to do more. The need to manage the flow of funds between employers, payers, and providers has led to much higher administrative costs compared to other countries and to diverting greater fractions of each health care dollar away from actual care [Gooch 2018]. The complexity itself is a barrier to change.
Our health care system fails at providing seamless coordination of care, especially when a patient moves from one site to another, such 03. as when a hospitalized patient leaves the inpatient setting and receives services at home. This failure results in duplication and waste, compromises in patient safety, negative effects on the patient experience, and higher expenses [Mate 2014].
Despite the increased access to insurance afforded with ACA,many people in the U.S. lack access to health care services either because of 04. where they live or because they still do not have insurance or can’t afford their share of health care costs. As a result, these individuals delay seeking care until the situation is more urgent and requires more expensive services. If people don’t have access to primary care, they must seek help in the ED, where services are more costly. The truth is, we are already paying for the lack of universal health care coverage, in higher insurance premiums and higher overhead costs for hospitals—costs that are eventually passed on to consumers and taxpayers. Although it may seem counter-intuitive, universal coverage could reduce total costs [Gaffney 2018].
The truth is, we are already paying for the lack of universal health care coverage, in higher insurance premiums and higher overhead costs for hospitals — costs that are eventually passed on to consumers and taxpayers.
6 Although overuse may not be the dominant driver for high health care costs, studies 05. have shown that certain health care services are overused in the U.S. Researchers have documented geographic variation in the use of some services — for example, how often a primary care physician refers a patient with knee pain to an orthopedic surgeon for joint Causes of unnecessary replacement surgery [Wennberg 2015]. However, higher utilization does not correlate with treatment better care. [Wennberg 2015; Newhouse 2013]
Consumers often have incomplete information regarding which doctors, facilities, and specific services are covered by their insurance plan, what those services cost or how While consumers can influence the price of 06. service providers differ in terms of quality. Physicians who were surveyed items when shopping for goods like furniture, food, and automobiles, the same does not reported that they believe hold true in health care, because In addition, there patients rarely pay directly for services. as much as 20 percent of is a paucity of useful information for consumers on health care costs [Gustafsson 2019] and treatment is unnecessary; they are often unable to determine and compare prices prior to receiving care. Also, some the most common reasons services are delivered by a combination of providers who are “in-network” – meaning their cited for overuse were fear of services are covered by a person’s insurance plan (for example, the surgeon) – and “out-of- malpractice, patient pressure, network” – meaning their services are not covered by the insurance plan (for example, the and difficulty obtaining medical anesthesiologist) – leading to “surprise billing,” which is a bill that is unexpected or far higher records. [Lyu 2017] than expected. Some patients receive bills for thousands of dollars because they chose an in-network hospital but received care in that hospital from an out-of-network physician.
Many stakeholders are profiting from the current system.The health care industry represents one of the largest segments of our economy and it employs a gigantic workforce, not only providing care, but also facilitating the function of the industry in the face of complexity. Insurance companies, hospitals, physicians, and other care givers 07. have all learned to thrive in the current system. Special interest groups, such as insurance companies, pharmaceutical and device companies, and physicians and executives in health care organizations, are likely to actively resist any shift that is in conflict with their business or will constrict their revenue or financial security. State and federal governments also benefit to some extent in the ways their roles are defined. Politicians may be uneasy changing the status quo and assuming new responsibilities for regulation or payment for services.
7 In many ways, each stakeholder plays the role in which Public & Private Sector Feedback Loops they are cast, seeking to survive and thrive by behaving in ways that secure greater financial resources or seeking to reduce costs and other constraints. It is entirely natural for people as patients to want whatever they believe they need in order to thrive so long as they can afford the cost. For many in the U.S., those health care-related ADMINISTRATION REGULATIONS COMPLEXITY needs are met through employer-funded private insurance which in part insulates people from the costs of their care. Medicaid and Medicare also similarly insulate people from the costs of their care. It is also entirely understandable PRIVATE SECTOR PUBLIC SECTOR ADMINISTRATION POLITICAL COSTS for employers to provide whatever insurance benefits ACTIVITIES TO PRESSURE & POLICY DISPARITY CONTAIN COSTS CHANGE are required to attract and retain a vibrant workforce in the face of competition for talent – so long as they can afford the cost – often by passing along higher costs to their customers. Private insurance companies and their executive teams have an inherent responsibility to their investors and shareholders to provide a financial return which they create by acting as intermediaries between employers and providers. Driving a return to shareholders requires increasing profit, driven in large part by the size of the stream of payments that flow from employer to insurance company to provider. Even not-for-profit insurance companies have a business imperative that drives very similar behavior to their investor-owned counterparts. Providers are similarly incented to provide what people demand, do more, and band together to have more power at the negotiating table.
The current system sets up a positive feedback loop between providers and payers who each naturally seek advantage in the negotiation and management of the contractual relationship that gets care paid for on behalf of beneficiaries. Providers merge together into bigger health systems to have more power at the negotiating table to be better paid. Payers similarly join together, aggregating greater numbers of beneficiaries and achieving more negotiating power on their side of the negotiating table. After contracts are developed, payers have an interest in holding on to as much of premiums as they can and providers have an interest in taking as much of the premium share as they are rightfully due for the services rendered. These opposing interests lead to a set of complex administrative functions to describe the services rendered, evaluate the appropriateness of payments, and then adjudicate appeals for concerns of overbilling or underpayment. The costs of supporting those complex administrative functions just adds to the costs that have to be covered from the premium dollar.
8 The most financially successful hospitals are ones that are able to direct care delivery efforts to patient populations with better-paying private insurance. Doing this allows them to cross-subsidize the care provided to people insured by government payers [Pashchenko 2016]. The net effect of all this is to create a growing disparity for people with lower paying government-provided insurance in accessing convenient and effective care.
To a limited extent, the public sector does address some of the unmet need by supporting some providers to deliver care to those who might not otherwise have access. Federal funding of federally-qualified health centers or New York’s funding of New York Health + Hospitals (including hospitals such as New York City’s Bellevue Hospital) are examples of this kind of publicly-funded safety net. These kinds of organizations do a remarkably good job delivering care, despite the fact that the population they serve has many challenges. However, they provide an incomplete safety net at best.
The public sector does provide a brake, or negative feedback control, on this private sector positive feedback loop. When access becomes too difficult for some people, the care too expensive, or the disparities too great, politicians experience pressure to build programs or offer regulation by providing a more attractive alternative to privately-insured care or by restricting the behaviors of payers and providers – for example by requiring all hospitals to provide emergency care despite a person’s ability to pay or by preventing private insurers from excluding people with pre-existing conditions. Although the public sector’s influence can help alleviate some of the negative consequences from the private sector’s relationships, regulations add their own administrative burden for compliance that has to be paid for from the health care dollar. Moreover, some of the public sector efforts, such as the Medicare Advantage Plans or Medicaid Managed Care Organizations, have privatized the oversight of payment programs in ways that pass public funds through private insurance companies and extend the administrative burden to public- sector funding.
Although providers lament the administrative complexity that has evolved as well as the challenge in fulfilling their missions to deliver care to those who need, most hospitals operate at a very thin profit margin and will be wary of any change that has the potential to reduce total revenue. Regardless of the substantial challenge, change is necessary. Without change in its current trajectory, our health care system will require an enormous input of additional funds to create the access, quality, and safety all patients need. Use of these funds for health care will drain financial resources we need to use elsewhere. 9 What steps will take us forward?
Based on my experience as a physician and as an administrator in Canada and the U.S., I have identified some key barriers to progress and have crafted a strategy for overcoming these barriers and catalyzing real progress. To move forward, I believe we must undertake four key steps. Together, we need to:
Ensure universal Redesign payment Create better bridges Optimize the use of coverage models between health care and technology social care
In this e-book I will explain why I believe these steps are critical and how we can use them to create the health care system we all want and that every patient deserves.
10 lthough on average, children with CF live 10 years longer in Canada than in the U.S., A digging deeper into the data, we find an unfair truth. Children in the U.S. whose families are wealthy and have access to high-quality health care have a life expectancy that is equal to their Canadian counterparts [Schechter, 2001]. It’s the children born in the U.S. to families facing socio-economic challenges whose life expectancy is significantly shorter. So the less wealthy you are, the less well your month-old daughter will fare. We all need to ask ourselves, is this a system that we want to perpetuate?
Currently in the U.S., the only health care services for which people have guaranteed access is care provided in the emergency department (ED). The ED is served by highly trained staff who specialize in treating trauma and other emergencies, but it is not equipped to provide preventive services or primary care. While the ED can handle emergency care really well, it’s expensive, and it doesn’t provide the kind of care that keeps people well. For that, people CHAPTER ONE: need primary care and preventive services, such as diabetes education, nutritional advice, Ensure “Universal and monitoring of blood pressure medications. Coverage” In the U.S., there is no universal insurance coverage for primary care, preventive care or hospitalization as there is in some peer countries like Canada or the U.K. Even among those countries that do provide universal coverage for a fuller set of services, there is no set definition for the services “universal coverage” includes. There is also no set definition for the set of services that might be available beyond those included in the set that all have equal access to. Moreover, universal coverage can exist in systems where government is the only payer or where private insurance plays an important role. In Canada, there is a single payer plan that covers hospital and physician services. The other services offered vary by province, but generally do not include prescription or outpatient rehabilitation coverage. In Canada, care providers cannot offer services paid for by private insurance if those services are covered by the government plan. In the U.K., the National Health Service (NHS) provides basic coverage to all. Unlike the Canadian system, private insurance can be purchased to cover services that are covered by the NHS system.
11 Reasons to Offer a Set of Basic Services to All
“ …Universal coverage does not always Why should we consider offering a set of basic hospital and equate to a single payer system” clinician services to everyone? I see several reasons:
As a society we need to answer three key questions in • It’s the moral and ethical choice to prevent and alleviate suffering. order to define effective universal coverage in the U.S.: • People’s needs for health care are unpredictable, as is their financial status, over the course of their lives — raising uncertainty about who will 1. What is the minimum set of services that all people cover medical costs if something should happen. should have access to regardless of ability to pay? 2. How much disparity can we tolerate across society • It would decrease barriers to obtaining care, reducing stress related to based on factors such as ability to pay? economic decisions and tradeoffs people must make. Also, access to 3. What results do we want the system to optimize? primary care leads to better outcomes and potentially better access to mental health care.
Question 1. What is the minimum set of services that all • When patients have secure access to basic services, clinicians also people should have access to regardless of ability to pay? benefit with reduced moral distress, which can be created by knowing which services are best for a patient but being unable to provide them In considering the goals of an improved health care due to external barriers. In addition, depending on how the services are system, we must first determine what services people managed, clinicians may have a decreased administrative burden, which have a right to access regardless of their individual ability is currently an important cause of burnout. to pay. This is a moral question rather than a technical • It would have significant financial advantages for employers and others one. The late noted health care economist, Uwe Reinhart, who pay for health care. Employers benefit when their employees are framed this well [Reinhart, 2019]. Paraphrasing Dr. Reinhart, healthier, in lower health care costs and reduced absenteeism. we need to ask “to what extent should children and their parents in poor households have access to the same • As is the case with automobile and home-owners’ insurance, to be preventive and life-saving services that children and financially viable health care costs must be spread across the population, their parents in rich households have?” Recognizing that including currently healthy people and current users of health care those with fewer resources cannot pay the costs of their services. This benefits everyone for two reasons. First, people who health care themselves, this question implies a second, are generally healthy may need care due to an unexpected illness (for deeper, question of ethics – to what extent do we have a example, cancer) or accident (for example, a traumatic injury from a responsibility to aid those less fortunate among us? motor-vehicle accident). Second, our society as a whole benefits when people are healthier, in increased productivity and reduced cost of care.
12 Question 2: How much disparity can we tolerate across society based Question 3: What results do we want the system to optimize? on factors such as ability to pay? What outcomes do we want to optimize? Beyond defining what services constitute a right — whether people’s access to basic services should depend on their financial means — we also need to define what level of disparity we will tolerate beyond those Care quality basic services. For example, were every U.S. citizen who needed hip surgery to be able to get it, with the surgery paid for through a universal • Better patient outcomes in terms of the six dimensions of quality health care program, we could build a system where everyone had identified by the Institute of Medicine (care that is safe, effective, exactly the same access. Alternatively, we could build a system where patient-centered, timely, efficient, and equitable) [IOM 2001] those who could afford to purchase supplemental private insurance might • Innovations leading to better diagnosis and treatment be cared for sooner or in a more comfortable setting. While that type of disparity may make some uncomfortable, I believe that an acceptable tradeoff would be providing a set of essential services that includes both hospital and outpatient as well as inpatient clinician services, while Cost tolerating a certain amount of disparity in terms of some people having access to services beyond that essential set. Certainly, such a model reflects a far lower level of disparity than we experience today. • Providing basic services without bankruptcy • Ensuring that money is well spent and that expenditures provide real value • Enhancing percent of money spent on care delivery rather than administrative costs
Access and time
• Better services for people who are currently underserved due to geographic location • Reducing wasted time (and toil) for providers and patients through coordination of services and information sharing
13 All other things being equal, it is likely that it is desirable to have a system of insurance company maintain a sufficient financial reserve. Moreover, health care benefits that: already 120-130 million people have some sort of government insurance through Medicare and Medicaid, paid for through a combination of payroll • Are portable – allowing people to retain their benefits even if they taxes, general taxes, and premiums from beneficiaries. Not only does change jobs, life partners, health status, or address government pay for health care but it administers one of the largest health • Covers pre-existing conditions – people can obtain affordable insurance care payment systems – Medicare – with among the lowest administrative even if they already have a health problem, such as diabetes or if they costs in the industry. know they are at high risk of a health problem based on their genetic profile, a situation that is becoming much more relevant in an era of low- Although many people balk at the idea of government involvement in cost genetic analysis health care, in truth, we already rely on the government to monitor • Covers people who are unemployed but not eligible for Medicaid safety and create policies to protect patients. • Covers people who could be insured under the current system but limit or otherwise self-ration their use of services because they cannot afford Government can exert significant influence on health care without being in high out-of-pocket costs (e.g., delaying a recommended imaging study the health care delivery business directly. It can limit the ability of insurance or a procedure due to co-payments) companies to implement exclusions, such as pre-existing conditions and • Optimizes outcomes in quality, effectiveness, cost, access, and time require that all individuals purchase insurance, ensuring that healthy people have coverage for unexpected illness and injuries and creating a financial It is impossible to conceive how today’s free market-driven approach to pool large enough to cover care for all. It can also influence health care health care will ever create a system of universal coverage, even at a purchasing. In our current system, Medicare is a significant payer, covering meager level of services, on its own because people who cannot afford to a larger portion of the population than any other single payer. For this pay for care do not have a mechanism to attract care providers on their own. reason, commercial insurance companies tend to shift policies and benefits In order to create a universal health system, the government will need to following the lead of Medicare. One of the most impactful levers that the play a significant role – whether through regulation, health care purchasing, government can use to change the health care system is making well- or direct provision of care. The challenge will be determining the “correct” planned changes in Medicare policy. As a purchaser of health care services, balance of government influence and free market factors to create a health the government could initiate payment reform by changing coverage and care system that provides what citizens need, what consumers want and benefits, introducing vouchers that could be used only for health care plans that achieves strong outcomes at a reasonable cost. Although many people that meet minimum standards, and exploring new payment arenas, such as balk at the idea of government involvement in health care, in truth, we federally qualified health centers. already rely on the government to monitor safety and create policies to protect patients. For example, to control safety and address ethical issues, Step one in fixing health care delivery in the U.S. is to enlist our the Federal Government regulates which providers are permitted to provide government to be part of a well-designed universal health care system health care. It also regulates payers, for example, by requiring that an that provides basic services to all. 14 s the parent of a child with CF, how might redesigned payment A models affect your family? There are several advantages to creating a payment system for health care services that is better aligned with the goal of improving health, while obtaining better value for the money spent. Redesigned payment models could cover a social worker and a case manager to help you more easily arrange for your daughter’s care. Instead of every physician visit requiring a trip to the specialist’s office, telemedicine would allow your daughter to remain at home for some of those visits. And if payment and care delivery were better aligned, you would deal with less
CHAPTER TWO: paperwork and fewer phone calls. You might be spared a surprise bill and Redesign Payment your out-of-pocket costs would likely be lower.
Models and Reduce The way that health care is currently paid for in the U.S. contributes to both high Administrative Waste costs and disparities in access, as well as disparities in outcomes. A number of forces contribute to rising prices for health care services. Those rising prices in Health Insurance contribute to fewer people benefitting from those services through employer or government-provided insurance or being able to afford to pay for those services themselves. Growing disparities in levels of access to services lead to growing disparities in health care outcomes and life-expectancy. The Affordable Care Act (ACA) did increase access to care and provide certain protections that enhance access to care, such as eligibility for patients with pre-existing conditions. However, the durability of these changes is currently in doubt and other issues remain.
15 Some of the other problems with the current payment model include:
• Payments based on fee-for-service set up perverse incentives. When care providers are paid to do more, whether that is imaging, diagnostic testing, surgery, physician visits, or hospital admissions, the tendency will be to focus on doing more, rather than on providing value and the best outcomes for the patient. • The separation of responsibilities for paying for care and for providing care hinders alignment of cost management with improving health. Because of the separation of financial risk and provision of care (plus the administrative complexity), it is difficult to create a system that prioritizes maintaining and improving health. When care providers and payers are separated, administrators manage the financial risk. When the two are integrated, more direct, less complex management systems and structures are effective. • Payment for individual services in silos results in a fragmented system. Fragmentation causes care disruption, confusion, and inconvenience for patients. It also prevents the development of the scale that is necessary for innovation and improving population health. • The shift from payment for volume, in other words fee-for-service, to payment for value is financially difficult for care providers. In the current payment system, hospitals and other care providers that reduce costs create increased value, but the insurance companies that retain a substantial portion of the dollars saved. To remain financially viable under value-based payment, care providers either need to cover more patients or combine care delivery with an insurance plan.
Many of these problems arise as a result of the way prices are set for services covered by employer-based insurance. These prices are essentially set through a process of negotiation between payers and providers that divide a health care “economic pie,” — created by premiums paid by employers — into pieces that serve the patients’ interests, the providers’ interests, and the payers’ interests.
Consider the example of payments related to the care of an insured patient needing a hip replacement because of pain and limited mobility.
Ex.) Hip Replacement
Actual Procedure Providers Charge the Payer Payers (Insurers) charge the employer Cost: $15,000 (Insurer): $30,000 who purchases the insurance for their To cover costs of administration, employee: $36,000 facilities, new programs To cover administrative costs and return dollars to their investors 16 These numbers are a fictitious example to illustrate the point and not indicative of actual costs Based on their own historic analysis and forecasting about inflationary trends, insurers will charge employers an average of approximately $36,000. This providers have some idea about what it will cost them to deliver a safe, becomes the economic pie that will be constantly negotiated as payers high-quality hip replacement experience when they sit down to negotiate identify providers to do the hip replacement. with insurers. But providers need to receive more than the actual costs of the physician and nursing labor, as well as the costs of the artificial hip, With the size of the economic pie in the mind of the payer and the costs of medications, and other necessary supplies. They require additional funds to delivering the service in the mind of the provider, both sit down to negotiate pay for the costs of administration, their facilities, and other expenses that a fee, essentially a price, for delivering hip replacements. It’s entirely have to be covered with patient care revenues. In addition, providers would understandable that the payer should seek to pay as little as possible and like to have some surplus to invest in new programs, new facilities, and other the provider should seek as high a payment as they can achieve, if only to activities such as programs that benefit the community. Investor-owned reduce the risks that their actual costs across a set of services will exceed health care providers also need to have money left over to provide a return what they forecasted. Once providers have a sense of the size of their portion to their investors. All of these extra costs add up. It is common for these of the pie, they also must make decisions as to how to divide resources to indirect costs of care to be equal to, or greater than, the direct costs of care. balance the interests of their current patients through direct care delivery, the interests of future patients through investments in facilities, technologies, For a hip replacement that costs the provider and new programs, and the interests of their employees through wages $15,000 to deliver the care, the provider might need and benefits. The precise distribution of the pie is modulated by a range of factors that have predictable influences: market power, organizational size, to receive an average of $30,000 from the insurer reputation of the providers, and labor market dynamics. These all shift the to support all of the other costs and expenses share of the pie that will go to providers and, ultimately, patients. necessary to remain viable. In thinking about this pie-dividing exercise, it is worth noting that the With respect to the payers, an insurance company can analyze its historical patients’ interests aren’t being addressed directly. It is also worth noting that data and know roughly what percentage of a population will need a hip providers and payers have a joint interest in getting the total expenditures replacement in any given year and roughly what they had to pay for hip – the size of the pie – to be as high as employers are willing to pay. People replacements in the previous year. They can then determine how much have to trust that their employers will be accountable to watch out for they need to charge employers to include hip replacement as a covered their interests in making decisions about which insurer to contract with. benefit for their employees. They also know how much they have to tack Employers, in turn, need to trust that the insurers will be accountable on to those direct costs of paying for hip replacements in order to operate to select providers and build relationships that are in the best interest their company, pay their executives, and show a return to their investors of patients. Providers need to be held accountable to work according – roughly an additional 20 percent on top of the payments that go out to to the terms of their contracts and to put resources to use in ways that providers. If providers receive an average of $30,000 for a hip replacement, demonstrate appropriate concern for patients’ interests.
17 In most cases, the nature of these negotiations and the resulting contracts create a fee-for-service approach that pays for care delivered. To ensure that money flows between parties in ways that are consistent with these contracts, the industry relies on an increasingly complex administrative structure that helps ensure patients get to a provider for which a contract exists, that patients have a right to a requested service under the terms of their insurance, that the services are justified by the patient’s condition and that the money flowing is consistent with the contract. Prior authorization, utilization- management, claims processing, and resolving disagreements around claims for payment all rely on a growing number of people that sit on both sides of a given transaction – staff within the provider organization, as well as staff at the payer organization. There is little standardization in the way each contract is developed or administered. Each provider contracts with many, sometimes dozens of, payers and each payer may have a number of versions of contracts relating to different insurance products, different employers, or different patient groups. The number of people involved in this complex administrative structure are amplified by the legions of consultants aiming to help one party or another come out ahead in this pie-sharing exercise and administrative arms-race.
The administrative costs of supporting this structure come out of the health care “economic pie” and explain some of the significant differences in health care costs between the U.S. and other developed nations.
For example, at Tufts Medical Center, a high-quality academic medical center,the administrative costs associated with paying for health care are nearly 50 times higher than I experienced at SickKids Hospital in Toronto, a similarly sized institution.
This tremendous discrepancy reflects the differences in the administrative costs associated with managing the transactions between the insurance companies, as well as other payers within the U.S. system, compared to those within the single-payer system of Ontario. At Tufts Medical Center, we process more than 1.5 million of these transactions each year, and we are a relatively small organization.
Under this fee-for-service model, there is a clear business interest for employers, payers, and providers in making sure that patients receive high quality care and a good experience, thereby creating loyalty and driving growth. However, with the exception of the employers who ultimately are paying the health care bill, the business interests in reducing costs of care are less apparent, and to some extent, in conflict with the interests of overall financial success for each part of the system.
18 A redesigned payment model could create better A redesigned payment model could have several distinct advantages over the partnerships between care providers and insurance current system. It could free up capacity by reducing unnecessary utilization, companies through preferred networks. This would helping people stay healthy, and supporting wiser choices for diagnosis and support the revenue of care providers and allow treatment, such as virtual visits. It could unite risk management and financing. them to deliver more value by reducing unnecessary Through payment, it could reward for desired actions such as: utilization while remaining fiscally viable.
We have several examples of redesigned payment Delivering better patient outcomes models. Here in the U.S., some health care providers have integrated their own insurance plans, such as Geisinger and Kaiser Permanente. Combining the two Creating opportunities for patients to engage in activities that functions within one entity aligns paying for health promote health care and improving health. In addition, when the majority of services are delivered within the entity’s Providing differential access, such as same-day service or after- network, it allows for more data collection and better hours care insights into what various patient populations need and how to improve services.
Integrating the delivery of behavioral health and medical care In Ontario, the provincial government selected a total amount it would pay for care and developed payment mechanisms based on that amount, with penalties if care providers fail to deliver adequate patient access. Coordinating longitudinal care from diagnosis until recovery This structure creates competition for patients, but the total amount of funding is capped, thereby creating a significant incentive to increase access Providing care that is more convenient, such as telemedicine and reduce costs. The government also directed and virtual care more money into certain services like telemedicine to increase access in rural areas. Providing ancillary services in the office setting, as is seen with patient-centered medical homes (PCMH)
19 There are several alternatives for new payment models that would address the issues associated with the current model. Three alternatives are: Needed: Decision Makers • Payers could move to a new payment design with a single fee schedule across all payers. Such an approach could distinguish amongst provider organizations and pay differently based on specific criteria. For example, the payer could adjust the fee schedule for the intensity of care delivery, the level of teaching activity, or other factors. Current examples of this option include the Massachusetts Medicaid ACO and regulations introduced For any of these options to come to fruition, by the state government in Maryland, where the state pays into relevant decision makers would need to be a pool and there is a global budget provided to participating involved. They include: hospitals to manage care. • Innovative payers that are ready to pilot a • The Federal Government could introduce new regulations to redesigned payment model change payment policies. • Hospitals and other care providers that are • We could move to a single payer system with a single standard looking to partner with innovative payers for administering payments for services • A more active federal government that would introduce payment changes Beyond these three alternatives, government, • State legislators who are ready to introduce new most importantly the Federal Government, payment regulations, like those in Maryland could serve as a role model through its current • Policymakers at the Centers for Medicare and insurance programs or through a new plan Medicaid Services (CMS), which administers the that competes with private insurance. This Medicare programs and could use its purchasing so-called Public Option could serve as a power to create new payment models that commercial payers would likely replicate de facto standard for administration and, through competition, drive reductions in the administrative burden and associated costs.
20 Redesigning payment models will require overcoming several barriers. First, change is difficult, especially with a complex topic such as health care. Second, people often react to their beliefs about the future without being fully informed. Correcting misconceptions is critical to progress.
Myths of Government Involvement in Health Care 01. 02. 03. 04.
You can’t keep your doctor The system is inefficient Uncle Sam will control my There is no evidence this health care decisions will work
FALSE FALSE FALSE FALSE
21 As an example of a deeply held misconception, many people are concerned A third barrier to change is that advancement will require a guiding coalition that the government being a more prominent payer (or the only payer if to move action forward, to educate payers and consumers, and to obtain we were to move towards a single-payer system) would reduce people’s buy-in from government officials and leaders of health care organizations. ability to choose their doctor or hospital. In every health care system, However, progress may be hindered by differing beliefs in the U.S. about choice and access can be limited by provider workforce. Beyond that, the degree to which the government should be involved in providing and our existing system limits choice for many people. Employers offer limited managing health care. It is likely that any government attempts at redesign options in insurance coverage and insurers/payers often provide strong will meet initial resistance from patients, care providers, and the insurance financial penalties for receiving care outside of a defined provider network. industry. In addition, it will take time for any change in payment to show In today’s system, providers don’t necessarily contract with every payer, real results. Since the political cycle is a relatively short one, it makes it thereby creating barriers for some people who might want their services. In very challenging for politicians to champion this change. Finally, we have other words, people may have choice within a defined set of providers, but little evidence about large-scale change in the health care system and much less choice beyond that defined set unless they pay out of pocket. some stakeholders may feel it necessary to conduct pilot studies and field Traditional Medicare insurance – the best example we have of government- research along the way before driving any disruptive change. funded insurance – offers among the most expansive set of choices, including virtually every hospital. In Canada, people are free to choose their While the political barriers to change are sobering, it is possible that hospital and their physician, limited only by a physician having enough time the situation created by the COVID-19 pandemic may be creating an to take on new patients. unprecedented window to challenge the status quo. The combination of increasing numbers of uninsured, the devastating financial impact on health A second misconception is that a government-payer system is less efficient care providers built to maintain their financial health on fee-for-service than a system dominated by commercial insurance plans. This is simply not business, and the clear dependence on state and federal governments to the case. sustain the health care industry through the crises, all highlight the criticality of a vibrant health care system, the importance of investing in capacity, and Medicare is about the most efficient of all the the ultimate reliance on government. The response of the industry as well various insurance products with approximately as government also illuminates how quickly change can happen when there is a burning platform. 95 percent of funds going to providers for care delivery. In contrast, across the commercial Despite these significant challenges to changing the way health care is insurance plans, approximately 20 percent of paid for in the U.S., we have a strong incentive to persevere. A carefully funds remain within the insurance company which redesigned payment model could drive adoption of technology, reduce administrative costs, increase transparency, increase access to data, and delivers only 80 percent of funds to providers for improve patient outcomes. care delivery.
22 magine that you are trying to take your child with CF to an appointment with the I pulmonologist but your car won’t start and the clinic isn’t accessible by public transportation. You recently lost your job and are worried about paying next month’s rent. Your spouse is working but without your income, you’ll need to find a less expensive apartment and have no idea where to turn to find one. And you worry that all the affordable apartments will be near roadways with air pollution or have issues with mold, which might affect your daughter’s breathing. When you get a ride and arrive at the appointment 30 minutes late, you are reprimanded for not being on time. You’re eventually given a new prescription for your daughter, but are warned that it might not be covered by insurance. You’re also given the phone number of a nutritionist whose office is far from your home and told to make an appointment for next week. Would fixing these “non-medical” issues improve your child’s health?
CHAPTER THREE: In the past, clinicians often focused only on physical health, or more specifically, restoring Create Better Bridges people to health when they have an acute illness or injury. We looked at the body as a across Health Care machine and understood illness or injury as a disruption in the body’s machinery. Through that biomedical model of illness, we saw health care delivery as the prominent determinant and Social Care of making people healthy. The concept of health care was built around individual episodes that brought a person in contact with health care delivery to diagnose and treat a specific problem. Today, experts recognize the need for a more holistic perspective, appreciating that a person’s physical health is influenced by the interplay of biological factors (in a way that is familiar from the biomedical model), psychological factors, and socio-environmental factors that drive risks for certain conditions and influence a person’s ability to cope. Under this bio-psycho-social model, many drivers of health lie beyond the realm of the health care system including education, socioeconomic status, housing, and access to healthy foods. We now better appreciate the interconnection between physical health, psychological health (coping, mental wellness), and social supports (access to resources in society) – referring collectively to a range of social influences as “the social determinants of health,” including: safe, affordable housing; access to healthy food; transportation access; neighborhoods free of pollution; safe places to exercise; access to education; and supportive family leave policies. 23 Effectively restoring people to health after acute illness or preventing or managing chronic disease all require social support systems. However, for a variety of Example: Social care for a patient with diabetes reasons, vast gaps currently exist between our health care system and available social support. Better bridges Consider a patient with diabetes mellitus, a relatively life-long chronic between health care and social care would improve condition. Diabetes is not difficult to manage clinically—we understand the patient outcomes and reduce the burden of trying to cause, have efficient diagnostic tests, and treatment is available. However, coordinate social services that patients, their families, managing diabetes well and avoiding complications requires patients to and care providers currently experience. Failure to be fully engaged in their care (eating a healthy diet, checking their blood provide patients with social support results in increased glucose daily) and adhering carefully to their treatment plan. To be able to fully utilization, more high-costs services, and less productive engage in treatment, a patient needs to be mentally well, have a safe place individuals in society. to refrigerate insulin and store needles, have dependable transportation to appointments, have a safe place to exercise, and have secure housing. Research has demonstrated that addressing social needs improves health outcomes. For example, researchers have shown that patients in states with a higher ratio of spending on social care to health care had better health, with lower rates of obesity, type 2 diabetes, and mortality due to lung cancer. [Bradley 2016] Supportive family and medical leave policies have also been shown to improve health outcomes. For example, the introduction of paid family and medical leave in California was associated with a reduction in hospitalizations for infants. [Pihl 2019]
If we believe that social support is important to physical health, why does our health care system fail to provide it? In large part, the failure is due to siloing between the organizations responsible for medical, social, and mental health services. Clinicians often struggle to find social services and to identify which patients are eligible for which services.
In addition, health insurance covers medical services and some mental health services, but typically no social services. For example, a pediatrician’s office cannot easily imbed social services, such as housing support, because under current payment models, they are not paid to provide these services. The physician can refer patients to social services elsewhere, but because organizations providing these services are not coordinated with the health care system, the patient’s family then must become “the general contractor” of their care. If office staff or clinicians take on this responsibility, they end up with an overwhelming amount of administrative work. Similarly, hospitals can only afford to pay for social needs like housing if they can cross-subsidize the cost by using funds generated elsewhere. Beyond the financial wherewithal, hospitals and health systems are not incentivized to make those investments in an environment where less need for acute care equates to less revenue.
24 For most providers, they see their business as delivering care rather than ensuring health and they have not invested in people with the kinds of skill necessary to address the interface between health care and social care. Countries with governments that play a more active role, Steps to create bridges like Sweden, exhibit less of a divide between health care and social care and can create more effective links between the health care and social care systems. Align the interests of various care and social What would better bridges between health care and social care look like? There are some service providers so that examples of innovative programs that are creating stronger connections between the health care jurisdictions and payment system and social support. In Alaska, the Southcentral Foundation’s Nuka model has redesigned are similar in health care health care to provide coordinated medical, dental, behavioral, and health care support services. and social services. According to the Foundation, “Recognizing that individuals are ultimately in control of their own lifestyle choices and health care decisions, Nuka focuses on understanding each customers Assess and plan for unique story, values and influencers in an effort to engage them in their care and support long- patients’ longitudinal needs, term behavior change.” [Southcentral Foundation 2018] For example, primary care is provided rather than providing by a team that is co-located in an open space and includes a primary care provider, a nurse episode-centric care. case manager, case management support personnel, and a certified medical assistant, as well as a nutritionist and pharmacist when needed. [Southcentral Foundation 2017] Mental health Alter payment models to providers are integrated into the primary care setting so that patients can have same day access support and incentivize care to a mental health clinician, with referral to continuing services when required. for a long-term perspective. For example, insurance In some health systems, clinicians can “prescribe” healthy foods to patients. For example, in companies and other payers 2016 Geisinger Health System launched a pilot program that provides free fresh food to patients could stipulate that to with diabetes and food insecurity. Over the course of 18 months, patients in the program had a receive payment clinicians 2.1point drop in HgbA1c, which translates into a 40 percent reduction in risk of death or serious must provide care in a complications. [Feinberg 2018] Health care costs dropped significantly for the participants: from holistic, team-based way $240,000 per patient to $48,000 per patient per year. With more resources and financial support including, as appropriate, (i.e., insurance or other payment), models like these could be spread across the country. in partnership with other community or social service In addition to spreading innovative models for providing care, how can we build better bridges to organizations. social services? There are three critical steps we need to take to transform our health care system into one that is fully coordinated and integrated with social care. (See figure.)
25 It’s true that we face several potential barriers as we move to a coordinated system of care. First, social ills, such as lack of education, poverty, food insecurity, or lack of housing, are complex and can be overwhelming to solve. Perhaps because of the complexity, it can be enticing to blame individuals for their misfortune rather than recognizing the complex factors that lead to unfortunate circumstances. Second, the U.S. has a capitalist economy, and while economic markets can address many problems, they do not generally solve social ones. Third, social services are not organized beyond the local level in most cases, and there are barriers to information sharing between the health care and social care systems.
We can overcome these potential barriers by increasing the transparency of the connection between health and social care issues and educating the public about this connection.
We can address the hesitancy to pay for social services by sharing the message that we are currently paying for this lack of connection in more expensive health care and a less productive workforce.
Finally, we can support more supportive government policies that would better address social ills such as poverty, homelessness, and lack of education. While these social determinants of health dramatically affect health outcomes, the health care system can only address social issues in a limited way. Improving our health care system will require that government, and our society as a whole, step up to provide better social support. While addressing these barriers may appear daunting, it is possible — and essential — to improving health outcomes and increasing the value of the dollars spent on health care in this country.
26 n 2012 the FDA approved monotherapy with a molecularly targeted I therapy for CF. [CF Foundation, no date] While very welcomed news, the therapy only benefited the 5 percent of patients with CF with a particular genetic mutation. Six years later the FDA approved dual therapy with an additional molecularly targeted agent; together, the therapy benefits about 50 percent of CF patients. In late 2019, researchers published encouraging results from a phase 3 randomized, controlled trial in which a third molecularly targeted agent was added. [Middleton 2019] This triple therapy has been shown to be effective for patients with the genetic mutations found in 90 percent of patients with CF and has been approved by the FDA for children 12 and older with these mutations. [FDA 2019] The availability of therapeutic agents that address the underlying cause of CF holds tremendous hope in changing the impact CHAPTER FOUR: of a CF diagnosis for children and their families. How can we ensure that Optimize Use of genomics and other innovative technologies are used to improve health for all without bankrupting the health care system? Within an effective, Technology coordinated health care system, we could implement such technologies rapidly and in equitable, cost-efficient ways.
Medical technologies have been identified as a key driver of escalating health care costs in the U.S. [Callahan 2008] At the same time, technology, specifically that relate to digital data, artificial intelligence and genetics, holds untapped potential to improve patient access, experience, and outcomes, and even to reduce costs. The health care industry is not yet generating the kinds of insight created by harvesting and analyzing data in the ways we experience in other industries. Moreover, health care is an industry that overwhelmingly depends on human labor and it has been difficult to generate the kinds of efficiency increases that other industries have enjoyed as a result of digitization and automation.
27 Consider the advances and disruptions in other industries. Uber has As we have introduced technology, we have also identified many become the world’s largest taxi company but owns no vehicles. AirBnB is unintended consequences or limitations of our strategies. Electronic among the largest temporary housing companies but owns no real estate. health records, which were implemented to improve communication and Facebook has become one of the largest media providers but creates documentation, have also led to significantly increased clerical workload little or no content of its own. These companies have made life easier by for clinicians. Nevertheless, data from the EHR is critical to all other applying digital tools to help people navigate life’s activities and drawing digital technology. insight from the data generated by those activities in order to continuously improve their product. Tesla, the preeminent manufacturer of electric The concept of Big Data – bringing together data from large populations - vehicles, captures 25 gigabytes of data per car per hour and the data from holds tremendous promise as a way to identify best practices and effective more than a million miles of driving every 10 hours. Using that data, Tesla treatments, as well as tailoring therapy so patients receive therapies that can fix problems and improve performance/safety by updating improved are most likely to help them, given their individual situation including algorithms to its fleet of cars without drivers even being aware. In contrast, their unique genetic make-up. The irony of precisely tailoring therapies to health care captures on the order of 100 megabytes of data per individual individuals is that the more precise the description of the individual, the per year and fragments that data across multiple providers and multiple larger the population of people a person needs to be compared against in information systems. order to find people like them. Similarly, developingartificial intelligence algorithms requires analyzing extremely large datasets. Harnessing the Over the last decade, we have increasingly captured data related to the value of Big Data or artificial intelligence requires an enormous amount of health care interactions that people have and those efforts have been patient data — aggregating this information is currently difficult due to the supported by a range of policies including federal efforts to encourage siloing of clinics, hospitals, and health systems. electronic health record adoption. In the U.S., data from electronic health records is not aggregated. This is However, too frequently, data is not examined in part because some organizations that hold data believe there may be across time, across treatment venues, or across strategic advantages of preserving their exclusive access – for example populations of people. As we contemplate having a higher probability of retaining their patients. There is also some lack of clarity about who “owns” the data and who must grant permission improvements in health care delivery, we can only for data sharing. In particular, there is a lack of clarity about how data might imagine the value created by applying the tools be aggregated and shared without a patient’s consent. In some cases, now so common in other industries. laws safeguarding patient privacy, such as the Health Insurance Portability and Accountability Act (HIPAA) have been used as convenient but not necessarily compelling rationale for not sharing data.
28 The lack of effective interoperability between EHR systems amplifies the challenge of data sharing and aggregation, preventing the mining of valuable data that is held within small networks. In contrast, the NHS in the U.K. is able to access data from the entire health system, allowing for a nation-wide genome project. Canada has data aggregated at the Optimizing Technology province level. Aggregated data is used to improve planning as well as health care delivery. In addition, researchers there can access data to create new insight, for example, developing better understanding of the connections between mental health and physical health. Such abilities to aggregate and share data becomes particularly important in situations such as the COVID-19 pandemic in order to gain insight into the spread of infection, the effectiveness of various treatments, and to coordinate care across multiple venues. • Easier interaction with EHRs
Health care today overwhelmingly depends on face-to-face encounters between people and • Better decision making with artificial their health care provider, typically necessitating time and effort in travel and waiting. Virtual intelligence visits, connecting people by telephone, video conferencing, or other means, can provide • Identifying health trends by capturing an effective alternative to many of these encounters as well as to address the challenge big data of ensuring access to services for people living in less populated or more remote areas as • Improve diagnosis and treatment well as those with barriers to travel. Such virtual visits, often referred to as telemedicine, by using genomics and precision are currently available today but accessibility is unevenly distributed with expansion medicine limited by economic barriers (i.e. many telemedicine services are not covered by private • Quicker, more convenient or governmental payers) and regulatory barriers (i.e. the requirements for providers to be interactions with virtual care licensed separately in each state where a patient receives their services). Patients can seek services across state lines without creating a burden for their providers but providers are not able to deliver remote services to patients across state lines.
In health care systems where the government plays a more central role, policies have generally evolved more rapidly to promote the adoption of technology including the widespread sharing of data. In the U.K., once new technologies have been vetted as being safe, effective, and cost-efficient, they can be rolled out across the country by the NHS, which can then easily monitor outcomes. In Ontario, the provincial government has invested extensively in infrastructure to support telemedicine and has promoted reimbursement mechanisms to increase the use of telemedicine in certain areas, particularly behavioral health. Moreover, the Ontario government has invested in infrastructure to promote widespread data sharing across provider institutions, as well as tools to promote patient engagement. In the U.S., the widespread use of a new innovation is encumbered by adverse incentives, and the large number of different payers which must weigh in on which new technologies will be covered and where patients can access them. The lack of coordination and a common payment model dramatically slows uptake of technologies that could provide more targeted treatment and improve health outcomes.
29 There are specific steps we could take to optimize the use of existing technologies.
First, EHR data could be made more portable and shared in new ways, such as by applying blockchain technology to ensure security while 01. allowing patients to have better control over the use of their health care data. Clinicians could interact with EHR differently, such as through voice recognition and in ways augmented by artificial intelligence (AI), which would improve the efficiency of the clinical workforce and reduce the high clerical burden as well as capture richer data.
Second, AI could be used to help improve clinicians’ performance in diagnostic decision making, in reading imaging tests, and providing 02. alternatives for patients to the traditional face-to-face encounter model. Companies such as Babylon Health (London, U.K.) already provide an AI-driven interface to the conventional health care world that increases convenience for patients and greater efficiency for providers. We may not anticipate AI replacing clinicians but AI could significantly improve performance of the system and allow clinicians to focus on those interactions where they can add the most value.
Third, capturing and using Big Data could vastly improve the health care system overall, by providing nation-wide information on changing 03. patient needs, shifts in diagnosis and treatment, and other trends. Fourth, genomics and precision medicine could improve diagnosis and treatment. Together, Big Data and precision medicine could provide 04. better value for the money spent and could reduce total costs. Fifth, virtual care or telemedicine could expand access to needed services and improve patient safety and care quality as well as provide 05. alternatives to current modalities. As more care is delivered outside the hospital, innovations in care delivery will allow patients to receive acute care services without being admitted to the hospital. Companies such as Medically Home (Boston, MA) are already supporting a technology platform and service set that allows people to be “hospitalized” in their own homes as opposed to being in a traditional hospital room. When 5G technology becomes widely available, opportunities for remote care will increase substantially. The ability to provide care without physical presence also unlocks new capabilities to deliver interdisciplinary team-based care and to support local care in new ways that augment local capabilities. For example, the application of virtual ICU care can extend intensive care expertise to local communities that would otherwise not have sufficient need to support the level of critical care expertise necessary to deliver acceptable outcomes.
Making these changes would optimize the potential benefits of digital technology. In doing so, patients would not need to make the tradeoff between convenience and quality or safety. Clinicians could maximize the time spent in direct patient care, rather than on clerical tasks. Patients and their families would bear less of the burden of communicating their health-related data to clinicians in treatment sites without EHR interoperability. Ideally, the health care system technology could anticipate patients’ needs and help them navigate services, similar to the way shopping and travel websites and applications anticipate customers’ needs and preferences. Finally, these changes would facilitate the movement of information across the system, including the delivery of information back to clinicians, facilitating their learning and improving the care experience over time.
30 ur health care system is not providing the benefit we are paying for and O not yet realizing the improvements from technology that we are seeing in other parts of our lives. It is time for change. We need to implement innovative solutions to provide better outcomes at reasonable costs. We have a unique opportunity to introduce real change and address the underlying issues that have caused our health system to underperform.
Although innovations in technology and service delivery driven by our market- based health care industry will continue to drive advances, the structure of the industry is not well-configured to address cost increases, disparity, or to drive long- term outcomes and improved health. Favorable changes are unlikely to emerge from the industry itself. Instead, the government will have to play an increased role drawing on three potentially overlapping, strategies: regulation, service delivery, or CHAPTER FIVE: by using its purchasing power, either as the sole funder of care or by providing an A Vision for the Future alternative to commercial insurance – a so-called public option.
With any of these strategies, it will be important to preserve competition among providers so that they continue to actively strive to provide better access, a better experience for people relying on their services, and improved quality. Today, government is responsible for providing services in a limited set of circumstances – primarily through the Veteran’s Administration, the Military Health Service, or the Indian Health Service. Having government actively involved in service delivery may have some limited benefit in these specific areas, but could stifle the kind of competition-spurring improvements and could limit the flexibility of provider organizations to respond to consumer needs in important ways. Developing the capabilities within government to operate a broader set of health care providing entities is not straightforward, creates substantial risk, and may not yield the kinds of administrative efficiencies or operational improvements that are necessary. Moreover, the benefits that public administration of health care could provide can be delivered through the other two strategies.
31 Health care is already a highly regulated industry and government regulation The current government-funded programs can be considered alternatives is currently used to address some of the deficiencies in the industry’s to commercial insurance because the beneficiaries of these programs are market-based structure. For example, the Emergency Medical Transfer free to purchase commercial insurance. The reality, however, is that these and Active Labor Act (EMTALA) ensures that everyone has access to an government-funded programs have become the sole or principal payer emergency visit regardless of insurance. Similarly, elements of the Affordable for people for whom the market-based health care industry has failed Care Act (ACA) ensure that people can purchase insurance without being to provide a solution – seniors and those who don’t have the means to disqualified by pre-existing conditions. Such regulation can be extremely purchase insurance at an affordable price. powerful. At the same time, it will be difficult to regulate the industry to address issues of limited access, health care disparities, and administrative complexity. Moreover, each regulatory step is subject to scrutiny and active The most effective solution to our current resistance by a range of stakeholder groups, the potential for radical shifts health care crisis is the introduction of a public in policy with each political transition, and legal challenge by parties who are aggrieved by the regulations. Regulatory reform will play an important role option for basic services. This would extend in the evolution of the industry to be sure. However, the experience with the government programs to ensure universal health passage of the ACA and the subsequent legislative and legal activities to care coverage and address other failures of our reverse many of the important elements demonstrates how unlikely it is that current market-driven industry. regulation alone will have the kind of transformative impact we need today.
If we reject the government providing health care or developing regulations as the ultimate solutions, we are left with the conclusion that The government taking on an expanded role of payer for the population the most effective strategies may come from the government’s role as currently covered through the commercial insurance market would be payer. The Federal government already plays a well-established role as beneficial across the industry. The government need not be, and likely a payer through the Medicare program that pays for the care of seniors should not be, the only payer. In fact, commercial insurance providing and disabled people and is also a significant contributor to the Medicaid competition for a government-funded insurance option would allow the program, augmenting the resources provided by state governments. Those public and private components of the industry to drive each other. One programs have had an influence well beyond their financial impact on the might expect that the private components would drive standards in service, industry and beyond the populations they are intended to serve. The rules customer experience, and access, whereas the public components would for participation in the Medicare program have led to general and extensive drive cost containment and public accountability. improvements in quality, transparency, and adoption of new technology. The costs of administering these government-funded insurance programs are substantially less than the costs of administering commercial insurance.
32 A public option also would mitigate the risk and disruption that an abrupt adoption of government-run universal coverage for all would create. Moreover, by evolving eligibility, subsidization, and eligible benefits of time, we can modulate the pace of change from our current system to whatever new steady- state we seek – thereby addressing the impact of disruption to the range of stakeholders impacted by any changes.
What might a public option look like? We can consider a number of elements:
The Federal Government develops a health plan option that covers basic services (for example, hospital and physician services, major 01. diagnostic services, and prescriptions). Mental health services and some social care services might also be included to the extent that they influence health. The plan would include consumer protections, such as no exclusions for pre-existing conditions. The plan could set the minimum level of coverage provided by commercial insurance products but consumers could choose to purchase additional benefits if desired.
The government would need to establish a way of paying providers that encouraged access, competition on the basis of service delivery, 02. and ensure that delivery of key services is financially viable for providers. This would mean paying providers more than most states’ Medicaid programs pay, but not as much as commercial insurers pay. Government would also need to ensure that providers would accept patients insured under the public option, potentially by tying participation to licensing, accreditation, or the participation in other government programs such as Medicare.
Over time, commercial plans would need to reduce administrative complexity and offer better value to compete with the public option. There 03. would be a greater incentive to integrate preventive care, primary care, mental health care, social care, and specialty care. Other health plans would be measured against the public option.
04. The increased role of the government could help reduce administrative complexity and rein in spending.
33 Although it is not possible to fully test this strategy before implementation, we have evidence that supports this approach. Research has demonstrated that financial barriers reduce access to care and that increases in copays and other out-of-pocket expenses reduces utilization of health care services. [Smolderen, 2010] If we provide universal coverage, increasing patients’ access to primary and preventive care, within a model that incentivizes care providers to manage utilization and use technology more effectively, we could:
• Improve patient outcomes • Ensure care is available for people who lose their jobs or have • Reduce redundant testing and other forms of waste unexpected health issues • Increase care coordination • Increase employees’ choices regarding work, since their health coverage • Reduce health disparities would no longer be tied to a particular employer • Increase the productivity of our society • Increase convenience for patients
34 Making a Public Option a Reality We need to take several steps to make this strategy a reality:
Bold political leadership. Any change will be complicated Eliminating employer-based tax incentives for health care. and may be risky politically, but if messaged correctly, The current incentives reduce the desire for consumers and a public option may have support of most citizens. employers to use a public option.
Using data to assess spending and inform public policy. Recognition that an incremental path is needed. Other Data that would help identify needs, evaluate the cost- industries have gradually changed, for example the energy effectiveness of various solutions, and monitor impact would industry moving away from coal. Health care can use the allow more effective design and implementation of a public same gradual shift to move away from a high reliance on option. Such a data-driven approach would also enhance private health insurance. the creation of other programs that support public health. For example, analysts could use “hot spotting” to identify Conscious and careful selection of benefits. A public where to spend our public health dollars that are outside the option would provide a certain level of benefits, which contract in the public payer option. the government would have a role in shaping. However, a public option could have different levels of coverage Identifying financial sources to support the public option. (for example, Gold, Silver, and Bronze levels of coverage) Government will need to determine the mechanism for based on a person’s willingness to pay. Moreover, whether paying for a subsidized public option through income or certain services are delivered as covered benefits or whether wealth taxes as well as by finding ways to harvest some care providers would deliver them as part of an ACO model of the savings associated with reducing administrative are decisions that would need to be made when crafting the complexity and reducing unnecessary utilization. public option.
35 Conclusion
We need to fix our health care system. Its current iteration fails to deliver the outcomes we all want and it is simply too expensive. A public health plan option with benefits and costs that are attractive to customers and employers could create competition for other payers to change their policies, improve the value they deliver, and reduce the complexity and costs inherent in the current system. An attractive public option is the first step in creating universal coverage that would deliver what we know is possible: a health care system that we can depend on, that provides high-quality, safe, equitable care, and that supports the productivity and well-being of our society.
36 he analysis and recommendations throughout this manuscript were T drafted prior to the World Health Organizations warnings in early 2020 about an impending pandemic caused by the severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). Containment of the coronavirus disease (COVID-19) caused by SARS-CoV2, the impact of the pandemic on the health of populations, their access to health care, and the ability of health care systems to respond to a surge in demand have varied widely around the world. Although many of these differences reflect differences in the decisions governments have made to restrict social interactions or take other political actions, the pandemic has helped show the differences between our health care systems in stark relief. Comparing the experience across the U.S. with that across Canada, as an example, highlights many of the reasons that the U.S. system must change. At the same time, responding to the pandemic has catalyzed transformations in care models and the use of technology that might have taken many years to achieve. Perhaps even more POSTSCRIPT: importantly, the impact of the pandemic on people’s health, their employment, and their dependence on government for a range of assistances may all contribute to a window Transformation In for more significant policy change than might have been feasible prior to the pandemic. The Wake Of A Given the magnitude of change we are still currently experiencing, this writing seems incomplete without reflecting on what we are learning. Global Pandemic As we consider the experience of different countries, we should recognize that all countries had similar information available at similar times. In other words, virtually all countries had similar head starts in preparing to address the needs of people with COVID-19 including: the need to examine people experiencing symptoms; to develop the ability to test for the virus; and, prepare the health care system to accommodate large numbers of critically-ill infected patients. Countries may have had the virus introduced at slightly different times and with slightly different numbers of infected individuals arriving from China or other affected countries – based on different travel patterns. However, these differences are likely small compared to the differences in how the virus spread within countries once
37 introduced by travelers. There is also considerable difference in the impact of the pandemic on the health care system as well as differences in the impact of people’s access to health care. These differences illuminate many of the structural flaws in the U.S. system including: barriers to accessing needed services for people that are underinsured; the impact of access difficulties on public health; the lack of alignment in interests between payers and providers; the dependence of American health care providers on fee-for-service payments; and the challenge in acting collectively. The pandemic journey in the U.S. has also shown in stark relief the importance of government involvement and the role of government as the sustainer of the health care system.
COVID-19 is a highly contagious disease that is fatal in approximately 1 percent of cases (although estimates have varied widely). Controlling the spread of the infection requires that people who are infected be identified through testing then quarantined until recovered so that they don’t spread the infection to others. Control also requires tracing the contacts of infected people and taking precautions to assess whether those contacts are infected themselves. Identifying people who are infected demands that people come to the attention of health care providers (or public health officials). Knowing that people forgo health care services because of cost, barriers to identifying infected people in the U.S. includes lack of insurance or people having to pay part or all of the cost of a health care visit.
As hospitals and other providers prepared to care for large numbers of people with COVID-19 and to support measures to limit the spread of infection, most began to reduce the delivery of services that could safely be deferred. In addition, many people chose to defer care to limit their exposure to the virus during travel or during a health care encounter. Moreover, providers faced a range of new expenses as they prepared for the pandemic. The result has been economically devastating for many with losses across US hospitals of $50 billion per month – staving off financial ruin only through the collective action of state and federal government. Independent physicians have faced similar challenges. At the same time, commercial insurers have experienced significant reductions in the services that they pay for leading to windfall profits and these payers have done little to support a health care system facing economic collapse. This fits with their fundamental responsibility being to their investors. Moreover, they may well see the challenges within the existing health care ecosystem as creating new business opportunities and greater strength at the negotiating table.
As employers struggle with reduced revenues in many sectors of the economy, the health care industry and people’s access to health care are particularly adversely impacted in the U.S. because unemployment leads to a loss of employer-provided health insurance. The Robert Wood Johnson Foundation [Garrett & Gangopadhyaya 2020] has estimated that as many as 43 million people in the U.S. may lose their health insurance as a result of the COVID-19 pandemic – at a time when barriers to accessing health care could contribute to increased misery from the pandemic and increasing spread of disease for the reasons stated earlier. To be sure, many of the people losing health insurance may qualify to seek coverage under government programs. However, states will face considerable challenge in funding the insurance of greater numbers of people at a time when their tax revenues have eroded. Moreover, providers that have cross-subsidized meager government revenues with healthier revenues from commercial payers, will find themselves with deteriorating surpluses and increasing difficulty funding ongoing business development let alone replacement of equipment and facilities that erode over time.
38 All of the attention paid to accountable care and population health notwithstanding, hospitals and health care providers are predominantly oriented towards a fee-for-service industry structure and this compromises resilience in the face of reduced activity. There is clearly a need to develop new business models rapidly [Kliff 2020] but the Gordian Knot formed by the massive array of contractual arrangements between payers and providers along with the large and expensive systems that support the adjudication of claims between these entities make such development of new models a formidable problem. In contrast, Canadian hospitals receive the majority of their funding directly from government and a large fraction of that funding does not depend on the quantity of care delivered. Moreover, the savings that the Canadian governments experience as discretionary care is deferred can be applied to support other costs that health care providers experience to prepare.
Responding to a pandemic requires addressing the interconnectedness and interdependence across the health care system and between the health care and social care systems. For example, ensuring that no hospital runs out of capacity to care for critically ill people requires moving ventilators or patients between hospitals that are experiencing different levels of activity. Caring for a wave of patients entering the health care system with life-threatening illness also requires being able to facilitate the movement of recovering patients through a range of rehabilitation, long-term care, and home environments to preserve intensive care capacity for newly infected patients. Keeping a broader population safe requires addressing the needs of people in congregant living situations like nursing homes and prisons as well as addressing the needs of people with homelessness who face some of the highest barriers for access to care. Working to address these interdependencies is complicated by a highly fragmented health care industry in the U.S. where many collaborations are prohibited by antitrust or anti-kickback regulations intended to protect the public from anti-competitive behaviors but that have limited value in facing a pandemic.
As the U.S. prepared for the pandemic, policy relied heavily on the belief that competitive approaches built on a capitalistic mindset would lead to rapid innovation and an effective response by the industry. That has not been the case and that failure is most evident when considering testing for COVID-19 in the U.S. compared with other countries. Whereas most countries introduced testing based on methodology and materials supplied by the World Health Organization, the U.S. sought to develop its own tests and to encourage companies to introduce their own tests. Complicated regulatory procedures slowed the approval of the initial COVID-19 tests [Kliff 2020] and the relaxation of those same procedures has facilitated the introduction of an array of tests for antibodies against the virus, many with questionable value. As Tufts Medical Center prepared to be one of the first centers in Massachusetts to introduce testing for the virus in late March 2020, conversations with my former colleagues in Toronto revealed that widespread testing was already in use across Ontario with testing available in the home, at drive through centers, and for people without symptoms [Ontario Ministry of Health 2020]. The Province was also doing surveillance testing of random individuals in order to assess the spread of the pandemic. At the time of this writing, such testing is still not available in most of the U.S.
39 In the U.S. system, it is difficult to drive collective action. It also is unclear what entities are responsible for creating the slack capacity and infrastructure necessary to be prepared for and manage a pandemic response. As a health care executive, I have experienced unprecedented levels of collaboration among health care institutions and between health care providers and government. At the same time, I’ve experienced the challenge of organizing support for testing or ramping up capability to support telehealth as an alternative to in-person care. I’ve also experienced the challenges in addressing the flow of information whether related to testing (for example, result reporting back to a person’s health care provider or public health authorities) or intensive care unit capacity. As a health care executive, I also recognize the challenges of funding excess capacity to provide space for people that might need an ICU bed during a “second wave” of the pandemic as well as the challenges of sustaining an operation built on the surplus generated from commercially-insured patient care. In Canada, the government owns the responsibility for a high performing health care system. Investments in telehealth platforms such as the Ontario Telemedicine Network, creation of pan-provincial information exchanges such as those supported by eHealth Ontario, and the function of quasi- governmental agencies to coordinate care such as Critical Care Services Ontario (created in the aftermath of the 2003 SARS pandemic), all provide the infrastructure necessary to thrive during a pandemic. At the same time, government provides a funding mechanism that allows hospitals to stand ready and respond with less of the concerns facing U.S. health care.
There is no doubt in my mind that the COVID-19 pandemic will be viewed as a turning point in U.S. health care. The crisis will challenge the current thinking about the importance of free markets in driving performance of the system and it will drive the current thinking about business models that depend on getting paid for performing procedures rather than on keeping people healthy. The need to keep people insured and health care providers financially solvent will also change people’s beliefs about the relative role of government compared to other actors. Whether or not these factors can create a policy window large enough to achieve a system where government is the sole or dominant payer is unclear but the chance of that has never been greater.
There is no doubt in my We can’t yet know what kind of health care system awaits us on the other side of this pandemic, but it will surely be different. If we can sustain the many innovations that have helped keep people healthy in the face of this – mind that the COVID-19 remote health care, hospital-at-home services, reductions in the use of less-valuable interventions – we will be pandemic will be viewed better for it. If we begin to better recognize the importance of collective efforts, long-range planning, and shared as a turning point in U.S. investment of capacity – we will be better for it. The disruption we are experiencing in the prevailing U.S. model health care. will create considerable opportunity for new business models at a time where regulations have been eased, new needs uncovered, and incumbents paralyzed to act. The challenge for businesses, regulators, and policy makers will be to germinate and nurture the ideas that create value, protect the public from opportunists, and ensure that there is an alternative to the market in delivering those services or making those investments for which market-driven approaches will never address. Whereas before the COVID-19 pandemic, Americans may have tolerated a high level of disparity in access and outcomes, the pandemic has taught us that all are equal in the face of a deadly virus and that an individual’s appropriate care is a public good as much as it is a benefit to the individual. If we can learn these lessons, something much better awaits us on the other side.
40 Acknowledgements
I’ve been fortunate to have a range of experiences that have shaped I wouldn’t have the perspectives that allowed me to write this piece had my understanding of health care and where we might find opportunities I not had the encouragement and support of my family for a journey that to improve our systems of care for both caregivers and the people we has taken a trajectory far different than the one I initially anticipated. My are privileged to serve. Even more, I’ve been fortunate to have a set of parents, Nate and Marlene have inspired me to want to make a difference teachers, mentors, and colleagues who have challenged my thinking in in my career and created the space to do that in my own way. My children ways that have helped me see the world from a number of vantage points. Dana and Jacob tolerated the late nights, the moves, and the travel - thriving The insight into health care financing I gained from Howie Forman, MD at and charting their own exciting paths that leaves me proud and inspired. Yale School of Management or the knowledge about health care systems None of the opportunities I’ve had could have been embraced without the I gained by working with Gayle Capozzalo at Yale New Haven Health have unwavering love and support of my wife Michelle who has approached each immeasurably shaped the way I look at the world of health care. The tenure transition with enthusiasm. I had at SickKids was one of the exhilarating experiences of my professional care. Colleagues like Jeff Mainland at SickKids, Julia Hanigsberg at Holland Most importantly, I want to Bloorview Kids Rehabilitation Hospital, Alex Munter at the Children’s Hospital express my deep gratitude of Eastern Ontario, Anthony Dale at the Ontario Hospital Association, and for the people who have Holly Burke at the Ministry of Health and Long Term Care were fantastic entrusted their care or their guides through a foreign system and wonderful co-conspirators as we loved one’s care to me as worked to improve health care in Ontario. I am grateful to have such a physician and the people exceptional individuals as friends and colleagues. I’ve had the privilege to lead as a health care executive. I’ve also benefited substantially from the care and attention of a number It’s through your eyes that of individuals that helped frame my thinking for this book. I’m grateful to I’ve learned the most about Diane W. Shannon, MD, for helping me organize my thoughts and for putting where we can have an even an initial outline on paper. I’m grateful to Rhonda Mann at Tufts Medical more positive impact as a Center for encouraging me to develop this work, for helping me navigate health care industry and it’s the development of the creative treatment, and for editing along the way. through your experiences This work has also been improved through Rhonda, Jeff, Howie, and Gayle’s that I’ve been inspired to suggestions as well as through those provided by Paul Hattis, MD, at Tufts do what I can to make our MICHAEL APKON, MD, PHD, MBA School of Medicine and Timothy Johnson, MD. systems of care even better. PRESIDENT & CEO TUFTS MEDICAL CENTER
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