The American medical system has been broken for so long that humorist Mark Twain and Harvard economist Joseph Newhouse agree on what needs fixing.

Fee-for-service payment brings “potential overservice,” says Newhouse. Twain, writing in his autobiography about the doctors’ house calls of his childhood, observed that the “universal custom of the physician…is this: to keep on coming and coming, long after the patient has ceased to need him — and charging for every visit.”

Nearly two centuries separate those two observations, but the challenge remains to steer a middle course between incentives that encourage too much care and ones that push toward too little. Increasingly, the health system is moving toward the type of solution that Newhouse advocates, known in shorthand as “value over volume.” Changing reimbursement to reward cost-effective, high-quality care has been endorsed by the Institute of Medicine and a bipartisan National Commission on Physician Payment Reform. It is also the keystone of bipartisan Congressional proposals (a rarity) ­intended to permanently alter how Medicare pays doctors.



If you could scale up one remarkable health care idea, what would it be? 


"Care should be delivered through provider-led delivery systems that treat a defined population and have at least some financial risk for the amount and quality of care they deliver to that population. Patients would have financial incentives to be treated within the system they elected. Such entities should be able to improve care coordination and efficiency."

- Joseph P. Newhouse, Ph.D., the John D. MacArthur Professor
of Health Policy and Management, Harvard University


Some of that change is already starting to occur, in bits and pieces, from private insurers and Medicare alike. In Massachusetts, where private insurers have been particularly aggressive, the impact on patient care can be seen at Boston-based Atrius Health, an alliance of six medical groups. About half its one million patients already have insurance plans that link reimbursement to specific cost and quality markers.

These measures apply to the entire pool of patients covered by any particular plan, not to any individual patient, and the financial risk and reward are directly borne by Atrius Health and its 1,100 doctors, not by any individual physician. That, says Newhouse, reduces the risk of “underservice.” With reimbursement changing so that more care doesn’t automatically produce more revenue, Atrius Health is also changing. It’s pouring resources into a concept known as “population health.”

The idea is to measure and manage the care of all patients, while intervening in a targeted way toward carefully defined subgroups, such as the population of diabetics. The objective is to keep people as healthy as possible as long as possible. The bottom line is care that’s simultaneously better and less expensive.

Dr. Richard Lopez helps direct that strategy as the health system’s chief medical officer and, as a practicing internist, sees it with his own patients. Early each Friday morning Lopez sits with his nurse and rapidly goes over a list of his diabetic patients that has been culled from Atrius Health’s electronic medical record. Diabetics frequently have multiple problems in addition to blood-sugar control, so the population of “all diabetics” is broken down even further.

“One week we sort it by cholesterol, one week we sort it by blood pressure,” Lopez says. “We look at the patients who are not in control and we make a plan. It takes one or two minutes per patient.” The patient might be paired with a nurse practitioner for more education, get a follow-up call, be sent to a nutritionist, be referred to a specialist or be asked to come in to Lopez’s office.

In Twain’s day, doctors waited to be summoned to the home of the sick. Today, the patient mostly comes to the doctor, but it is still the patient who must decide to seek care. With population health, “you’re not just taking care of the patient in front of you in the exam room,” says Lopez, a 30-year Atrius Health veteran. “You’re looking at the whole population and reaching out to diabetics [and others] who in the past did not come in regularly. This way they don’t fall between the cracks. There’s a continuing interplay.”

Chronic diseases collectively account for nearly three-quarters of U.S. medical costs. The effect of population health management on patients with high blood pressure (hypertension) illustrates its potential. Nearly a third of U.S. adults have hypertension, and the percentage almost doubles for those 60 or older, according to data compiled by the American Medical Group Foundation. The condition contributes to deaths, disability and more than $130 billion in direct health care spending annually. Atrius Health has increased the share of its hypertensive patients whose blood pressure is under control from 67 percent, slightly above the national average, to 80 percent, among top performers.

For patients, that translates into fewer heart attacks and strokes, fewer trips to the emergency room and fewer days spent in the hospital. Atrius Health calculates it has also avoided $14 million in medical costs, a significant portion of which would have gone to its doctors. But Lopez has no second thoughts. “We think this is the way health care ought to go,” he says.

Physician compensation at Atrius Health reflects the changes in organizational compensation. Pay for primary care physicians is based on the number of patients in their “panel,” productivity and measures of the quality of care and the patient’s experience. Nationally, a survey by ECG Management Consultants found that a majority of physician groups have altered doctor compensation to include those same types of quality measures, which are often being used by payers to evaluate the entire group.

Unlike providers, patients may neither understand the benefit of collaborating in care coordination nor have any financial incentive to do so. Atrius Health has nearly 30,000 Medicare patients in an accountable care organization (ACO), a type of arrangement with provider incentives designed to support high-value care but no incentives for patients. Medicare and private ACOs cover some 20 million lives, according to a Leavitt Partners estimate. Atrius Health has another 25,000 patients in the Medicare Advantage program, which uses incentives for providers roughly similar to an ACO but also includes incentives for patients to stick with the Atrius Health network. Medicare Advantage covered 14.4 million people in 2013, according to the Kaiser Family Foundation.

Newhouse says he would strengthen the financial incentive to patients in ACOs to stay inside the network. At the same time, he acknowledges that fee-for-service medicine won’t vanish anytime soon. In part, that’s because not every physician group can replicate what Atrius Health has accomplished. “We can’t shift the entire delivery system to this because not every group has the expertise,” he says.

Nonetheless, the trend is clear. Says Atrius Health’s Lopez: “This level of care goes from being an initial trial effort to the way medicine is practiced.”