First, much of the trend driving spending today is the result of an epidemic in
chronic conditions, including heart disease, hypertension, and diabetes, which
has origins in changing patterns of diet and physical inactivity. This is a
worldwide phenomenon. Medical science cannot reverse it -- only changes in food
supply and lifestyle can. We have a health emergency all around us, and our
response to date has been far too tepid to have an impact.
The second reality behind health care costs is that they are often concentrated on
a small number of very ill persons. Five percent of patients in any given year
account for roughly half of all health care spending. These patients, afflicted with
multiple chronic conditions, are the same patients who often receive
uncoordinated and ineffective care from multiple specialists, hospitals, and
emergency rooms. This lack of coordination hurts patients with the
greatest health needs and robs the system of needed resources.
A third reality is that health care costs are not the same in every part of the
country. There are major variations in both the price and volume of care that doesn't seem to be related to positive health outcomes or quality, even within the
same state or region. In fact, more care and more expensive care turn out not
to be better care in many cases. This
variation is partly a function of a lack of transparency in health care
spending -- too often we don't know what is being done and by whom, at what price,
and with what results.
If we are to face up to these realities, changing how providers deliver care and
how they are compensated will be vital. The incentives inherent in today's fee-for-service
reimbursement system reward volume, not value. Fee-for-service incentivizes
distinctly quantifiable medical procedures rather than the more amorphous counseling
and follow up consultations, which cannot be billed under the current system but are often the key to improving patient health. It gets in the way of the
"team care" approach -- where doctors, nurses, and other health professionals work
together -- that is proving most effective at producing the best outcomes for
patients in practice demonstrations nationwide.
There are many proposals to move us away from a purely fee-for-service reimbursement
system, but they all share a common theme -- tying payment to value. Value is
understood to be mostly about achieving optimum patient outcomes, but it also
takes into account the relative cost of certain procedures versus alternatives.
Alternatives to fee-for-service reimbursement are in development. Hospitals are purchasing
the practices of specialists and moving them to a salaried reimbursement system,
albeit with incentives built in to advantage the specialists. Medicare and
other insurers are going ahead with "pay for performance" reimbursement
initiatives that modify physician fees based on measures of quality and
resource use. Likewise, there are now successful experiments in "bundled"
payments that set a price for all services related to an entire course of care,
such as treating a broken leg.