Stop the bleeding. Stat.
With healthcare spending projected to account for 21% of the nation’s GDP by 2020, industry experts offer their suggestions on how to stem the tide
To slow ever-escalating healthcare costs, comprehensive reform to provider paymentsas opposed to incremental changeis a necessity, according to an overwhelming majority of healthcare experts in a Commonwealth Fund/Modern Healthcare Opinion Leaders Survey.
A broad group of 214 opinion leaders working in healthcare policy, delivery and finance were asked about various strategies to slow healthcare cost growth trends. The survey was conducted by Harris Interactive in March and it is the 18th in a series of surveys designed to take the pulse of healthcare leaders on timely policy issues.
Controlling healthcare costs is top-of-mind as Congress and the Obama administration tackle healthcare reform this spring and summer. Congressional leaders and the president have said that any health reform initiatives must address the staggering and rising cost of healthcare, as well as improved access and coverage.
Healthcare spending accounts for nearly 17% of the nations gross domestic product this year. At its current trajectory, healthcare is projected to account for 21% of GDP by 2020.
The majority of opinion leaders surveyed are not very optimistic that healthcare costs could be metered below 17% of GDP by 2020. Some 41% of those surveyed say that having healthcare account for 19% of GDP in 2020 is an appropriate and realistic target. Another 22% of respondents say that 17% of GDP is a realistic target for 2020. And 33% say that healthcare accounting for 16% or less of the nations GDP is realistic. However, no one says that they expect healthcare to account for more than 21% of GDP in 2020, according to the survey.
I take that as a consensus for need for change, says Karen Davis, president of the Commonwealth Fund. Its pretty interesting to me that most think we are on the wrong path.
Nearly all of the surveys respondents97%say that they strongly support or support reforming the Medicare physician payment system to control costs and improve quality and efficiency. And 94% say that there should be a streamlined approval system for generic drugs and a way to prevent drug companies from blocking the introduction of generic competitors. Some 87% of those surveyed say that Medicares Hospital Quality Improvement Program, known as the CMS/Premier Hospital Quality Demonstration Project, which links payment to performance on specific quality measures, should be expanded.
A sizable majority66% of those surveyedsay that the sustainable growth rate, or SGR, a formula to control Medicare physician spending growth, should be replaced with fundamental provider payment reform. Only 3% say that todays SGR should remain in place.
Francois de Brantes, founder of Bridges to Excellence, which is testing a new provider
payment model called Prometheus, says
that payment reform is key to broader healthcare reform.
Theres a fair amount that can and should be done in making fee-for-service a lot better than it is today, according to de Brantes, who participated in the survey. Its going to take a while, however, to not only test payment models but to get results.
Payment reform would be effective at controlling costs while maintaining or improving quality, the vast majority of survey respondents say. Some 70% say that moving away from fee-for-service toward bundled payments would be either extremely effective or very effective at controlling costs while maintaining quality.
Pay-for-performance models that reward for quality and efficiency also proved popular, with 45% of respondents saying that this would be extremely effective or very effective at controlling costs while maintaining or improving quality, according to the survey.
Many systems and payers are trying pay-for-performance today, with mixed results. De Brantes says that players should keep trying to improve on the model to find the right combination of incentives. You dont abandon something because the formula is flawed; you fix the formula, he says.
But the take-away from respondents is that pay-for-performance is just one part of payment reform, Davis says. It really means fundamentally moving away from fee-for-service that pays for volume, she says. Its got to be more than getting a bonus on fee-for-service.
Malpractice liability reform and more consumer cost-sharing were less popular ideas for controlling costs while boosting quality, according to survey respondents, with 24% and 19%, respectively, saying that these changes would be either extremely effective or very effective.
Overwhelmingly, respondents are in favor of competitive bidding for medical equipment prices, with 91% supporting or strongly supporting this tactic. And 82% of those surveyed support or strongly support drug price negotiation by Medicare.
This level of support is a surprise to Davis because, she says, they are not high on the agenda for healthcare reform in Washington. I felt there was a little bit of a disconnect between whats on the policy agenda and what people in the field are thinking about, Davis says.
Douglas Carr, medical director for the Billings (Mont.) Clinic, says that theres much that can be done immediately to lower costs and improve quality.
As they say in Casablanca: Lets round up the usual suspects, Carr says, such as better managing patients with diabetes, cardiovascular disease and other common chronic conditions that can become very costly if left untreated. He adds that cost-control reforms must address the 20% of patients who account for 80% of medical spending.
But provider incentives arent there yet, says Carr, who participated in the Opinion Leaders survey. The Billings Clinic identified 3,500 heart-failure patients on Medicare, and enrolled 500 of them in an intensive treatment and disease-management program. Hospitalization rates for those 500 patients fell by 40% in a year, Carr says.
The program could be expanded to all 3,500 patients if a pay structure were in place, Carr says. We save Medicare $2 to $3 for every dollar we spend on this, but theres no reimbursement for it, he explains.
Integrated delivery systems, such as the Billings Clinic, are seen by the majority of opinion leaders surveyed as a way to control costs without sacrificing quality. Sixty-two percent of those surveyed say that promoting the growth of integrated delivery systems would be extremely effective or very effective in reducing the growth of healthcare costs.
This was, for me, an amazing amount of endorsement for integrated delivery systems, Davis says, noting that integrated systems account for only about 10% of the market today.
But integrated care isnt feasible in some regions, says Bruce Bullen, chief operating officer of Harvard Pilgrim Health Care, a Boston-based health plan. Bullen is also one of the participants in the survey.
Whats driving healthcare costs is an unwillingness among employers and consumers to accept any narrow markets, Bullen says. Were operating in an environment where employers and consumers dont want limits on their provider network.
Bullen adds that the private marketplace has worked hard to contain costs, including tamping down excessive high-end radiology, implementing health information technology and improving transparency in provider quality and cost data.
Ideas that have gotten a lot of buzz lately, such as providing incentives to create medical homes, establishing a center for comparative effectiveness and accelerating health IT adoption, rated high on the Opinion Leaders survey as ways to control healthcare costs.
But Bullen says that these ideaswhile compellingdont get to the heart of reform: that many consumers and employers are happy with the coverage they have and may be unwilling to make sacrifices to control costs.
De Brantes agrees that its the details of reform that matter. Medical homes, comparative effectiveness, these things are nice, sexy and new, he says.
More complex is changing the way providers and payers are paid, and doing it in a way that ultimately works for everyone.
What we need to know is: Is the juice worth the squeeze? de Brantes says. We are not going to know this until we test it.
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