Fixing payment system key to successful reform: Jessee

It's an exciting time to be in healthcare. Our nation is poised to take a great leap into the unknown. After watching our national expenditures for healthcare climb into the stratosphere—$2.3 trillion in 2007, or $7,600 per person—both houses of Congress, with urging from the White House, seem close to acting.

Exactly what reforms they will enact remains to be seen. One thing, however, seems certain: The changes will be too much for some observers and too little for others. The major focus, of course, is on how to expand health insurance to include the 47 million or so Americans who lack it.

Unfortunately, that will cost a lot of money. So to pay for expanding coverage, the federal government is either going to have to increase its revenue (by raising taxes or fees) or reduce the costs of federal programs like Medicare and Medicaid (by cutting payment rates). Neither option is likely to be popular, and both are probably going to be necessary.

Unfortunately, too much attention has been focused on expanding coverage, and not nearly enough on what I consider to be the two biggest reform challenges: How to rein in costs, and how to ensure we have enough health professionals to meet the demand. The issues surrounding expanded insurance coverage are complex, and the concerns being raised by many of the participants in the debate are valid. Should there be a public option or not? Should employers be mandated to offer coverage? How about individual mandates? And whose taxes should be raised to pay the cost of covering the uninsured?

But the worst scenario I can imagine would be to arm those millions of formerly uninsured people with reasonable coverage, and then unleash them on a healthcare system that still operates under the current, totally irrational payment scheme.

Providers' revenue is based on volume and throughput—not on results. In fact, if you keep people healthy and out of the hospital, the economics of the current payment system punish you severely. Dumping 47 million newly insured people into that perverse system will only make costs go further through the roof—spurring cries of “I told you so” from many critics. Reforming the payment system is critical if reform is to succeed.

At the same time, the experiment with universal coverage in Massachusetts has given us a taste of what impact additional insured people will have on manpower needs. We already have shortages of primary-care physicians, general surgeons and nurse practitioners.

In 2011, the first of the baby boomers will become eligible for Medicare—and many of them are health professionals who will, at the same time, leave the workforce. The combination of expanded numbers of people with insurance, a cohort of Americans becoming consumers of more care and a significant exodus of health professionals from the work force has disaster written all over it. We need to address our health manpower needs—now.

But despite these concerns, I'm optimistic about the future—more so than I have been in many years. I think we have the talent and the capability to meet these challenges. One reason for my optimism is the steady growth of integrated delivery systems. Whether such systems are centered around one or more hospitals, a multispecialty medical group, or a clinically integrated independent practice association, the idea of doctors and hospitals working together as an integrated unit to provide more comprehensive, better coordinated care to their patients just makes sense.

As purchasers increasingly enter into risk transfer contracts with these organizations to care for a population of people at a fixed price, I believe we will see an incredible flowering of creativity in figuring out how to provide high-quality, patient-centered, safe, effective care at a reasonable price. The best part is that each of these organizations will be free to come up with its own local solution to create aligned economic incentives and to reduce or eliminate administrative waste. That's a far better approach than trying to create a one-size-fits-all payment scheme at the national level.

I'm also optimistic that we're making progress toward creating safer healthcare organizations, measuring and improving quality, and implementing electronic health records. Hospitals, doctors and administrative leaders all over the nation are rising to the challenge of creating a culture in their organizations in which patient safety is their highest value. Measuring and reporting quality has become routine in virtually every hospital and medical practice in the nation. And billions of dollars of federal stimulus funds to spur deployment of electronic health records was a huge step in the right direction.

Sure, we have a long way to go, but we're making progress. And all the reform proposals on the table to date include specific steps to move us forward on these three fronts.

Over the time of my career in healthcare, the issues really haven't changed much. After all, access and costs have been concerns ever since the 1930s. Patient safety and quality came to the forefront in 1999, but those issues bubbled under the surface for many years before that time. We've tried a lot of different approaches to solve these dilemmas, with little success.

But in the words of Winston Churchill, “You can always count on Americans to do the right thing—after they've tried everything else.” I think we may be about ready to do the right thing. And as a result, I'm fired up and ready to go. How about you?

William Jessee is president and CEO of the Medical Group Management Association.

What do you think?