February 12, 2021

Dear Interested Readers,

 

Health System Accountability for Heath Care, Quality, Equity, and Cost

 

It’s been a remarkable week in Washington. One of the benefits of retirement is that every day is Saturday. I have spent most of Tuesday, Wednesday, and Thursday watching the Second Impeachment of Donald Trump. We live in strange times and it seems a foregone conclusion that even if the former president’s defense team was composed of two eighth-graders who were presenting theories gained from comic books it would not make any difference. It is highly unlikely that when it is over we will have anything but a demonstration that we are a deeply divided country.

 

The frustrating reality of the politics of the moment makes me apprehensive about our collective future and the possibility of bipartisan progress toward solving any of the complex problems that cast a shadow over our future.  It is becoming increasingly obvious that short of a last-minute miracle it is highly unlikely that there are seventeen Republican Senators who will accept the case that the Democratic House Managers have put together to prove that Donald John Trump is guilty of high crimes and misdemeanors and therefore should be barred from ever again holding public office because he has demonstrated that he is incapable of abiding by or defending the principles of the Constitution.  

 

I have appreciated the experience. I have learned a lot about Constitutional Law, but more about the current width of the divide we all are trying to understand and overcome.  The lead House Manager is Representative Jamie Raskin who has taught Constitutional Law at American University for many years. He is a great teacher who gives an excellent lecture. Apparently, many of the Senators to whom he is trying to speak have other things on their minds and are not interested in what he and the other well prepared House Managers are presenting to them.

 

My intent in this letter is not to bemoan what is likely to be or to remind you of how dramatically we are divided. The plan for this note has been to continue the discussion of the November 17, 2020 report of the Commonwealth Fund Task Force on Payment and Delivery System Reform. The task force reported six policy imperatives. In Tuesday’s post, we reviewed the first imperative,  “Increase health care delivery systems’ preparedness for health disasters.” The objective of this post is to review the second objective: Increase Health System Accountability for Health Care Quality, Equity and Cost.

 

More than thirty years ago I was captivated by the enthusiasm for quality and safety that my colleague, Don Berwick was promoting in our practice, The Harvard Community Health Plan. Most of our colleagues had been attracted to our practice by the opportunity it offered to work in an innovative environment that was looking for the system changes that were consistent with our founder’s concept that:

 

“The existing deficiencies in health care cannot be corrected simply by supplying more personnel, more facilities and more money. These problems can only be solved by organizing the personnel, facilities and financing into a conceptual framework and operating system that will provide optimally for the health needs of the population.”

Dr. Robert Ebert, Dean of Harvard Medical School

1965

 

Dr. Ebert was convinced that prepaid medical care which came to be called “capitation” was a better system of healthcare finance than the fee for service finance of practice. He was equally convinced that a focus on preventative care delivered in a multispecialty ambulatory environment was more likely to meet the health needs of individuals and the community than reactive care in a hospital environment after a disease had been established. He was not dismissive of acute care in a hospital, he was just convinced that many hospitalizations could be avoided if we practiced in a more anticipatory way seeking to avoid disease by promoting health. He realized that a prepaid form of finance for a population, what we now call value-based compensation which utilizes a budget for the care of a population, would favor preventative practice and would direct our attention to approaches that reduce avoidable hospitalizations and would simultaneously reduce the cost of care for the population as it improves the health of individuals and the community.

 

I like to think that HCHP was a grand experiment, or if you prefer a pilot program, where Dr. Ebert’s ideas could be further explored, developed, and proven. He selected Dr. Joe Dorsey and Dr. Richard Nesson as the medical leaders of his practice. Dr. Nesson left a few years later to lead the Brigham and in 1994 was a principal founder of Partners Healthcare which is now Mass General Brigham Health. Dr. Dorsey mentored me and a host of other colleagues who were drawn to the excitement of a new way to practice. Joe Dorsey was a promoter of Don Berwick’s early expansion of Dr. Ebert’s concepts. It is my opinion that Don vigorously added the concepts of measured quality, the focus on safety, and the importance of continuous improvement to Dr. Ebert’s concepts. 

 

These concepts peaked at HCHP in the late 1980s and very early 90s. Don left at the end of the eighties to found the IHI to promote the importance of quality and safety to a national and international audience. HCHP was more focused on growth and market issues after Don left and in retrospect, I greatly regret the slow progress that was made during these years although compared with many other practices we continued to be a national leader in the efforts to deliver high-quality care with a focus on safety while being the best value in our market. 

 

After Crossing the Quality Chasm was published in 2001, we felt that our founding principles were confirmed even as we were brought close to bankruptcy as patients fled Harvard Pilgrim, our principal source of patients and income when Harvard Pilgrim went into receivership after it lost sight of the realities of the medical loss ratio and tried to sell healthcare coverage for less than the cost to provide it. 

 

We lost several years of improvement to the effort to recover from our near-death experience, but we never lost sight of our heritage of value-based compensation even as we were forced to grow our fee for service business just to survive. In 2006 Massachusetts passed “RomneyCare” and by 2008 when I became CEO there was a strong suggestion that the state would move toward value-based compensation as its primary finance mechanism and the best way to achieve better care for the whole population at a sustainable cost. I spent my six years as CEO trying to return the practice to its original concepts and prepare the practice to succeed in a value-based finance environment by reemphasizing principles of quality, safety, and efficiency while developing preferential relationships with like-minded organizations, introducing Lean process management, and seeking out value-based opportunities like participating in the Pioneer ACO project of CMMI.

 

I have given you this past history to explain my enthusiasm for this second recommendation from the task force. It was Dr. Ebert’s recommendation in 1965. Kaiser is continuing proof of the validity of the recommendation. The ACA was the legislative prescription for the pathway to value-based compensation. Progress toward value-based compensation is the veiled purpose of MACRA that was a bipartisan act of 2015 to eliminate the SGR. Moving away from fee for service finance has been a huge challenge over the last seventy-five years because it is a complex process of adaptive change that has been resisted by the majority of physicians.  Collectively through the AMA, the strategy seems to have been to preserve fee for service practice and defeat attempts to promote value-based compensation by weakly embracing it. 

 

The second section of the Task Force’s recommendations begins with an excellent introduction if you are reading it as a student of the evolution and controversies of health care policy in our slow journey toward something that is best presented as the Triple Aim: Better care for everyone in healthier communities at a sustainable cost to society. I have bolded the introductory phrases that are a restatement of the Triple Aim and underline racism in healthcare. I salute the Task Force for emphasizing the fact that structural racism undermines equity. I share the opinion of the 1619 Project that racism is an underlying reason for why we still don’t have universal access to care. They begin:

 

Payment and delivery system reforms have long been levers for improving health care quality, increasing equity, improving health outcomes, and lowering health care costs. Over the past 10 years, the federal government and states have invested in and accelerated the adoption of such reforms. These experiments have yielded insight into what works, what shows promise, and what should be retired. This period of innovation has also revealed areas of unmet need, particularly around confronting and combatting structural racism* within the health care system. 

Based on our careful review of the evidence on value-based payment models from the past 10 years, the Task Force recommends that federal and state officials speed up the adoption of promising value-based payment approaches in Medicare and Medicaid that enhance accountability for health care cost, quality, and equity. The Task Force believes acceleration toward value-based payment is critical at this juncture, particularly as Medicare faces insolvency, possibly as soon as 2024, and Medicaid accounts for an increasing share of state budgets. We focus on federal policy in this area for these reasons, and also because Medicare and Medicaid have a powerful direct and indirect influence on the behavior of private actors, including commercial payers. 

While transferring more financial risk to elements of the health delivery system will come with its challenges, the COVID-19 pandemic has also highlighted the benefits of value-driven payment approaches to health systems and clinicians. Uncoupling compensation from the volume of services provided could increase financial security and flexibility to adapt to crises. Under fee-for-service arrangements, providers’ financial survival depends on their throughput; during disasters, however, when providers’ services are most needed, their financial survival can be jeopardized by dramatic declines in revenue. An additional benefit of  prospective advance payment is that it creates the aligned incentives that are critical to creating shared accountability for quality, cost, and equity among the many parties whose actions are essential to improving our health care delivery system. 

While evidence indicates that payment reform is a critical tool, it alone will not transform the care delivery system. This is why the Task Force proposes several other federal actions, including creating a robust primary care system, reducing administrative burden, and engaging patients and their families in the design and delivery of care. 

 

There are several important statements in those introductory paragraphs that I want you to notice, and that I want to expand. They are:

 

• …the federal government and states have invested in and accelerated the adoption of such reforms. These experiments have yielded insight into what works, what shows promise, and what should be retired.

 

The ACA has driven a great deal of innovation through its many pilots that have been fostered by CMMI and CMS. The expansion of Medicaid has been resisted in “red states” but in a slowly progressive way, individualization of program development fostered by the variations that have been allowed to entice states to expand their programs have shown much that works, and much that doesn’t add value like imposing work requirements. 

 

• We focus on federal policy…because Medicare and Medicaid have powerful direct and indirect influence on the behavior of private actors, including commercial payers. 

 

Fee for service compensation has been a multiple of Medicare RVU payments for many years back into the 90s. Commercial contracts are frequently twice as lucrative as Medicare payments. Why should a procedure that Medicare compensates at $1000, but compensated at $2200 by Blue Cross? This reality makes systems highly value commercial payers and disdain “public payment.” Different resources for different populations drive the intent of institutions and is a major factor in the origin of the health inequities that we see. 

 

• …transferring more financial risk to elements of the health delivery system will come with its challenges… 

 

This is a comment that is based on the predictable issues of adaptive change. There is nothing that generates more volatile “affect” at the institutional or individual level than changing “how we are paid.” There will need to be substantial changes in operations. There will be disruptions in the labor force as clerks that generate bills for services rendered are no longer necessary. The list of changes and the discussion of each change that will flow from this shift in finance would fill several books. 

 

• …the COVID-19 pandemic has also highlighted the benefits of value-driven payment approaches to health systems and clinicians…Uncoupling compensation from the volume of services provided could increase financial security and flexibility to adapt to crises.

 

I sit on two healthcare boards and can give witness to the dramatic changes in revenue when elective surgeries and appointments for routine care were suddenly discontinued so that the institutions could focus their physical resources on the treatment of patients infected with the coronavirus. Caring for complex patients with infections yields nickels on the dollar compared to doing elective hips, knees, and hearts. Our hospitals are production factories for elective surgical procedures and are not designed to effectively shift their production capabilities to the management of large numbers of complex medical patients. As I reviewed finance statements showing tens of millions of dollars of loss, it seemed obvious that a fee for service finance system for healthcare would never be able to meet the needs of all citizens in a moment of challenge. In reality, we used government subsidies to mitigate the losses, which seemed to me like a clumsy backdoor way of covering the needs of a population. Ironically, commercial insurance companies made a lot of money when they did not need to pay for elective procedures. 

 

•  …additional benefit of prospective advance payment is that it creates the aligned incentives that are critical to creating shared accountability for quality, cost, and equity among the many parties whose actions are essential to improving our health care delivery system. 

 

Perhaps this is the most important point to consider when it comes to developing the institutional machinery necessary to achieve improvement in the six domains of quality. Patient centeredness requires both an individual and an institutional emphasis. Collaboration creates shared values. Maintaining the perspective of patients and families as the highest core value of the organization is much more likely when the work is organized around the collective financial concerns of the group. Having unnecessary interventions take a disproportionate share of the resources is less likely when resources are managed internally and there is less opportunity to demand that the outside world cough up more of the community’s assets. 

 

Quality and safety are systems issues. Value-based compensation is based on systems performance and supports collaboration. FFS finance is driven by individual activities that can often be deleterious to the collective mission and can undermine collaboration toward achieving the larger goals of the group. Finally, healthcare in the twenty-first century is not a solo performance. All clinics are dependent upon the performance of dozens of colleagues against the background of a well-organized infrastructure.  I have observed in my own organization that as we were forced by market forces to migrate away from our practice habits that were grounded in value-based compensation many individuals forgot how dependent they were on the work of others. 

 

There is much more that could be said. The task force report transitions to a lengthy list of recommendations that add much meat to the generalizations in the paragraphs that I have reviewed. The list could be the table of contents for a lengthy report. Many of the recommendations begin with “CMS should…” or “CMMI should…” That is great because those things can be instituted through administrative decisions. The recommendations that begin with “Congress should…” will be harder to accomplish. Some can be passed utilizing the simple majority vote associated with “budget reconciliation” but that is a well that can’t quench every thirst. “Congress should…” underlines how vulnerable we are to the filibuster in the Senate or conversely how important it is to continue to try to find the way to a productive bipartisan process for the improvement of healthcare. 

 

The recommendations are realistic in that they recognize that we are all in different places. We have different internal resources. We have had different experiences. It is right to demand more in some places and provide more support in others. One thing that has become clear to me and that the recommendations underline is that the most progress is made when there is downside risk. One significant way our systems vary across the country is in their managerial experience with risk. How we support institutions as we expose them to the risks that encourage them to improve will take great collective wisdom. 

 

The realities underline that sooner or later we must develop a process of collaboration that does not yet exist because we have not figured out how to balance self-interest with collect interest. To realize the benefits that the task force envisions will require a combination of leadership and collaboration that we currently lack. Collaboration is dependent upon trust that is also in short supply. What I have learned from my own experience is that all of these barriers can be managed through effort and commitment to shared values and eventually could become past history. The last ten years have shown us that progress can be made. Despite the attacks on the ACA, we know things now because of the ACA that we did not know in 2010. When we try something we learn something. The task force makes many suggestions of specific things that are ripe for trial. I hope that you have downloaded the PDF of the report and will give it your attention.

 

Plenty of Snow and Wood

 

It has been pretty cold up here in New Hampshire. There is deep snow in my yard. The ice fishermen are out on the lake where two feet of ice will support their snowmobiles and icehouses. The thermometer has not cracked thirty-two for many days. Last night’s low was minus two degrees. 

 

I have read that in nineteenth-century New Hampshire the homes were so poorly insulated that it took about thirteen cords of wood to heat a home through the winter months. The common heating fuels in New Hampshire are now oil and propane. Wood pellets have enjoyed recent popularity. Electricity is expensive, but electric heaters are commonly used as augmentation or to heat places that are particularly vulnerable to freezing like plumbing in outside walls. Before I lived in New Hampshire full time, I did not realize that like their ancestors from the eighteenth and nineteenth centuries many New England families still heated their homes with wood or used food to augment or reduce their use of propane or heating oil. Many of the men who do seasonal lawn care or construction augment their income in the winter by selling firewood. 

 

I have always enjoyed my fireplace as a luxury. It’s part of the ambiance like Christmas trees, steamy hot beverages, thick warm mittens, and long scarves that I relish as part of the desired winter experience. For me, my cheery fires are a small luxury. What a surprise it was to witness that for many of my neighbors wood was a critical necessity. 

 

In retirement, I have engaged in the work of a couple of non-profit organizations. Sometimes I chuckle to myself when I conceptualize these activities as “community service” and then have the thought that judges often sentence people to some number of hours of “community service” as their way of repaying society for the damage that their crime has inflicted. Perhaps, I am doing community service as a self-imposed penalty for my accumulated failures. I don’t think so. I do what I do because I enjoy the sense of community that is associated with the most fundamental of activities, being part of a team that helps a neighbor’s family stay warm during a very cold February night.

 

There is a system to our work that has evolved over several years. Some of our wood is donated by homeowners who have trees that need to come down. We collect that wood in warmer times. There have been cutting, splitting, and stacking parties. In recent times we have shifted our activities to buying the bulk of the wood that we deliver. We use donations to buy “green wood” in the late spring and early summer when the price is low, and then stack it for drying. Today’s header is a glimpse of what happens in the winter. First, a person in need calls. Next, a “crew” is assembled that will load a few trucks and trailers and then deliver the wood to the family or individual in need. Perhaps, there is a more efficient way to get wood to the people in need. We could just write a check and have someone deliver the wood. If you can find it, seasoned wood is delivered for $350-$425 per cord (128 cubic feet–8 feet x 4 feet x 4 feet). We don’t do that because the reward for us is the sense of community that comes from doing the work. It is much like the joy of practicing medicine. Who knew?

 

Be well.  Be hopeful.  Be a part of the effort to rebuild and redirect the future of healthcare. Let me hear from you. I would love to know what is happening wherever you are.

Gene