Improved Care And Compensation Key To Budget Balance

Health insurance reform opponents maintain that we cannot afford to expand coverage without saddling our children and grandchildren with a huge tax bill for many years to come. Many experts point out that reorganizing and improving care nationwide to eliminate or drastically reduce the waste of unnecessary medical services could help finance expanded access to cover uninsured. We’ve covered a similar topic, reducing medical errors, in a previous blog post.

Physician Elliott S. Fisher, from the Dartmouth Medical School, and colleagues from the Dartmouth Institute for Health Policy and Clinical Practice, discussed the cost reduction solution in the article “Getting Past Denial — The High Cost of Health Care in the United States,” in the September 24 New England Journal of Medicine. These researchers’ conclusions are based on the Dartmouth Atlas of Health Care, first published in 1973 by Dartmouth’s Jack Wennberg, also a physician. The Atlas continues to rigorously examine patterns of medical resource intensity and utilization across the United States.

Doctors and other medical providers often claim that their greater use of services and higher costs are due to sicker, poorer patients. But sicker, poorer patients do not account for the spending differences. Physician Atul Gawande provided an excellent illustration in the case of high cost McAllen, Texas.

When the Dartmouth group reexamined regional differences in price-adjusted health care spending and intensity of care taking into consideration patients’ risk factors, they found that health status accounts for $593 of the $3,280 difference between the lowest- and highest-intensity regions, or just about 18% of the difference. Differences in poverty and income levels in regions accounted for little, if any, of the variation in the cost and intensity of care.

More than 70% of the differences in spending “cannot be explained away by the claim that "my patients are poorer or sicker,"” Dr. Fisher and colleagues wrote.

The Dartmouth Group’s previous extensive research on medical practice patterns across the United States has shown that “discretionary decisions by physicians seem to account for most of the regional variation in spending.” For example, “compared with Medicare beneficiaries in the lowest-spending regions, patients in the highest-spending regions spend more time in the hospital (an average of 2.1 days vs. 1.4 days), have more frequent physician visits (14.5 vs. 10.7 per year), and undergo more magnetic resonance imaging (MRI) procedures (21.9 vs. 16.6 per 100 beneficiaries) and computed tomographic (CT) scans (61.4 vs. 46.9 per 100 beneficiaries).” These differences are not reflected in worse outcomes or in rationing for patients in the lowest-spending regions.

Less intensive, invasive, and more cost-effective services, do require more management time from primary care doctors, nurses, or even specialists, although currently, they are not reimbursed for such time. Instead, physicians are compensated according to the number and complexity of services they provide.

“The implications for health care reform efforts are clear,” Dr. Fisher and colleagues concluded. “Health is indeed a critical determinant of health care spending. Efforts to improve the health of the public and to reduce the burden of chronic illness should be pursued. And because caring for sicker patients costs more, payment reforms will have to be carefully designed. Health systems such as academic medical centers and safety-net providers that care for disadvantaged patients or those with complex conditions will need to be reimbursed fairly with the use of careful case-mix adjustment in order to reduce the likelihood of harm to either patients or the institutions themselves.”

“We should recognize that so much discretionary care is provided in the United States that we could easily afford to expand coverage without increasing taxes — or rationing care — as long as we couple coverage expansion with a commitment to rapidly test and broadly implement successful reforms in payment and delivery systems,” Dr. Fischer and colleagues emphasized. “We should not let denial get in the way of acceptance of the need to move forward on fundamental reform of the U.S. health care delivery system. We can't afford the alternative.”

Nearly all human resources and benefits executives surveyed by the Towers Perrin consulting firm view cost containment for employers and employees and improving health care quality as top priorities for health care reform. The question is, how do we get the other players in this equation on board?.