Newtown, CT – August 7, 2015
Can we expect significantly different (and better) results from today's provider organizations? Perhaps, but at a recent gathering of thoughtful physician leaders, it was plainly evident that the transformation needed to achieve those significantly better results is painstakingly long. What was also evident is that patient-focused innovation in delivery of care is virtually impossible to formalize in most large healthcare organizations. Instead, much of the process innovation is in "industrializing" current processes and removing the human touch that is so essential to good care, especially for complex patients. Innovation can flourish when the market creates incentives to reward that innovation, and we have seen hundreds of examples in the rest of the economy and some in healthcare as well. The ones in healthcare have, for the most part, been driven by consumer-focused incentives, not payer ones. For example, the rapid expansion of retail clinics to provide timely, convenient and highly affordable routine sick and preventive care is clearly a result of the shift to high-deductible health plans. There are some pockets of innovation that result from payer action, such as the admirable work done by Commonwealth Care Alliance for its dual eligibles. These innovations are positive harbingers of other good things to come, but only if payers, especially the public sector ones, don't inadvertently close the door on them.
What this means to you – In a recent blog post Gene Steuerle of the Altarum Institute points out how the avoidance of action by the federal government could have significant consequences on the future rise of health care costs. His point is simple and important. If we bask in the comfort of current low trend rates and release the pedal from the metal, then costs will go back up a lot more quickly than current projections estimate. And the general tendency of any Administration to avoid political fights when they're not needed means taking chances by catering to lower common denominators. That, almost always, means that true disruptive innovation that can create significant improvements in cost and quality get sacrificed. Because it's only by pushing the system to its edges that innovation emerges. And in a recent Health Affairs blog post, Suzanne Delbanco and I delineate why the proposed CMS mandated joint replacement program should not be followed as is by other payers. For example, by fixing the payment on acute care facilities, CMS is shutting the door on the most promising innovation in joint replacements: same day procedures, which create lower overall episode costs and better outcomes for many patients. Medicare's blind spot to delivery system innovation is significant and must be countered by the private sector and other public sector payers. We all know that it's very difficult for incumbents to become disruptive innovators, and it's almost impossible when payers create counter incentives to that innovation. So let's make sure that payment policies encourage innovation instead of stifling it because it's hard enough as it is.