Newtown, CT – October 21, 2011
It's taken more than 30 years, but Jerry Solon must be smiling from heaven – In 1967, Dr. Solon published a paper in which he describes a novel way to measure the use of services, one that would be more consistent with the way physicians treat and manage a patient's condition or illness. He called it the analysis of an episode of medical care. Two years later he published another paper in which he relates the results of a measurement experiment, comparing the analysis of population use measures with episode measures. Between then and now, others, including Kerr White, Mark Hornbrook, and our own Doug Emery, expanded Dr. Solon's framework of measurement to a framework for payment. Countries from as far as Indonesia, to as close as the Netherlands adopted this framework, understanding that a medical episode of care is a relevant unit of measure and payment for physicians and hospitals alike, and a relevant unit of purchase for consumers. Today, in the US, Dr. Solon's insights have made it to the mainstream. In a recent editorial in Modern Healthcare, Valinda Rutledge and Nancy Nielsen, both now at the CMMI, eloquently state: "Patients experience care based on episodes of illness. Why can't providers deliver and be paid on episodes too?". And in the September issue of the Harvard Business Review, Profs. Kaplan and Porter explain how analyzing costs of an episode of medical care could help providers squeeze significant inefficiencies from current care processes. They call it their Big Idea. And Big it is, albeit not exactly theirs.
â€¨What this means to you – Payment reform is a means to an end. Dr. Solon's insight was that meaningful feedback loops would help physicians and hospitals understand the amount of resources that they were deploying to care for a medical episode….by medical episode. Instead of grappling with an incoherent statistic like total bed days, or total readmissions, what mattered was to understand the variation in these use measures by medical episode type. Only then could the physician-scientist take action and understand the direct effect of that action. Paying physicians and hospitals with a single risk adjusted fee for a specific medical episode of care, simply focuses the provider's attention on Dr. Solon's insight. And as Profs. Kaplan and Porter explain, from that insight comes an understanding of marginal cost and contribution of a health care "product" – an episode of medical care such as a total knee replacement, or a year's worth of chronic care – and a focus on optimizing resources instead of wasting them. Yes, Dr. Solon is smiling, and so should you, because the real transformation of healthcare has begun.
Francois de Brantes
Health Care Incentives Improvement Institute, Inc.