HCI3 Update from the Field: No More Blaming the Great Recession

Submitted by francois.debrantes@hci3.org on Friday, January 20, 2012 - 12:59

Newtown, CT – January 20, 2012

Something's going on, and passing it off to the Great Recession is no longer holding water – The CMS's report on the growth of health care spend in 2010, and the Altarum Institute's estimates of 2011 both continue to provide good news for all: price growth has significantly slowed. For the first time in decades, healthcare price inflation is not much greater than general price inflation, and the share of healthcare has come down to 17.8% of GDP from over 18%. Utilization did creep up in 2011 from the low in 2010, and is back down as we get into 2012. So what's going on? There's no question that the Great Recession has had an effect on demand for health care services, but there are other factors at play. First, the number of patients enrolled in high deductible health plans continues to grow, reaching 17% in 2011 and likely over 20% in 2012. When 1 in 5 Americans with health insurance have to take a chunk of money out of their pockets to pay for a portion of services consumed, the era of consumer involvement in healthcare has finally arrived. Second, payment reform experiments have vastly multiplied and are yielding results. A CBO report restates a prior CMS report on the impact of bundled payments: it works. Plain and simple. Further, ACOs are starting to achieve some of their aims. There's still a distance to travel, however, so-called high-performing medical groups like Monarch are, in the words of a new report's authors: "strengthening care management capabilities; building relationships with physicians, payers, and other partners; and developing a new kind of payment model". Of course, some pundits thought that's what these medical groups had been doing all along. The yeoman's work accomplished by the Brookings-Dartmouth team is getting providers to finally collaborate clinically to increase quality and lower cost of care. Form follows function, and function follows incentives.
What this means to you – there are dozens of provider organizations across the country that are actively working to transform themselves into higher-performing systems. There are dozens more creating value around bundled services – episodes of care. And there are hundreds in the wings who will jump in once they've been approved by the CMMI to participate in its payment reform pilots. We must encourage them by leveraging the newly activated throngs of health care consumers. Creating reference pricing for simple procedures like colonoscopies; deploying tools like CastLight; offering competing bundled services like total knee replacements to plan members; are all powerful mechanisms to push this market forward. There are two tools created by our friends at Catalyze for Payment Reform that all employers should be using to get these tactics implements. It's all here folks. Let's get it done.


Francois de Brantes
Executive Director
Health Care Incentives Improvement Institute, Inc.
w: www.hci3.org