By MATTHEW HOLT

It’s the morning after the big night. Soon all melodrama of the past 14 months will be forgotten, particularly the last 6 weeks (for which the current narrative is that Nancy Pelosi brought health care reform back from the ashes with an assist from Angela Braly and Anthem Blue Cross). In the end the current bill is probably better than the version that would have come from a 60 vote Senate win after conference as the abuses of the Cornhusker kickback and more would still be there. Given that the sticking points at the end were more about the irrelevancy of abortion than anything else, the more mainstream Democrats might be wondering whether this wasn’t a better way to do things in the first place, and therefore whether they couldn’t have got a public option through if the 51 vote reconciliation process was adopted earlier in the bill’s life.

But no matter, we’s got what we’s got. For now. And whatever happens I can’t see any way that this gets overturned—especially when people figure out what’s in the bill. More likely the subsidies get sweetened, and the holes in the coverage get filled.

So it’s almost time to turn our attention away from payment reform, to delivery reform. Now every time in the past that we’ve had reform or something approaching it, those organizations who have shaped themselves to operate in an environment that rewards cost-effective innovation have ended up losing their financial shirts. You can go back to Friendly Hills in the 1990s, or look at Intermountain and Virginia Mason more recently. (Which is why I’ve been ranting at Michael Porter & Elizabeth Teisberg for years)

Now as Maggie Mahar has trumpeted, there appear to be some serious provisions for pilots in Medicare payment and eventually changes to overall Medicare reimbursement. Ideas like accountable care organizations and more should start to become reality. But of course, these concepts will need considerable change on the provider side before they become reality.

So the big question for the health care system going forward is, if providers start making the changes that will promote more cost-effective care, will they be rewarded or will they be hung out to dry?

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23 Responses for “The big question for what’s next”

  1. T. R. Levin says:

    Insurers will win if they find a way to promote cost-effective care. They will be facing more members and less money per member. The trick will be to engage hospitals and doctors, so everyone has incentive to do the right thing. Integrated health systems already have the right incentives.

  2. Doug Ritchie says:

    If you truly believe that “soon all melodrama of the past 14 months will be forgotten” you have not been listening or reading your own blog. This mess will continue for a decade of debates!

  3. Yes Matt, I believe we’re effectively talking about ‘managed care 2.0′ which will actually be about the business of purposefully managing care (aka risk and resource utilization) vs. contracting for discounts or global risk shifting from health plans to ill equipped, and improperly incented, downstream networks of providers.
    We have learned a lot since the 90s. ACOs, PCMHs, and “Mayo” or “Kaiser” equivalents (wannabes) are nothing new. The primary difference today is the superior nature of their business models are finally being recognized – at least by some.
    If best in class integrated delivery systems didn’t ‘shadow price’, odds are their premiums would be somewhere between 20 and 30% below prevailing market benchmarks.
    If you eliminated the routine churn of group health accounts, and the integrated delivery system held the member or covered life for something more than the estimated 2.6 year retention, the plan might actually pay more than lip service to prevention and wellness programs that have a return on investment beyond the “liability holding period”. Why get serious in active case finding (early detection, etc.) only to burden your medical loss ratio for a claims exposure that can be otherwise kicked down the street to the next usual suspect who is under pricing to gain market share?
    Yes, it’s time for innovation; and there are obvious leadership candidates. Lets get them in the conversation. This can only happen if the playing field is leveled, and all players operate under the same set of incentives. We’ll see if in the aggregate the beta pool will have sufficient horsepower to model the delivery system of the future.

  4. Reforming the delivery of care earlier could have minimized the need for the current reforms just approved on The Hill. It will be interesting to see just who steps up to affect change in delivery, especially if that change includes redefining the business model under which providers are currently paid.

  5. bev M.D. says:

    Thoughtful comment, Gregg. I agree, do not only look to the providers for delivery-of-care improvement. Here are some good quotes from Michael Turpin’s post on 2015 below: (pardon my ignorance, but who is Michael Turpin?)
    “Insurers have shifted from opaque and complex provider contracting to focus on consumer activation, public health improvement and patient advocacy and satisfaction.
    Insurers are now better branded and enjoy a more trusted role as a healthcare system ombudsman.
    Insurers have worked with CMS to aggregate clinical data on quality and efficiency of doctors and hospitals to create a credible, non-partisan consumer report to help patients make more informed choices of providers. High performance networks have become the norm to ensure optimal value over an entire episode of care.
    Insurers have become better community stewards recognizing that healthcare is local.”
    As for providers, those such as Paul Levy, the Virginia Mason CEO and the Intermountain Health Care guy have shown us what will work; it is not rocket science. Whether or not they are hung out to dry will depend on this new independent Medicare commission – and isn’t that part in the bill yet to be passed?

  6. Tom O'Brien says:

    Hi Matt:
    Have to agree with Gregg’s comment above. I think the big challenge is that the leadership, communication and execution of managed care delivery (Managed Care 2.0) is not something most organizations are willing or able to do. Sure, Kaiser and Mayo can do it – but they are exceptions to the rule.
    I am skeptical about the (potential) success of MC 2.0 – mostly because of all the things that have to be done right to make it work.
    No question, that MC 2.0 – when done well – will reduce costs. No question at all.
    Tom O’Brien
    MotiveQuest LLC

  7. Cynthia says:

    Anybody want to take a bet insurance companies are raising their rates as we speak? Now that it’s mandatory and there is no option, the insurance companies are dancing in the isles. And you can believe that any subsidy will eaten up like candy, but I bet the fine won’t!

  8. Stop Obamacare says:

    As a healthcare professional who is in different hospitals everyday I am saddened to see a bill with so many holes passed and especially in the manner it was.
    I recently attended the California Association of Neurological Surgeons annual meeting and healthcare reform was a main topic. Many surgeons expressed their concern and discontent with how this bill will negatively affect their businesses, hospitals, and patients.
    I expect to see a less personal relationship with patients and doctors now as this bill cuts Medicare reimbursements causing doctors to increase their volume to mantain their previous business models. Anytime volume is rewarded rather than quality the level of waste and unsatisfaction responds inversely. We can expect that with many family doctors.
    Lastly, I carry health insurance to protect myself and my family. That is a choice I make every year keeping in mind the opportunity cost of premiums spent. I don’t feel it is the governments responsibility or right to tell me what goods I must purchase. If I don’t want to carry health insurance for my family I shouldn’t have to. I can’t think of an example in history where the government has mandated that a certain good MUST be purchased. (I’ve heard the car insurance argument, not applicable. I don’t HAVE to carry insurance that covers MY goods, I can choose not to drive, and I can prove the financial means to not carry it)
    It is a scary trend that our government this year has decided what industries will be supported by the country (banking and automotive) and what industries will be capped or slowed from growing (healthcare) and what products MUST be purchased by it’s citizens (health insurance).
    I look forward to midterm elections this year so the American people’s voice can be heard!
    Waiting for the demise of the best healthcare industry in the world,
    Healthcare Professionals

  9. leeann4250 says:

    I predict a future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them.
    —Thomas Jefferson

  10. Stop Obamacare says:

    With regards to the Medicare cuts slated to pay for this bill, see below as to how they will affect doctors and ultimately patients. Do we want 32 million more people insured at the cost of the elderly in this nation?
    And if this is how our nation’s doctors feel about the health plan run by our gov’t, do we want them to have a hand in the insurance of 32 million more?
    http://www.thehealthcareblog.com/the_health_care_blog/2010/03/dear-mr-president-medicare-stinks.html

  11. bev M.D. says:

    To Stop Obamacare:
    The bill is passed. You are dwelling in the past. Time to move on.

  12. Mao says:

    FUNNY, MATTHEW
    ” .. So the big question for the health care system going forward is, if providers start making the changes that will promote more cost-effective care, will they be rewarded or will they be hung out to dry?”
    How FUNNY!!! Try Comedy Central! And add these –
    “I’m from the government, and I’m here to help.”
    “NHS works just fine.”
    “VA just as good as private providers.”
    “Medicare is not bankrupt.”
    “Taxes do not deter economic growth.”
    “Obama is competent.”

  13. Kim says:

    The scary thing is that costs are going to go up more, not less, for at least the the short term, and stop blaming those insurers. When one combines mandatory expansions of coverage (e.g., removal of lifetime limits and opening up the risk pool) with increasing provider bargaining power (e.g., Bersenson, et al (http://www.hschange.com/CONTENT/1118/) or the Massachusett AG report (http://www.mass.gov/Cago/docs/healthcare/Investigation_HCCT&CD.pdf)) — well, it does not bode well. Until subsidies and mandates start to kick in there is not much hope of improving the underlying risk pools, and richer coverage/more high cost insureds/higher provider costs will trump “Managed care 2.0,” whatever that might end up being — at least in the near term. We’re going to need to at least stabilize the underlying cost drivers before costs will start to slow.

  14. ed waltz says:

    Well Kim your full of crap the VA hosp is as good as the public/ I’m a 100% disabled vet and I’d rather go to civilian doctors and hospitals. The VA has made so many cuts its in sorry shape for the vets. Government health care is so great huh. Only get to see you primary health care doctor twice a year. Get real.

  15. Ken says:

    To “Stop Obamacare”,
    It is clear that, while you may be an accomplished doctor in your field, you don’t have the faintest idea of health economics. That is why arguments of many health care professionals, much as I respect them for doing their noble calling, ring really hollow.
    Your comparison to the mandatory car insurance is correct and incorrect. You are right in that driving car causes externality (hurting other people) and the tort system alone cannot compensate victims due to judgment-proof problem. Thus the need for mandatory automobile insurance.
    Yet, living without health insurance also causes externality. When one gets sick without health insurance, where do they go? To the ER! Which is inefficient than if the patient saw his primary doctor earlier. And the costs? If he can’t pay, it will be dumped to other taxpayers! Besides, the notion that people can decide on their own how much health risk they can bear (thus decide whether or not to buy health insurance) is complete nonsense! This fact must have been taught at any medical school during health policy/management course with abundance of evidence.
    Why do you think all the other developed countries require mandatory health insurance? Do you think it’s because they are socialists like some conservatives would have you believe? Yes, there is a “tranfer of wealth” effect in universal health care, but mostly it’s because universal health insurance is the MOST EFFICIENT form of insuring as many people! Ask your most conservative, capitalist economist friend (of course, who knows health economics)and I can guarantee he/she will come back with the same answer.
    If you expect lay people to respect physicians’ decision as to the welfare of patients, then you should pay the same respect to what health economists/policy scholars have been saying about mandatory health insurance. Ignorance in health economics cannot be an excuse.

  16. rxvette says:

    applaud President Obama for his effort to get healthcare reform passed. This legislation has many much needed fixes for our current system. However, being the independent voter and healthcare professional I am I do believe that we still fall far short of addressing the core of this nation’s healthcare crisis. And this would be – an unhealthy America.
    Michelle Obama is the one fighting the bigger more important fight with her campaign to reduce obesity in children. This needs to be expanded to everyone in America. Because if you still have 2/3 of Americans who are overweight and sick you still have a healthcare crisis regardless of the legislative fixes you put in place. To learn more and to find specific resources we can all use to make an even bigger impact on our nation’s healthcare system please read my article on healthcare reform below. It turns out that we all individually have much more control over what happens about this issue than we think.
    A healthcare professional’s view on health care reform – http://bit.ly/9QLV8

  17. Kim says:

    ed waltz – i think your comment was intended for Mao, and I believe his comments were sarcastic.

  18. jd says:

    It will be nice when the yellers who don’t know anything about healthcare go back to NewsMax or wherever they came from.

  19. ExhaustedMD says:

    To Stop Obamacare:
    pay attention to the loudest zealots taking shots at physicians like you and I, they are not clinicians and per reading their repeated comments, you have to wonder if they are either psychotic or have an agenda that will not be exposed until something forces their hand.
    As I shared at a prior posting, everyone is a damn doctor until the feces hits the fan, and how convenient these charlatans are the first for the door and leave the patient and doctor to be showered with their filth.
    It is the timeless rhetoric of those who resent the committment of doctors who make the sincere effort to practice the craft of healthcare.
    And, who are the loudest detractors of health care, as so illustrated by the Political body of this country? Lawyers! God forbid someone tries to step in and regulate their profession. Then you would see true violence if they could not use the courts to manipulate further.
    Sorry if that is an overgeneralization. But, hey, aren’t they good at projection!!!

  20. Fred says:

    I find it ironic that a guy from England promotes how great subsidies and govt run health care are ! ?!
    Wow, England NHS is such a model of health care.
    Wow,England is such a model of innovation
    Wow, england is such a model for working hard and achieving
    Wow, England is….well i could go on…but let’s just say, a great place for culture, a terrible place for just about anything else.
    When’s the last time you heard “wow, that company came from England”. you dont, its a social state with a broke system, and a broke hc system to boot.
    Fabulous, and now we have an Englander lover of all things govt promoting a blog and entitlement packages.
    strange.

  21. Lucifer66 says:

    So now it’s “Buy health insurance or face the I.R.S.” what’s next?
    Will they mandate that we buy a GM (Government Manufactured) vehicle if we wish to drive in America?
    Will we be mandated to only use government owned banks to keep our money in so they can keep track of our money that much easier?
    How long before we are mandated to join a union if we wish to work?
    How many more times will we see them marching lockstep up those steps to take away our rights?
    Better wake up America before we change to The United Socialists States Of America.

  22. Peter says:

    “I’m a 100% disabled vet and I’d rather go to civilian doctors and hospitals.”
    ed, who pays for that?

  23. altruance says:

    These bills are NOT real health care reform; they are simply a tweaking of the health insurance industry. What has changed is that insurance companies now have some new regulations to contend with. They can no longer drop you when you get sick and they can no longer say NO to your application for whatever little visit to the doctor you may have on your record. Additionally, there is nothing in the passed bill that really attacks the root cause of health insurance premium increases.
    Read more: http://www.altruance.com/2010/03/health-insurance-reform-reality-check/

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