By BOB WACHTER, MD

For people like me, who, perversely enough, get a certain thrill from studying healthcare policy, there’s never been a more exciting, if also dizzying, year than 2010. Passage of the reform bill last March was only the start – and in some ways merely a marker – of the Shifting of the Paradigms: from provider to system; from pen to keyboard; from pay-for-piecework to pay-for-performance; from secrecy to transparency; from patient as passive actor to patient as star of our show.

I’ve been catching up on my reading during the holidays, so bear with me as I devote this blog – lengthier than usual – to a handful of articles, talks, and experiences that, while seeming unrelated, helped me better understand some of the threads of this vibrant healthcare tapestry we’re now weaving.

For decades, one of the defining characteristics of the American healthcare enterprise has been the remarkably poor value – quality divided by cost – it produces. Most of the changes afoot represent a push by a variety of stakeholders, using the tools at their disposal, to improve this value equation. And much of the push-back can be seen as the predictable acts of those who benefited from the old order. As the late William Safire once observed, when you zap a sacred cow, you need to brace yourself for the ensuing mooing. Welcome to Old MacDonald’s Farm.

Michael Porter’s recent NEJM perspective is a good, albeit dense, introduction to the thinking of the nation’s guru on the subject of healthcare value. (The accompanying editorial by Tom Lee offers a more accessible distillation of Porter’s ideas.) Porter writes,

Value – neither an abstract ideal nor a code word for cost reduction – should define the framework for performance improvement in health care. Rigorous, disciplined measurement and improvement of value is the best way to drive system progress. Yet value in health care remains largely unmeasured and misunderstood.

Porter goes on to emphasize the fact that the measures that populate the numerator of the value equation need to be consumer- (i.e., patient-) centric. Moreover, he disses process measurement, arguing that outcomes are the only quality measures that really matter.

I’ll buy that in concept, but defining such outcomes and accounting for patient differences is hellishly challenging. Until recently, most publicly reported quality measures were of processes (like aspirin and beta blockers for MI), since they’re easy to collect and don’t require elaborate risk adjustment or prolonged follow-up.

But lately, we’ve begun to take Porter’s advice to heart, focusing on outcomes like 30-day readmission and mortality rates. Another NEJM article compared the performance of the four most popular risk-adjusted mortality measurement tools. The finding that each of these methods produced wildly discordant results when applied to the same hospital data (some facilities appeared to go from world class to dangerous with a click of a mouse) doesn’t leave one brimming with confidence as we place outcomes at the heart of our performance measurement programs. I wouldn’t throw out those process measures just yet.

Even if we were confident that our outcome measures are accurate and authentic, we quickly arrive at a different question: what kinds of outcomes should we be measuring? Although many physicians believe that clinical outcomes (i.e., did we make the right diagnosis and give the correct treatment; did the patient live or die) are what counts, patients put more stock on their experiences of care. In an excellent JAMA article, Lagu and Lindenauer reviewed the state of patient ratings of care.

While in the US Medicare assesses hospitalized patients’ experiences via a post-discharge survey of random patients (using a tool called the Hospital Consumer Assessment of Healthcare Providers and Systems, or HCAHPS), folks looking for individual patient comments won’t find them on Medicare’s Hospital Compare website. In Britain, however, the National Health Service has created a website (NHS Choices) on which patients can (respectfully) provide their feedback about both physicians and hospitals. After CMS compares the traffic on Yelp and Angie’s List (very popular websites that do host patients’ comments on doctors and hospitals, along with plumbers and restaurants) and NHS Choices with the relatively skimpy uptake of its own Hospital Compare site, don’t be surprised to see Medicare decide to post patient comments within a few years.

Medicare’s patient questionnaire includes no questions about amenities – the survey developers explicitly chose to avoid questions about the “hotel functions” of hospitals. But patients do base some of their judgments about hospitals on plasma televisions and the firmness of hospital beds, as this NEJM article on the burgeoning amenities arms race in American hospitals described. We can expect to see even more amenities creep as hospitals try to recruit patients – particularly ones with good insurance – and are judged on “would you recommend?” questions.

Last year, I visited the remarkable Henry Ford West Bloomfield Hospital, whose lobby is nicer than many four star hotels (all the more remarkable when one considers the state of the Michigan economy). Take this jaw-dropping virtual tour to see for yourself. Unsurprisingly, when the hospital needed a new CEO, it sought a seasoned executive with relevant experience… and hired the former VP for food and beverage services for the Ritz Carlton!

The relative weighting of clinical versus patient experience measures becomes acutely relevant as we move toward value-based purchasing. I hadn’t fully appreciated the math until I spoke recently at a conference hosted by Press Ganey, the healthcare survey company that recently diversified into the broader quality measurement and reporting biz. As you may know, beginning in 2013, CMS will withhold 2% of every hospital’s Medicare payments each year. Hospitals can earn back some or all of this money by performing well on a variety of quality indicators. While 70% percent of this quality score will be derived from clinical quality measures (all processes for now), fully 30% is based on scores on Medicare’s post-discharge questionnaire.

The Press Ganey folks allowed me to preview a tool that will allow hospitals to see both the amount of money withheld by Medicare and the dollars they managed to earn back via their quality performance. Using 2009 data from UCSF Medical Center as an exemplar, I learned that had we been in the program we would have had about $2.1 million withheld and earned back $1.2 million, leaving over $800,000 on the proverbial table. Where did we falter? Our clinical quality performance was terrific; most of our losses would have come through our fair but unexceptional patient survey scores in 2009.

The Press Ganey tool even allows users to play an unlimited number of “what if?” scenarios by tweaking the results on any of the quality scores. For example, bump up our score on HCAHPS Question #3 and voilà – we net an extra $61,000. A CFO with time on her hands could have countless hours of fun with this!

Does a 70-30 balance between clinical quality and patient experience really capture the overall quality of care? I think most caregivers will find the clinical aspects underweighted (I do), but as long as this is Medicare’s recipe, you can be sure that other former hotel, or Disney, execs who want jobs in healthcare won’t have trouble finding them.

Speaking of cross-industry hires and Michigan, you might have seen the amazing story of William Hamman, one of several pilots who found work in healthcare teaching team training and safety principles. We worked with one such company a few years ago, and I really enjoyed it – it’s one thing for a schlub like me to talk about what healthcare can learn from aviation, and another to hear it from a real pilot. (And pilots, whose pensions and earnings have been decimated over the past decade, are grateful for the extra income.) But Hamman was a pilot with a difference: he was also a cardiologist.

Until he wasn’t. It turns out that Hamman, who directed simulation and safety research at the prestigious William Beaumont Hospital in Royal Oak, MI and had procured millions of dollars in grants, was a fraud. While he really was a licensed pilot for United Airlines, his claims to have graduated with both an MD and PhD from the University of Wisconsin School of Medicine were bogus. I’ve met him a couple of times and, like many who worked with him, I was impressed – he was smart and easily believable. The irony is that he could have done fine portraying himself honestly, and now he’s lost everything (Beaumont fired him and UAL grounded him). Catch Me If You Can meets patient safety.

Fraud aside, the question of what we can learn from other industries has been one of our defining issues of the past decade. One of the most impressive thinkers in this regard is Clayton Christensen, who, like Michael Porter, is a professor at Harvard Business School. If you have an hour, you’ll do well to watch Christensen’s lecture at MIT (you gotta love YouTube – Christensen’s speaking fee is in the $50-75K range, and here he is for free), where he describes his worldview. He’s a terrific speaker – thoughtful, crystal clear, with a nerdy charm – and this speech is a useful primer on his trademark issue: the power of disruptive innovation to transform industries. His description of the slow but inexorable death of our steel industry is fascinating (it begins at about 13:00) and holds lessons for the future of American healthcare.

Of course, healthcare has resisted disruptive innovation more than nearly any other industry, in part because legacy providers have created interdependent, complex organizational structures that they’ll defend to the death, and in part because there are many regulatory, licensure, and payment hurdles that can thwart innovation. Like Porter, Christensen sees government’s job as creating conditions that allow value to be specified and measured and permit those who improve value to reap the benefits. One can expect that hospitals, healthcare organizations, and physician groups (all legacy providers, really – this is equal opportunity recalcitrance) will push back on nearly all kinds of disruptive innovation, and you can bet that all will brand their obstructionism as “defending the public” rather than guild behavior. The problem is that some of the time they’ll be right. Sorting out which is which will be one of the great tasks of health policy and outcomes research for the coming years.

A parallel point regarding the role of government was made by several of my colleagues from the American Board of Internal Medicine in a recent JAMA article highlighting the critical role of professionalism. Just as Porter and Christiansen advance the case that government needs to facilitate, not stifle, innovation, these authors argue that

… rather than looking to develop payment methods that incentivize physicians to behave in certain ways (e.g., pay for performance linked to isolated patient outcomes), the systems view of professionalism suggests that payment methods should be reformed to better enable physicians to fulfill their professional obligations to both individual patients and society…. Focusing on how to enable professionalism in practice provides a different guide for these discussions that affirms the importance of physicians’ intrinsic motivation to do the right thing and creates structures to support them in this effort.

This piece was only one of several last year emphasizing the role of physicians in value creation by reaffirming the centrality of our professional responsibilities… newly understood. Robert Kocher, one of the main architects of “Obama-care” and a keynote speaker at this year’s Society of Hospital Medicine annual meeting, co-wrote a nice piece in the NEJM describing the consequences of having Accountable Care Organizations run by physicians versus hospitals. While everyone continues to struggle to figure out what exactly an ACO is and how it will save us from ruin, it is clear that some kind of entity will emerge from the healthcare swamp to receive a fixed payment for the delivery of care, be accountable for outcomes and reap the benefits of efficiencies. At this point, it is anybody’s guess whether these entities will be run by hospitals or doctors. Although I’m hoping that many physician groups will rise to the occasion to effectively organize and lead ACOs, a betting person would put his or her money down on hospitals after reading the Kocher/Sahni piece.

The larger point is that today’s doctors need new skills, including the ability to work in teams, manage budgets, understand population-based data, and preserve scarce healthcare resources. There were a number of wonderful contributions in this area in 2010. The big one, of course, was Educating Physicians, the report authored by my UCSF colleagues Molly Cooke, David Irby, and Bridget O’Brien. This book, which has been called a modern day Flexner Report (that game-changer, also commissioned by the Carnegie Foundation, was published exactly 100 years ago), cogently argues for a wholesale retooling of medical education, from premedical requirements through residency, emphasizing the new competencies but particularly what the authors call “professional formation.” For those interested in the training enterprise and the future of medicine, it is essential reading.

Another JAMA piece, this one written by Sachin Jain and ABIM CEO Chris Cassel, provided more food for thought on physicians’ place in the new world of healthcare. Jain and Cassel highlight the work of British economist Julian Le Grand, who advanced the theory that public policy hinges on whether people are seen as knights (motivated by virtue), knaves (rigidly self-interested players), or pawns (passive victims of circumstances). The authors argue that doctors, like professionals everywhere, like to see themselves as knights and want others to see them that way too. This posture helps professions retain professional prerogatives: the ability to self-regulate and sidestep too many outside intrusions.

Alas, the “knight” view of doctors is eroding rapidly; today’s physicians are increasingly seen as knaves. When viewed this way, write Jain and Cassel, one would logically believe that…

Physicians are interested in themselves and their financial well-being first and their patients second, if at all. Physicians must be given rewards and incentives to motivate them to what is right by their patients and any such schemes would have to be carefully monitored for abuse, fraud, and waste. Physicians learn new techniques and procedures and order tests and studies for personal gain. Any participation in scientific research is driven by self-glorification and narcissism. The health care system works in spite of knave physicians, not because of them. Policies and regulation must guard against their malfeasance, and the public must be protected by regulation and report cards.

One of the scariest things about knave-dom is that it can easily become a self-fulfilling prophecy. As Le Grand wrote, disaster may follow when “policies fashioned on a belief that people are knaves [suppress] their natural altruistic impulses and hence destroy part of their motivation to provide a quality public service.”

The final option is that of the Pawn – one in which physician behavior is unpredictable. Pawns are not as beneficent as Knights, but they are malleable enough to be influenced by the way they are paid. If doctors are pawns, health policy and regulation is needed:

… to guide his or her every behavior because he or she lacks individual agency and judgment to reliably do what is right.

Without underestimating the challenge (nor ignoring the fact that some physicians are, in fact, knaves, and more than a few are pawns), bringing out physicians’ professionalism – to allow them to both be, and be seen as, knights – will require that doctors receive new kinds of training.

One of the most interesting experiences I had last year was helping to organize a hospitalist leadership training program for 40 senior physicians from the nation’s largest hospitalist company, IPC. In this yearlong program, the participants learn key principles of quality improvement and leadership, complete mentored QI projects at their local sites, and gain a deep understanding of their own leadership roles and styles. I have no doubt that graduates of this fellowship will be better capable of being knights themselves, and of guiding the hundreds of physicians they manage to do the same.

Leadership is always important, but never more so than when paradigms are shifting. Patients will be poorly served if doctors withdraw from leadership roles because they lack skills or interest, or if they concentrate on grabbing as much of a shrinking pie as they can before it’s too late. Our times demand that physicians act as leaders: not glumly resigning themselves to a new healthcare system but helping to shape one that delivers the highest quality, safest, most reliable, most satisfying, most accessible care at the lowest cost. It is a worthy goal, and I think we’re up to the challenge.

Best wishes to you and yours for a wonderful 2011.

Robert Wachter, MD, is widely regarded as a leading figure in the modern patient safety movement. Together with Dr. Lee Goldman, he coined the term “hospitalist” in an influential 1996 essay in The New England Journal of Medicine. His most recent book, Understanding Patient Safety, (McGraw-Hill, 2008) examines the factors that have contributed to what is often described as “an epidemic” facing American hospitals. His posts appear semi-regularly on THCB and on his own blog, Wachter’s World.